Q4 2023 K92 Mining Inc Earnings Call
Thank you for standing by this is the conference operator, welcome to the cane Ninety-two mining 2023 fourth quarter and annual 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 then zero.
David: I would now like to turn the conference over to David My Black President S. C. O O. Please go ahead.
Thank you all for you and thanks again for attending <unk> fourth quarter 2023 annual results Conference call. We hope you and your families are doing well. In addition to myself we have on the line John Lewis, Chief Executive Officer, and director and Jonathan <unk>, Chief Financial Officer, I would also like to remind everyone that after the remarks management the call will be followed by Q&A session as we will be making forward looking.
John Lewis: Statements during the call. Please refer to the cautionary notes in risk disclosure in our MD&A on slide two of the webcast presentation also please bear in mind that all dollar amounts mentioned in the conference call are U S dollars unless otherwise noted now I'll turn it over to John to provide you with an overview.
John Lewis: Oh, Thank you David and welcome everyone.
We begin as always with safety.
John Lewis: Turning to his number one priority as shown on the chart 292 is operating from a safety performance that has been significantly better than the industry average.
John Lewis: Start up commercial production.
However, in 2023 lost time injury frequency rate increased and we take this extremely seriously.
John Lewis: We've taken many actions to address this and we've got more underway.
John Lewis: In the third quarter and independent safety audit was completed following the incident in the second quarter. The findings from the audit indicated that our safety procedures and systems with generally good with room for improvement primarily in our frontline supervision to make sure that safety procedures and systems or almost policy, we have an additional independent safety audit.
John Lewis: Underway as we look for further opportunities for improvement.
John Lewis: Introduce various technologies to improve safety, including in cabin monitoring of our entire fleet and that of our contract is operating on site implementation of other safety enhancing technologies are currently underway such as proximity detection system for our underground mobile fleet culturally we've seen multiple <unk>.
Was it as leading indicators, including significant increase in job safety assessment and we've also had changes to our personnel were required to drive this.
John Lewis: I'd like to reiterate that <unk> is relentless in its.
John Lewis: Pursuit of our goal of achieving zero harm amongst our workforce.
John Lewis: Now discuss the Nonindustrial incident, which occurred on the mining lease.
John Lewis: March 10th and which resulted in a deceased employee <unk>.
John Lewis: Initially the incident appeared to be an industrial accident.
John Lewis: However, preliminary findings from K 92, and the role Papua New Guinea, and Constabulary, which police indicated the death was nonindustrial suspicious faithful incident.
John Lewis: Canine two continues to work with the relevant government authorities under the Criminal Code Act and the mining Safety Act to support the investigations.
John Lewis: At this point the mineral resources authority are still treating the incident as an industrial action and as such or the temporary suspension of underground activities through the issuance of a form 29 pending the completion of action orders in relation to an independent safety audit and the installation of a collision avoidance system.
John Lewis: Work on these action Otis is underway and we are in process I can't only two prior to the issuance of the action orders, we have accelerated lease and they are well advanced in terms of progress given the non industrial nature of the incident and what we believe are misapplication of the mining safety initiatives.
John Lewis: 29, K 92 has appealed the form 29 through various channels. This process is now well advanced and we expect to receive a positive outcome shortly with operations resuming immediately thereafter in terms of impact to production. There's a moderate impact in Q1 production and is expected to have them.
John Lewis: Moderate impact to Q2 production at <unk> is working to resolve this expeditiously and we'll provide another update in due course.
John Lewis: On the ESG front K 92, it's extremely proud to have received the award for outstanding community humanitarian initiatives for its women in mining program at the P&G resources and energy investment conference in Sydney In December 2023 program champions women's empowerment initiatives, including Upskilling and preventative health care.
John Lewis: This is the second consecutive year attained 92 has been recognized with an industry ESG Award.
John Lewis: During the fourth quarter K 92, established a mou with the Don Bosco Technological Institute. The Mou focuses on a number of areas designed to support and grow talent in Papua New Guinea, including information Exchange Technical assessments Engineering studies and research and participation in canine tooth tertiary scholarship and <unk>.
John Lewis: <unk> training program canine too now has four mou's with tertiary institutions in Papua New Guinea, which is university of Papua New Guinea University of technology in Le University of Caracas, and nice Don Bosco.
John Lewis: In February 2024, we welcomed the clash of 'twenty 'twenty four for the K Ninety-two graduate program and also the inaugural tree vocation program shown on the left and right images respectively. These programs are designed to provide invaluable work experience training to develop local talent and future leaders.
John Lewis: In their respective fields for more information on pay 90 twos. Many ESG initiatives I would encourage you to read our sustainability report found on our website.
John Lewis: Moving onto operational performance during the quarter can actually go mine produced a record 39101 answers gold equivalent with 151 times 908 tonnes processed at a head grade of eight seven grams per ton gold equivalent cash cost $430, an ounce and all in sustaining costs were.
John Lewis: $1062 per ounce gold quarterly cash costs for the second lowest on record for the year. We produced 117607 ounces of gold equivalent exceeding the top end of our updated production guidance of 111 to 116000 ounces gold equivalent cash costs.
John Lewis: $585, an ounce beat the original guidance range of $6 20 to 660 per ounce gold and all in sustaining costs at $1162 per ounce also beat the original guidance of 11 eight to 1300 per ounce gold as annotated on the chart all of <unk>.
John Lewis: Any costs have been elevated for the past few quarters as the company continues to make a considerable investment in the stage three expansion with cost expected to decline considerably thereafter in terms of our key operational quarterly physicals can't onto took a major step forward in Q4 delivering a record.
John Lewis: Total ore tons processed record total developed meters and record total tonnes mined.
John Lewis: A major positive for several quarters now has been the performance of the process plant, particularly after the commissioning of the final part of the stage two a plant expansion in May and Q4, the process plant throughput averaged 1651 tons per day exceeding the stage to a design throughput rate of 13.
John Lewis: 70 tons per day by 21% a new weekly record was also achieved in Q4, but we averaged 2136 tonnes per day, which is 56% greater than the stage to a design throughput a daily record was also achieved in Q4 of 2000 and 320 tons processed on November 19th.
John Lewis: Now that 69% greater than the Iia designed throughput rate. The process plant has certainly shown that if the tons are in front of it from the mine. It is extremely capable and provides significant optionality going forward. The records also highlight the potential that the stage three process plant, which was basically uses the same design parameters.
John Lewis: <unk> is the existing plant is potentially capable of much greater than its nameplate design.
John Lewis: I'll now turn the call over to our Chief Financial Officer, Justin Blockchain to discuss our financial results for the fourth quarter.
Justin Blockchain: Thank you John and Hello, everyone. During the fourth quarter, we had record quarterly revenue of $75 3, Million% to 22% increase from prior year, we sold 33273 gold ounces at an average realized selling price of $1898 compared to 35200 <unk>.
Justin Blockchain: While balances at an average realized selling price of 1006 hundred $52 in the prior year.
Justin Blockchain: As at December 31, 2023, there was 5285 gold ounces in inventory, including both concentrate and Dore a decrease of 781 gold ounces when compared to September 30th due to timing of sales during the year, we had record annual revenue of two <unk>.
Justin Blockchain: Hundred point 3, Million% to 6% increase from prior year, we sold 97355 gold ounces at an average realized selling price of $1869 compared to 110654 ounces at an average realized selling price of $1711 in the prior year.
Justin Blockchain: Q4 cost of sales was $35 9 million compared to $29 8 million in the prior year cost of sales is higher primarily due to the increase costs associated with the operation of the stage two a expansion with operational activity increasing from 121686 tons.
Justin Blockchain: In Q4, 2022 to 151908 tons in Q4 2023 for the year cost of sales was $111 4 million compared to $96 3 million in the prior year or $77 7 million compared to $74 7 million when you exclude noncash I'd.
<unk> cost of sales before noncash items on a per ton basis decreased from 2022 due to efficiencies created with the stage two a expansion which resulted in the company increasing total ore mined from 448079 times in 2022 to 506000.
Justin Blockchain: 318 tons in 2023.
Justin Blockchain: Q4, 2023 cash flow from operating activities before changes in working capital was $38 6 million compared to $26 6 million in the prior year, a new quarterly record for the year, we saw a record cash flow from operating activities before changes in working capital of $82 1 million compared to $72 five.
Justin Blockchain: $5 million in 2022.
Justin Blockchain: As of December 31, 2023, we had $79 1 million in cash and cash equivalents and short term treasury bills, while spending $64 2 million in expansion capital for the year and our working capital balance of $99 6 million. The company also has no debt on the balance sheet.
As John mentioned during the fourth quarter. They can answer gold operations produced 33309 ounces of gold 2 million 728623 pounds of copper and 56000, and 502 ounces of silver or <unk> 39101 ounces of gold equivalent we sold 33.
Justin Blockchain: <unk> thousand 273 ounces of gold 3 million 61956 pounds of copper and 63301 ounces of silver we incurred a cash cost of $430 and an all in sustaining costs of $1062 per ounce of gold, which was significantly below our realized.
Justin Blockchain: Gold selling price of $1898 per ounce.
Justin Blockchain: During the year. They can enter gold operations produced 100533 ounces of gold 7 million 690477 pounds of copper and 160006 hundred 28 ounces of silver or 117607 ounces of gold equivalent we sold 97300.
Justin Blockchain: 55 ounces of gold 7 million 512951 pounds of copper and 159202 ounces of silver we incurred a cash cost of $585 and an all in sustaining costs of $1162 per ounce of gold for the year.
Justin Blockchain: Well below our realized gold selling price of $1869 per ounce, our 2023 cash cost per ounce of gold increased to $585 from $538. In 2022. The increase is primarily due to processing lower grade material compared to the prior year. It is important to note that we can.
Tinian to see downward pressure on costs, the economies of scale as operations ramp up and the stage III expansion is complete I will now turn the call back to John to continue with the rest of the presentation.
John Lewis: Thank you Justin on the exploration and girls section, we will begin with what I think you'll agree is a powerful demonstration of the transformation in value created by K 92 through exploration.
First long section as from May 2017, when K ninety-two discovered corridor Kora and <unk> combined had an inferred resource of 165 million ounces.
John Lewis: An excellent traction is from late 2021, with Cora, Tom Pete and Cora North combining to form one large resource collectively referred to as core and covering over a kilometer in strike and over a kilometer vertically at this point the high grade Jud was only recently discovered and it was a limited.
John Lewis: The main two drilling completed now.
John Lewis: Fast forward to our latest resorts announced in late 2023 Cobra has significantly grown along strike and John has significantly expanded in all directions in terms of numbers. The latest resource update increased measured and indicated by over 15% and inferred by over 70% grades reported a high measure.
John Lewis: Indicated recording $2 6 million ounces at 10 grams per ton gold equivalent and inferred recording $4 5 million ounces at eight five grams per ton gold equivalent importantly, this was achieved net of almost two years of production depletion and was very cost effective with mineralization intersected in almost every hole.
John Lewis: Discovery cost of less than $8, an ounce gold equivalent.
John Lewis: The updated resource further solidifies <unk> as a world class large high grade gold system as shown in this chart provided by BMO and late February cannot two announced its 2024 operational guidance forecasting production of 120 to 140000 ounces gold equivalent.
John Lewis: And cash costs of 822, $880, an ounce all in sustaining costs montage and 440 to $1540 per gold ounce.
John Lewis: Costs and all in sustaining costs of briefly elevated during 2024 due to the significant investment for stage three and stage four expansions, which are underway production is expected to be strongest in the second half of the year as operations progressively expand ahead of the commissioning of the phase III.
John Lewis: Pension in terms of exploration the company forecast spending between 17 and $20 million and we see significant value creation in the near term from US Lastly, the company forecasts growth capital of $145 million to $160 million in 2024.
John Lewis: $40 million to $50 million in 2025, the total growth capital is now forecast to be $210 million, which is a 12% increase from the stage four expansion P E and that's driven by global cost inflation as the study's effective date was over two years ago and we've also had a few minor scope changes.
John Lewis: We view this as a as a positive outcome.
John Lewis: As well we've been receiving many questions in relation to the elevated cash costs and all in sustaining costs. So we've created several slides, which we hope will illustrate why costs are expected to be briefly higher over this 2024 period and won a significant decrease is expected upon delivery of stage three and then stage four expansions a key point.
John Lewis: To remember is it 'twenty 'twenty four is a transition year with a significant amount of investment being made in terms of sustaining capital operating development and increasing overheads.
John Lewis: Of this expansion.
John Lewis: We begin with the the mining operating costs, which increase considerably in 2024 due to an increase in the total amount of waste tonnes. Mined importantly, this is a six fold increase in operating development from 2023.
John Lewis: And that reports to our unit cost and our cash costs mining costs are expected to decline considerably at stage four run rate driven by the significant decrease in tons of waste that are mined the significant increase in highly productive low cost long haul stoping tonnes, increasing from 25.
Percent in 'twenty, 'twenty, 4% to 55% at that run rate and then of course, the significant productivity gains from the underground infrastructure, which is being completed this year and early next year and will be discussed later in the presentation in.
John Lewis: In 2024, we've significantly increased the G&A costs on site ahead of that stage three and stage four expansion as we expand our workforce and support for the expanded rates at the run rate, we expect only a moderate increase in G&A cost and the total G&A costs, well, obviously significantly.
John Lewis: Increasing throughput by almost three fold, thereby significantly reducing the unit G&A costs.
John Lewis: In 2024, there is a moderate increase in processing costs due to additional overheads ahead of stage three stage four expansions with the stage four plant operating at a throughput rate, which is three times greater than 2024, we expect to realize significant economies of scale the performance of the.
John Lewis: Plant to date as discussed earlier in the presentation has been very strong and we see potential to ultimately achieve better costs than the P E and the procession.
John Lewis: To summarize.
'twenty 'twenty four is pretty much a peak year in terms of unit cost and we see a significant reduction in all operating cost categories thereafter.
John Lewis: Importantly, in addition to production and unit costs. The expansions are planned to deliver significantly more metal multiple times greater than 'twenty 'twenty four and at a lower total sustaining capital expenditure in 'twenty 'twenty, four which will further drive down cash costs and all in sustaining costs. We would encourage you to read these pre.
John Lewis: <unk> slides in more detail after the conference call.
John Lewis: In terms of our production growth strategy canine two remains on track for commissioning the stage three expansion commencing the end of Q1 2025, transforming the company into a tier one mid tier producer as at the end of February 49% of stage III in pool growth capital.
Has either been spent or committed in late March GR engineering commenced mobilization to site with the Earth works for the process plant largely handed over from K 92 to GR engineering as shown in this recent drone image the <unk>.
John Lewis: Process plant is the largest growth capital package. It was awarded in July on a lump sum fixed price basis and significantly de risks the project for K 92.
John Lewis: On the paste fill plant front end engineering and design or almost complete K 92 has taken a lower technical risk approach for the design producing a filter cake product at the process plant is shown on the image on the right than trucking the product to the underground paste will plant. The design shown on the image on the left through this approach paced.
John Lewis: For the entire mine plan is delivered through either gravity or a single stage of pumping orders for long lead items pumps have been placed executing orders for the remaining items are well advanced on the tender process for construction is underway.
John Lewis: Other surface packages for the expansion are also progressing well with contracts recently entered into for the maintenance facilities and the warehouse expansion Bill.
John Lewis: Beyond the stage three stage four expansion surface works underground multiple near term infrastructure upgrades are being put in place the.
John Lewis: The twin incline is effectively complete and as shown in the two side by side Pictures here. The twin inclined shown on the right is a major improvement in game changer in terms of our capability to move material out of the mine. We're looking at trucks, which are 40 or 50% larger than travel at four times the speed from that which we're currently operating the twin incline as we.
John Lewis: <unk> noted in previous presentations is also capable of moving material well beyond the requirements of stage for.
John Lewis: As part of the expansion. We're also putting in place the series of ore and waste passes to efficiently leverage gravity to connect the main mine to the highly productive twin incline infrastructure.
John Lewis: Reis will works are planned to commence shortly with the rig and heads onsite. The underground setup is almost complete the first race will be to upgrade ventilation in the main mine followed by waste and ore passes upon the completion of the second race, which isn't a waste pass we expect a significant ramp up in material movement rates from the mall.
John Lewis: <unk>.
John Lewis: These various infrastructure upgrades combined with a tripling of mining fronts in 2024 as shown on this slide are set to fundamentally transform the mine and business over an 18 months period into a tier one mid tier producer.
John Lewis: In terms of exploration, we are drilling the core of Cora size and judge outside Spain systems, the Ara comfort vein system and the a one porphyry.
John Lewis: In late February <unk> announced the first drilling results at Ara Champa in 32 years, our comp is shown on the map on the right is located approximately four and a half kilometers from the process plant she's actually closer than Cora and jet.
John Lewis: Historically, our Acampo recorded limited drilling the total of 18, largely shallow holes drilled for a total of only 1800 meters drilled.
John Lewis: Our initial drilling results reported two holes and they were quite exceptional our second hole recorded for high grade loads, including 7.2 meters at 24.8 grams per ton gold equivalent 5.7 meters at 9.9 grams per ton gold equivalent five three meters at $6, one grams per ton gold equivalent and three.
John Lewis: Six meters at 3.4 grams per ton gold equivalent. These intersections are within a bulk intersection of almost 220 meters at 1.59 grams per ton with a higher grade core of almost 150 meters at $2. One two grams per ton gold equivalent and as shown on the cross section mineralization stocks.
John Lewis: Near surface.
John Lewis: While it's still early days the target size is very large with a known mineralization striker where were one seven kilometers within a 150 to 225 meter wide corridor and a known vertical depths called 500 meters as shown in the <unk> and the plan view in long section here the system.
John Lewis: Is open in multiple directions.
John Lewis: Hello mineralization as shown on the core photos, which was also on display at our booth at PTC for those on the webcast debuted it show similarities to Cora and jobs in terms of host rock. Our comfort is hosted in tone of light to diabetic rock, while Cora in unchartered hosted and Meda sediments were obviously very encouraged.
John Lewis: By the drilling results, thus far at our copper.
None: I'm pleased to announce that a second drill rig has recently commenced drilling with that operator, we would like to commence the Q&A session. Thank you.
None: Thank you.
None: To join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request.
None: We are using a speakerphone please pick up your handset before pressing any Keith to withdraw your question. Please press Star then two.
None: The first question comes from <unk> Habib, Let's Scotiabank. Please go ahead.
Habib: Thanks, Operator, hi, John and can I get to just a couple of questions from me.
Habib: In regards to the shutdown now John you mentioned that the impact is going to be moderate in Q1 and Q2.
Habib: What is the cutoff point, where they shut down starts to impact our 'twenty 'twenty four guidance and is there an opportunity to catch up on the ounces that you lost in Q1 and potentially Q2.
None: Thanks Tavis.
None: <unk>.
Tavis: So I think.
None: First off yet in terms of Q1.
None: Where we believe we're pretty close to the to our budget in terms of our production for Q1, which is obviously at finish line.
None: <unk> finalized.
None: Accounting yet.
None:
None: Certainly in terms of our guidance for 2024, we are not updating our guidance based on this on this incident and certainly we believe that.
<unk>.
None: We can we can certainly ameliorate the impact of the shutdown to a to a large extent.
None: Not least because as you'd be aware towards the end of the year we stopped.
None: Developing a fairly significant stockpile.
None: Paul.
None: <unk> ahead of the commissioning of the expansion in 2025.
In terms of.
None: When that would start impacting on our 2020 for guidance.
None: I would I would say it would be well into the second half of.
All April before.
None: That had any potential to impact on our 2020 for guidance.
Perfect, Ken and John do you have any stopes.
None: That are available to you right now I mean in terms of our blasting that you know you can recommence operations as soon as you get the order from the regulators.
Ken: Yes, we do we actually.
Blasted multiple stopes.
None: After the the.
None: Issuance of the form 29.
None: As they were already.
So.
None: Already charged them, obviously, we couldnt, we couldnt leave them to sleep for an extended periods. Although there were a number of stopes that were hard.
None: After the actual issuing of the form 10.
None: Got it and just a just further to this question you know I mean this suspension does this impact your underground development that youll needed to complete in preparation for the expansion expected in Q1 2025 again is there a catch up process there as well.
None: Yes look certainly at it.
None: It does impact on development.
None:
None: And yes, we.
None: We'll.
None: We will have to catch up some of those meters and that's it.
None: That's something that the the guys on site or are looking at is to.
None: How do we catch up those those meters.
Okay. That's that's great John.
None: That's it for me so thanks for taking my questions.
None: Thanks Anish.
None: The next question.
None: Comes from Alex <unk> with <unk> financial Please go ahead.
Alex: Hi, good morning, everybody. Thanks for taking my questions.
Alex: Just sticking with this the same team here from a vas.
Alex: And correct me, if I'm not understanding the form 29, and the stoppage sure Budd.
Assuming your appeal of form 29 doesn't work.
Alex: How much time would be needed for the various.
Alex: Call. It I guess safety initiatives to be implemented and beat the mras requests.
Alex: Or just.
Alex: A little bit.
Infused our questions. So you know what's actually needed to be done and how much time that will take before you can restart underground operations.
Okay.
Alex: Okay. Thanks, Alex So two things one is independent audit.
Will actually present, our findings from the independent audit to the MRA.
Alex: On Friday.
Alex:
And I'll be onsite.
All on currency going through those.
The second thing is the proximity system.
Alex: Or mobile fleet and as we've said that's something that we already started.
Alex: A process Sean in terms of.
Alex: Putting that system into our fleet.
Alex: And we would see that we would be installing that later this month starting to install that later this month.
Alex: And those are the two.
Alex: Two issues is that the MRA have raised.
Alex: Okay.
Alex: And then during this stoppage of the underground is any surface construction activities or any exploration been impacted.
Alex: At this point.
Alex: Surface exploration has not been impacted.
And.
Alex: Surface construction.
Alex: Has not been impacted to this point in time however.
Alex: Surface construction would be impacted again.
Alex: It is.
Alex: The.
Alex: That suspension takes us into probably the second Apple.
April.
Alex: Okay.
None: Okay, Great and then just last question kind of related.
None: You know it did.
The second half of April maybe before you your guidance is impacted.
None: I would suggest to me that they're seeing us on some good grade high grade tonnes that you can.
None: Available to catch up on here.
None: Related to that I guess.
None: And how much stockpiling.
None: Bill it's still running at the moment do you have a you know some some.
None: The low grade stockpile still available to us to be putting through the mill.
None: Yeah.
Bill: The mill is not running right now.
None: We.
None: We ran was stockpile.
None: We have.
None: We had a program to replace both trunnion bearings, which was due to happen.
None: In the second quarter towards the end of the second quarter, we brought that forward.
None: And we've and we've completed that and we just completed that.
None: We are also doing are relying on the mill.
None: Which again was schedule for later in the quarter.
None: So that.
The impact in terms of overall running time is not.
None: It's not a significant issue for the mill.
None: And I think as you're aware aleksey.
None: The mill actually is runs at a higher.
Sure right and the mine can produce certainly until until the.
The fourth quarter of this year, but certainly.
None: We had we had a reasonable stockpile prior to the stoppage and.
None: With melt that with mill that stockpile.
None: During the latter half of March.
None: Okay.
None: That's it for me now thank you.
None: The next question comes from Nicholas Dion with Cormack Securities. Please go ahead.
Nicholas Dion: Hey, guys. Congrats on the Q4 and congrats on the drill results at Ara copper.
Nicholas Dion: Just one for me and sorry, if you've already spoken to this but maybe just to reiterate.
It looks like a few items, including operating costs and mill throughput or better than expected in Q4 on the stage two Mel and so I'm just wondering what that might mean for the upcoming stage three expansion.
None: You know, how many inferences or read throughs, we can make there.
Okay.
None: Yeah. Good question.
None: The.
None: Certainly when you look at the numbers that we're getting.
None: The <unk>.
None: Existing.
None: Right.
None: I mean, it's it's it's it's doing up to anything up to show the 50% beyond.
None: The design throughput.
None:
None: As you'd be aware with a brand new plant you already built in.
None: A certain amount of.
None:
Pat I guess for lack of a better term into your designs generally you you'll look at the hardness of material that you're going to deal with.
And you have lot of about 15% order.
None: To be able to get you your.
None: Hourly rate throughput.
None: In other words, you ensure that the mill can achieve the designed early hourly rate and you are about 15% order than the average.
None: The hot or hardness.
None:
None: We certainly believe that there is a very significant potential for the mill to do.
None: Well beyond the.
None: The nameplate capacity, which is the $1 2 million tonnes per annum.
None: And.
None: And we've in fact modified the design of the layout.
None: <unk>.
None: The plant to allow us to be able to expand the float capacity at the backend of the plant.
None:
None: In the event that we can get significantly more through.
None: Obviously the.
None: The mill itself being the.
None: The.
None: The part of the plant that basically determined what you can get is the throughput. So we've allowed that.
None: We will get a significant amount higher than we than the nameplate through the mill.
None: That being the case, we've allowed to expand the backend the float.
None: To cater for that.
None: And already the filtration section.
None: <unk> is designed to be able to handle significantly more than that because it's designed for stage four in any event.
None: Thanks, John and just on the cost Brian.
None: And how are they call it on the call today.
None: Yes look.
None:
None: Certainly.
None: We've achieved.
None: R.
None: P a soda costs.
None: While we were running stage two way.
That has potential for us to get to.
None: To see better costs.
None: Mainly June two.
None: A the overhead of people and management.
B in relation to power.
None: In relation to reagents and those sort of things that they are pretty much related to your actual.
None: Your actual throughput right so.
None: Knowledge potentially but certainly in those in those two areas.
None: We think there is a potential for us to see.
None: To see maybe.
None: 10% better than.
None: And then we've alive in the Pea.
None: Great. Okay. Thanks, that's it for me.
None: Thank you.
None: The next question comes from Irene <unk> with TD Securities. Please go ahead.
Irene: Thanks, operator, just in terms of development, so without accounting for the shut down.
Irene: I know you did just under 900 meters on average per month in Q4.
Irene: Can you just remind us what the expectation is of where you're going to get to by the end of this year is it kind of slightly more than 1000 meters.
Irene: What are the expectations.
None: The expectations are as you say to get.
None: Little north of a thousand meters a month at the end of the year.
None: And of course, they do.
None: The meters that we're doing a change significantly from from last year.
None: Last year.
Every month, we were getting over 200 meters a month out of.
None: The twin incline.
None: And now of course, Sheila that completed that means that the meters that we're getting are all associated with opening up.
None: Sure.
None: <unk>.
None: The ore body itself.
None: So just maintaining showed a 900 meters already.
Sheila: You're putting 200 meters a month more into.
Sheila: Into opening up the <unk>.
The ore body itself got a little bit still going on Puma, the which is the.
Sheila: The twinning of the Puma as part of our ventilation.
Sheila: But we're basically over 200 meters a month more going into opening up the mine because we're no longer doing the twin.
Thanks for that John and then just lastly for me I know you you're well funded.
None: $80 million of cash no debt.
None: Just any kind.
Comp due to how the $100 million loan conditions haven't been satisfied to access that.
None: Are there any major conditions that are pending.
None: To be able to get access to that facility or is it simply.
None: Given where the balance sheet that is.
None: You didn't need the money in Q1, and you just kind of saving interest just any color on that would be great.
None: Suddenly we didn't need it in Q1, we don't need it in Q T V.
None: The.
None: The only issue that we'd go to finalize is approval from the central Bank in PNG.
None: And.
None: The approval from the Central Bank.
None: Is both for the modified offtake agreement and for the loan itself.
None:
None: In Papua New Guinea.
None: You have gold export license.
Every company has one.
None: We have one.
None: And every time you change an offtake.
None: Either for your copper gold call or for your bogie it needs to be approved by the bank.
None: Which of course is here.
None: Is fairly important or from.
None: From the government's perspective to ensure that you're not getting transfer pricing and all those sort of things.
None: Can occur.
None: So you got to go through the process with the Central Bank, which you've gone through twice before.
Of getting approval for an updated offtake agreement.
None: Given that we get about three percentage points improvement in offtake, that's not major but it is a process that you culture.
I actually met with.
Central Bank last week.
None: And we should get that approval from them.
None: Shortly.
None: Great. Thanks, that's it for me.
None: The next question comes from Andrew <unk> with BMO capital markets. Please go ahead.
Hi, John.
Andrew: Lots of question Bath, just one point of clarification.
Andrew: I think earlier, you mentioned that because you're building are scheduled to build a material stockpile in the second half of this year.
Andrew: That to some degree it gives you.
Andrew: Some flexibility in.
Andrew: Dealing with this delay in mining delay in underground development, that's been going on here since March 13th.
Andrew: Because essentially you can absorb some of that in the stockpile and ore.
Andrew: Differ a little bit of that stockpile or development or mining into next year is that the correct interpretation of that comment.
Yeah, correct, we can we can catch up throughput.
Andrew: In the in the third and fourth quarter.
None: If required.
None: Okay.
None: Well, let's.
None: That's it for me thanks for all the detail and I'm sure everyone's waiting for further positive updates from the MRI and well stay tuned.
None: Thanks, Sean.
None: Once again, if you have a question. Please press Star then one the next question comes from Stephen <unk> with Stifel. Please go ahead.
Stephen: Yeah. Thanks, guys just a quick one for me.
Stephen: You mentioned, you're doing are relying on the mill.
Stephen: A long how long do you expect that to take before the mill will be call it ready ready to be running again.
Stephen: Yeah.
Stephen: Oh, the rely on we'd be we'd be ready by the end of the week latest.
None: Thank you Rob alignment.
None: Got it.
None: And then just changing tracks a little bit here just had a question about that.
None: The taxes it seemed seem reasonably low on the cash taxes compared.
None: Compared to kind of hit the profit generated through the year. If you could just provide a little color. There is there incentives for kind of the dollars being rolled back into the mine expansions or how should we kind of think about that.
None: How about that run rate. Thanks.
None: Yes.
None:
None: It was.
None: Within.
None: P&G.
None: We pay GST.
None: For materials that we purchase et cetera et cetera.
None: And we are entitled to get a credit back.
None: Or.
None: For any G S T that we pay.
None: And the credit generally comes.
Bye.
Reducing it from the <unk>.
None: <unk> protects that you pay.
None: And we I think we've accumulated.
None: We have accumulated quite a significant amount of GST.
None: And I think it was a charade $12 million.
None: I'll just just to ask Justin just to comment on that I think it was in that sort of region Justin.
Justin Blockchain: That's correct Tanya.
Justin Blockchain: Yes.
Justin Blockchain: So that would come off of a corporate tax.
Okay makes sense. Thanks, that's it for me I'll open the line for anyone else.
Justin Blockchain: Yes.
Justin Blockchain: This concludes kit.
None: This concludes today's question and answer session and today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Okay.
None: Yes.
None: Mhm.
Yes.
None: Okay.
None: Okay.
None: Okay.
None: Okay.
None: Okay.
Thanks.
Hum.
None: [music].