Q1 2024 Gold Resource Corp Earnings Call
Operator: Good afternoon, ladies and gentlemen, and welcome to the Gold Resource Q1 2024 Earnings Conference Call. At this time, all lines are in a listen-only mode.
Good afternoon, ladies and gentlemen, and welcome to the Gold Resource Q1, 2024 earnings Conference call. At this time all lines are in a listen only mode.
Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, May 3, 2024. I would now like to turn the conference over to Chet Holyoak. Please go ahead, sir.
In the presentation, we will conduct a question and answer session. If at any time. During this call you require immediate assistance. Please press star zero for operator. This call is being recorded on Friday may three 2024, I would now like to turn the conference over to Chad for Ya <unk>.
Chad: Go ahead Sir.
Chet Holyoak: Thank you, Ludi, and good morning to everyone. On behalf of the Gold Resource team, I would like to welcome you to our conference call covering our first quarter 2024 results. Before we begin the call, there are a couple of housekeeping matters I would like to address. Please note that certain statements to be made today are forward-looking in nature and, as such, are subject to numerous risks and uncertainties, as described in our annual report on Form 10-K and other SEC filings.
Thank you Larry and good morning to everyone on behalf of the gold resource team I would like to welcome you to our conference call covering our first quarter 2024 results.
Chad: Before we begin the call there are a couple of housekeeping matters I would like to address.
Speaker Change: Please note that certain statements to be made today are forward looking in nature and as such are subject to numerous risks and uncertainties as described in our annual report on Form 10-K, and other SEC filings.
Chet Holyoak: Please note all amounts referenced during this presentation are in U.S. dollars unless otherwise stated. Joining me on the call today are Allen Palmiere, our President and CEO, and Alberto Reyes, our Chief Operating Officer. Following Allen, Alberto, and my prepared remarks, we will be available to answer questions. This conference call is being webcast.
Speaker Change: Please note all amounts referenced during this presentation are in U S dollars unless otherwise stated.
Speaker Change: Joining me on the call today is Alan Plum year, our president and CEO and Alberto <unk>, our Chief operating officer.
Following Allen Alberto and my prepared remarks, we will be available to answer questions.
Speaker Change: The conference call is being webcast for those of you joining us on the webcast you can download a PDF copy of the conference call slides.
Speaker Change: Event will also be available for replay on our website later today.
Speaker Change: Yesterday's news release that was issued following the close of the market and the accompanying Form 10-Q have been filed with the SEC on Edgar and are also available on our website at Www Dot Gold resource Corp Dot com.
Chet Holyoak: For those of you joining us on the webcast, you can download a PDF copy of the conference call slides. The event will also be available for replay on our website later today. Yesterday's news release that was issued following the close of the market and the accompanying Forum 10Q have been filed with the SEC on EDGAR and are also available on our website at www.goldresourcecorp.com. I will now turn the call over to Allen. Thank you, Chet. Good morning, everyone.
Speaker Change: I will now turn the call over to Alan.
Allen Joseph Palmiere: Thank you Chad good morning, everyone.
Allen Joseph Palmiere: I'd like to thank you all for joining our Q1 conference. I will address a few points first, and then Alberto will address the operations, followed by Chet with the financial resources. Following their remarks, I'll make a few closing comments, and then we will open the floor to questions.
Allen Joseph Palmiere: I'd like to thank you all for joining our Q1 conference call.
Allen Joseph Palmiere: I will address a few points first and then Alberto will address stock ratio followed by Chuck.
Actual results.
Speaker Change: Following their remarks I'll make a few closing comments and then we will open up to questions.
Allen Joseph Palmiere: I was reviewing prior comments I've made and realized that I always start off by addressing challenges that we faced in the quarter or year. The reality is that mining is a challenging business. Each mine brings its unique challenges, and given that we can't see the rock ahead of the active mining areas, we're always surprised. Our job is to be able to deal with those surprises as they occur while maintaining a reasonably steady level of production.
Speaker Change: I was reviewing prior comments have been made and realized that I always start off by addressing challenges that we faced in the quarter or year.
Speaker Change: Reality is that mining is a challenging business each mine brings G&A challenges and given that we can't see the rock I head up the active mining areas. There are always surprises our job is to be able to deal with those surprises that may occur, while maintaining a reasonably steady level of production.
Allen Joseph Palmiere: Non-controllable factors, such as commodity prices and foreign exchange rates, add an additional layer of complexity. During the first quarter, we experienced some equipment availability issues due to an aging fleet. We also encountered unexpected poor ground conditions resulting in our mine plan being redeveloped. The Mexican peso continued to remain higher than planned against the U.S. dollar, which adversely affected our production and capital. A lower-than-forecast price of zinc also adversely affected our by-product revenue.
Speaker Change: The non controllable factors, such as commodity prices and foreign exchange rates.
Speaker Change: Additional letter layer of complexity.
Speaker Change: During the first quarter, we experienced some equipment availability issues due to an aging fleet. We also encountered.
Speaker Change: Encountered unexpected poor ground conditions, resulting in our mine plan being redeveloped.
The Mexican peso continued to remain stronger than planned against the U S dollar, which adversely affected our production and capital costs.
Speaker Change: Lower than forecasted price of zinc also adversely affected our byproduct revenues.
Allen Joseph Palmiere: While the foreign exchange rates and commodity prices are not controllable, we remain focused on those factors that we can control, including reducing costs and increasing productivity. To achieve these goals, we selectively mined higher-grade ore veins this quarter and achieved better grade control by improving geotech design to reduce over break and dilution. Early in the first quarter of 2024, we also undertook a process review in the concentrator to identify opportunities to improve recovery, the trial and error nature of this testing resulting in lower than anticipated recoveries for a few weeks.
Speaker Change: The foreign exchange rates and commodity prices are not controllable we remain focused on those factors that we can control, including reducing costs and increasing productivity.
Speaker Change: To achieve these.
Speaker Change: Golar, which we selectively mined higher grade order base this quarter and achieved better grade control by improving G. O check designed to reduce over the break and dilution.
Speaker Change: Early in the first quarter of 2024, we also undertook undertook a process to review and the concentrator to identify opportunities to improve recoveries.
Speaker Change: The trial in nature in a trial and error nature of this testing.
Speaker Change: Resulting in lower than anticipated recoveries for a few weeks, but by the end of the quarter. We started to see positive results in stabilized recovers.
Allen Joseph Palmiere: But by the end of the quarter, we started to see positive results and stabilized recovery. Dash continues to be tight and remains a key focus for the company. Now turn to slide four, and I will briefly address our exploration. We continue to focus our activities on the areas of mineralization known as the Three Sisters, Gloria, Marina, and a continuation of Splay 31, as we discussed in the past.
Speaker Change: Gosh continues to be tight and remains a key focus for the company.
Speaker Change: Now turn to slide four and I will briefly address our exploration results we can.
Speaker Change: Continue to focus our activities in the areas of mineralization on the.
Speaker Change: Three sisters, Gloria Marina and a continuation of splay 31, as we discussed in the past.
These areas will be a critical part of the future of dawn to it but we continue to spend money to explore them.
Speaker Change: With the goal of adding higher grade material to our resource and reserves.
Speaker Change: I can say that when we redo our escape 1300 for this year.
Everyone will see the results of our work, but it is fair to encourage it.
Allen Joseph Palmiere: These areas will be a critical part of the future of Don David, and we continue to spend money to explore them, with the goal of adding higher-grade material to our resource and reserve. I can say that when we redo our SK-1300 for this year, everyone will see the results of our work, but it is very encouraging. I'll now turn the call over to Alberto for an update on the operation. Hello, everyone, and good morning to you all. Quarter one concluded safely with zero lost time.
Speaker Change: I'll now turn the call over to Alberto for an update on the operations.
Alberto: Hello, everyone and good morning to you all.
Alberto: Quarter, one completed safely with zero lost time incidents, however, not without facing multiple challenges.
Alberto Reyes: However, not without facing multiple challenges, the discipline of certain teams to achieve their safety results is the same, we observe under daily activities and cost-saving initiatives. Despite major operational and external difficulties, the team showcased resilience in overcoming challenges. For example, preparations for TSF closure limited water volume for processing, affecting pH levels.
Alberto: Discipline, all starting with teams.
To achieve their safety result is the same discipline.
Alberto: We observed on their daily activities and cost saving initiatives.
Alberto: Despite major operational need external difficulties, but team showcase resilience and overcoming challenges.
Alberto: Preparations for TSS closer limited water waterfall for processing affecting ph levels, although violence was achieved in February.
Alberto Reyes: Although balance was achieved in February, I think processing remains somewhat. System Reviews time for the early quarter to optimize the same search.
Alberto: <unk> processing remains suboptimal.
Alberto: System reviews painful early quarter, two to optimize the thing circuit.
Alberto Reyes: External factors included fluctuating base metal prices and a stronger Mexican peso against the dollar. Cost reduction strategies continue to be integral against rising costs and maintaining productivity. Production for quarter one reached approximately 98,000 while operating with a reduced input compared to 2023, at 1,330 pounds per day and in line with our 2024 target. I am pleased to say that we process nearly 98.9 thousand tons of ore and so the 3,567 ounces of gold and 216,000 pounds of silver. In addition, we sold 264 tons of copper, approximately 667 tons of lead, and more than 1,682 tons. Now turning to slides, TDGM's capital expenditure aligned with the year's plan.
Alberto: External factors in Q1.
Alberto: It fluctuate in base metal prices and a stronger Mexican peso against the dollar.
Alberto: Cost reduction strategies continue to be integral against rising costs.
Alberto: To maintain productivity levels.
Alberto: Production for quarter, one reached approximately 90 days.
Alberto: Thousand pumps, while operating with a reduced throughput from part D plans.
Alberto: 1300, 30 tonnes per day and in line with our 'twenty 'twenty four targets.
Alberto: I'm pleased to report that we processed nearly 98 9000 pumps award.
Alberto: Sold approximately 3567 ounces of gold and $216000.
Alberto: And ounces of silver equating to over 5965 gold equivalent ounces.
Alberto: Addition, we sold 264 tonnes of copper approximately 660 signed Pennsylvania and more than 1682 tonnes of zinc.
Now turning to slide six.
Alberto: <unk> capital expenditure align with years plan.
Alberto Reyes: Investing $1.35 million in underground development, $282,000 in other sustaining, and $440,000 in children. Sustaining Capital Investments totaled $2.1 million, while Grown Investments reached $1.3, for $899,000, meeting annual guidance. Exploration development for 250 meters will commence in quarter two.
Alberto: Investing $135 million in underground development, $282000 and other sustaining and $440000.
Alberto: So the.
Alberto: Sustaining capital investments totaled $2 1 million, while growing the investment.
Alberto: 899000 meeting annual guidance exploration development for 250 meters will commenced in quarter two.
Chet Holyoak: We recognize the effort and achievements by the DDGM team; we showcase resilience, effective communication, and organization, promoting health and safety while maintaining focus on business objectives. I'll now pass the presentation over to Chet to discuss the financial results. Thank you, Alberto.
Speaker Change: We recognize.
Speaker Change: The effort and achievements by the BTG EM team, we showcase in soybeans effective communication organization promoting health and safety, while maintaining focus on business objectives.
Chet Holyoak: During the first quarter, we experienced a small decrease in our cash balance, and we ended the quarter with $5.7 million. The declining cash is primarily due to lower sales and increased cash costs at DDGM, which we will discuss in just a moment, and expenditure related to our exploration program, as mentioned earlier by Allen. Cash provided by Operating Activities is $1.5 million for the year and includes $900,000 spent on exploration in Mexico and over $200,000 spent in Michigan related to the Back Forty Optimization Project. For the first quarter of 2024, we reported a net loss of $4 million, or $0.05 per share.
Speaker Change: I'll now pass the presentation over to Chuck to discuss the financial results.
Chet Holyoak: During the quarter, net sales of $18.7 million were 40% lower than the same period in 2023, due mainly to lower volumes of all metals sold and a 22% lower zinc price. While production costs for the quarter of approximately $16.1 million are slightly lower than the prior year, the significantly lower tons processed, along with lower gold equivalent ounces sold, resulted in an unfavorable impact on unit costs, such as cost per ton processed and cost per gold equivalent ounce sold.
Chuck: Thank you Alberto during the first quarter, we experienced a small decrease that decrease in our cash balance and we ended the quarter with $5 7 million.
Chet Holyoak: We will discuss this a bit more on the next page. Depreciation for the period is lower than depreciation for the same period in 2023, mainly due to lower UOP depreciation as a result of less tons mined. Finally, gross mining profit is lower in 2023, primarily due to the lower sales not being proportionally offset by lower production costs. For the quarter, Don David Gold Mines' total cash cost after co-product credit was $1,667 per gold equivalent ounce sold, and total all-in sustaining cash costs per gold equivalent ounce sold was $2,295 per ounce.
Chuck: The decline in cash is primarily due to lower sales and increased cash costs at D. D. G M, which we will discuss in just a moment and spend related to our exploration program as it was mentioned earlier by Alan.
Chuck: Cash provided by operating activities was $1 $5 million for the year and includes $900000 spent on exploration in Mexico and over $200000 spent in Michigan related to the back 40 optimization project.
Chuck: For the first quarter 2024, we reported net loss of $4 million or <unk> <unk> per share during the quarter net sales of $18 $7 million were 40% lower than the same period in 2023, due mainly to lower volumes of all metal sold in a 22% lower zinc Chris.
Chuck: While production costs for the quarter of approximately $16 $1 million or slightly lower than the prior year, the significantly lower tonnes processed along with lower gold equivalent ounces sold resulted in an unfavorable impact on unit costs, such as cost per tonne processed and cost per gold equivalent ounce sold we will discuss this a bit more on the next.
Chuck: Page.
Chuck: Depreciation for the period is lower than depreciation for the same period in 2023, mainly due to lower U O P. Depreciation as a result of less tonnes mined.
Chuck: Finally, gross mining profit is lower in 2023, primarily due to the lower sales not being proportionally offset by lower production costs.
Chuck: For the quarter, Don David Gordon Mines total cash cost after co product credit was $1667 per gold equivalent ounce sold and total all in sustaining cash cost per gold equivalent ounce sold was $2295 per ounce turning to slide eight will discuss.
Chet Holyoak: Turning to slide 8, we will discuss cash costs for the quarter. The two key drivers related to the increase in cash costs per gold equivalent ounce sold are the reduction in gold equivalent ounces sold and a reduction in co-product credit. The gold equivalent ounces are lower due to the lower tons process and the lower grade ore and recoveries realized during the quarter. Some of our final shipments during the quarter were also delayed as our customers couldn't receive them due to the Easter holiday.
Chuck: Cash costs for the quarter.
Chuck: The two key drivers related to the increase in cash cost per gold equivalent ounce sold or the reduction in gold equivalent ounces sold and a reduction in co product credits.
Chuck: The gold equivalent ounces are lower due to the lower tonnes processed and the lower grade ore and recoveries realized during the quarter.
Some of our final shipments during the quarter were also delayed as our customers couldn't receive them due to the Easter holiday.
Chet Holyoak: The lower co-product credit was the result of lower copper, lead, and zinc tons being sold as compared to the respective 2023 periods, and the significantly lower realized metal price for zinc during the quarter. Additionally, similar to the lower gold equivalent ounces, some shipments of co-products were delayed due to the Easter holiday.
Chuck: The lower co product credit was the result of lower copper lead and zinc tons being sold as compared to the respective 2023 periods and a significantly lower realized metal price for zinc during the quarter.
Chuck: <unk> to the lower gold equivalent ounces some shipments of co products were delayed due to the Easter holiday.
Allen Joseph Palmiere: While the above-mentioned drivers resulted in a negative impact on the quarter, we are seeing an increasing trend in metal prices, and the metallurgical testing has resulted in positive results through our processing plan. Allen, back to you. Thank you, Chet.
Chuck: While the above mentioned drivers resulted in a negative impact for the quarter. We are seeing an increasing trend in metal prices and the metallurgical testing has resulted in positive results through our processing plant.
Allen Joseph Palmiere: Alan back to you.
Allen Joseph Palmiere: Thank you Chuck.
Allen Joseph Palmiere: With increasing commodity prices and the softening peso we have seen lately, our cash generation is improving and relieving some of the cash pressure that we've been under for the past several months. The share price has recovered a little, but we still feel that it does not reflect the underlying value of the company. We still have a relatively strong balance sheet and excellent technical and operating teams, and our exploration results are very encouraging and point to a bright future.
Allen Joseph Palmiere: With the increase in commodity prices.
Allen Joseph Palmiere: The softening pace. So we have seen lately, our cash generation is improving and relieving some of the cash pressure we've been under for the past several months.
Allen Joseph Palmiere: Our share price has recovered a little but we still feel that it does not reflect the underlying value of the company.
Allen Joseph Palmiere: We still have a relatively strong balance sheet and excellent technical and operating teams and our exploration results are very encouraging and point to a bright future.
Allen Joseph Palmiere: The Board of Directors and Management continue to explore and evaluate strategic alternatives to unlock value for our shareholders. While no decision has been made, and there is no certainty around the outcome, we are confident that the process is necessary to ensure that we are acting in the best interests of all stakeholders.
Allen Joseph Palmiere: The board of directors and management continue to explore and evaluate strategic alternatives to unlock value for our shareholders.
Allen Joseph Palmiere: But no decision has been made and there is no certainty around the outcome. We are confident that the processes necessary to ensure that we are acting in the best interests of all stakeholders.
Operator: With that, I'll turn the call over to the operator for questions. Thank you. And ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your telephone keypad. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two.
Speaker Change: With that I'll turn the call over to the operator for questions.
Speaker Change: Thank you and ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press the star followed by the number one on your telephone keypad, you will hear from Victor how does it go to waste.
Speaker Change: Should you wish to declines into calling process. Please press the star followed by the number one.
Speaker Change: One moment. Please for your first question.
Operator: One moment, please, for your first question. And your first question comes from the line of Heiko Ihle from HSC Wainwright. Your line is open.
Speaker Change: And your first question comes from the line of Heiko Elaine <unk> from H C. Wainwright. Your line is open.
Heiko Felix Ihle: Hey there, thanks for taking my questions; hope all is well. All well, Heiko, good to hear from you. Always a pleasure.
Heiko Elaine: Hey, there thanks for taking my questions Hope all is well.
Heiko Elaine: All well heiko good to hear from you always a pleasure hey, so plant throughput was reduced in the quarter recoveries were a bit lower in Q1, given the reparations for the closure of the third sell up the T. S F.
Heiko Felix Ihle: Hey, so plant throughput was reduced in a quarter, recoveries were a bit lower in Q1, given the repairs for the closure of the third cell of the TSF. But then it also says until solutions are achieved, and work will continue. What have you exactly seen in regards to improvements during the second quarter? I mean, we're now in May, right?
Heiko Elaine: But then it also says until solutions were achieved and our work will continue.
Speaker Change: What exactly you're seeing in regards to improvements during the second quarter, I mean, where we're now in may right.
Alberto Reyes: Heiko, let me answer the question. Somewhat indirectly, throughput was down. That was primarily through design. We're effectively on budget. We're looking at about 1,200 tons per day throughput this year, but recoveries were down, and recoveries were down for two primary reasons. One, I alluded to it in my opening remarks, but We were trying to work with the plant to increase metal recovery, and the net result of that for a couple of several weeks actually was decreased recovery.
Heiko Elaine: Heiko theirs.
Let me answer the question somewhat indirectly throughput was down.
Heiko Elaine: It was primarily through design, we were effectively on budget. We're looking at about 1200 tonnes per day throughput this year.
Heiko Elaine: Coverage, we're down and recoveries were down for two primary reasons why I alluded to it in my opening remarks, but.
Heiko Elaine: We were trying to work with.
The plants and increased metal recovery going.
Heiko Elaine: The net result of that.
Heiko Elaine: Or.
Heiko Elaine: A couple of weeks several weeks actually was decreased recovery.
Alberto Reyes: That occurs because when you optimize the zinc, the copper circuit, your lead circuit gets out of whack. And then when you come in to try and optimize the lead circuit, your zinc circuit is out of whack. It's a, I'm hesitant to use a term, but really is trial and error as you try and get all three circuits.
Heiko Elaine: That occurs because when you optimize the zinc copper circuits you loved circuit jumps out of whack and then when you come and should try and optimize the lead circuit zinc circuit is holding flat.
Heiko Elaine: It's a.
Heiko Elaine: It Hasnt I'm hesitant to use the term, but really as trial and errors and try and get all screen circuits.
Alberto Reyes: Balanced and Optimized. We did achieve stability in the latter part of Q1, and we're seeing the benefit of that in Q2. The other issue, while all of this was necessitated by the cessation of utilization of TSF-3. What that did was reduce the volume of water we have available or available for processed water.
Heiko Elaine: Balanced and optimized.
Heiko Elaine: We did get achieved stability.
Heiko Elaine: In the latter part of Q1, and we're seeing the benefit of that in Q2.
Heiko Elaine: The other issue while all of this was necessitated by.
Heiko Elaine: The <unk>.
Heiko Elaine: <unk> of utilization.
Heiko Elaine: <unk> three <unk>.
Heiko Elaine: What that did was reduce the volume of water we have available.
Heiko Elaine: Available for process water.
<unk>.
Alberto Reyes: And changed the makeup of the water going into the plant. As we work through that process, optimizing the water purity, our recoveries are anticipated to improve going forward. That really, I think, is the answer to your question. That's a fair answer.
Heiko Elaine: Change the makeup of the water going into the plant.
Heiko Elaine: As we work through the process.
Heiko Elaine: Optimizing the water purity.
Speaker Change: Recoveries are anticipated to improve going forward, but I really I think is the answer to your question.
Alberto Reyes: Building on what you just said, in the release, you said pretty much exactly what you just said, that you're focusing on higher-grade ore and also lower costs. Can you quantify some of the lower costs that we saw, I mean, especially given you were talking about the aging fleet earlier on this very call? One of our major costs right now is repair and maintenance of mining equipment, and what we are looking at doing, and I expect to get the results of the study within the next week or so, is replacing certain pieces of mining equipment.
Speaker Change: That's a fair answer.
Speaker Change: Building on what you just said in the release you said pretty much exactly what you just said that you're focusing on higher grade ore and also lower cost.
Speaker Change: Can you quantify some of the lower cost that we saw especially giving you were talking about the aging fleet earlier on this very call.
Speaker Change: One of our major cost right now is repair and maintenance of the mining fleet.
Speaker Change: And what we are looking at doing.
Speaker Change: I expect to get the results of the study within the next week or so is replacing certain pieces of mining equipment, notably our low profile trucks.
Alberto Reyes: Notably, our low-profile trucks, we're looking at rebuilds, and replacement of our development jumbos. [inaudible] Replacing those pieces of equipment, we anticipate a very significant reduction in operating costs and put it in context. I'm just going to use one example, Heiko, but our development costs underground are currently running about $2,800 a meter.
Speaker Change: We're looking.
Speaker Change: He builds or replacement of our development jumbos.
Speaker Change: Bye.
Speaker Change: Replacing those pieces of equipment.
<unk>, a very significant reduction in operating cost.
Speaker Change: And put it in context, I'm, just going to use one example, heiko but.
Speaker Change: Our development cost underground currently are running about $2800 a meter.
Alberto Reyes: With equipment that does not require so much maintenance, we expect that we can get that down to as low as $2,200. Given that development is both a significant capital and operating expenditure, that would obviously have a very dramatic impact on our game. That is just one example, but that runs throughout the mine. Old equipment translates into higher operating costs, and that translates into rates at higher levels of ASIC.
Speaker Change: With equipment that does not require so much maintenance, we expect that we can get that down to as low as $2200 a meter.
Speaker Change: Given that development is both a significant capital and operating expenditure.
Speaker Change: Obviously have a very dramatic impact on our P&L.
That is just one example, but that runs throughout the day.
Speaker Change: Mike.
Speaker Change: Old equipment translates into higher operating cost and that translates into.
Heiko Felix Ihle: By replacing some of this fleet, we'll be able to drop that pretty significantly. Fair enough. Perfect. That was useful. I will get back in queue.
Speaker Change: Great a higher levels of ASIC by replacing some of those fleets, we'll be able to drop that pretty significantly.
Speaker Change: Fair enough perfect that was useful I will get back in queue.
Heiko Felix Ihle: Thanks, Heiko. Thank you. And once again, if you would like to ask a question, simply press star followed by the number one on your telephone keypad.
Speaker Change: Thanks, Michael.
Speaker Change: Thank you and once again, if you would like to ask a question simply press star followed by the number one on your telephone keypad.
Operator: Your next question comes from the line of Jake Sekelsky from Alliance Global Partners. Your line is open. Hey, Allen and team. Thanks for taking my question. Good morning, Jake.
Speaker Change: Your next question comes from the line of Jack Zukowski from Alliance Global Partners. Your line is open.
Jack Zukowski: Hey, Alan and team thanks for taking my questions.
Jack Zukowski: Morning, Jake.
Jacob G. Sekelsky: So we saw gold grades pick up a bit quarter over quarter. And I'm just curious, given the recent strength in gold and silver prices, have you identified any opportunities to target more precious metal-rich areas as we head into the second half of the year? And I guess, have these higher prices sort of changed the way you're looking at things from a cutoff perspective? The mind-bomb for this year is... to a certain extent in the plexiglass, we will be targeting those areas that have got higher precious metal grades.
Jack Zukowski: So we saw gold grades pick up a bit quarter over quarter and I'm just curious given the recent strength in gold and silver prices.
Jack Zukowski: You identified any opportunities to target more precious metal rich areas as we head into the second half of the year and I guess have these higher prices sort of changed the way you're looking at things from a cutoff perspective.
Jack Zukowski: Okay.
Jack Zukowski: The mine plan for this year.
Jack Zukowski: Somewhat inflexible.
Jack Zukowski: The extent possible, we will be targeting those areas. So that's got higher.
Jack Zukowski: Metal grades, but we don't have a lot of flexibility.
Jacob G. Sekelsky: But we don't have a lot of flexibility. Drill results from our exploration, and you've heard me talk about Mirena, Three Sisters, Gloria, Ad Nauseam, but we're anticipating that once we get into those areas in 2025, we will be seeing higher precious metal prices and higher NSRs per ton. Given the nature of the operation, we don't have, unfortunately, a great deal of flexibility, Jacob.
Jack Zukowski: Drill results from our exploration and you've you've heard me talk about Marina screw sisters.
Lori our AD nauseum, but.
Jack Zukowski: We're anticipating that once we get into those areas in 2025.
Jack Zukowski: We will be seeing higher precious metal prices and higher <unk> per ton.
Jack Zukowski: Okay.
Jack Zukowski: Given the nature of the operation, we don't have unfortunately, a great deal of flexibility Jade.
Jacob G. Sekelsky: Okay, that's helpful. And then just on cost, I mean, you mentioned the sensitivity to base metal prices and movements in the peso. Can you just touch on your hedging strategies here? And, you know, have you seen the peso soft enough to where you might look at hedging out some of that exposure or just high-level thoughts there? Precious metals we tend not to want to hedge. A lot of our shareholders want to have exposure to the upside of precious metals. In terms of base metals, we have hedged zinc in the past.
Okay. That's helpful.
Speaker Change: And then just on costs I mean, you mentioned the sensitivity to the base metal.
Speaker Change: Rice's and movements in the K. So can you just touch on your hedging strategy here and have you seen the peso soft enough to where you might look at hedging out some of that exposure or just high level thoughts there would be helpful.
Speaker Change: Okay.
Precious metal, we tend to not want to hedge a lot of our shareholders launch a high exposure to the.
Speaker Change: The upside on precious metals.
In terms of base metals, we have hedged zinc in the past.
Speaker Change: Okay.
Speaker Change: Zinc has been so low for the last period of time that Theres really no opportunity to hedge but zinc.
Speaker Change: Zinc comes back up to close to $1 30.
Speaker Change: It's something that is on our radar and it's something that we would consider.
Allen Joseph Palmiere: Zinc has been so low for the last period of time that there's really no opportunity to hedge, but you know as zinc comes back up to close to $1.30, it's something that is on the radar, and it is something that we would consider. Terms of the Peso Hedge. The peso today is, the last time I checked was $1696.98. But the peso is pretty volatile right now. It's been running between 1640 and 1730 and 1740, but it is probably one of the most volatile currencies vis-a-vis the U.S. dollar out there right now. AISO is being held up. And I'm not going to say it's artificial, but it's being held up by the carry.
Speaker Change: In terms of the peso hedge peso today as last time I checked was 16 90 698.
Speaker Change: The peso was pretty volatile right now it's been running between <unk>.
Speaker Change: 16, sporty and 17 30 17 already.
Speaker Change: But it is probably one of the most volatile currencies vis vis the U S dollar out there right now.
Speaker Change: Queso is being held up.
Speaker Change: And I am not going.
Speaker Change: I'm, just saying I'm, sorry, the official but it's being held up by the carry trade.
Allen Joseph Palmiere: The U.S. prime rate is running. I'm just going to use round numbers, 5%. The Mexican peso is running at 11.5%. That spread is what's holding the peso up. The U.S. dollar strengthens, or approaches it in a different way. As the Mexican Central Bank backs off on its High Interest Rate Policy, the expectation is that the Carey Trade will unwind, and the peso will soften against the dollar. We actually expect that the peso should be... By the end of the year, It should be 18 or higher.
Speaker Change: U S prime rate.
Speaker Change: Running.
Speaker Change: I'm just going to use round numbers, 5% the Mexican peso is running at 11, 5%.
Speaker Change: That spread is what's holding the peso up.
Speaker Change: As.
Speaker Change: The U S dollar strengthened.
Speaker Change: Sure.
Speaker Change: I'll approach it in a different way.
Speaker Change: The Mexican central bank backs off on.
High interest rate policy, the expectation is that the.
Speaker Change: Carry trade will unwind and the peso will soften up against the dollar.
Speaker Change: We actually expect the peso should be.
Speaker Change: By the end of the year.
Speaker Change: No.
Speaker Change: It should be 18 or higher.
Allen Joseph Palmiere: At that point, we would consider hedging it. But at this point, all we would do is lock in the lower exchange rate. So I'll address it, Jake. It does.
Speaker Change: At that point, we would considered hedging it but at this point all of our locking would do is lock in these low.
Speaker Change: Our exchange rate.
Speaker Change: So ill address it Jake.
It does thanks.
Jacob G. Sekelsky: Thanks. Okay, thanks. Thank you, and there are no further questions at this time. I would like to turn it back to Allen Palmiere for closing remarks. Thank you, operator, and thank you all for joining us for our Q1 conference call. It hasn't been very long since we did our year-end, so there hasn't been a lot of change.
That's all on my end.
Jake: Okay. Thanks.
Speaker Change: Thank you and there are no further questions at this time I would like to turn it back to Alan <unk> for closing remarks.
Allen Joseph Palmiere: But I do look forward to being able to update you all on progress for our Q2 conference call that will take place in late July or early August. Again, thank you all for taking the time to... listen and have a great afternoon. Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a lovely day. Allen Palmiere, Jacob Sekelsky, Allen Palmiere, Kimberly Perry, Alberto Reyes, Chet Holyoak,
Allen Joseph Palmiere: Thank you operator, and thank you all for joining us for our Q1 conference call. It hasn't been very long since we did our year end and so there hasn't been a lot of change, but I do look forward to being able to update you all would progress.
Allen Joseph Palmiere: Our Q2 conference call that will take place late July early August.
Allen Joseph Palmiere: Again, thank you all for taking the time to them.
Allen Joseph Palmiere: To listen.
Allen Joseph Palmiere: Have a great afternoon.
Speaker Change: Thank you presenters, ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect have a lumpy D.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: [music].