Q1 2024 Torex Gold Resources Inc Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to Torex Gold's first quarter 2024 conference call and webcast. 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. Should you need assistance during the conference call, you may signal an operator by pressing stars and 0. I would now like to turn the conference over to Laura Toton, Investor Relations Analyst.

Thank you for standing by this is the concept operator welcome to the first quarter of 2024 content.

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Speaker Change: All participants and listen only mode and the confidence of being recorded after the presentation that will be an opportunity to ask questions.

Speaker Change: The question to you.

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Speaker Change: Like to turn the conference over to Laura.

Laura: Relations analyst.

Laura: Go ahead.

Laura Toton: Thank you, Operator, and good morning, everyone. On behalf of the Torex team, welcome to our Q1 2024 conference call. Before we begin, I wish to inform listeners that a presentation accompanying today's conference call can be found in the Investors section of our website at www.torexgold.com. I would also like to note that certain statements to be made today by the management team may contain forward-looking information. As such, please refer to the detailed cautionary notes on page 2 of today's presentation, as well as those included in the Q1 2024 MD&A.

Laura: Thank you operator, and good morning, everyone.

Laura: On behalf of the tour X team welcome to our queue 120, 24 conference call.

Laura: Before we begin I wish to inform listeners that a presentation accompanying today's conference call can be found under the investors section of our website www dot <unk> dot com.

Laura: I would also like to note that certain statements to be made today by the management team may contain forward looking information.

Laura: As such.

Laura: To the detailed cautionary notes on page two of today's presentation.

Laura: Those included in the queue 120, 24 M D N a.

Laura Toton: On the call today, we have Jody Kuzenko, President and CEO, Andrew Snowden, CFO, as well as Dave Stefanuto, Executive Vice President, Technical Services and Capital Projects. Following the presentation, Jody, Andrew, and Dave will be available for the question and answer period.

Laura: On the call today, we have Jody <unk>, President and C E O.

Jody: Andrew Snowdon, CFO as well as Dave Stephanie <unk> Executive Vice President Technical services and capital projects.

Laura: Following the presentation, Jody, Andrew and Dave will be available for the question and answer period.

Laura Toton: This conference call is being webcast and will be available for replay on our website. Last night's press release and the accompanying financial statements and MD&A are posted on our website and have been filed on CDAR Plus. Also, please note that all amounts mentioned in this call are in U.S. dollars unless otherwise stated. I will now turn the call over to Jody.

Laura: This conference call is being broadcast and will be available for replay on our website.

Laura: Last night's press release, and the accompanying financial statements and MBNA are posted on our website and had been filed on SEDAR plus.

Laura: Also note that all amounts mentioned in this call R. U S dollars unless otherwise stated.

Laura: I will now turn the call over to Jodie.

Jody Kuzenko: Thank you, Laura, and good morning to all in the line. The first quarter of 2024 marked a great start to the year for Torex just across the board. Production returned to more typical levels for us after our near record Q4 last year. Costs are tracking to expectations, and ELG continues to fire on all cylinders. While it's still early in the year, obviously, we are well on pace to deliver annual production guidance for the sixth year in a row.

Jodie: Thank you Laura and good morning to all on the line. The first quarter of 2024 marked a great start to the year for tour X just across the board production returns more typical levels for us after our near record Q4 last year cause start tracking to expectations and E. L. G continues to fire on all cylinders, while it's still early in the year. Obviously, we are.

Laura: Pays to deliver annual production guidance for the sixth year in a row.

Jody Kuzenko: Our liquidity position remains excellent, particularly impressive considering we've now crossed the two-year mark on MediAluna construction. With the record gold prices we're seeing and funding well in hand to execute on our strategic objectives, we're in a solid position financially and expect to exit the MediAluna build with a very modest level of net debt we expect to pay back before the mine is even fully ramped up. In addition to the strong operational results, cash generation, and balance sheet, Media Luna is progressing on schedule, with the project almost 70% complete at the end of March, and first concentrate production expected in Q4 and commercial production coming early next year.

Laura: Our liquidity position remains excellent, particularly impressive considering we've now crossed the two year Mark on medical Gonna construction.

Laura: With the record gold prices, we're seeing in funding well in hand to execute on our strategic objectives.

Laura: Solid position financially and expect to exit the medical Linda build with a very modest level of net debt, we expect to pay back before the mine is even fully ramped up.

Laura: In addition to the strong operational results cash generation and balance sheet metal Luna is progressing on schedule with the project almost 70 per cent complete at the end of March and first concentrate production expected in Q4 and commercial production coming early next year.

Jody Kuzenko: I was at the mine a few weeks ago and saw for myself the progress being made. They will speak to the project in more detail, but what I saw was two-thirds of the concrete poured, steel being erected across multiple work fronts, the flotation cells now being set in place at the flotation circuit, and the underground mine is starting to look like an underground mine with more than 30 active headings. It's really incredible to see the project coming together and the finish line in sight.

Laura: I was at the mine a few weeks ago and software can progress being made they will speak to the project in more detail, but what I saw with two thirds of the concrete port steal being erected across multiple work, France. The flotation cells now being set in place at the flotation circuit.

Laura: [noise] Grand line is starting to look like an underground mine with more than 30 active headings, it's really incredible to see the project coming together and the finish line in sight.

Jody Kuzenko: Starting, as always, with our strategic pillars on slide 4. It's the anchor for our presentation. You'll remember that last quarter we updated our strategy to reflect the progress that has been made and how we're shifting our focus to ensure that we not only deliver MediALUNA on schedule and on budget but that we see a smooth integration of the project with existing operations. We're well underway to deliver Media Luna to full production, with a number of schedule-critical milestones now behind us. Now, our attention has turned to ensuring that our vendors meet key delivery timelines.

Laura: Starting as always with our strategic pillars on slide four it's the anchor for our presentation, you'll remember that last corridor, we updated our strategy to reflect the progress that has been made and how we're shifting our focus to ensure that we not only deliver many alone on schedule on a budget, but that we see a smooth integration of the project with existing operations.

Laura: We're well under way to deliver <unk> full production with a number of schedule a critical milestones now behind us our attention is turned to ensuring that our vendors meet key delivery timelines, it's turned to installing and commissioning the Y as can bear through the <unk> on the main side, we're working hard I'd or control grill drilling.

Jody Kuzenko: It's turned to installing and commissioning the WAHIS conveyor through the WAHIS tunnel. On the mine side, we're working hard at ore control drilling, underground construction of the mine, and tighter and tighter iterations of the year one and two mine plan. On the processing side, we're preparing the final plans to complete the necessary tie-ins at the plant in Q4 of this year. Another important focus for us is integrating and optimizing the entirety of the Morelos asset, ensuring that our project is handed over to our operations team seamlessly and that both ELG and Medialuna work together at their peak operational performance. Work is very much in stride with what we call our operational readiness teams, and our strategy is advancing as planned.

Laura: Underground construction of the mine and tighter and tighter iterations of the you're wanting to mine plan.

Laura: On the processing side, we're preparing the final plans to complete the necessary times at the plant in two four this year.

Laura: Another important focus Flores is integrating in optimizing the entirety of the morello asset ensuring that her project is handed over to our operations team seamlessly and that's spelled E. L. G. <unk> gonna work together at their peak operational performance.

Laura: Work is very much in stride with what we call our operational readiness teams and our strategy is advancing his plan.

Jody Kuzenko: On the pillar of capital allocation and disciplined growth, our balance sheet remains strong, and we're building a buffer with respect to available liquidity and remaining spend on MediAlu. On Grow Reserves and Resources, we released our year-end reserve and resource update in late March, and we did just that. At ELG Underground, we increased reserves to over 654,000 gold equivalent ounces, which now sees us with a reserve life through 2028. At EPO, indicated resources increased to 1.2 million with another 720,000 gold equivalent ounces in the inferred category. The pre-feasibility study at EPO is progressing nicely.

Laura: On the pillar of capital allocation and discipline growth our balance sheet remains strong and we're building a buffer with respect to available liquidity and remaining spent on Betty Luna.

Laura: On grow reserves and resources, we released our year end reserve and resource update in late March and we did just that.

Laura: E L. G underground, we increased reserves to over 654000 gold equivalent ounces, which now sees us with a reserve life through 2028.

Laura: At E. P. O indicated resources increased to 1.2 million with another 720000 gold equivalent ounces and the inferred category.

Laura: The pre feasibility study or D. P. O is progressing nicely if you've got to look at it as a management team a couple of weeks ago, and we expect to be in a position to provide a high level results later this year.

Jody Kuzenko: We got a look at it as a management team a couple of weeks ago, and we expect to be in a position to provide high-level results later this year. I'll touch on reserves and resources again before the end of the call. In terms of the remaining two pillars, I mentioned last quarter that retain and attract the best industry talent was not a new strategic pillar for us, but certainly was a new strategic pillar, but certainly not new to Torex.

Laura: I'll touch on reserves and resources again before the end of the call.

Laura: In terms of the remaining two pillars, I've mentioned last quarter that retain and attract best industry talent was not a new strategic pillar forests, but certainly.

Laura: A new strategic tiller, but certainly not near Detour X.

Jody Kuzenko: There's an important point here I want to touch on, and that's that a key piece of the MediALUNA build has been our workforce transition plan, to retain our local talent and offer our open pit employees the opportunity to transition to underground mining as the open pit mine comes off mid next year. And, of course, to attract and supplement with new talent as required.

Laura: There's an appointment <unk> important point here I want to touch on it's about a key piece of the <unk> Luna Bill has been our workforce transition plan to retain our local talent and offer her open pit employees the opportunity to transition to underground mining is the open pit mine comes off mid next year and of course to attract and supplement.

Laura: With new talent is required we're making good headway here, we have now hired 110 people and transfered 61 people to the medical doing a project with another hundred and 65 transfers in process.

Jody Kuzenko: We're making good headway here. We have now hired 110 people and transferred 61 people to the Meti Luna project, with another 165 transfers in the process. In fact, our first class of minors from our underground training program graduated in quarter one.

Jody Kuzenko: These crews are now working alongside our underground development team. And finally, we continue to build on ESG excellence, so this is shown through a number of improved ratings from various agencies that we got in the quarter. This is all in detail in our corporate deck on the website. I'd encourage you to look at it.

Laura: In fact, our first class of miners for from our underground training program graduated in quarter. One. These crews are now working alongside our underground development team.

Laura: And finally, we continue to build on E. S. G. Excellent. So this is shown through a number is improved ratings from various agencies that we got in the quarter. This was all in detail in our corporate duck on the website I would encourage you to look at it it really does reflect the important work. The team is doing on the ground and safety social and environmental issues.

Jody Kuzenko: It really does reflect the important work the team is doing on the ground in safety, social, and environmental issues. Moving to slide 5, our unrelenting focus on safety didn't let up during the quarter. The ELG Complex has now surpassed 14 million hours worked last time injury-free. Our last time injury frequency for the Morelos Complex in its entirety, this is ELG and the project and all contractors, now sits at 0.15. Down from 0.31 at the end of Q4 and 0.47 at the end of Q3, what you hear in those numbers is a solid downward trajectory, and we're working hard to maintain this.

Laura: Moving a slide five are unrelenting focus on safety didn't let up in the quarter E. L. G. Complex has now surpassed 14 million hours worked lost time injury free or lost time injury frequency for the <unk> in its entirety. This is E L G and the project and all contract.

Laura: <unk> now sits at 0.15 down from 0.31 at the end of two four and 0.47 at the end of two three what you hear in those numbers is a solid downward trajectory and we're working hard to maintain this.

Jody Kuzenko: Production at 115,000 ounces and costs with ASIC at $1,202 per ounce are tracking the plan. Revenue of $237 million was supported by our highest quarterly average realized gold price of $2,023 per ounce. However, with quarter one being another quarter of significant spending on Medialuna, enterprise-wide, our free cash flow remained negative.

Laura: Production at 115000 ounces and cost with a sick at 1200 and $2 per ounce or tracking of plan <unk>.

Laura: <unk> you have 237 million with supported by our highest quarterly average realized gold price of $2023 per hour.

Laura: With one being another quarter of significant spending on metal Luna enterprise wider free cash flow remained negative that said, you'll see here is that prior to medi Luna spend E. L. G generated positive free cash flow of $77 million.

Jody Kuzenko: That said, you'll see here that prior to Medialuna's spending, ELG generated positive free cash flow of $77 million. This is a good indication of what's to come when we return to positive free cash flow enterprise-wide in mid-25. On the balance sheet, our liquidity position of over $400 million means we're comfortably funded for the remaining $257 million of capital expenditures on Medialuna.

Laura: This is a good indication of what's to come when we return to process. It a free cashflow enterprise wide and the 25.

Laura: On balance sheet or liquidity position of over $400 million means we're comfortably funded for the remaining $257 million of capital expenditures on <unk>.

Jody Kuzenko: Turning more specifically to our operational performance on slide six, our solar production was driven by yet another new record at the processing plant. Gold recovery averaged 90.7% for the quarter, really the highest to date. The processing plant also achieved its fifth consecutive quarter above 13,000 tonnes per day.

Laura: Turning more specifically to our operational performance on slide six are solid production was driven by yet another new record up the processing plant.

Laura: Go to recovery average, 90.7% for the quarter really the highest to date. The processing plant also achieved its fifth consecutive quarter above 13000 tons per day.

Jody Kuzenko: You can see on the bottom left that the processed grade, although lower than Q4, was in line with our expectations. Recall, Q4 was a bit of a grade outlier after two quarters of heavy strip through the middle of last year. Our Q4 open pit mining rates were at record highs, so we fed the higher grade open pit material directly to the mill and directed lower grade feed to stockpiles in accordance with our feed strategy.

Laura: You can see on the bottom left processed grade all the lower than Q4 was in line with our expectations recall Q4 was a bit of a great outlier. After two quarters of heavy stripped through the middle of last year or two for open pit mining rates were at record highs. So we fed the higher grade open pit material directly to the mail and directed low.

Laura: Great fee to stockpiles in accordance with our feet strategy.

Jody Kuzenko: Those swings are behind us now in the pits, and we expect grade to be relatively flat for the balance of the year, in line with what we saw in Q1. And lastly, our underground mining rates dipped below 2000 tons per day in Q1, given the backfill priorities in the mine plan, particularly during the month of March. Mining rates are expected to improve in Q2 and return to what we now call the steady state range of over 2,000 tons per day for the remainder of the year.

Laura: Those swings are behind US now in the pits and we expect to grade to be relatively flat to the balance of the year in line with what we saw in Q1.

Laura: And lastly, our underground mining rates dipped below 2000 tons per day in Q1, given the backfill priorities in the <unk> mind plan, particularly during the month of March.

Laura: Finding rates are expected to improve in Q2 and returned to what we now call. The steady state range of over 2000 tons per day for the remainder of the year.

Jody Kuzenko: Slide 7 shows our Q1 performance compared to our full year guidance. I've already talked about production of 115 places that's on track. Total cash costs of $918 per ounce and all in sustaining costs of $1202 per ounce were both slightly above our full year guidance ranges, but this was expected.

Laura: Like seven shows are two one performance compared to our full your guidance I've already talked about production of 115 places. It's on track total cash cost of $918 per ounce and all and sustaining costs of 12 O. Two per ounce. We're both slightly above her stole your guidance ranges. This was.

Laura: As expected costs are expected to decrease 320 24 is stripping requirements continue to decline with the wind down of the open pit.

Jody Kuzenko: Costs are expected to decrease through 2024 as stripping requirements continue to decline with the winding down of the open pit. We very much expect to achieve full year guidance for both TCC and ASIC. During the quarter, $126 million was spent on Medialuna. We expect to remain above $100 million of spending per quarter through Q3 before CapEx comes off in Q4 as first concentrate production is achieved. There has been no change to full-year guidance of between $350 million and $400 million for Betty Aluna this year. And on that note, I'll hand the call over to Andrew to discuss our financials in more detail.

Laura: We very much expect to achieve for your guidance for both T C C and a sick.

Laura: During the quarter $126 million was spent on maybe you'll do not be expect to remain above $100 million of spending per quarter through Q3 before capex comes often to forest first concentrate production has achieved there's been no change to pull your guidance of between 350 and $400 million on Betty alone.

Laura: This year.

Laura: That note I'll hand, the call over to Andrew to discuss our financials in more detail.

Andrew P. Snowden: Okay. Thank you, Jody, and good morning, everyone.

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Andrew P. Snowden: I'll start my commentary discussing our Q1 financial performance, and you can see this summarized on slide 9. You'll note here that despite another quarter of elevated spending on Media Luna, and this has been the highest quarter spent to date, we ended the first quarter in a strong financial position. Our Q1 operational performance, supported by a record realized gold price of over $2,000 an ounce, helps us achieve an all-in sustaining cost margin of 39% and generate $113 million in adjusted EBITDA.

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Andrew P. Snowden: Although our financial performance was supported by these higher gold prices, the strong Mexican peso did erode some of this margin and impact our cost performance, averaging $17 to $1 during the quarter and has remained around these levels since. As a reminder, we budgeted this year at an exchange rate of 18 to 1, and for every one peso move relative to the U.S. dollar, all in sustaining costs will be impacted by about $10 million.

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Andrew P. Snowden: On cash flow, with the ongoing investment in Media Luna, we did again see free cash flow remain negative this quarter, as it has been over the past year. We are, however, still very much on track, though, to return to positive free cash flow in mid-2025.

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Andrew P. Snowden: And in addition, the current gold price environment, combined with the consistently strong operational performance we're seeing from ELG, bodes well for further margin expansion and robust cash flow generation. This should further strengthen our funding position and allow us to exit the media lunar build with only a modest level of debt. I'm turning now to slide 10.

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Andrew P. Snowden: You can see a summary of our unit cost performance here and just a few comments I want to make on this slide. Firstly, looking at the open pit unit costs, in addition to the peso strength I mentioned, the mining costs there were also impacted and also higher due to some higher contractor and fuel costs in the quarter. At the underground level, the higher costs you see there are directly related to the stronger peso and also the lower underground mining rates that Jody mentioned earlier. These costs are expected to come down through the year as mining rates ramp back up to around and above 2,000 tons per day. Other plants' processing costs were higher due to the stronger peso.

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Andrew P. Snowden: And then, finally, I just want to talk briefly about the Mexican profit sharing for the PTU. And just to point out that this amount is accrued quarterly, and that's based on the expected full-year taxable income, which is then allocated between OPEX and CAPEX. The lower expense you see here in Q1 is just due to the lower taxable income currently forecast for 2024, and that's due to the one-month plan shutdown we're building into our forecast for Q4, and also an increased employee focus on MediaLuna.

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Andrew P. Snowden: And also an increased employee.

Andrew P. Snowden: Focus only be Luna.

Andrew P. Snowden: And those MediaLuna employee costs, of course, get capitalized to the project. That said, the continuation of the current gold price environment could serve to increase the PTU cost through the year. And so if the $2,300 an ounce price does remain, you should expect that it will increase back up to closer to 2023 levels.

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Andrew P. Snowden: Turning now to slide 11, the strong EBITDA generated in the quarter helped to offset the $126 million spent on the Media Luna project while closing the quarter with a cash balance above $110 million. And that's without yet having to draw on our credit facility at the end of the quarter. In addition to the significant capital expenditure, and as a reminder, tax and royalty payments are always higher in the first quarter. The taxes paid in the quarter of approximately $44 million included the annual 7.5% Mexican mining royalty payment, and that was $25 million. And in addition, it was also $12 million in revenue-based royalty payments made in the quarter. These royalty payments are not considered taxes and are therefore accrued quarterly within our reported costs in EBITDA.

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Andrew P. Snowden: And as a reminder, our profit sharing or PTU will be paid this month. In fact, that's getting paid today and will have an impact on our Q2 cash flow. This year we expect the payment in relation to 2023 to be approximately $23 million. Finally, on this slide, I also want to just remind everyone that, in addition to the tax royalty and PTU seasonality this year, we are expecting cash flow in Q4 to be impacted by the one month shutdown of processing plants and the media lunar tie-ins. Well, we'll only have two months of revenue during that quarter.

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Andrew P. Snowden: This year, we expect repayment in relation to 2023 to be approximately $23 million.

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Andrew P. Snowden: Looking now at our liquidity position, which you can see on slide 12, this slide really shows that we closed the quarter with over $400 million in available liquidity and no amounts yet drawn on our credit facility. You will recall, though, that one of our strategic objectives is to retain approximately $100 million in cash on the balance sheet through the build. And based on the current forecast, I expect we'll draw about $150 million on the credit facility to achieve this.

Andrew P. Snowden: Looking around with home liquidity position, which you can see on slide 12, before I really sure. We can close the call through with over $400 million from available liquidity.

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Andrew P. Snowden: About $150 million on the credit facilities to a cheaper so.

Andrew P. Snowden: And so with $100 million in cash, really a net debt of $50 million coming out of the build. On this note, we did draw the first $30 million of the credit facility this April, and you'll note that in our disclosure here that that was a post-quarter end activity. Just briefly touching on leases, our lease related obligations also increased this quarter to $44 million, and now it's driven by $11 million of additional lease related obligations.

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Andrew P. Snowden: On this note we did draw the $2 billion with a credit facility April.

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Andrew P. Snowden: In summary, our balance sheet continues to remain strong, leaving us well-positioned to deliver on our strategic priorities. The continued strength in the gold price also bodes well for further balance sheet strength, which, if continued, should allow us to exit the MediaLuna build with only modest levels of net debt, and we expect we'll be able to repay that debt back very quickly as MediaLuna ramps up. And you can see this liquidity position much more clearly on slide 13, and you can see how our liquidity position compares to both the $257 million of remaining spend on Media Luna and our strategic objective of maintaining at least $100 million on the balance sheet.

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Andrew P. Snowden: Performing on these priorities compares to the $130 million of cash and $292 million of available credit facilities we had at quarter end, resulting in a funding surplus of about $50 million at the end of the quarter. A surplus we expect will further improve over the remainder of the year given the strong cash flow generation from ELG, which, after taking into account corporate G&A and exploration, has generated $246 million of free cash flow prior to immediately the spend over the last 12 months. That's an average price of just under $2,000 per ounce.

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Speaker Change: Plus we expect will further improve improve over the remainder of the year given the strong cash flow generation from D O G.

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Speaker Change: Price of just under $2000 a month.

Andrew P. Snowden: With the gold price now hovering around the 2,300 ounce range, we're well positioned to further strengthen our funding position through the remainder of the year. And with Media Luna tracking the plan, I expect, as I mentioned earlier, we'll return to positive free cash flow during 2025. Finally, just a quick reminder to the listeners about our hedging position. You can see this summarized on slide 14.

Speaker Change: With a gold prices now hovering around the $2300 range.

Speaker Change: <unk> position for the remainder of the year.

Speaker Change: Immediately.

Speaker Change: Alright, I'll start with I mentioned earlier will return as opposed to free cash flow during 2025.

Speaker Change: Alright fine with just a quick reminder to the listeners on all hedging position you can see these these summarized on slide 14 mm.

Andrew P. Snowden: At the end of the quarter, we had just over 114,000 ounces remained hedged on gold at an average price of $19.75 an ounce. Recall these hedges were purpose-built to protect the balance sheet during the build-out of MiniLuna. Copper and silver prices going forward. Also, in terms of the Mexican peso, as I mentioned, we're currently seeing it trade around 17 to 1, and that compares to the 18 to 1 assumption we had in our operating budget this year and also the 20 to 1 assumption we made in our Media Luna feasibility study.

Speaker Change: So it'd be hard to just over 114000 ounces remained hedged on gold or some average price of 1975 and I don't recall.

Speaker Change: This bill to protect the balance sheet during the build out for video <unk>, we do not have any plans to Anthony Hutchinson 2025, Oh beyond.

Speaker Change: Will provide full exposure to a strong <unk> copper and silver prices going forward.

Speaker Change:

Speaker Change: The Mexican peso as I mentioned, but currently see trade around 7221.

Speaker Change: <unk> to be 18 to one assumption we had enough operating budget. This year and also the 20th two one assumption we made it all <unk> uhm feasibility study.

Andrew P. Snowden: As we reported previously, to help manage the foreign exchange risk related to the build, we did enter into a series of zero-cost collars to hedge against foreign exchange movements, and the details of that are summarized on this slide. As a reminder, approximately 45% of the remaining expenditures are expected to be denominated in pesos, and the level hedged represents just under 40% of the peso-denominated expenditures. And so with that, I'll turn the call over today for an update on Media Luna.

Speaker Change: As reported previously to help manage the foreign exchange risk related to build we did <unk> <unk>.

Speaker Change: Uhm foreign exchange movements from the details of that all summarized on this line.

Speaker Change: Just as a reminder, approximately four to five per cent of the remaining expenditures are expected to be denominated in pesos.

Speaker Change: <unk> represents just under 40% of the piece of furniture.

Speaker Change: Alright, so with that I'll turn the call over to that you for an upgrade told him to leave you alone.

Dave Stefanuto: Thanks, Andrew, and good morning to everyone on the call. Slide 16 shows the progress at Media Luna during Q1, which was announced in a press release earlier last week. As at the end of March, overall progress sits at 69% complete, up from 60% at the start of the quarter. Underground development and construction were 64% complete. Significant progress has been made here on installing the Wise conveyor system, with 78% of the conveyor tables installed at the end of March. The conveyor belt segments have been received and are being spliced to length at site, with their installation expected to commence in mid Q2, well ahead of commissioning in August. In-mine development has also continued to advance steadily.

Speaker Change: Thanks, Andrew and good morning to everyone on the call Slide 16 shows the progress at media Luna During Q1, which was announced in a press release earlier last week.

Speaker Change: At the end of March overall progress that's at 69% complete up from 60 per cent at the start of the order.

Speaker Change: Development and construction was 64% complete significant progress has been made here on installing the was conveyor system with 78 per cent of the conveyor tables installed at the end of March the conveyor belt segments have been received at <unk> at sight with their installation expected to commence.

Speaker Change: You too well ahead of commissioning in August.

Dave Stefanuto: The first charging bays for our Sandvik production equipment and Roqueon McLean support equipment were excavated, and the installation of the charging equipment was completed in April. On the surface, two-thirds of our planned concrete for the project has been poured, including all concrete for the paste plant thickener area. The balance of the plant concrete is to be completed during the second quarter to facilitate the start of steel erection in May. On the north side of the river, significant progress was also made, including the setting of the first flotation cells at the processing plant, the start of installation of the Wye's tailing thickener, piping installation in the water treatment area, and at the processing plant between the grinding and flotation circuits.

Speaker Change: And mine development also continued to advanced steadily the first charging base for sandwich production equipment and wrote John Mccain's support equipment were excavated in the installation of the charging the equivalent was completed in April.

Speaker Change: On surface two thirds of our plan calls for the project has been <unk>, including all concrete for the peace plan secure area. The balance of the plant concrete just to be completed during the second quarter to facilitate the start of steel erection in me.

Speaker Change: The north side of the River significant progress was also made including the setting of the first location salt with the processing plant. The start of installation of the was feeling sick note typing installation in the water treatment area and at the processing plant between grinding insultation circuits.

Dave Stefanuto: Procurement reached 78%, with deliveries of important infrastructure such as the ore and waste transfer conveyors taking place during the quarter. Finally, engineering was at 91% complete at the end of Q1 and continues to focus on finalizing electrical deliverables, such as electrical schematics. We are working closely with vendors to expedite purchase orders and compress delivery times where possible.

Speaker Change: Procurement reached 78 per cent with deliveries are important infrastructure, such as the orange waste transfer conveyors, taking place during the quarter.

Speaker Change: Finally engineering was at 91 per cent complete at the end of the queue wanting continues to focus on finalizing electrical deliverables such as electrical schematics. We are working closely with vendors to expedite purchase orders and compressed delivery times where possible.

Dave Stefanuto: Moving to slide 17, you'll see some pictures of the project development. The conveyor table installation I just mentioned can be seen on the left side of the slide. The picture really gives you a good idea of the scale of the size of the Wise Tunnel when you look at the workers in comparison. As a reminder, the tunnel sits at 6 meters wide by 6.5 meters tall.

Speaker Change: Moving to slide 17, you'll see some pictures of the project development. The conveyor table installation I just mentioned can be seen on the left side of the slide.

Speaker Change: You really gives you a good idea of the scale of the size of the wise tunnel. When you look at the workers in comparison.

Speaker Change: Reminder of the tunnels sorts of six meters wide by six and a half meters tall.

Dave Stefanuto: The top middle photo is the Wise Conveyor Head Station, where the conveyor will terminate outside the Wise Tunnel portal. From here, ore and waste will be re-handled to their final destination. During the quarter, the e-house for the Wise Conveyor was placed on concrete supports to prepare for electrical installation next quarter. The top right shows the copper and iron sulfide flotation cells being set in place and piping being installed, and finally, the bottom photo shows progress made at the paste plant, where concrete foundations have been poured.

Speaker Change: The top middle photos, the wives can be your head station, where the conveyor will terminate outside the was tunnel portal from here Orange waste will be re handled to its final destination during.

Speaker Change: During the quarter of the house for the Wilds conveyor was placed on the concrete supports to prepare for electrical installation next quarter.

Speaker Change: The top rate shows the copper and iron sulfide flotation cells being set in place in <unk> installed and finally, the bottom photo shows progress made us splint, where concrete foundations have been cord erections with a binder silo and <unk> will come in shortly.

Dave Stefanuto: Erection of the binder silo and thickener will commence shortly, in parallel with erection of the filter building steelwork. In summary, a lot of progress has been made in Media Luna during the quarter. With first production still on track for Q4 this year, we're looking forward to delivering Media Luna to the plant. With that, I'll turn the call back over to Jody. Well, thanks Dave. We're looking forward to that too.

Speaker Change: <unk> with erection to the filter building steelwork.

Speaker Change: Suddenly a lot of progress has been made and videos and a during the quarter with first production still on track for Q4. This year. We're looking forward to deliver immediately to plan with that I'll turn the call back over to Judy. Thanks, Dave We're looking forward to that too [laughter] before we wrap up here I wanted to touch on the excellent ear and reserves and resources update we put out at the end of March or T.

Jody Kuzenko: Well, thanks Dave. We're looking forward to that too. Before we wrap up here, I wanted to touch on the excellent year-end reserves and resources update we put out at the end of March. Our teams are doing a lot of work to grow our resource base, and the results we released highlighted just that. You can see, on slide 19, a summary of the changes to our reserve base. You can see that 67% of the reserves processed last year were replaced.

Judy: Or doing a lot of work to grow a resource based on the results free relate release highlighted just that you can see here on slide 19, a summary of the changes to our reserve base.

Judy: Can see that 67% of the reserves process last year were replaced.

Jody Kuzenko: Importantly, the focus area here is the mine life of ELG Underground. It was extended by two years through 2028. This underscores our belief in the resource potential of this deposit, that we'll be able to mine a year, add a year, mine a year, add two years, year after year for the foreseeable future. And this ELG underground is an important part of the Life of Mine plan to complement Media Luna production and fill the mill post-2027.

Judy: Certainly the focus area here is the mind like a V. L. G underground it was extended by two years 320 28. This.

Judy: Underscore as our beliefs and the resource potential of this deposit that we'll be able to mining you're out of your mind a year add two years year after year for the foreseeable future.

Judy: And it's E. L. G underground is an important part of the life of mine plan to complement Luna production fell the mail post 2027.

Jody Kuzenko: I'll also note here that we increased our reserve prices across gold, silver, and copper. We saw this as a prudent thing to do given where commodity prices sit today. The reserve price used for gold was $1,500 an ounce, and it's in line with the average of North American-listed precious metals produced. Resources are shown here on the next slide, slide 20.

Judy: I'll also note here that we increased our reserve prices across gold silver and copper we saw this as a prudent thing to do given where commodity prices today. The reserve price used for gold with $1500, an ounce and it's in line with the average of North American listed precious metals producers.

Jody Kuzenko: In 2023, we increased our measured and indicated resource base by over 900,000 gold equivalent ounces. The year before, we added over a million ounces of gold equivalent to the M&I category. So, almost 2 million ounces in two years, which I think is pretty impressive for a company our size, and there is more to come. The two main drivers of resource growth this year were, not surprisingly, our focus areas. ELG underground, now sitting at 1.4 million ounces in M&I, and EPO, now sitting at 1.2 million ounces in indicated.

Judy: Resources are shown here in the next slide slide 20th 2023, we increased our measured and indicated resource base by over 900000 and go with the Kremlin ounces the year before.

Judy: Before we added over a million ounces of gold equivalent to the <unk> category. So almost 2 million ounces in two years, which I think is pretty impressive for a company our size.

Speaker Change: More to come.

Speaker Change: The two main drivers of resource growth. This year, we're not surprisingly our focus areas E. L. G underground now sitting at 1.4 million ounces and <unk> and E. P. O now sitting at 1.2 million ounces and indicated.

Jody Kuzenko: Similar to reserves, we increased our resource prices as well, now sitting at $16.50 per ounce gold, $22.00 per ounce silver, and $3.75 a pound copper. Again, we're still relatively conservative here. The gold price used for resources is modestly below the average of North American-listed precious metal peers.

Speaker Change: Similar to reserves, we increased our resource prices as well now sitting at 16 50 per ounce gold $22 per ounce silver and $3.75 a pound copper.

Speaker Change: Again, we're still relatively conservative here the gold price used for resources modestly below the average of the North American listed precious metal peers.

Jody Kuzenko: And finally, slide 21 highlights our overall exploration and drilling plan for 2024. With two strong growth years behind us and $30 million budgeted for this year on the drill bit, we're confident we'll continue to see success and growing reserves and resources on both the north and south sides of the property. And we're also this year advancing early stage exploration on some of the more regional targets across the property. We expect to release initial results from the 2024 program at ELG Underground in June and have a steady cadence of exploration releases throughout the year and into early 2025.

Speaker Change: And finally slide 21 highlights our overall exploration and drilling plan for 2024 with two strong growth years behind us and $30 million budgeted for this year on the drill bit. We're confident will continue to see success and growing reserves and resources on both the north and south sides of the property.

Speaker Change: Also this year advancing early stage exploration on some of the more regional targets across the property.

Speaker Change: You expect to release initial results from the 2024 program that Yohji underground in June and have a steady cadence of exploration releases throughout the year and into early 2025.

Jody Kuzenko: With 3 million ounces produced, we crossed that milestone last year, another 10 million ounces in our resource base, and the property remaining 75% unexplored, we all know there is much more value to unlock here at Morelos, and we're working away at doing just that. So that's the sum up of an excellent quarter that was and the finish line at Media Luna. And with that said, I'll now hand the call back to the operator to open the line for questions.

Speaker Change: With 3 million ounces produced we crossed that milestone last year, another 10 million ounces in our resource based on the property remaining 75 per cent unexplored.

Speaker Change: We all know there is much more value to unlock here at Morello and we're working way of doing just that so.

Speaker Change: So that's the stomach of an excellent quarter that was and the finish line at Mezzaluna and with that said I'll now have the call back to the operator to open the lines for questions.

Speaker Change: Thank you.

Operator: Thank you. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. The first question comes from Don DeMarco with National Bank Financial. Please go ahead.

Speaker Change: Enjoying the question Q U my presta than one on your telephone keypad, you'll hear a tone and your request.

Speaker Change: A speaker phone please pick up your handset before pressing any key to withdraw your question. Please fester then too.

Speaker Change: First question comes from down the Michael with National Bank Financial. Please go ahead.

Don DeMarco: Thank you, Operator. Good morning, Jody and team. Great work proceeding with Media Luna development. It's great to see another quarter of execution. So, first question, what's on the critical path for Media Luna development over the next three quarters?

Michael: Thank you operator, good morning, Jodie and team.

Michael: Great work proceeding with a media room development grades.

Don DeMarco: <unk> another quarter for execution. So first question, what's on the critical path immediately development over the next three quarters.

Dave Stefanuto: Hi Don, thanks for the question. Dave Stefanuto here. Yeah, in terms of Critical Path, for us, it's really just delivery of the final components of electrical gear to support the commissioning of the flotation plant and the pace plant later in the year. So, it's making sure those vendors meet those commitments and ensuring we have that gear installed to facilitate that commissioning.

Michael: Hi, Dawn. Thanks for the question do you stuff noodle here yeah in terms of critical path for US. It's really just delivery of the final components of electrical gear to support the commissioning of the flotation plant in the peace plan later on in the year. So it's making sure those vendors need those commitments in ensuring we have that.

Michael: Installed so to get that permission.

Don DeMarco: Okay, and are there any parts or equipment that's not on site yet that could be potentially delayed?

Dawn: Okay and are there any parks or equipment, that's not on site yet it could be potentially delayed.

Dave Stefanuto: Again, primarily electrical gear, but we do have some switchgear.

Dawn: Again, primarily electrical here, we do have some switch gear. It wasn't long lead item, but there's a lot of high demand in the industry for this so vendors are struggling to meet deliveries, but we do have a work around so many of these and playing b. So we do have ways to mitigate that risk before other than NASA.

Dave Stefanuto: It wasn't a long-lead item, but there's a lot of high demand in the industry for this. So, vendors are struggling to meet deliveries, but we do have workarounds for many of these in Plan B. So, we do have ways to mitigate that risk moving forward. Other than that, the majority of all of our major equipment, major processing equipment, and major underground equipment has already arrived on site.

Dave Stefanuto: A majority of all of our major equipment major processing equipment in major underground equipment is already arrived that site.

Jody Kuzenko: And Don, I just want to make another point here on this question about delay because it's an important question. While we're very much planning to produce Copricon and Q4 of this year, if and when this electrical gear doesn't come in, all we're going to do is continue to produce out of ELG in the way that we have. And so, unlike a true greenfield project where delay means massive overrun costs and no cash flow, we're sitting in a very different situation in terms of the business reality of schedule risk on this project. So, I just want to amplify that.

Speaker Change: I just want to make another point here on this question around delay because it's an important question, while we're very much planning to produce corporate calling in queue for this year.

Jody Kuzenko: This electrical gear doesn't come in all we're going to do is continue to produce out of E. L. G and the way that we have and so unlike a true Greenfield project, where delay means massive overrun costs then no cash flow, we're sitting in a very different situation in terms of the business reality.

Jody Kuzenko: Schedule a risk on this project so I just want to amplify that.

Don DeMarco: Okay. Okay.

Jody Kuzenko:

Don DeMarco: Okay, okay. So looking at operations over the next few quarters, could you walk us through those next few quarters? Like obviously, Q4 is gonna be the low watermark for the year with the shutdown and the tie-in. But would you expect Q2 and Q3 then to be the higher production quarters relative to Q1? I see the strip is easing, and so on.

Dawn: So looking at operations over the next few course could you walk us through those next few quarters like obviously Q4 is going to be a watermark for the year with a shutdown the Italian.

Don DeMarco: But would you expect you two and three then to be the higher production quarters relative to Q1, let's see this trip as easing and so on.

Jody Kuzenko: You can think of that production, Don, as relatively flat: Q1, Q2, Q3, and then coming off slightly, not slightly, a month's worth in Q4. I think the real sort of puts and takes in production is one that you mentioned already, strip coming off in the pits. It halves roughly every quarter. So we were at eight; it goes to four to five and then two and then comes right off at the end of the year.

Don DeMarco: You can think of that production John is relatively flat Q1, 2223, and then coming off slightly not slightly a month worth in Q4.

Jody Kuzenko: <unk> the real sort of puts and takes in production is one that you mentioned already stripped coming off in the pits.

Jody Kuzenko: <unk> roughly every quarter. So we were at eight it goes to four to five and then to you and then comes right off at the end of the year.

Jody Kuzenko: And the other one is, as mentioned on the call, the underground mining rates are going to pull back up to where they need to be. Eighteen hundred tons a day is low for us in this new environment. We had to backfill the crown pillar in Q1, and so that took up some time and attention for the underground mine. But we'll pull those back up. But in terms of finished ounces, you can think about it as relatively flat through Q4.

Jody Kuzenko: One is as mentioned on the call. The underground mining rates are gonna pull back up to where they need to be 800 tons a day as low for us in this new environment, we had to backfill the crown pillar in Q1, and so that took up some time and attention for the underground mine, but we'll pull those back up but in terms of finished and says you can think about it is relative.

Jody Kuzenko: <unk> thought flashed through to queue for.

Don DeMarco: Okay, sure. And then, taking a look back at the technical report from 2022, how should we look at ASIC over the mine life and why the... Peso strength has been mentioned. I see the tech report is also based on $1,600 of gold, and that's now $700 higher, but with respect to cost, should we apply some kind of a factor to those in our models?

Speaker Change: Okay sure and then taking a look back at the technical report from 2022.

Don DeMarco: How should we look at a sick over the mine life and lettuce.

Don DeMarco: So strength mentioned or other factors.

Don DeMarco: <unk> based on $1600 gold now $700 higher but with respect to car. So you know should we apply some kind of a factor to those in our models.

Jody Kuzenko: Yeah, I mean, the cost profile for MediAluna in its early days is going to be higher than what you see in the technical report. I mean, my instructions to the team are first, figure out how to do it, and then figure out how to do it safer, faster, cheaper. And I'm going to give you one good example of that.

Don DeMarco: Yeah, I mean, the cost profile for <unk> early days, it's going to be higher than what you see in the technical report I'm in my instructions to the team our first figure out how to do it and then you figure out how to do it safer faster cheaper and I'm Gonna give you. One. Good example of that we're gonna be producing corporate <unk> there are a number.

Jody Kuzenko: We're going to be producing copper concentrate. There are a number of ports of choice that we can send it to, as Andrew and his team are making arrangements with traders and smelters. We have landed at a port in Manzanillo that is far away from the operations only because the security around that is well established, the port infrastructure is well established, and that will cost substantially more than the transportation costs we had outlined in the technical report.

Jody Kuzenko: Reports of choice that we can send it to is Andrew and his team are making arrangements with trader. Some smelters, we have landed on a port and <unk> that is far away from the operations only because of the security around that is well established support infrastructure is well established and that will cost.

Jody Kuzenko: Substantially more than the transportation costs, we had outlined in the technical report as the <unk>.

Jody Kuzenko: As we move forward and get good at our logistics and systems on copper concentrate delivery, we will move to a much closer port and work with a partner to build infrastructure that ensures that that's secure. So there will be a period of time when costs are under pressure early in the mine life. And after that, I very much expect them to settle out at about eleven hundred dollars an ounce out of MediAluna. We'll continue to be among the best cost-profile producers for a very long time. And the pace of strength will be more than offset by the gold and copper prices we're seeing.

Jody Kuzenko: Move forward and get good at our logistics and systems on copper Con delivery, we will move to a much closer port and work with a partner to build infrastructure that sees that that secure so there will be a period of time where costs are under pressure early in the mine life and after that I'm very much expect.

Jody Kuzenko: To settle out at about $1100, an ounce set of medical Luna will continue to be in and among the best cost profile producers for a very long time, and the peso strength won't be more than offset by the gold and copper price for foreseeing.

Don DeMarco: Okay, great. Thanks for that, and good luck with the rest of Q2 and the rest of the build. That's all for me.

Speaker Change: Yeah, Okay, great. Thanks for that and well good luck with the rest of our queue too and the rest of the bill.

Operator: That's all for me. Thanks for that, Don. We appreciate it. The next question comes from Spencer Lehman, an individual investor. Please go ahead.

Speaker Change: Thanks for that song we appreciate it.

Spencer Lehman: The next question comes from Spencer Lehman, Individual Investor. Please go ahead. Jody, how are you getting on with copper, you know?

Spencer Lehman: The next question comes from Censoring in English.

Spencer Lehman: <unk>. Please go ahead.

Spencer Lehman: Oh, Judy how <unk> I was having a nice run lately in the.

Spencer Lehman: The future demand this looks huge.

Spencer Lehman: How important is copper becoming.

Spencer Lehman: <unk> and in the future.

Spencer Lehman: Opening with the media Luna.

Jody Kuzenko: Yeah, thanks for the question. We like copper. When we're in full production there, we're going to be producing about 45 million pounds of copper per year. The value of copper in that deposit is about 30%, and so it becomes an important piece of the story for Torex, not only in terms of what we're doing at Morelos, but as we conclude Medialuna and as we think about M&A, I think we have a really nice and natural segue to look at acquiring some assets that are rich in copper as well, so to bolster our gold production profile with copper production, which will give our investors We like copper going forward; I'm quite bullish on it. I see no scenario where the supply side meets the demand side in the next 10-15 years.

Jody Kuzenko: Yeah. Thanks for the question, we like copper when we're at full production there were gonna be producing about 45 million pounds of copper per year.

Jody Kuzenko: The value of copper and that deposit is about 30% and so it becomes an important piece of the story for <unk> not in terms of not only in terms of what we're doing at morello, but as we conclude media Luna and as we're thinking about M&A I think we have a really nice a natural segue to look.

Jody Kuzenko: At acquiring some assets that are rich in copper as well so to bolster our gold production profile with copper production, which will give our investors are nice diversified metal supply mix. In addition to diversifying jurisdiction, we'd like copper going forward I'm quite bullish on it I see no scenario where.

Jody Kuzenko: The supply side meets the demand in the next 10 15 year Mmm.

Speaker Change: Good thank you that sounds good.

Speaker Change: Thanks for your question.

Operator: The next question comes from Kevin O'Halloran at BMO Capital Markets. Please go ahead.

Jody Kuzenko: The next question comes from Kevin O'halloran BMO capital markets. Please go ahead.

Kevin O'halloran: Hey, Jody and team, thanks for taking my question. A few of mine have already been asked, but maybe just building on the M&A theme here. With Medialuna progressing well, and the balance sheet looking really strong, can you refresh us on your thoughts? You know, if you're actively looking, what sort of assets and, maybe more importantly, what type of timing you might be considering if you were to transact?

Kevin O'halloran: Hey, Jodie and tea and thanks for taking my question a few <unk> converted than maybe just building on the M&A seem here with <unk> progressing well the balance sheet looking really strong can you refresh us on your thoughts you know if you're actively looking what sort of.

Kevin O'halloran: So, it's and and maybe more importantly, what type of time and you might be considering if you were to to transact.

Jody Kuzenko: Yeah, thanks for the question, Kevin. And M&A, as the MediAluna finish line is in sight, M&A starts to be in sharper and sharper focus because once MediAluna is on, we'll have an asset that delivers $200 million in cash flow year over, year over year for, in my view, what will be decades to come. Our mine lights out to 2033, but the mag anomaly at MediAluna is only about a third drilled off, and the asset, the property itself, is 75% unexplored.

Speaker Change: Yeah. Thanks for the question, Kevin and M&A as as Betty I'm Gonna finish line is in sight M&A starts to be and sharper and sharper focus because what's funny Loon is on will have an asset that delivers $200 million in cash flow year over year over year for in my view what will be decades.

Jody Kuzenko: To calm her mind lifestyle 2033, but the Mag anomaly Mettie alone is only about a third drill das in the asset. The property itself is 75 per cent unexplored. So that really opens up the opportunity with good solid cash generation to look at growth beyond Guerrero and in terms of <unk>.

Jody Kuzenko: So that really opens up the opportunity with good solid cash generation to look at growth beyond Guerrero. And in terms of jurisdiction, we're looking at the Americas, Canada, the United States, and Mexico. We believe we're good at what we do in Mexico. We've demonstrated that to ourselves and to the rest of the world. I believe Mexico's in for a bit of tailwinds here as the election occurs and we get some increased political stability.

Jody Kuzenko: <unk>, we're looking at the Americans, Canada, the United States, Mexico, We believe we're good at what we do in Mexico, we've demonstrated that to ourselves and to the rest of the world I believe Mexico's in for a bit of Tailwinds here as the election occurs and we get some increased political stability and so.

Jody Kuzenko: And so that's what we're looking at geographically. In terms of the metal mix, I've already touched on that and on my commentary on copper, and we're open to, we have a three-pronged strategy in terms of the type of asset we're looking at. One is an MOE-type transaction.

Jody Kuzenko: So that's what we're looking at geographically and Theresa metal mixed I've already touched on that and on my commentary on copper and we're open to we have a three pronged strategy in terms of the type of asset. We're looking at one as an M. O V type transaction I'd like to get our share price up a little bit before we do something.

Jody Kuzenko: I'd like to get our share price up a little bit before we do something like that. The other is a project that we can add value to and create really real value for our investors by deploying what is now a very experienced project team who will have successfully built Media Luna into the next one. We think we have the skills to do that, and we can add a lot of value by doing that.

Jody Kuzenko: That the.

Jody Kuzenko: The other is a project that we can add value to and create really real value for our investors by deploying what is now a very experienced project team who will have successfully built mattia Luna into the next one we think we have the skills to do that we connect a crew a lot of value in doing that.

Jody Kuzenko: And then the third stream is smaller, very early stage exploration plays. We've really worked hard to bolster our exploration team. Last year, we now have a VP of exploration and two lieutenants, one of whom is going to be specifically focused on assessing and evaluating early stage exploration plays. In terms of timing, the sooner the better, as far as I'm concerned; we'd like to really get on this growth trajectory because we think we're ready to do it.

Jody Kuzenko: And then the third stream is smaller very early stage exploration place, we've really worked hard to bolster our exploration team. This last year. We now have a V P of exploration and two lieutenants.

Jody Kuzenko: Whom is going to be specifically focused on assessing and evaluating early stage exploration place in terms of timing.

Jody Kuzenko:

Jody Kuzenko: Sooner the better as far as I'm concerned we'd like to really get on this growth trajectory because we think we're ready to do it.

Kevin O'halloran: Great. Thanks, Jody. I appreciate that. And I'll pass it on to the next caller. Thank you, Kevin.

Speaker Change: Great. Thanks, I appreciate that and I'll pass it on to the next caller.

Speaker Change: Thank you Kevin.

Operator: The next question comes from Eric Winmill with Scotiabank. Please go ahead.

Kevin O'halloran: The next question comes from Eric Windmill Scotiabank. Please go ahead.

Eric Winmill: Hi Jody and team. Thanks for taking my question. Congratulations on the quarter.

Eric Winmill: Great <unk>. Thanks for taking my question congrats on the quarter.

Eric Winmill: Just a question on a P. O I know you said, you're getting the study results now and put somebody out to the market. Later this year. What are you thinking we might see there and how you sort of thinking that by integrating the details we appreciate it.

Eric Winmill: Just a question on EPO. I know you said you're getting the study results now and putting something out on the market later this year. What are you thinking we might see there, and how are you thinking that might integrate? Any details would be appreciated. Thanks.

Jody Kuzenko: Thanks for the question, Eric. We're very excited about EPO, and I'll tell you why. It will be the first example of adding ounces to the mine plan on the south side that floats off of the back of all of this heavy lifting on the capital investment we've made at Meti Aluna. So remember, this $875 million investment got us the tunnel, the conveyor system through the tunnel, the increase in power supply, the increase in water supply, to really exploit that south side in a very capital efficient way, and EPO is going to And so what you're going to see is a mine plan that's not fully defined in terms of the ounces. It's expensive to drill EPO from the surface.

Speaker Change: Alright, thanks for the questionnaire, we're very excited about Epo and I'll tell you why it will be the first example of adding ounces to the mine plan on the south side that floats off of the back of all of this heavy lift on the capital investment we've made up media Luna. So remember this 875 million dollar investment.

Jody Kuzenko: Got us the tunnel the conveyor system through the tunnel the increase in power supply the increase in water supply it got us everything we need to.

Jody Kuzenko: To really exploit that south side, and a very capital efficient way and a P. O is going to be the first example of that and so what you're going to see is the main plan. That's not fully defined in terms of the ounces, it's expensive to drill a P. O from surface. It's at the very top top of the mountain, where we have to <unk>.

Jody Kuzenko: It's at the very top of the mountain where we have to go in. So we're going to go in there, start to drift over from the Wahus Tunnel. It's about a 400 meter drift, and really continue to drill that off from underground.

Jody Kuzenko: Go in so we're going to go in there and start to drift over from the <unk> tunnel, it's about a 400 metre drift and really continue to drill that off from underground.

Jody Kuzenko: Pull the ounces back in through the existing infrastructure at Meti Aluna, all of the ore and waste handling systems. And so this will be an example of a very capital efficient, bolt-on, additive ounce situation to the existing mine plan. And one of the things we really like about it is that when we show that added in, we will be able to showcase a scenario that we're growing increasingly confident in that we will fill the mill post 2027.

Jody Kuzenko: Pull the ounces back in through the existing infrastructure at <unk> all of the Orange waste handling systems and so this will be an example of a very capital efficient Bolton additive ounce situation to the existing mine plan and what are the things we.

Jody Kuzenko: Really like about it is when we showed that added in we will be able to showcase the scenario that were growing increasingly confident in that we will fill the mail post 2027, and so the way the production profile <unk> is the meal is being taken down to 10600 tons a day with the <unk>.

Jody Kuzenko: And so the way the production profile looks is the mill is being taken down to 10,600 tons a day with the Meti Aluna build. We expect about 7,500 tons a day from Meti Aluna. We expect about 2,000 tons a day from ELG Underground, and we expect another 1,500, and 2,000 tons a day from EPO. When we showcase that we have that mill full, it will become clear to everyone that we will be a 500,000 ounce producer for many, many years to come with great cash costs, and that will punctuate the idea that Morelos is our flagship asset from which we grow this company.

Jody Kuzenko: And the Bill we expect about 7500 tons a day from <unk> Luna, we expect about.

Jody Kuzenko: 2000 tons, a day from El G underground and we expect another 1500 2000 tons a day from E. P O.

Jody Kuzenko: When we showcase that we have that <unk> it will become clear to everyone that we will be a 500000 ounce producer for many many years to come with great cash Cos and that will punctuate.

Jody Kuzenko: This idea that morello since our flagship asset from which we grow this company.

Eric Winmill: Oh, fantastic. Thank you. I really appreciate the added detail. So congrats again. I'll hop back in the queue. Cheers.

Speaker Change: Okay Tastic. Thank you really appreciate the the detail so congrats again I'll call back in the future.

Speaker Change: Thank you.

Operator: As there appear to be no more questions, this concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Speaker Change: Is there appears to be no more question. This concludes the question and answer session and today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.

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