Q1 2024 OceanaGold Corp Earnings Call
Okay.
Good morning, ladies and gentlemen, and welcome to the Oceana Gold Corporation Q1, 2024 earnings conference call at.
At this time all lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
But any time during this call you need assistance. Please press star zero for the operator. This call is being recorded on Wednesday May <unk> 2024, I would now like to turn the conference over to Rebecca Harris. Please go ahead.
Rebecca Harris: Good morning, and welcome to Oceana Gold's first quarter 2024 results webcast and conference call.
Rebecca Harris: Rebecca Arris director of Investor Relations. We are joined today by Gerri Bond President and Chief Executive Officer, Mary <unk>, Chief Financial Officer, David Lim Donyo, Chief Operating Officer, Americas, Peter Sharp, Chief Operating Officer, Asia Pacific and Crazy Bray, Chief Exploration Officer.
The presentation that we will be referencing during the conference call is available through the webcast and on our website.
Rebecca Harris: I'd also like to remind everyone that our presentation will be followed by Q&A session. As we will be making forward looking statements. During the call. Please refer to the cautionary notes included in the presentation news release and MD&A as well as the risk factors set out in our annual information form all dollar amounts discussed in this conference call are in U S dollars I will now turn the call over to Jerry.
Jerry: For opening remarks.
Jerry: Thank you Rebecca and good morning, everyone and thanks for joining us today.
Jerry: We are pleased to safely delivered first quarter production in line with plan in a period of record high average realized gold prices.
Jerry: We had strong production from our three largest thoughts and we were free cash flow positive despite it being a quarter in which we were investing just set up.
Jerry: Stronger remainder of the year.
Jerry: During the quarter, we released updated technical reports about Tayo and Macquarie.
The mine plan now includes the addition of a second underground mine with Palomino projected to increase the average fee grade improve the economics and extend the life of Hyatt.
Jerry: <unk> Technical report showed its updated mine plan now it's important to note that this is a reserve case based on the <unk> hundred dollars an ounce gold price, we see plenty of potential for a longer mine life at <unk> at higher gold prices.
Jerry: We also released multiple exploration updates during the first quarter, which Craig will cover off on later.
Jerry: Each of these exploration updates highlight the organic growth potential we have in close proximity to our existing mines.
The best form of growth is organic growth and in our case, we have a number of options, which mainly relate to increasing access to high grade ore to feed existing mills.
Jerry: This is low risk and high return growth.
Jerry: Finally last month, we hosted the analysts and investors at our Ohio mine and we were really proud to show off the side, particularly the horseshoe underground mine.
Jerry: We continue to open up new development headings in lines that plan to reach full production rates.
Jerry: The end of the second quarter.
This next slide shows how we are tracking compared to our guidance ranges.
Jerry: As outlined when we set guidance in February quarter, one was expected to be our lowest production quarter of the year with our production profile to be second half weighted and this is driven by the time, we give access to high grade ore at all sites.
Our first quarter result is in line with yes.
Jerry: Open pit stripping is on track at Highlander crisis, and we are entering new all phases in both open pit mines.
Jerry: Together with the ramp up and how long the ground. This will help drive a stronger second half at both of those thoughts.
Given the production profile across the year first quarter all in sustaining cost per ounce is higher than we expect for the remainder of the year.
Jerry: With the benefit of more ounces produced in each subsequent quarter. This year, we expect the all in sustaining cost to come down quarter over quarter and be within our guidance range by the end of the year.
Jerry: Our capital projects are on plan.
Jerry: Items are open pit stripping entitling storage facility expenditures at Hyatt Linda cries continued capital developments Horseshoe underground at Haile and ongoing permitting and study costs at W. P.
Jerry: 2024 is a year of delivery price Yamana gold and our plan is for progressively stronger quarters for the remainder of the year.
Jerry: We are on track to achieve the projected annual growth in production reduction in unit cost and generation of strong free cash flow.
Jerry: I'll now turn the call over to Mario who will discuss our financial highlights for the quarter.
Mario: Thank you Jared and good morning, everyone.
Mario: I'm pleased to share that we generated quarterly revenue of two units and $70 million in Q1.
Mario: Driven by strong sales of 117000 ounces.
Mario: Had a record average realized gold price.
Mario: Free cash flow benefited from the strong gold price and was positive for the quarter.
Mario: Despite higher capex investments as well as drawing down low grade stockpiles at <unk>.
Mario: Yeah.
Mario: This translated to an adjusted earnings of <unk> <unk> per share and an operating cash flow of 11 <unk>.
Jerry: Net debt was $82 million at the end of the quarter, which is mainly made up of our drawn debt of $160 million.
Jerry: Available cash.
Jerry: As for our recent announcements the available net proceeds from the IPO will be applied to the repayment update and will further strengthen our balance sheet.
Jerry: It is pleasing to see the $550 million valuation for this asset following the bulb prices.
Jerry: Additionally, the sale of the Blackwater project to FID horizon mining for $50 million is expected to close in the coming months.
Jerry: Looking ahead.
Jerry: We are expecting an improving quarterly production profile throughout the year and combined with the strong gold price environment and ongoing cost improvement focus we forecast to be in a net cash position well before the end of the year.
Jerry: This guy's toward our strategy of being financially strong and gives us the flexibility to continue to invest in our.
Jerry: Organic growth opportunities across the business.
Jerry: Also considering increased returns to our shareholders.
Jerry: I will now turn the call over to David to discuss the whole operation.
David: Thank you Mario and Hello, everyone.
David: First quarter gold production at <unk> was approximately 35000 ounces in alignment with the planned 2024 gold production profile.
David: Male paid this quarter was a combination of higher grade underground ore plus lower grade stockpile material at the open pit activities were focused on the continuous stripping on better basis to one three.
Jerry: We expect access to higher grade ore in live better to begin later in the second quarter.
Jerry: To continue to consistently deliver through the remainder of the year.
Jerry: Underground ramp up at Horseshoe is progressing as planned and during the first quarter. We began drilling the first on the ground stops with Samantha truck sale.
Jerry: As we continue to open near production headings, we expect that the underground will be updating that ore mining rates by midyear.
Jerry: Capital spend during the quarter was in alignment with the 2020 plan as we continue with TSMC.
Jerry: Structuring activities and expect to ramp up the construction of Westpac base too.
Jerry: Q2, we bought facility scheduled for completion prior to the end of the year.
Jerry: All other projects are being executed Aspen 'twenty 'twenty four plan.
Jerry: I will now turn the call over to Peter to discuss the Epo and <unk>.
Peter Sharpe: A lot of assets.
Peter: Thank you David and good morning, everyone.
Peter Sharpe: <unk> delivered first quarter gold production of 26000 ounces and copper production of 3000 tonnes.
Peter: So this was lower than the previous quarter. It was in line with the mine plan as I start to sequence. This quarter had a higher contribution from the lower grade ones and what stopes.
Peter Sharpe: We expect to be morning, again from the high grade richest types in the second half of the inline with the launch schedule.
Peter Sharpe: The lower production in Q1 in addition to the cost of a planned mill shutdown resulted in a higher all in sustaining costs for the quarter in line with the plan and in line with our guidance expectation for the year.
Peter Sharpe: We announced during the quarter the results of the underground optimization work, which suggests we can encourage morning rates from the current 175 million ton per annum to $2 5 million tonne per annum.
Peter Sharpe: We look forward to the upside this will bring to the DPI and we'll share more on this opportunity as we advance this work.
Peter Sharpe: <unk> produced 32000 ounces of gold in the first quarter.
Peter Sharpe: <unk> continues to build on the mill efficiency, we've previously spoken about and I'm happy to say that once again exceeded the quarterly throughput record at the mill.
Peter Sharpe: Thanks for the middle of this quarter relied on a higher input from the lower grade stockpiles, though as open pit activities were focused on stripping. The next all size it in its mills.
Peter Sharpe: We expect to be in progressively more open pit ore in the next couple of quarters, which is in line with our full year plan.
Peter Sharpe: We are also continuing to assess opportunities for additional mineralization at <unk>, which would be economic at current gold prices.
Peter Sharpe: <unk> continues to be one of our key focus areas during 2024 and will drive some of the exploration and engineering updates you will see over the next year.
Peter Sharpe: Another exciting milestone for the <unk> team last quarter was the commissioning of the new electric shovel.
Peter Sharpe: This new shovel will contribute contribute to our goal of lowering greenhouse gas emissions and is already being successful in this material movement output and done so at a lower unit cost compared to its diesel counterparts.
Peter Sharpe: We look forward to leveraging our experience with this type of equipment in other areas of cross sell and eventually across the business.
Peter Sharpe: Wahid produced approximately 11000 ounces of gold in the quarter and continues to address challenges with underground remnant mining, including higher stock dilution, which has resulted in lower average grades to the mill.
Peter Sharpe: And part of waste mining area, we had an additional geotechnical challenges last quarter. We are in a historic Crown pillar was identified through probe drilling to be broken and unlikely to be able to adequately support in general above the stoping zions.
Peter Sharpe: As you say requires a top down mining sequence to manage the geotechnical risk and engineered crown pillar would need to be designed and installed product commencing stope mining.
Peter Sharpe: This is delight approximately $4 5000 ounces of production from the first quarter into the second half of 2020 full as we re sequenced operations into other areas of the underground.
Peter Sharpe: The difficultly of mining and remnant areas as being well known to us and more affected into our production guidance at the start of the year.
Peter Sharpe: We spoke last quarter about the positive developments at the national level of government in New Zealand.
Peter Sharpe: Since then I've introduced a new fast track approvals bill into Poland and we are.
Peter Sharpe: Following closely and believe that our Hawaii North project, which includes wip will be suitable for consideration as part of the government's plans to support accelerated timelines for getting <unk> project in New Zealand consented and 10 minutes.
Peter Sharpe: I will now turn the call over to Craig to share some exploration highlights from the quarter.
Craig: Thank you Peter and good morning, everyone.
Craig: During the quarter, we had a number of exciting exploration updates as we have had a successful start to the year.
Craig: At Haile, we released the results of the first underground exploration holes into the horseshoe extension target.
Craig: These results are similar to those of hoelscher in a significant way. So we're excited to continue drilling with hopes of announcing a new resource by next year.
Craig: At <unk>, we continue to discover and extend mineralization at depth.
Craig: Currently we're underground mining from Stopes, just 120 meters below the open pit floor logistic extended mineralization to 720 meters below this.
Craig: 600 meters below our current production stopes.
Craig: These new results provide us ample opportunity to continue testing extensions, but importantly grow the resource through infill drilling with three drill rigs and more than 24000 meters budgeted for the remainder of the year.
Craig: In addition to the drilling focused on resource growth with the GPO I am pleased to share that we've began exploration on a regional <unk> target approximately nine kilometers north of <unk>.
Craig: We've drilled four holes as part of the newly exploration campaign, and we will continue to advance our knowledge of the area with additional exploration through the year.
Craig: It's our first time exploring beyond the mine gate in many years. So we are very excited to again be testing targets in what is a highly prospective area.
Craig: We also released exploration results from W. K P. In New Zealand last quarter, where we continued to extend mineralization on the EG banging through additional high grade step outs and infield drill holes.
Craig: While exploration continues to expand the high grade shoot from the drill pads, it's great to see we have recently commissioned a new drill pad that opens up drill access to the E Bay. So several hundred meters further south.
Craig: This is part about 2020 full plans to significantly grow the resource with more step out holes and over 11000 meters of drilling.
Craig: These results across our portfolio highlights why we continue to be excited about the organic growth options. We have in our business. So I look forward to updating you again as we receive more results from these programs.
Craig: I'll now turn the presentation back to you Jerry.
Jerry: Thank you Craig.
Jerry: So in summary, we have safely delivered the first quarter in line with plan and we remain focused on our goals for the remainder of 2024.
Jerry: We have some exciting milestones coming up firstly, the ramp up of Hyatt laundry brand to its full run rate by mid year.
Craig: Secondly, progressing W. K P.
Craig: The drilling and study work so that we are well placed to advanced project. If the project is awarded a fast track project status by the New Zealand government.
Craig: Turning to safely and responsibly increase of free cash flow generation from that business, taking advantage of current metal prices and bringing more of the price to the bottom line by improving our asset utilization and lowering costs.
Craig: Continuing exploration and.
Craig: And finally, completing the listing of Oceana golf, Philippines, zinc and the Blackwater sale to.
Craig: With the free cash flow generated from operations. This will allow us to repay debt strengthening our balance sheet and position ourselves to fund our growth and increase returns to shareholders.
Speaker Change: I will now return the call to the operator and open up the line to any questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the one on your Touchtone phone you will hear Tom perhaps acknowledging your request.
Speaker Change: If you would like to withdraw your question. Please press star followed by two.
Speaker Change: Ladies and your speaker phone please lift the headset before passing any case.
Habib Scotiabank: Your first question comes from <unk> Habib Scotiabank. Please go ahead.
Habib Scotiabank: Hi, Gerard and that Oceana gold team.
Habib Scotiabank: Just a couple of questions from me.
Habib: Just starting off with E L F.
Habib: I was definitely glad that I attended the hail ctrip.
Habib: And was great to see Haile underground.
Habib: Forming well.
Habib: Maybe this question for David any color you can provide on the ongoing development.
David: Essentially how far ahead of production are you right now.
David: And what's the target for the next let's say six months.
David: Hi, good morning, a Paris.
David: So as we saw continued benefit do we actually already done at the 995 level.
David: We're mining in the 975.
David: No.
Paris: But at least six months.
Paris: On the development.
Paris: So we made good progress we are opening up youll have these already.
Speaker Change: Okay, great ready for the full ramp up before the middle of the year.
Speaker Change: Excellent thanks for that.
David: And just maybe moving on to the <unk> IPO.
David: How should we be looking at withholding taxes on the funds that would be generated with this IPO.
Speaker Change: Hi, guys good morning.
Speaker Change: The expected withholding tax rates, 10% proceeds we also have some costs associated with the.
Speaker Change: Our IPO as well so it'll be what what we've indicated to the market via our release less cost less 10%.
Speaker Change: Perfect. Thanks, Thanks for that and then just moving on to New Zealand, you mentioned that the new government introduced a fast strike that was build up of mining projects.
Speaker Change: And the.
Speaker Change: Any more color you can provide as to how <unk> fits into this and kind of what we should expect over the next couple of months regarding the PPP.
Speaker Change: Yes, two things drive that.
Speaker Change: First the Bill has to go through the parliamentary process and it will have a number of regions. So.
Speaker Change: I think the target of the government as announced by them is to have it enacted.
Speaker Change: Enacted by the end of the year concurrently we will continue to do the study work.
Speaker Change: And the drilling work.
Speaker Change: Make sure that we've got the best possible.
Speaker Change: Reserve resource size for that study and any.
Speaker Change: <unk> Technical report that we do.
Speaker Change: As we said before we will.
Speaker Change: Continued progress and hope to get that done by the end of the year. So there could be this nice convergence between having some clarity on the bill.
Speaker Change: Clarity on how we're going to progress the project and also.
Speaker Change: Ultimately and it's a process that we'd have to.
Speaker Change: We have no line of sight on other than we hope to be a fast track project.
Speaker Change: We get that get that status, which will have the benefit of giving us greater certainty of that that period from the time that oxide releasing that technical report and two two.
Speaker Change: First production.
Speaker Change: Thanks for that John and just last question for me in terms of inflation that we've obviously, we saw heightened inflation going into the end of <unk> have you started seeing any sort of inflation tapering off, especially on the labor side.
Speaker Change: Coming into 2024.
Speaker Change: Look most of inflationary costs had been low single digits as it relates to labor.
Speaker Change: The issue we have in some jurisdictions is turn out that that's kind of like the hidden cost of inflation and obviously.
Speaker Change: When you've got a vibrant Australia mining sector side close to New Zealand and the Philippines, We do get some.
Speaker Change: Particularly younger folks.
Speaker Change: The opportunity to earn more money in a hyatt paint jurisdiction.
Speaker Change: But as it relates to the cost of.
Speaker Change: Wages Bill, it's low single digits.
Speaker Change: That's been locked in at the start of this year or late last year for this year as a result of both collective agreements and then try and pay rises.
Speaker Change: And.
Speaker Change: I would tell you that.
Speaker Change: Also included in our guidance estimates for this year.
Speaker Change: Sounds good.
Speaker Change: Okay. Thanks for that Jonathan that's all for me.
Speaker Change: Appreciate it thank you.
Speaker Change: Thank you next question comes from Wayne Lam at RBC. Please go ahead.
Wayne Lam: Yes, thanks, good morning, guys.
Wayne Lam: Just wondering at Haile.
Wayne Lam: 5% weighting in H, two implies a pretty big second half and the underground grades seem to have held up pretty well.
Wayne Lam: Versus plan.
Wayne Lam: But just curious on the mining and development rates that looked a little bit lighter in terms of the ramp up.
Wayne Lam: Just wanted to understand a bit more detail about perhaps number of stopes.
Wayne Lam: Might be opened up by mid year or any other metrics that you are looking at that gives you confidence that the ramp up remains on track.
Speaker Change: Yes, Thanks, Wayne look I'll, let David do the second half of that question, but just a reminder for everyone on the call I mean, we have two.
Wayne Lam: Two things going on there at Hyatt <unk> got the ramp up of the underground to full mining rates, which we expect will it be achieved by the end of this year.
David: And that obviously gives us a great guy.
David: <unk> advantage.
David: And then secondly, just to the.
David: Open pit or that we were stripping in the first quarter and progressing a bit through this quarter. So we get a double barrel effect of both high grade.
Wayne Lam: Underground and high grade from progressive with high grades from Leadbetter open pit that all that will do is displace low grade stockpiles.
Wayne Lam: As it relates to the rate of ore feed from underground in the first quarter. We were doing as David mentioned nearly a lot of development work to give us that.
Wayne Lam: That spikes those headers that allow us to achieve that full run rate, but David do you want to get to the second half of our wines question do you want to give some.
David: Some some sense for what he was asking about in terms of development rights.
David: Stripping.
David: Yes. So at this point in time, we are actually doing a lot better than we budgeted for development.
David: Advancing about between 304 hundred meters per month, and we actually by Jeffrey <unk> 40. So that's very good because we as Jennifer said wait up any more headings, we plan to be mining about four stops per quarter, which is in line with the mine plan.
David: And as Jeff said with getting to the.
David: A couple of high grade ore in that better. So we're very confident that we can.
David: Help deal that we that we planned for the second part.
David: The second half of the year.
Speaker Change: Okay perfect. Thanks, and then maybe just that Mccray's.
Speaker Change: We will help outline a little bit more detail on where you see potential for additional material.
Mccray: Can be pulled into the $2300 gold price versus the 1700 dollar resource assumption and just wondering given the loss of some of the reserves earlier. This year I guess as an offset to that is there any additional material that could be brought forward into the plan given the higher gold price.
Speaker Change: Yes, great Great question Wayne paid it in order to take that one.
Mccray: Yes.
Speaker Change: So the areas that we.
Speaker Change: Yes, I would look to extend with the higher gold price <unk> Mills, there is a significant.
Wayne Lam: Cut back that we could we could that we are looking at and that we could execute in munis mills coronation and coronation North.
Mccray: We've got a number of cutbacks.
Mccray: <unk> got another two capex and these will rule.
Mccray: Areas that with.
Mccray: With the higher gold price, we would be able to execute.
Mccray: We see reasonably simply and quickly there is obviously the approval process, we would need to go through.
Mccray: And we're looking using the new fast track process with New Zealand government potentially make sure we get those nominated as well.
Speaker Change: Okay, Great and then maybe just last one for me.
Speaker Change: Just a Y E I wanted to understand a bit more about the geo tech issues this quarter.
Speaker Change: Are those issues kind of localize our.
Speaker Change: Is there any impact to potential scaling back of mining rates, there that might impact.
Speaker Change: Output levels.
Mccray: Now as a diehard localized.
Mccray: And one of the challenges.
Mccray: Some of the challenges, we're having with the underground remnant areas, we actually have to develop and Lori cases develop out to the old remnant areas and then probe drill.
Mccray: So actually really understand what we're relying on a lot of historical information.
Mccray: And we would actually need to verify before we can we can fully execute the product drilling in this case identified that the crown pillar was was not adequate which meant that we did have to have a mine plan change.
Mccray: So that has deferred some of those answers yet for the second half of the year, but in actual fact in our plans and they are looking at how do we ramp up.
Mccray: Underground mining rates from why so.
Mccray: Less about actually pulling back then it's more about.
Speaker Change: Good morning more tons.
Speaker Change: We are continuing to see some challenges around dilution. We are we haven't got a program to reduce that but.
Mccray: We also want to make sure that we more on all of the contango.
Mccray: And in the remnant areas, sometimes it's been a tight a little bit more and get all of the contango, but it does reduce the average grade through the mill. So we are working on our plans data who actually ramp up total mining capacity. So that we can we can maintain the ramp up that we expect.
Speaker Change: Okay perfect. Thanks for taking my questions and best of luck in the ramp up that.
Mccray: Yeah.
Mccray: Yes.
Speaker Change: Thanks Helane.
Speaker Change: Thank you next question comes from Cosmos <unk> at CIBC. Please go ahead.
Cosmos: Thanks, Gerry and team.
Cosmos: Maybe going back to the <unk> IPO.
Cosmos: No.
Cosmos: You'll be floating 20% share.
Cosmos: Shares of the subsidiary.
Cosmos: You'll be changing your guidance in any way now that you don't own a 100% and the next question is are there any accounting interest it seems that we should be aware of.
Cosmos: After the completion of the IPO.
Cosmos: Thanks.
Speaker Change: There won't be any change to the guidance we operate.
Speaker Change: Yes.
Speaker Change: Percent owned by Us.
Speaker Change: So in line.
Speaker Change: Practice by all gold miners will have included in our guidance, obviously that affects the net cash flow really safe.
Speaker Change: From an accounting perspective, I would just say it will be consolidated as usual.
Cosmos: Counting rules and there'll be minority interest and they will be there.
Cosmos: The biggest delta will be of course, a full cash flow because it will be a 20% minority.
Cosmos: Interest receiving the dividends that will be repatriated Bioshock gold, Philippines, Inc to all shareholders, including parent.
Cosmos: Great.
Speaker Change: And maybe as a follow up could you maybe comment on D. C. IPL process were you satisfied with it.
Speaker Change: Certainly in some areas talked about.
Speaker Change: India and you've got a good price.
Speaker Change: Initial documents could appointed to potentially even more or even higher price for the IPO.
Cosmos: Could you maybe comment on that.
Cosmos: How you feel about the entire process.
Cosmos: Yes.
Cosmos: We're pleased with the process.
Cosmos: The process went well and the outcomes great. So.
Cosmos: We achieved a.
Cosmos: Our price.
Cosmos: In 100% terms that is above consensus estimates the consensus analyst estimates for <unk> and Thats from minority interest. So we were pleased with it.
Cosmos: All right. When we started this process of gold and copper prices went on with good run in <unk>.
Cosmos: You'd love to think that that would translate to an even higher price, but that's not happening to gold equities more broadly. So that's more of a macro question about the disconnect between spot gold prices and gold equities, but as it relates to the valuation of.
Cosmos: The DPI mine.
Cosmos: We were happy with the outcome of guidance because we beat.
Cosmos: No.
Cosmos: I actually think the asset is a fabulous asset and that's a great opportunity not marketing, but it's a great opportunity.
Cosmos: Given it is so low on the cost curve and generate so much cash flow and as Craig said has done much exploration upside and that goes to longevity and along with the.
Cosmos: The increase in mining rates at <unk> about.
Speaker Change: Yes, we were selling just somewhat reluctantly because we had to do was attempted the FTAA.
Speaker Change: Yes.
Speaker Change: A great asset.
Speaker Change: We're happy with the outcome.
Cosmos: Alright.
Speaker Change: Maybe if we can talk about guidance a little bit Jarrett.
Jarrett: Well telegraphed that Q1 is going to be the weakest quarter of the year.
Jarrett: As you mentioned, it's going to strengthen with each successive quarter.
Jarrett: Waiting 30 DNA.
Jarrett: The company is well it does sound like it.
Jarrett: It's going to be stronger in the second half.
Jarrett: With the underground with the higher grades at some of the assets.
Jarrett: But could you maybe talk about the velocity of change in terms of.
Jarrett: Successive quarter in terms of improving our production it might correct that it's really going to jump in the second half.
Speaker Change: What's going to happen say in Q2.
Speaker Change: Yes.
Speaker Change: In summary.
Speaker Change: Cause we expect each quarter to be successively stronger.
Speaker Change: And then just from a like a compound perspective by definition the second half is stronger than the first.
Speaker Change: But that we expect.
Speaker Change: That final quarter to be the strongest.
Speaker Change: This is going to have an inverse positive relationship with all in sustaining cost because.
Speaker Change: <unk> King and.
Speaker Change: Yeah.
Speaker Change: Mills.
Speaker Change: With the exception why he is flat out.
Speaker Change: The waste to ore ratio at the open pits.
Speaker Change: Slows.
Speaker Change: We get like a triple whammy.
Speaker Change: So I know its quarter on quarter improvement.
Speaker Change: And Thats most dramatic at Haile.
Speaker Change: And.
Speaker Change: Equally.
Speaker Change: Contribution from Macrae and given that that represents.
Speaker Change: 70% about production, that's what drives a lot of that.
Speaker Change: Great.
Speaker Change: And then maybe one last question.
Speaker Change: Q1 was a bit of a perfect storm in terms of transitioning from one pad to another at Haile waiting for the underground to come through.
Speaker Change: Pre stripping at a.
Speaker Change: Mccray's.
Speaker Change: And what does appeal grades were down a little as well.
Speaker Change: So it resulted in the weakest quarter of the year high all in sustaining costs.
Speaker Change: Jarrett other company was there any thought in terms of smoothing out quarterly production.
Speaker Change: Or was that something that you know.
Jarrett: Not when you consider it's really dependent on the individual.
Jarrett: Mines in the individual mine plans.
Speaker Change: I'm, just wondering because sometimes people will talk about multi.
Jarrett: Multi asset company diversification is theres a benefit I'm just wondering if they were ever any thoughts in terms of smoothing our production quarter over quarter.
Jarrett: In short calls no every mine is.
Speaker Change: Has to be optimized in and of itself and we're not we're not playing portfolios smoothing and we're trying to get the most gold at the lowest cost to market as soon as we can we.
Jarrett: We do get the benefit of diversification I mean, it's happened in the last two years.
Jarrett: Last year, the price performed and did they pay out the full suite of strongly to offset a slightly weaker Hyatt before Ohio massively outperformed offset a weaker.
Jarrett: Mcbride, so over a year, we get that benefit but now each eight saw it has its.
Jarrett: It's unplanned and as you said at the beginning this was a.
Jarrett: A quarter that that with the exception of Wahid for the reasons paint dimension.
Jarrett: Performed entirely in line with expectations.
Jarrett: We have to manage the business.
Jarrett: Two.
Jarrett: On a multiyear basis without trying to smooth.
Jarrett: We're not trying to smooth production.
Speaker Change: Of course.
Jarrett: Jarrett those are all my questions. Thanks for your answers. Thank you.
Speaker Change: I appreciate it thank you.
Speaker Change: Thank you, ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Speaker Change: Next question comes from Mike Parkin at National Bank. Please go ahead.
Michael Parkin: Hey, guys. Most of my questions have been answered just following up on.
Michael Parkin: The potential to kind of bring in marginal tons most of it would seems like crazy.
Michael Parkin: Higher gold price versus budget.
Michael Parkin: Is there any of it.
Michael Parkin: Thank you.
Michael Parkin: Opened up quality tons that are just kind of buried behind water waste if thats the case.
Michael Parkin: Are you comfortable just going ahead with it in this gold price environment or would you use any kind of short term collar structure just to ensure cash margins.
Michael Parkin: <unk> maintained to access those tons.
Speaker Change: Yeah, Greg Great question, Michael and welcome back Greg to have you back on the line.
Greg: You're obviously, a big rock, you're obviously a bit rusty.
Michael Parkin: Mark has been the fourth.
Speaker Change: Person on the call you.
Michael Parkin: Most of your questions, we'll be honest the daily.
Michael Parkin: But that one is one so we will be very careful to make sure that anything we do as you call them module tons give us good return on the capital deployed.
Speaker Change: Youre spot on I mean, you could you could hedge out.
Michael Parkin: Over the next three years.
Michael Parkin: Gold pricing and lock in a price higher than what.
Michael Parkin: Sure.
Michael Parkin: Market analysts habits.
Michael Parkin: Okay tight brio gold price estimates, although I do note that the <unk>.
Michael Parkin: <unk> at the backend.
Michael Parkin: Almost on weekly basis, but at this point in time with a strong balance sheet.
Michael Parkin: Largely deleveraging.
Michael Parkin: We are.
Michael Parkin: I don't think we want to be calling the top of the gold price and I don't think we would necessarily hedged, but that's a decision we don't have to make it.
Michael Parkin: But you can and everyone on the call can be certain that we're not having to mine.
Michael Parkin: And to produce production Thats, one dollar an ounce below the gold price, we are going to make sure we get a good margin.
Michael Parkin: The investment there is always a risk when you're doing stripping campaigns that you take that bet.
Michael Parkin: The balance sheet and overall portfolio profitability.
Michael Parkin: Warrant that.
Michael Parkin: And again their decisions ahead of us.
Michael Parkin: The current thinking at this point in time.
Speaker Change: Okay. Thanks very much.
Speaker Change: Thank you Mike.
Speaker Change: Thank you there are no further questions I will turn the call back over for closing comments.
Speaker Change: Thanks, everyone. Thanks for joining us that concludes the call a replay will be available on the website later today on behalf of everyone at Oceana gold the management team all employees.
Speaker Change: Thank you for attending and wish you a pleasant rest of the day off now.
Speaker Change: Ladies and gentlemen. This concludes your conference for today, we thank you for participating and we ask that you. Please disconnect your lines.