Full Year 2023 Endeavour Silver Corp Earnings Call
Unknown Attendee: Thank you for standing by. This is the conference operator. Welcome to the Endeavour Silver Corp. Full Year 2023 Financial Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. If you need a conference call, you may signal an operator by pressing star and zero.
Thank you for standing by this is the conference operator, welcome to the Endeavour Silver Corp, full year 2023 financial results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded after the presentation, there will be an opportunity to ask.
Questions to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing star Zero I would now like to turn the conference over to Galina Balaguer, Vice President of Investor Relations. Please go ahead.
Galina Meleger: I would now like to turn the conference over to Galina Meleger, Vice President of Investor Relations. Please go ahead. Thank you, operator, and good day, everyone. Before we get started, I ask that you view our MD&A for precautionary language regarding forward-looking statements and risk factors pertaining to these statements. Our MD&A and financial statements are available on our website at www.edrsilver.com. With us on today's call is Dan Dixon, Endeavour Silver CEO, as well as Elizabeth Senna, our Chief Financial Officer, and Don Gray, Endeavour's B.O.O. Following Dan's remarks, we will then open up the call for questions. And now, over to Dan.
Thank you operator, and good day everyone.
Before we get started I ask that you view, our MD&A for cautionary language regarding forward looking statements and risk factors pertaining to the C. R.
Our MD&A and financial statements are available on our website at Www Dot E. D. R. W. Baird.
Cool.
With us on today's call is Dan Dickson Endeavour, silver CEO as well as Elizabeth Bennet, our Chief Financial Officer.
And Don Great endeavors.
Oh Oh.
Following Dan's remarks, we will then open up the call for a question and now over to Dan.
Daniel W. Dickson: Thank you, Galina, and welcome, everyone. As we commence this year's earnings call, I think it's important to acknowledge the dynamic landscape that has shaped the mining sector in 2023. Rollercoaster market forces led to volatile and lower equity prices. These events negatively impacted company valuations across the precious metals sector, creating a significant disconnect from the underlying commodity prices. But against this broad market backdrop, we navigate higher operating costs, adding complexity to our operation. This theme was apparent for all Mexican mining firms, which saw cost pressures across multiple channels. To put this into perspective, I'll provide some key data points.
Thank you Galina and welcome everyone.
Because we commenced this year's earnings call I think it's important to acknowledge the dynamic landscape that shaped the mining sector in 2023.
Roller coaster market forces led to volatile and lower equity prices. These events negatively impacted company valuations across the precious metal sector.
Create a significant disconnect from the underlying commodity prices.
But this broad market drop backdrop, we navigate higher operating costs, adding complexity to our operations.
This theme was apparent for all Mexican mining firms, which saw cost pressures across multiple channels.
To put this into perspective I'll provide some key data points over the last three years in the Mexican consumer price index surged by more than 21% and was amplified within our industry as key inputs such as steel reagents and other consumables were impacted by supply constraints.
Daniel W. Dickson: Over the last three years, the Mexican Consumer Price Index surged by more than 21% and was amplified within our industry as key inputs such as steel, reagents, and other consumables were impacted by supply constraints. Furthermore, from Q4 2021 to Q4 2023, the Mexican peso strengthened by nearly 20% against the U.S. dollar, which had cascading effects on our in-country purchases and labor costs. As I look back on the year, I can affirm that our operations team displayed unwavering dedication in navigating these challenges. Today, I don't want to just reflect on these challenges but to emphasize the strategic initiatives we've implemented to ensure the growth and success of our company. On a consolidated basis this year, we produced 8.7 million silver ounces equivalent of metal, which met guidance after two consecutive years of exceeding production guidance. However, production was near the lower end of the guidance range with a production shortfall in Q3, largely due to mine re-sequencing changes we implemented to improve ventilation and ultimately worker safety. This temporary disruption in operations results in a reduced mine output and ore grades.
Furthermore, from Q4 2021 to Q4 of 2023, the Mexican peso strengthened by nearly 20% against the U S dollar.
Had cascadia effects on our in country purchases and labor costs as I look back on the year I can affirm that our operations team displayed unwavering dedication in navigating these challenges today.
Today I don't want to just reflect on these challenges, but to emphasize the strategic initiative and sweep implemented to ensure the growth and success of our company.
On a consolidated basis. This year, we produced $8 7 million silver ounces equivalent metal, which met guidance after two consecutive years of exceeding production guidance.
Production was near the lower end of the guidance range with a production shortfall in Q3, largely due to mine seat re sequencing changes, we implemented to improve ventilation and ultimately workers' safety. This temporary disruption of operations, resulting in reduced mine output and ore grades and please say iguana <unk> performance improved significantly in the fourth.
Daniel W. Dickson: I'm pleased to say Guanasavi's performance improved significantly in the fourth quarter as the planned improvements were executed extremely well and swiftly. Not only did Gwanacebe's production return to historical levels, but the recovery strategy more than met expectations as silver grades, gold grades, and plant throughput exceeded our estimates. The plant refurbishments completed at the beginning of Q4 enhance our operational flexibility to exceed the historical throughput of 1,200 tonnes per day. These improvements and enhancements led to escalated costs in the second half; however, cost metrics significantly improved in Q4. Well, Gowanus V had its challenges in Q3.
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The planned improvements were executed extremely well and swiftly.
Not only did wanted to these production returned to historical levels, but our recovery strategy more than met expectations as silver grades gold grades and plant throughput exceeded our estimates.
The plant refurbishment completed at the beginning of Q4 enhance our operational flexibility to exceed the historical throughput of 1200 tonnes per day.
These improvements and enhancements led to escalate it cost in the second half hour cost metrics significantly improved in Q4.
I want us to be had its challenges in Q3 ball Nieto's performance remained steady with increased silver production offset by lower gold production in the fourth quarter.
Daniel W. Dickson: Polonido's performance remained steady, with increased silver production offset by lower gold production in the fourth quarter. From a financial standpoint, for the year, we reported revenue of $206 million, with cost of sales of $169 million, for operating earnings of $37 million, and mine operating cash flow of $40 million. After exploration, G&A, and other investment expenses, we reported a net income of $6 million, or $0.03 per share. For the year, Guanacivi delivered $14.3 million of mine-free cash flow, and Bolognitos delivered $2.5 million. Our cost of sales increased 6% compared to the previous year, and while there were a number of drivers, a strong Mexican peso and inflationary pressures on consumables were the two most impactful. Again, these two factors, with lower than planned ore grades and mine due to the mine resequencing in Q3, contributed to elevated cost metrics for the year, with cash costs and all-in sustaining costs at $13.49 and $2 Both metrics were higher than we originally guided. However, the fourth quarter gave us some footing as costs came down significantly from Q3. Our fourth-quarter cash costs and all sustaining costs were $12.54 and $21.48 per ounce, respectively.
From a financial standpoint for the year, we reported revenue of $206 million with cost of sales of $169 million for operating earnings of $37 million and mine operating cash flow of $40 million after exploration G&A and other investment expenses we reported.
Net income of $6 million or <unk> <unk> per share.
For the year <unk> delivered $14 3 million of mining free cash flow and ball nieto's delivered two and a half million dollars.
Our cost of sales increased 6% compared to the previous year. While there are a number of drivers of strong Mexican peso and inflationary pressures on consumables were the two most impactful.
Again, these two factors with lower than planned ore grades in mines.
Or grades mined due to the mine sequencing in Q3 contributed into elevated cost metrics for the year with cash costs and all in sustaining costs at $13 49 and.
And $22 93 per ounce respectively.
Both metrics were higher than we originally guided.
However, the fourth quarter gave us some footing as costs came down significantly from Q3, our fourth quarter cash cost and all in sustaining costs were $12.54 and $21 48 per ounce respectively.
Daniel W. Dickson: The remediation efforts extended into early Q4, and the positive momentum on these initiatives is expected to carry forward. Looking into 2024, containing costs and finding efficiencies will remain in focus. While we continue to experience inflationary pressures and strong local currency, we are aggressively implementing business improvement initiatives to mitigate these headwinds. As of year end, we had cash of $35 million and a working capital of $43 million.
Remediation efforts extended into early Q4, and the positive momentum on these initiatives are expected to carry forward.
Looking into 2024 containing costs and finding efficiencies will remain in focus while we continue to experience inflationary pressures and strong local currency, we are aggressively implementing business improvement initiatives to mitigate these headwinds.
As of year end, we had cash of $35 million and working capital of $43 million cash decreased in Q4 as funds were spent on the development activities at Turner and long term Prepays went up significantly as we placed deposits with contractors and equipment.
Daniel W. Dickson: Cash decreased in Q4 as funds were spent on the development activities at Terranera, and long-term prepaids went up significantly as we placed deposits with contractors and equipment. Working capital has fallen as we continue to invest in the Terranera project. With this investment, we've built up our non current assets, including $22 million in construction deposits related to the Terranera build and $23 million in value added tax. The EVA receivable has been submitted for processing, and the company is working with authorities on timely collection. However, we conservatively classify these as non-current assets until collection starts.
Working capital has fallen as we continue to invest in the Terra narrow project with this investment we built up our non current assets include including $22 million in construction deposits related to the geron are billed and $23 million in value added tax the Eva receivable has been submitted for processing and the company is working with authorities on <unk>.
Henry collection. However, we considerably classified these as non current assets until collections starts.
Daniel W. Dickson: As per requirements under the $120 million Senior Secured Debt Facility, we must primarily self-fund development through cash on hand before drawing on the facility. As such, we are well positioned to satisfy the financing requirements of the project and are expecting to complete our first draw in March. During Q4, we raised gross proceeds of $39 million through the ATM, and another $24 million was raised subsequent to year-end to ensure there is sufficient funding in place for the development of Terranera. When you add this all up, we have sufficient capital.
As per our requirements under the $120 million senior secured debt facility, we must primarily self fund development through cash on hand before drawing on the facility as such we are well positioned to satisfy satisfy the financing requirements of the project and are expecting to complete our first draw in March.
During Q4, we raised gross proceeds of 38 $39 million through the ATM and another $24 million was raised subsequent to year end to ensure there's sufficient funding in place for the development of Turner.
When you add this all up we have sufficient capital we're confident that the actions. We've taken will see churn are through the finish line. While also supporting the high value organic growth initiatives in place that pit area.
Daniel W. Dickson: We're confident that the actions we've taken will see tear and error through the finish, while also supporting the high-value organic growth initiatives in place at Pizzeria. As a reminder, PIT III is our next project in the pipeline, located in the Durango State of Mexico. It's one of the world's largest undeveloped silver deposits, with nearly 600 million ounces of silver defined.
As a reminder, three is our next project in the pipeline located in the Durango State of Mexico, and it's one of the world's largest undeveloped silver deposits with nearly 600 million ounces of silver defined.
Daniel W. Dickson: Let's give a quick update on the construction progress at Terranera. In January 2024, we completed a risk analysis on the project for the remaining expenditure and provided an updated initial capital costs and execution plan. Similar to the trends we experienced at our producing mines in Mexico, we faced similar headwinds at Ternera during the construction year. The impacts of a stronger Mexican peso, ongoing inflation, and tight markets for equipment and bulk materials all contributed to an 18% increase to our updated initial capital estimate of $271 million, up from $230 million.
Let's give a quick update on the construction progress at Turner.
In January 2024, we completed a risk analysis on the project for the remaining expenditure and provide an update at initial capital cost and execution plan.
Mirroring the trends we experience experienced at our producing mines in Mexico, we faced similar headwinds at 10 era. During the construction here the impacts of a stronger Mexican peso ongoing inflation in tight markets for equipment and bulk materials. All contributed to an 18% increase to our updated initial capital estimate of $271 million up from two <unk>.
<unk> hundred $30 million.
Daniel W. Dickson: Capital pressures notwithstanding, the pace of the project development continues to advance and is on track with previous guidance, with commissioning planned in Q4 of 2024. At the end of the year, we reached 46% completion on the overall project progress compared to the original guidance. However, due to the adjusted waiting on the updated initial CapEx management estimates an adjusted 43% completion as of December 31st. We had spent $122 million on direct development, while project commitments total $171 million, or 63% of the updated capital budget.
Capital pressures notwithstanding the pace of the project development continues to advance and is on track with previous guidance with commissioning planned in Q4 of 2024.
At the end of the era, we reached 46% completion on the overall project progress compared to the original guidance.
However, due to the adjusted waiting on the updated initial Capex management estimates, an adjusted 43% completion as of December 31.
We had spent $122 million on direct development, while project commitments totaled $171 million or 63% of the updated capital budget.
Daniel W. Dickson: During Q4 we concentrated our efforts on completing key items, including earthworks for our upper mill platform, procurement of equipment, and advances in plant concrete, and achieved significant progress in constructing our process plant. If you are interested in seeing photos of the construction progress, I encourage you to visit our website under the Terranera page. Let me provide a few recent highlights of progress at Terranera, which demonstrates our strong commitment to responsible, sustainable development and working collaboratively with our local key stakeholders. Starting with safety, our Taquito culture has served as a solid foundation for building a strong safety record at the project. We finished the year with no lost time accidents, over 172 days of work at the site, which translates to about 600,000 man hours.
During Q4, we concentrate our efforts on completing key items, including earthworks for upper mill platform procurement of equipment and advances in plant concrete and achieved significant progress in constructing our process plant.
If you are interested in seeing photos of the construction progress I encourage you to visit our website under the Taro narrow page.
Let me provide a few recent highlights of progress at Turner, which demonstrates our strong commitment to responsible sustainable development and working collaboratively with our local key stakeholders star.
Starting with safety or to Quito culture has served as a solid foundation for building a strong safety record at the project. We finished the year with no lost time accidents over 172 days of work at site, which translates to about 600000 man hours.
Daniel W. Dickson: Specifically, we heightened safety protocols significantly, especially during the rainy season and, notably, in Q4 when we were alerted to the imminent arrival of Hurricane Lydia along the coastline. Despite facing a Category 4 storm, our site weathered the event admirably, experiencing only minor damage to exterior fixtures and some fallen trees. The robustness of our drainage system proved crucial in maintaining the integrity of the site and roads. As a precautionary measure, we suspended on-site activities to ensure the safety of our personnel. Fortunately, power and normal operations were swiftly restored within a few days. We also support local relief efforts with our onsite team helping local communities to recover.
Specifically, we heightened safety protocols significantly, especially during the rainy season, and notably in Q4, when we were alerted to the imminent arrival of Hurricane Lydia along the coastline.
Despite facing a category four storm our site, whether the event admirably experienced only minor damage to exterior fixtures and some fallen trees.
The robustness of our drainage system proved crucial in maintaining the integrity of the site and roads.
As a precautionary measure we suspended onsite activities to ensure the safety of our personnel. Fortunately power in normal operations were swiftly restored within a few days.
We also support our local relief after its with our onsite team, helping local communities to recover.
Daniel W. Dickson: Over the year, we've emphasized the importance of the efficiency of our mine development. To address this, we strategically onboarded top-tier talent and successfully transitioned to our in-house mining team after starting with mine contractors. This shift was always designed and has yielded significant development efficiencies, with notable enhancements in Q4 where we met our daily advance rate targets, facilitated by improved blasting techniques, water control, and better ground conditions. As the year concluded, our cumulative underground development reached over 2,200 meters, marking a substantial 70% increase in meters compared to Q3. The positive momentum and advance rates indicate a promising trajectory forward. During the quarter, Portal 4 Incline broke through the surface, and preparations are now underway to complete the portal structure in Q1 2024.
Over the year, we've emphasized the importance of the efficiency of our mine development to address this we strategically onboard at top tier talent and successfully transitioned to our in house mining team. After startup with mine contractors. This shift was always designed and has yielded significant development efficiencies with notable enhancements in Q4.
We met our daily advance rate targets facilitated by improved blasting techniques water control and better ground conditions.
As the year concluded our cumulative underground development reached over 2200 meters, marking a substantial 70% increase in meters compared to Q3, the positive momentum in advance rates indicates a promising trajectory forward.
During the quarter port of foreign client broke through the surface and preparations are now underway to complete the porous structure in Q1 2020 for.
The majority of construction activities have progressed well at the plant site currently surface construction stands at nearly 50%.
Completion, and the advanced stage of concrete where it sets the stage for commencement of vertical.
Construction, which started in January.
At year end the concrete was nearly done in both the grinding floatation areas and was being prepared for the general contractor begin structural steel and mechanical installations.
Also during Q4, we initiated the construction of the access road connecting lower platform to the tailing storage facility area.
And the upper upper mail platform.
Our turn their workforce continues to grow with over 520 employees and contractors on site on the procurement side. All major equipment was ordered by year end and the team is focused on procuring bulk materials, including structural steel piping and electrical cable and lastly on the community relations side. We continue to have full support from the municipality and continue to engage in.
Educate the municipality as we progress at site.
Okay. So I've touched a lot on our 2023.
Let's have a look at what's in store this year for for Endeavour.
We enter 2024, and a solid position both financially and operationally with a number of strategic initiatives underway that will drive our future growth.
Our production outlook anticipate golden silver to be consistent with 2023, and managing costs will continue to be a key focus as we aim to offset the impact of rising cost Qantas VM, Bonnie is or mature assets and we have plans to invest more than $30 million in sustaining capital to optimize the performance and maximize output.
Equally important on this year's agenda is advancing our growth profile, we have $9 million earmarked across our exploration portfolio to continue our long successful track record of growing through the drill bit.
For instance, at <unk>, we hope to invest over $5 million on several initiatives. This year's planets conduct a 6000 meter drill campaign to target the high grade zones and theater structures of the existing resource we will use the data collected to guide our next steps with the expectation to assess this project is an underground silver mine Ulta.
Ultimately the combination of <unk> and <unk> supports our long term vision to become a 20 million ounce senior silver producer and provides a value proposition that is best in the silver space.
With constructive macro backdrop for both gold and silver in place. We believe our growth strategy is well timed and well suited to drive outperformance for our stock holders in the coming years.
I'd like to add that over the past few years, we have deliberately reinvested in the business for long term growth now with less than a year ago before turn it comes on stream. We can expect to see the benefits of these investments accrue to our shareholders 2024 is about execution at Turner, which is clearly transformational.
Upon completion, we expect <unk> will nearly double our production significantly reduce our cost profile and provide substantial free cash flow for our shareholders.
It's going to be exciting year for endeavour, and our stakeholders, while we faced a few more capital intensive months ahead as we ramp up to production. We look forward to the arrival of strong free cash flow generated in 2025 before.
Before opening for questions I'd like to formally welcome Elizabeth San as our recently appointed CFO to our executive leadership team.
Living and joined US in January and we're thrilled to have her on our team as a finance executive with predominantly Latin American focused she brings over 20 years of value and accounting corporate finance and corporate treasury to her role.
On behalf of the entire team at Endeavour Silver I would like to also thank Christine West our former CFO for her many contributions to the company over the past 16 years.
Router Courier with endeavor. She has demonstrated incredible incredible dedication to work and to the success of our company.
Christine we wish you all the best in retirement.
Together with the other members of our management team would be happy to take your questions, Let's open up the lines operator.
Secondly to join the question queue. You May Press Star then one on your telephone keypad, you will hear tone.
Our request.
A speakerphone please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.
The first question comes from Duke Zukowski with Alliance Global Partners. Please go ahead.
Hey, Dan and team thanks for taking my questions.
Hey, Jake how are you.
Well how are you.
So starting with.
Guidance for the year can.
Can you speak to or maybe quantify the positive impacts of the recent move in the gold price might have.
From a credit perspective.
Yeah.
While for the year just for all the listeners will produce both 5 million ounces of silver and about 35000 ounces of gold.
Obviously 100 dollar impact on increase in the price of gold has a significant impact from a byproduct standpoint, we did our budgeting I believe at $18 40 for the year on <unk>. Obviously today, we're sitting around just shy of 2200.
That impact.
Well first of all significantly drives down on a on a per ounce basis byproduct basis.
Specifically, what it goes right into our cash costs and where our guidance was it's beneficial but I think it's still early days and we'll stick by our guidance of using $18 40.
Okay. That's helpful.
And then just sit there and Eric can you just touch on the remaining exposure from a capex standpoint.
Broadwell inflationary pressures what else.
Often.
Yes, I think at this point Jake.
The inflationary pressures, it's probably taken away just the fact that we've done most of our key procurement even on bulk items now.
When we read.
We estimate it at the price of Terra narrow the initial capex going from $232 70, we adjusted our Mexican FX rate to 17, 3% and our budget.
And so as long as the Mexican FX rate stays there.
I think we'll be all right now it just comes down to productivity at site.
And making sure we execute.
Again, there is always going to be small headwinds, whether it's inflationary or or or if the peso continues to depreciate.
But the impact on what's left to build over the next kind of nine months is small.
As long as we produce.
Got it okay. That's all from me Thanks again.
The next question comes from Michael <unk> with H C. Wainwright. Please go ahead.
Oh.
Okay.
Hey, Heiko hopefully your question comes through seemed a little digitize at this time.
Yeah.
Okay.
Sure.
Okay.
Sure.
Yeah.
Yes.
No.
Paul.
Change at all.
Paul.
Florida law.
Yes.
Paul.
Yes.
Okay.
Apologies Heiko from our end, we couldnt get what Youre, saying everything's come through digitized operator, if we can maybe go to the next question Heiko back in queue if possible.
Certainly the next question comes from Lucas pipes with B Riley Securities. Please go ahead.
Thank you very much operator, and good morning, everyone.
Good morning Lucas.
I'll try not to sound like are too detailed but at.
First I wanted to add my congrats to Elizabeth and then Kristina I Hope you.
Do you enjoy retirement.
And maybe a first question on the cost side.
What else can be done what else are you looking at to mitigate costs kind of going forward.
Right yes.
<unk>.
Yes, <unk>. It comes still we still have opportunity for productivity. So in Q3, we had ventilation issues that made it extremely warm for our employees to work underground and as we got deeper into the <unk> area. It got harder in Q.
Q4, Q3, and Q4, we put through a new and ventilation system and ultimately increase our pumping out of the <unk>.
Water that was coming out and we got a lot of benefit of that in Q4, but there is still some benefit to come in Q1 and that just comes down to productivity. So when when the mine got overly heart, we had to give.
More breaks to our employees and put them in cooling chambers to effectively make sure that they're operating in a safe manner.
I think at this point in time with the ventilation and where the temperature is underground.
Can work fully and so theres productivity gains that can be gained iguana city and then it's working across both <unk> and making sure we're procuring and going out to a number of different vendors and trying to get some bulk work done on that and theres always abilities to kind of look at what we're doing from a purchasing.
Standpoint, what we're doing from a productivity standpoint.
Making sure that ultimately our mine development is a big focus this year that we are getting our advance rate as expected and putting some.
Incentives to make sure that we're doing that as a group. So theres a lot of little things that we can do obviously, they're mature assets are going to see <unk> as kind of diminishing returns over the years, but.
I think with what we've seen in Mexico with regard saw those cost pressures that we have to look at anything that's available to us to try to reduce our costs on a per ton basis.
Okay. Thank you for that.
Switching over to Karen thereof.
What is the workforce stand today, and what kind of your employee count versus.
Which is contractor.
Labor.
I think you've mentioned that it's kind of it.
A key driver of productivity and efficiency going forward.
The ball mill.
That being transported.
The plant yet or is that expected in Q1.
No for sure.
To answer the first question. So at December 31 were 520 total employees and contractors have that 520 about 120 or direct employees.
Through this year, we do expect to peak around 700 on site.
And then with regards to our ball mill, it's a good question.
A lot on Q4, and what was happening at site are.
Bill, our Sag mill, and our ball mill actually already at site and they have been placed so it's been exciting kind of Q1, but we will have a full update of Q1 generally in April from a construction standpoint.
Alright, well I really appreciate it I'll turn it over best of luck.
Thanks Lucas.
The next question comes from Steven Silk with Stifel. Please go ahead.
Hi, Dan and team congrats on a good quarter. My question is just more on terra in ore in the underground rates I think this was kind of a critical path item and great to hear they would come up so so.
Notably over the last quarter can you just comment on if those are all tracking to your original plan or is there a catch up to do there or are you seeing additional efficiencies that you hadn't counted on at this point in the transition and just a little more color around that around how that's progressing.
Yes, it's a very good question Steven.
Our plan ultimately is about four meters of advanced per critical heading per day.
We're able to achieve that in Q4, and we've seen that in Q1, there is always a little bit of opportunity.
Redesigning of our mine plan, we continually redesign our mine plan I would almost call. It dynamic just based on ground conditions water flow.
Things that we've done we've got a very seasoned team on site and they have been phenomenal I would say over the last six months. So we are hitting our advance rate as planned to make sure. We're in commissioning for Q4 of this year.
Perfect that's great to hear and know that that's it for me I appreciate it.
Thanks Steven.
The next question comes from Craig Hutchinson with TD Securities. Please go ahead.
Hi, Good morning, guys. Thanks for taking my question.
Good morning, Greg.
And Martin Dan maybe a similar question to Steven is just with regards to critical items you guys mentioned, the tailing storage facilities on the critical path and any updates on kind of where that stands.
You did mention that you are going to provide an update in Q1, but any kind of numbers you can kind of give us in terms of where the overall project sits here in mid March 43% at year end.
Where are you in the fifties now anything on that would be helpful. Thanks.
Yeah.
Correct, and maybe you could kind of expand on Steven's question right now we see the critical path being mine development and the tailings storage facility and probably the scaling tailings storage facility. Originally on the outset of the build was and expect it to be a critical path item, but just on timing of when we got started on that lower platform and where the tailings dam is it's right there with me.
Development I'm happy to say that in Q1, all of our work began on the TSS.
With the expectation that that work will be done mid year. So there is still some time around it.
Again productivity around the TSS starts off a little bit slow, but it's picked up in <unk>.
Hopefully we can make it so it's no longer a critical path item and it remains to be the mine development.
Okay.
And just overall progress any updates from the sort of 43% at year end.
Yes, I can say, we originally thought 46 and we adjusted to the updated initial Capex right now at December 31, we felt we were about 43, generally we're adding 2% to 3% of efficiencies per months.
Generally the plan. So we're probably sitting at the beginning of March not mid March here, but around 50%.
I know Don grades on our line our CFO Don would you have any other color you'd like to add to that.
Yeah. Thanks, Dan So Craig we're just just under 50%.
And we will.
We will have the <unk>.
We'll have better visibility on that at the end of March, but but things are things are moving really well at site a lot of work going on.
On the mechanical and the upper platform like Dan said, we've set the mills and also starting to set pumps and flotation cells and things like that so.
The excavation is going well down on the lower platform area.
Okay, Great. Maybe one last question for me just you guys are planning to pay down the debt facility. This quarter or is that still on track will be the full amount or will it be sort of increments of the format.
I'll take that one this is maybe for Ed.
We are planning to go down this path.
Hello, Matt.
Okay, great. Thanks, guys.
Thanks, Craig.
Once again, if you have a question. Please press Star then one the next question comes from Heiko with H C. Wainwright. Please go ahead.
Can you guys hear me okay.
These sounds phenomenal heiko.
I'm in my in my House, I don't know what happened earlier.
So I hung up and dialed back in so if this question was asked my apologies in advance.
Dan earlier on this call in your prepared remarks, you mentioned early Q4 for commissioning reading into this we're looking probably of a pole or maybe you know early November seven.
Seven months away.
Has that timeline changed at all and then just went through the February 12.
Press release, and also just Eat's Q4, and we probably had more more like mid Q4, and our model and this is obviously quite a bit better and instant timeline has changed what exactly help.
<unk> please.
You know I go we've always been we've always publicly said that we are Q4 commissioning and we've never indicated whether that was going to be October November December and I think that buys a little bit of time.
We initially had planned in our feasibility study kind of a three to six months commissioning phase.
In our model right now, maybe it's a little bit shorter than six months and closer to that three months.
But the expectation at the outset since April 2023 until today as we've publicly been saying its a Q4 commissioning for 2024.
Got it okay building on that.
I'm just thinking out loud here the cost curve up here and there obviously are sort of ramp associated with it.
In your internal model for anything with this ramp up curve changed compared to what you maybe were a year or two ago before it really started getting fully built.
Maybe I'm not fully understanding your question so with the ramp up of the initial capex going from 230 to $2 70.
You're asking about the impact on our model.
No no once once once it's actually in production later this year.
Which I assume is efficiencies at site get added within two to three four quarters as the whole thing ramps up anything youre seeing anything that changed internally over the past couple of months and what youre seeing in the costs of the ramp up.
Yeah to be honest the cost per ounce.
Yes, we haven't come out publicly and from an internal standpoint.
On operating costs, so clearly from our existing operations we have seen.
Operating cost pressures increase because of the Mexican peso because of the inflation rate.
Publicly in our feasibility study, we put out an $87 cost per tonne on the operation again that was up $17 50 ton per day, when we announced the construction decision for <unk>, we talked about the 2000 tonne per day scenario, which brought our cost per ton down to 80, now clearly with the pressures that we've seen across the space that 80.
Dollars per tons, probably not going to be $80 per ton increase in steel prices increase and reagents is going to push that up we haven't remodeled all of that.
As we approach operations and going into commercial production, we'll probably update the market at that time with regards to those.
Just knowing the operations and where those pressures have been.
I don't think it'll be significant or change the outcome of what we do at Turner.
Perfect No that's sir apologies.
Apologies for the bad connection again, and I'll talk to you soon.
Thank you no no apologies necessary.
This concludes the question and answer session I would like to turn the conference back over to Dan Dickson for any closing remarks.
Well, thanks, operator, and thanks for everybody attending this year's 2023 earnings call.
Hopefully 2024 turns out to be a wonderful year I know in the last two weeks, we've had a real push on gold prices and hopefully that translates into the silver price I know, we're still sitting close to 90 to one ratio and ultimately we see some loving the gold price that will translate over to the silver price.
It's our job to execute this year on <unk> and I think we will have a very wonderful 2024, and hopefully beyond that thank you and have a good day.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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