Q1 2024 K92 Mining Inc Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the K92 Mining 2024 First Quarter Financial Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your cell phone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to David Medilek, President and CEO. Please go ahead.

Thank you for standing by.

Operator.

Two the Cana 92 mining 2024 first quarter financial results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation, there will be an opportunity to ask questions.

I joined the question you May Press Star then one on your telephone keypad.

Do you need assistance during the conference call you May signal, an operator by pressing Star then zero I would.

And now I'd like to turn the conference over to David Blackman President.

David Medilek: President and CEO. Please go ahead.

David Medilek: Thank you, operator, and thanks, everyone, for attending K92 Mining's 2024 First Quarter Results Conference Call. We hope you and your families are doing well.

David Medilek: Thank you operator, and thanks, everyone for attending <unk> 'twenty 'twenty four first quarter results Conference call. We hope you and your families are doing well. In addition to myself we have on the line John Lewis, Chief Executive Officer, and director and Justin <unk>, Chief Financial Officer, I would also like to remind everyone that after the remarks from management the call will be followed by Q&A session and we will be making forward looking statements during the call.

David Medilek: In addition to myself, we have on the line John Lewins, Chief Executive Officer and Director, and Justin Blanchet, Chief Financial Officer. I would also like to remind everyone that after the remarks from the managers on the call will be followed by a Q&A session. As we will be making forward-looking statements during the call, please refer to the cautionary notes and risk disclosure in our MD&A and slide two of the webcast presentation. Also, please bear in mind that all dollar amounts mentioned in the conference call are United States dollars unless otherwise noted. Now, I'll turn it over to John to provide you with an overview.

John Derek Lewins: Please refer to the cautionary notes in risks associated in our MD&A in slide two of the webcast presentation also please bear in mind that all dollar amounts mentioned in the conference call ours. It's just always unless otherwise noted now I'll turn it over to John to provide you with an overview.

John Derek Lewins: Well, thank you, David, and welcome, everyone. As always, we'll begin with safety, K92's number one priority. Now, K92 has historically operated with one of the best safety records in PNG, as well as the broader Australasian region, as shown in this chart. And, as we stated in our previous conference call, we take the increased lost time injury frequency rate we achieved in 2023 very seriously. Multiple actions have been taken. [inaudible] have already been realized.

John Derek Lewins: Well, thank you David and welcome everyone.

As always we'll begin with safety Kleen 90, two's number one priority.

John Derek Lewins: <unk> two has historically operated one of the best safety Records in PNG as well as the broader Austral Asian region as shown in this chart.

John Derek Lewins: And as we stated in our previous conference call. We take the increased lost time injury frequency rate. We achieved in 2023 very seriously multiple actions have been taken.

John Derek Lewins: Two independent safety audits have completed the first in the second half of 2023 and the second in April of this year, while overall our systems were found to be comparable with other operations in Australia, and the Asia Pacific region opportunities to improve safety were identified and many approved improvements.

John Derek Lewins: Have already been realized.

John Derek Lewins: Additional safety technologies have been progressively introduced, such as in-cab monitoring and the implementation of our proximity detection and collusion avoidance system, which is nearly complete. Further enhancements and systems beyond this are also planned. I think culturally, there are multiple positive leading indicators, including a significant increase in job safety assessments for several consecutive quarters. As part of our expansion process, management and supervisory capabilities have been enhanced and expanded, including a major focus on safety and training. In Q1, there were no lost-time injuries, and I'm pleased to highlight that this is now the third consecutive lost-time injury-free quarter.

Additional safety technologies have been progressively introduce such as in cabin monitoring and the implementation of our proximity detection and collision avoidance system, which is nearly complete.

John Derek Lewins: Further enhancements and systems beyond this are also planned.

John Derek Lewins: I think culturally there are multiple positive leading indicators, including a significant increase in job safety assessments for several consecutive quarters.

John Derek Lewins: As part of our expansion process management, and supervisory capabilities have been enhanced and expanded.

Including to provide a major focus on safety and training and.

John Derek Lewins: In Q1, there were no lost time injuries and I'm pleased to highlight that this is now the third consecutive lost time injury free quarter I'd like to reiterate.

John Derek Lewins: I'd like to reiterate that K92 relentlessly pursues our goal of achieving zero harm among our workforce. So I'd now like to provide an update on the non-industrial incident that occurred on the mining lease on March 10th, and which resulted in a deceased employee, as well as the issuance of a Form 29 by the Mineral Resources Authority, or MRA. I note that Form 29 required a temporary suspension of underground activities on March the 13th, and it was initially incorrectly interpreted as a mine accident on April 8th.

John Derek Lewins: Reiterate pertain only to relentlessly pursues our goal of achieving zero harm among our workforce.

John Derek Lewins: We announced that the MRA had vacated Form 29 by letter and the operations were resuming imminently. This letter followed a presentation that was delivered by the Independent Safety Auditor to the MRA which highlighted that our underground safety management plan was good, conformed to criteria in ISO 45001, and had been implemented. The safety auditor also noted that no substandard document processes or systems were found and that the underground safety management plan was comparable to other operations in Australia and Asia.

John Derek Lewins: So now I'd like to provide an update on the Nonindustrial incident that occurred on the mining lease on March the 10th and which resulted in Atc's employee as well as the issuance of a form 29 by the mineral resources authority our MRI.

John Derek Lewins: Since restarting operations, operations ramped up in April and have now returned to normal, and we're pleased with the focus and motivation of our workforce. In terms of the proximity detection and collision avoidance system, installation is nearing completion, with, as noted in the prior slide. Lastly, in late April, the coroner's report confirmed that the incident is non-industrial. It is deemed not to be a mine accident, and it's the jurisdiction of the Royal Papua New Guinea Constabulary or the Crown.

I know that the form 29 required a temporary suspension of underground activities on March 13th.

John Derek Lewins: As it was initially incorrectly interpreted that's a mine accident.

John Derek Lewins: On April eight.

John Derek Lewins: We announced at the MRA had vacated the form 29 through letter and the operations, we're resuming imminently.

John Derek Lewins: This lecture followed a presentation that was delivered by the independent safety auditor to the MRA, which highlighted that our underground safety management plan was good confirmed two criteria and ISO 45 couple of one.

John Derek Lewins: And had been implemented.

John Derek Lewins: The safety Auditor also noted that no substandard document process or systems will find that the underground safety management plan was comparable to other operations in Australia.

John Derek Lewins: Australia and Asia.

John Derek Lewins: Since restarting operations ramped up in April and have now returned to normal and we're pleased with the focus and motivation of our workforce.

John Derek Lewins: In terms of the proximity detection and collision avoidance system installation is nearing completion.

John Derek Lewins: With as noted in the prior slight.

John Derek Lewins: Lastly in late April the Coroner's report confirmed that the incident is nonindustrial. It is deemed not to be a mine accident in <unk>.

John Derek Lewins: The jurisdiction of the raw Papa New Guinea Constabulary all the police.

John Derek Lewins: On the ESG highlights, K92 is extremely proud of its positive impact on women's empowerment. The five female graduates shown on the slide are within a larger group of outstanding female leaders and future leaders in our company. They work in a range of roles within the company, including but not limited to mining engineering, Sustainable Agriculture and Livelihoods, Finance, and Community Affairs.

John Derek Lewins: On the ESG highlights K 92 is extremely proud of its positive impact on women's empowerment. The five female graduate as shown on the slide are within a larger group of outstanding female leaders and future leaders in our company.

John Derek Lewins: They work in a range of roles within the company, including but not limited to mining engineering.

John Derek Lewins: Sustainable agriculture, and livelihoods finance and community Affairs.

John Derek Lewins: Some of the female graduates are also previous scholarship recipients, including the inaugural Women in Mining Scholarship. Our Women's Empowerment Programs are wide-ranging, focusing on education and healthcare training and awareness, business development, developing our workforce, and partnering with academia, and are designed to deliver long-term and diverse positive impact. K92 is extremely proud of the positive impact that we're having in Papua New Guinea, and we look forward to announcing our latest sustainability report in the next couple of months.

John Derek Lewins: Some of the female graduate so also previous scholarship recipients, including the inaugural women in mining scholarship.

John Derek Lewins: Women empowerment programs, a wide ranging focusing on education, and health care training and awareness business development, developing our workforce and partnering with academia and are designed to deliver long term and diverse positive impacts K 92 is extremely proud of the positive impact that we're having in pattern.

John Derek Lewins: Guinea, and we look forward to announcing our latest sustainability report in the next couple of months.

John Derek Lewins: Now moving on to operational performance, during the quarter, K92 Gold Mines slightly exceeded budget with 27,462 ounces of gold equivalent produced, even with the temporary suspension of underground operations for the final 22 days of the quarter due to that non-industrial incident. During the quarter, a total of 130,632 tons were processed at a head grade of 7.2 grams per ton gold equivalent, and cash costs were $934 an ounce, all in sustaining costs of $1,366 an ounce.

John Derek Lewins: Now moving onto operational performance during the quarter can.

John Derek Lewins: <unk> goldmine slightly exceeded budget, the 27462 ounces gold equivalent produced.

John Derek Lewins: Even with the temporary suspension of underground operation for the final 22 days of the quarter due to that non industrial incident.

John Derek Lewins: During the quarter a total of 130632 tonnes were processed at a head grade of seven two grams per ton gold equivalent and cash cost $934, an ounce all in sustaining costs $1366 an ounce.

John Derek Lewins: As annotated on the chart, all in sustaining costs have been elevated for the past few quarters as the company continues to make a considerable investment in that Stage 3 expansion, particularly in 2024, with costs then expected to decline considerably after delivering Stage 3 expansion next year. I think it's important to highlight that the non-industrial incident had a moderate impact on our Q1 production of about 3,000 to 4,000 ounces, and we expect a moderate impact in Q2, as previously disclosed.

John Derek Lewins: And annotated on the shot on the chart all in sustaining costs have been elevated for the past few quarters as the company continues to make considerable investment in that stage three expansion, particularly in 2024 with costs than expected to decline considerably after delivering stage three expansion next year.

I think it's important to highlight that the Nonindustrial incident had a moderate impact on our Q1 production of about three to 4000 ounces and we expect a moderate impact in Q2 as previously disclosed.

John Derek Lewins: Q1 was on track prior to the incident to be our best first quarter on record, and there are certainly a lot of positives to build on going forward. As outlined in our operational guidance earlier in the year, the second half of the year is expected to be our strongest. Therefore, we reiterate our 2024 guidance.

John Derek Lewins: Q1 was on track prior to the incident to be our best first quarter on record and there's certainly a lot of positives to build on going forward as.

John Derek Lewins: As outlined in our operational guidance earlier in the year. The second half of the year is expected to be our strongest so we reiterate our 2024 guidance.

John Derek Lewins: In terms of key operational quarterly physicals, K92 has demonstrated the ability to sequentially expand the operation for several years, with physicals in Q1 clearly impacted by the temporary suspension of underground operations for the majority of March, as well as the completion of the twin incline. In Q1, a major positive in terms of operational physicals was realized with a process plant delivering multiple records earlier in the quarter; a new monthly throughput record was achieved in January, averaging 1,843 tons per day, or 35% greater than the stage 2A design throughput.

John Derek Lewins: In terms of key operational quarterly Physicals, K 92 has demonstrated the ability to sequentially expand the operation for several years with physicals in Q1, clearly impacted by the temporary suspension of underground operations for the majority of March.

John Derek Lewins: As well as the completion of the twin in client and.

John Derek Lewins: In Q1, a major positive in terms of operational physicals was relaunched with the process plant delivering multiple records earlier in the quarter.

John Derek Lewins: Our new monthly.

John Derek Lewins: Throughput record was achieved in January averaging 1843 tons per day, or 35% greater than the stage to a design throughput.

John Derek Lewins: A new weekly throughput record was achieved in January, averaging 2,149 tons per day, which is 50% greater than the stage 2A design. And finally, a new daily throughput record was achieved on the 21st of January, of 2,389 tons processed, 74% greater than the stage 2A design. So the process plant has clearly demonstrated that with the tons in front of it from the mine, it is extremely capable and provides significant optionality going forward.

John Derek Lewins: New weekly throughput record was achieved in January averaging 2149 tonnes per day, which is 50% greater than the states to a design and finally.

John Derek Lewins: New daily record throughput was achieved on the twenty-first of January of 2389 tons processed 74% greater than that stage two a design. So the process plant has clearly demonstrated that with the tons in front of it from the mine. It is extremely capable and provides significant optionality.

John Derek Lewins: Going forward.

John Derek Lewins: I think the records also highlight the potential of the Stage 3 process plant, which uses the same design parameters as the Stage 2a process plant and is therefore potentially capable of significantly greater throughput than the 1.2 million tonne per annum nameplate design. With that, I'll now turn over to our Chief Financial Officer, Justin Blanchet, to discuss our financial results for the first quarter.

Speaker Change: I think the records also highlight the potential of the stage three process plant, which is used the same design parameters at this stage to a process plant.

Speaker Change: And is therefore potentially capable of significantly greater throughput than the $1 2 million ton per annum nameplate design with that I'll now turn over to our Chief Financial Officer, Justin Blase to discuss our financial results for the first quarter. Thank.

Justin J. Blanchet: Thank you, John. Hello everyone.

Justin J. Blanchet: Thank you John and Hello, everyone.

Justin J. Blanchet: During the first quarter 2024, we had quarterly revenue of $59 8 million or 48% increase from prior year. We sold 27996 gold ounces at an average selling price of $2016 compared to 17000, and 602 ounces at an average selling price of 1800 <unk>.

Justin J. Blanchet: During the first quarter of 2024, we had quarterly revenue of $59.8 million, a 48% increase from the prior year. We sold 27,996 gold ounces at an average selling price of $2,016 compared to 17,602 ounces at an average selling price of $1,807 in the prior year. As at March 31st, 2024, there were 1,677 gold ounces in inventory, including both Concentrate and Dore, a decrease of 3,608 gold ounces when compared to December 31st due to timing of sales.

Justin J. Blanchet: $7 in the prior year as at March 31, 2024, there was 1677 gold ounces in inventory, including both concentrate and dori.

Justin J. Blanchet: A decrease of 3608 gold ounces when compared to December 31st due to timing of sales during the first quarter 2020 for cost of sales was $40 9 million compared to $23 7 million in the prior year or $32 9 million compared to $16 7 million when excluding noncash.

Justin J. Blanchet: During the first quarter of 2024, cost of sales was $40.9 million, compared to $23.7 million in the prior year, or $32.9 million, compared to $16.7 million when excluding non-cash items. Cost of sales is higher as expenditures incurred during the temporary suspension were expensed directly to cost of sales. In addition, there was a reduction of costs capitalized as development.

Justin J. Blanchet: Cash items.

Justin J. Blanchet: Cost of sales is higher as expenditures incurred during the temporary suspension or expense directly to cost of sales. In addition, there was a reduction of costs capitalized as development. During the first quarter 2024 cash flow from operating activities before changes in working capital was $20 million compared to 16.5.

Justin J. Blanchet: During the first quarter of 2024, cash flow from operating activities before changes in working capital was $20 million, compared to $16.5 million in the prior year. As of March 31, 2024, we had $73.4 million in cash, cash equivalents, and short-term Treasury bills while spending $18.1 million in expansion capital in the quarter. We had a working capital balance of $89.2 million and had no debt on the balance sheet.

Justin J. Blanchet: A million in the prior year as at March 31, 2024, we had $73 4 million in cash cash equivalents and short term treasury bills, while spending $18.1 million in expansion capital in the quarter, we had a working capital balance of $89 2 million and had no debt on the balance sheet.

John Derek Lewins: As John mentioned, during the first quarter, the Kanantu Gold Operations produced 24,389 ounces of gold, 1,443,300 pounds of copper, and 35,650 ounces of silver, or 27,462 ounces of gold equivalent. We sold 27,996 ounces of gold, 1,582,668 pounds of copper, and 38,812 ounces of silver. We incurred a cash cost of $934 and an all-in sustaining cost of $1,366 per ounce of gold, which would significantly blow our selling price of $2,016 per ounce.

Justin J. Blanchet: As John mentioned during the first quarter. They can answer gold operations produced 24389 ounces of gold 1 million 443300 pounds of copper and 35000, and 650 ounces of silver or 27462 ounces of gold equivalent we sold 27.

996 ounces of gold 1.582 million and 668 pounds of copper and 38812 ounces of silver we incurred a cash cost of $934 and an all in sustaining costs of $1366 per ounce of gold, which was significantly below our <unk>.

Justin J. Blanchet: Selling price of $2016 per ounce, our first quarter cash cost per ounce of gold increased to $934 from $758. In 2023. The increase was due to the higher cost of sales mentioned earlier. It is important to note that we will see downward pressure on costs via economies of scale.

John Derek Lewins: Our first quarter cash cost per ounce of gold increased to $934 from $758 in 2023. The increase was due to the higher cost of sales mentioned earlier. It is important to note that we will see downward pressure on costs via economies of scale as operations ramp up and the Stage 3 expansion is complete. I will now turn the call back to John to continue with the rest of the presentation.

Justin J. Blanchet: As operations ramp up and the stage three expansion is complete.

Justin J. Blanchet: I will now turn the call back to John to continue with the rest of the presentation well. Thank you Justin for.

John Derek Lewins: Well, thank you, Justin. In the Exploration and Growth section, we begin with an update on the Stage 3 and 4 expansion, which are designed to fundamentally transform K92 into a Tier 1 mid-tier producer by sequentially increasing production to 300,000 ounces per annum and then to 470,000 ounces per annum. Importantly, this transformation is happening near-term with the commissioning of the Stage 3 process planned for late April 2025. I note this is a slight extension from our original timing of late March 2025 due to a longer and significantly wetter rainy season and also some impact from the Form 29 suspension. Now, that delayed the completion of the site earthworks and subsequent handover to the contractor. Fortunately, the impact occurred early in the mobilization process, resulting in limited variation to costs.

John Derek Lewins: So the exploration growth section, we begin with an update on the stage three and four expansion, which are designed to fundamentally transform <unk> into a tier one mid tier producer through sequentially, increasing production to 300000 ounces per annum, and then to 470000 ounces per annum importantly.

John Derek Lewins: This transformation is happening near term with the commissioning of the stage III process plant planned for late April 2025, I know this is a slight extension from our original timing of late March 2025, due to a longer than significantly wetter rainy season, and also some impact from.

John Derek Lewins: The form 29 suspension now that delayed the completion of the site earthworks and subsequent handover to the contractor Fortunately the impact occurred early in the mobilization process, resulting in limited variation to costs. The delivery of stage four expansion remains on track targeting second half 2026 as at the end of April.

John Derek Lewins: The delivery of Stage 4 expansion remains on track, targeting the second half of 2026. As at the end of April, 52% of Stage 3, 4 growth capital has either been spent or committed. And as a reminder, the process plant is the largest growth capital package, and that was awarded in July 2023 on a lump sum fixed price basis, significantly de-risking the project for K92. We're pleased to report that GR Engineering Services or GRES is now fully mobilized on site.

John Derek Lewins: 52% of stage III for growth capital has either been spent or committed and as a reminder, the process plant is the largest growth capital package and that was awarded in July 2023 on a lump sum fixed price basis significantly Derisking. The project Bouquet 92, we're pleased to.

John Derek Lewins: A report that Gee, our engineering services or Greuze is now fully mobilized on site. So there's video clip begins with the design layout of the process plant, which has outlined in the integrated development plan is a conventional single stage crusher Sag ball mill combination followed by gravity and flotation.

John Derek Lewins: This video clip begins with the design layout of the process plant, which as outlined in the integrated development plan is a conventional single-stage crush-sag ball mill combination, followed by gravity and flotation recovery, producing a copper gold concentrate and Dory. The recovery method is the same proven method as we use in the Stage 2a expansion, with the new plant having a much more optimized design and enhanced process control, which includes real-time product analysis.

John Derek Lewins: <unk> recovery, producing a copper gold concentrate and dory. The recovery method is the same proven method as we use in the stage two expansion with the new plant, having a much more optimized design and an enhanced process control, which includes real time product analysis, we now pivot to show recent drone.

John Derek Lewins: We now pivot to show recent drawn footage of the construction site, starting with the primary crusher, where we installed pilings prior to handing over the site to Grez. Now moving towards the surge bin and reclaims plus stockpile area, which is not on the critical path, so we've seen limited work to date. That's followed by the sag and ball mill area, which, as you can see, Grez is already well underway with work on the mill footings and foundation.

John Derek Lewins: Food each of the construction site, starting with the primary crusher, where we installed pilings prior to handing over the site two greuze moving towards the surge being in Reclaims, plus stockpile area, which is not on the critical path. So has seen limited work to date, that's followed by the Sag and ball mill area, which as you can see grids is already <unk>.

John Derek Lewins: Well underway with with work on the mill Footings in foundation and then towards the wet end of the process plant, where you can see greuze is all is already underway completed work on the concentrate and tailings thickness footings and foundations over to the right is a long lead material lay down area I think it's important to highlight.

John Derek Lewins: And then towards the wet end of the process plant, where you can see Grez is already underway, having completed work on the concentrate and tailings, thickness footings, and foundations. Over to the right is the long lead and material lay-down area.

John Derek Lewins: I think it's important to highlight there is a surplus area for the construction materials and long lead items, which de-risks the project in terms of inventory management. Then, on the far right, are the offices for Grez and the various subcontractors, which are now operational. And then lastly, as we continue along, these are the designated areas for the reagents, water services, and concentrate filtration and storage head. Again, this is not on the critical path, so limited work has been completed in this area to date.

John Derek Lewins: That's been a surplus area for the construction materials and long lead items, which de risks the project in terms of inventory management than in the far right of the offices regress and the various subcontractors, which are now operational and then lastly, as we continue along these are the designated areas for the reagents water services and.

John Derek Lewins: Concentrate filtration and storage hit again this is not on the critical path. So limited work is being completed in this area to date I think it's fair to say, we're excited with the increased construction activity, which is gaining significant momentum and we're looking forward to providing further updates on the process plant construction in June.

John Derek Lewins: I think it's fair to say we're excited with the increased construction activity, which is gaining significant momentum, and we're looking forward to providing further updates on the process plant construction in due course. For the paste fill plant, front end engineering and design is almost complete.

John Derek Lewins: Of course on the paste fill plant fronted front end engineering and design is almost complete and as shown on this slide we've got the latest designs. The image on the left is our tailings filtration plant design utilizing plate and frame pressure filters. The image on the top right is our surface.

John Derek Lewins: And as shown on this slide, we've got the latest designs. The image on the left is our tailings filtration plant design, utilizing plate and frame pressure filters. The image on the top right is our surface storage system near the portal area for the filter cake and binder before it's transported underground to the paste plant itself, with a design shown in the bottom right image here. Long lead item ordering is progressing.

John Derek Lewins: Toward system near the pool area for the filter cake and binder before is transported underground to the paste plant itself with design are shown in the bottom right image here long lead item ordering is progressing the pumps, which have the longest lead item were ordered in Q1 and the remaining long lead items are to be ordered shortly.

John Derek Lewins: The pumps, which are the longest lead item, were ordered in Q1, and the remaining long lead items are to be ordered shortly. Work towards the award of the construction contract is well advanced. Beyond the stage three and four expansion surface works, multiple near-term major infrastructure upgrades that are fundamentally transforming the mine productivity are being put in place, with the twin incline already effectively completed. As part of the expansion, we're also putting in place a series of ore and waste passes to efficiently leverage gravity to connect the main mine to the highly productive twin incline infrastructure.

John Derek Lewins: <unk> worked towards awarded the construction contract is well advanced beyond the stage three and four expansion surface works multiple near term major infrastructure upgrades that are fundamentally transforming the mine productivity are being put in place with the twin incline already effectively completed as part of the expansion were.

John Derek Lewins: Also putting in place a series of ore and waste passes to efficiently leverage gravity to connect the main mine to the highly productive twinning client infrastructure as shown in the images. The the raise bore rig and associated power pack is underground with electrical commissioning to begin imminently followed by the commencement of boring operations the first raise who.

John Derek Lewins: As shown in the images, the raised bore rig and associated power pack are underground with electrical commissioning to begin imminently, followed by the commencement of boring operations. The first raise will be to upgrade our ventilation to the main mine, and that will be followed by waste and ore passes.

John Derek Lewins: B to upgrade our ventilation to the main mine and that will be followed by waste and ore passes. These various infrastructure upgrades combined with a tripling of the mining fronts in 2024 as shown on this slide are set to fundamentally transform the mining business into a tier one mid tier producer near term in terms of exploration.

John Derek Lewins: These various infrastructure upgrades combined with a tripling of the mining fronts in 2024, as shown in this slide, are set to fundamentally transform the mine and business into a tier one mid-tier producer near-term. Now, in terms of exploration, we're drilling the Cora-CoraSouth, Judd-JuddSouth vein systems, Aricompo vein system, and, of course, A1 porphyry. On May 6th, K92 reported a total of 140 holes at Cora-CoraSouth and Judd-JuddSouth, which we believe continue to demonstrate that this is a world-class deposit with significant upside potential. I think for the results at Cora, there are three key takeaways.

John Derek Lewins: We're drilling Cora coda size, George Soros vein systems, or a combo vein system and of course, a one porphyry and made a 6K 92 reported a total of 140 holes at quora choruses and Jud judge size, which we believe continue to demonstrate that this is a world class deposit with significant upside.

John Derek Lewins: Potential I think for the results at Quora. There are three key takeaways. Firstly, you said discovery of a new potential by latent zone to the south beyond the existing resource envelope highlighted by whole Ku D. D. Double-o five three intersecting $78 five meters at 27.

John Derek Lewins: Firstly, it's a discovery of a new potential dilatant zone to the south beyond the existing resource envelope, highlighted by hole KUDD0053, intersecting 78.5 meters at 27.3 gram per tonne gold. Second, it's the expansion and upgrade of a large zone of high-grade within the resource, as demarcated by the large ellip with a dashed black line. In multiple areas, drilling results were higher grade than the resource, with highlights including KMDD0657, recording six meters at 47.27 grams per tonne gold equivalent in K2, KMDD0662, nine meters at 40.35 grams per tonne gold equivalent also in K2, and then KMDD0634, recording 12.1 meters at 18.9 grams per tonne gold equivalent in K1.

John Derek Lewins: These results, I think, are particularly important as they're immediately above the main workings, setting us up well for the stage three expansion over the near to medium term in that area. And then thirdly, there is significant high-grade mineralization intersected from step-out drilling to the south from the underground drill drives shown by the small ellipse located on the left, including KMDD0652 with 9.3 meters at 15.3 gram per tonne gold equivalent and KMDD0654A, recording 17.5 meters at 23.79 gram per tonne gold equivalent in the K2 vein. These holes continue to support our view that Cora South's best grade is at depth.

John Derek Lewins: I think it's important to highlight that exploration to the south continues to intersect high-grade copper, as annotated in the K2 long section with multiple significant step-out intersections approaching 4% copper, in addition to recording high gold. These intersections have extended the high-grade copper zone further to the south and continue to confirm our thesis for high and possibly increasing copper grades as we drill further to the south towards the A1 porphyry. Now Judd also delivered some impressive drilling results with two key takeaways.

John Derek Lewins: Three gram per ton gold sector.

John Derek Lewins: Firstly, is the vertical expansion of a high-grade zone, the J1 vein, as shown by the large dashed black line ellipse, and, very importantly, at significantly higher grades than the resource with multiple plus one ounce per tonne intersections, including JDD0025 with 4.1 meters at 69 grams per tonne gold equivalent, JDD0231 with 3.67 meters at 41.05 grams per tonne gold equivalent By CORA, this is particularly important as it's immediately above the main mine workings, and so again, it's setting us up well for that stage three expansion into that area.

Is the expansion and upgrade of a large zone of high grade within the resource as demarcated by the large you live with the dashed black line in multiple areas drilling results were higher grade than the resource with highlights, including K M. D. D 0657 recording six meters at 40 727.

John Derek Lewins: Second, is the intersection of significant mineralization to the north from a 300-meter step out in an area which effectively has no drilling, highlighted by KODD0055, recording 9.85 meters at 7.58 gram per tonne gold equivalent. In late February, K92 announced the first drilling results at Arakompa for 32 years. Arakompa, as shown on the map to the right, is located approximately 4.5 kilometers from the process plant, so that makes it closer than CORA and Judd.

John Derek Lewins: Historically, Arakompa has recorded limited drilling with a total of only 18 largely shallow holes for a total of 1.8 kilometers drilled, so averaging just 100 meters depth. Our initial drilling results, reporting two holes, were exceptional. The second hole recorded four high-grade loads, including 7.2 meters at 24.8 grams per tonne gold equivalent, 5.7 meters at 9.9 grams per tonne gold equivalent, 5.3 meters at 6.1 grams per tonne gold equivalent, and 3.6 meters at 3.4 grams per tonne gold equivalent. These intersections are within a bulk intersection of 219.8 meters at 1.59 grams per tonne gold equivalent, and within that, a higher-grade core of 149.4 meters at 2.12 grams per tonne gold equivalent.

John Derek Lewins: Now, shown in the cross-section, mineralization started near surface, and the entire width of that corridor is still to be drilled. Importantly, the target size is also very large, comprising a 150 to 225-meter-wide corridor of mineralization containing these high-grade veins with a non-mineralization strike of 1.7 kilometers and a non-vertical depth of 500 meters, as shown in the plan view and long section here. And, as you can see, the system is open in multiple directions.

John Derek Lewins: Gram per ton gold equivalent in K, two K M. D. D 066 to nine meters at 43, five grams per ton gold equivalent also NK too and then K M. D. D 063 for recording 12, one meters at $18 nine grams per ton gold equivalent NK. One these results I think.

John Derek Lewins: Particularly important as they were immediately above the main workings setting ourselves up well for the stage three expansion over the near to medium term in that area and then thirdly is a significant high grade mineralization intersected from step out drilling to the south from the underground drill drives shown by the smaller lips located on the left.

John Derek Lewins: Including K M. D. D 0652, with 9.3 meters at $15 three gram per ton gold equivalent and K M. D. D 0654, a recording 17.5 meters at $23 seven nine gram per ton gold equivalent and the K two vein. These holes continue to support our view that course.

John Derek Lewins: Cora <unk> best grade is at depth I think it's important to highlight the exploration to the south continues to intersect high grade copper as I think as annotated and the K two long section with multiple significant step of intersections approaching 4% copper. In addition to recording high gold. These intersections have extended the high grade core.

John Derek Lewins: One further to the size and continue to confirm our thesis for high and potentially increasing copper grades as we drove further to the south towards a one porphyry now Jud also delivered some impressive drilling results with two key takeaways. Firstly is the expansion vertically of a high grade zone. The J one vein.

As shown by the large dashed black line ellipse and very importantly at significantly higher grades in the resorts with multiple plus one ounce per ton the intersections, including J D. D zero zero to five with four one meters with 69 grams per ton gold equivalent J D D zero to three one with <unk>.

<unk> six seven meters at 41.15 Gram per ton gold equivalent and J D. D zero to three nine with 2.7 meters at $44 four eight gram per ton gold equivalent by Cora. This is particularly important as its immediately above the main mine workings and so again, it's setting ourselves up well for that stage III.

John Derek Lewins: <unk> expansion into that area second is the intersection of significant mineralization to the north from a 300 meter step out in an area, which effectively has no drilling highlighted by K O D. D. W. Five five recording 9.85 meters at 758 Gram per ton gold equivalent in late February.

John Derek Lewins: <unk> announced the first drilling results at Ara Champa with thirty-two use Ara compact as shown on the map to the right is located approximately four and a half kilometers from the process plant. So that makes it closer and Cora and Judd historically, our combo has recorded limited drilling with a total of only 18 largely shallow holes for a total of one.

John Derek Lewins: We're pleased to report that exploration at ARACOMPA is accelerating. From the recent drone footage, we begin at the Arakompa Exploration Camp, looking towards the Markham Valley in the distance. The exploration camp, as you can see, is a significant facility since we believe that we'll be drilling here for an extended period. As the drone footage rotates, the Kanantu Gold Mine Accommodation Facility, or Kumian Camp, which I think some analysts on the call will be familiar with, can be seen in the distance, with a process plant just hidden from view. And that's located, as I mentioned, 4.5 kilometers from Arakompa.

Operator: We now pivot to footage of the exploration drills operating. Drilling at Arakompa commenced with a single rig, and after the exceptional initial drilling results, we've increased the number of rigs to two. We're shortly adding a third rig, with its drill pad construction almost complete. Conditions for drilling are good, the rock is competent, and penetration rates and productivity are better than Cora and Judd. From the footage, you'll also notice the topography towards the Markham Valley is relatively gentle, with a positive attribute for constructing road access and hopefully the eventual transportation of mine material downhill to a process plant.

Operator: Now here's some of the fresh drill core that our drone crew filmed as it was coming out. While the Cora footage is not from one of the high-grade loads, you'll notice that the rock is still well mineralized. An important feature of Aracompa is the presence of significant background gold-copper mineralization between the high-grade loads. This indicates, as we mentioned, the potential for bulk mining. From those initial results, that intersection of almost 220 meters at 1.59 gram per ton gold equivalent, within that higher grade, 149 meters at 2.12 gram per ton gold equivalent.

John Derek Lewins: Eight kilometers drilled so averaging just 100 meters depth. Our initial drilling results reporting two holes were exceptional the second hole recorded for high grade loads, including 7.2 meters at 24.8 Gram per ton gold equivalent 5.7 meters at nine nine grams per ton gold equivalent five three meters of $6 one gram.

Operator: The rock, as demonstrated here, is competent, and the mineralization is certainly easy to visually distinguish. For the high-grade loads, the mineralization has similarities to Cora and Judd. We look forward to providing an update on our exploration at Aracompa in the near term. And with that, Operator, we'd like to commence the Q&A session.

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 Ralph Grafitti with Aid Capital. Please go ahead.

John Derek Lewins: Per ton gold equivalent and three six meters at $3 four gram per ton gold equivalent. These intersections are within a bulk intersection of $219 eight meters at 1.59 grams per ton gold equivalent and within that a higher grade core of $149 four meters of $2. One two gram per ton gold equivalent show.

John Derek Lewins: And the cross section mineralization started near surface and the entire winter that corridor is still to be drilled importantly, the target size is also very large comprising a 150 to 225 meter wide corridor of mineralization containing these high grade veins with a known mineralization strike at one point.

John Derek Lewins: Seven kilometers and a known vertical depth of 500 meters as shown in the plan view in long section here and as you can see the system is open in multiple directions. We're pleased to report that exploration of Erica is accelerating.

Ralph Grafitti: Thanks, Operator John. Thanks for the presentation and the videos. So firstly, as it pertains to development and total material mined, just wondering if you're... You know, the original target was 1.6 million tons of total material mined for 2024. Just wondering if you're kind of back to that run rate, at least, and sort of whether or not that target's still good for 2024.

John Derek Lewins: From the recent drone footage we'd begin at the Ara copper exploration camp looking towards Markham Valley in the distance the exploration camp as you can see is a significant facility. Since we believe that we'll be drilling here for an extended period as the drawn foodies rotates they can onto goldmine accommodation facility or to me and camp, which I think.

John Derek Lewins: Some analysts on the call will be familiar with can be seen in the distance with the process plant just hidden from view and that's located as I mentioned 4.5 kilometers from our compound we now pivot to food each of the exploration drills operating drilling at Ara conflict commenced with a single rig and after the exceptional initial drilling results.

John Derek Lewins: We've increased the number of rigs to two with shortly adding a third rig with its drill pad construction almost complete.

John Derek Lewins: <unk> for drilling are good the rock is competent and penetration rates and productivity are better than Cora and Judd from the footage you'll also notice the topography towards a market valley is relatively gentle with a positive attribute for constructing road access and hopefully the eventual transportation of mine material downhill.

Through a process plant.

John Derek Lewins: Here's some of the fresh drill core that are drawn crew filmed as he was coming a while the core footage is not from one of the high grade lodes, you'll notice at the Rockies Stillwell mineralized unimportant feature or buyer accomplished is the presence of significant background gold copper mineralization between the high grade loads. This indicates as we mentioned the.

John Derek Lewins: <unk> for bulk mining from those initial results that intersection of almost 220 meters at 1.59 Gram per ton gold equivalent within that that higher grade 149 meters at $2. One two gram per tonne golden equivalent the rock as demonstrated here is confident in the mineralization is certainly easy to visually distinguish the high <unk>.

John Derek Lewins: Grade lodes of mineralization has similarities to Cora and Chad.

John Derek Lewins: We look forward to providing an update on our exploration of Arequipa in the near term.

Speaker Change: And with that operator, we'd like to commence the Q&A session.

Speaker Change: Thank you.

Speaker Change: Join the question queue, you May press Star one one on your telephone keypad.

Hey, Tom.

Speaker Change: Looking at our class.

Speaker Change: Using a speakerphone please pick up your handset before pressing anything.

A question Please press star one too.

Speaker Change: The first question comes from Ralph <unk> with eight capital. Please go ahead.

Ralph: Oh, Thanks, operator, John Thanks for the presentation and the videos.

Ralph: So firstly as it pertains to our development and total material mined just wondering you know if your.

Ralph: You know the original target was $1 6 million tons of total material mine for 24, just wondering if you're kind of back to that run rate at least in and sort of whether or not that target is still good for 2024.

Okay. Thanks for the rock.

Ralph:

John Derek Lewins: Okay, thanks for the rob. It took us until basically the end of April to get ourselves back up to our budgeted run rate. We obviously have dropped some of our meters of development during that suspension of operations, in terms of total tonnes mined for the year. But we're still looking at that 1.5 to 1.6 million tonnes for the year.

Ralph: It took us until basically.

Ralph: End of April to get ourselves back up to our.

Ralph: Our budgeted a run rate.

Ralph: We obviously have dropped some of our meters of meters of development.

Ralph: During that.

Ralph: During the suspension of operations.

Ralph: In terms of.

Ralph: Total tonnes mined for the here.

Ralph: We're still.

Looking at that one five to $1 6 million tons for the year.

Ralph: Yes.

Ralph Grafitti: Okay, great, yeah, thanks. A question on the dilatant zones, and it's still early days, and we've got some indication in the May 6th press release on where you're going with that. I'm just wondering, even though it's still early days, is it the view that, from a dimension of these zones that both vertically and along strike the same dimensions as the veins themselves, or are we going greater long strikes or perhaps even greater depth extent, dilatance versus veins?

Speaker Change: Okay, great. Thanks.

Speaker Change: Thanks.

Speaker Change: A question on the the Dilatant zones, and it's still early days and we've got a we got some indication on the May 6th press release, some on where you're going with that I'm just wondering even though it's still early days is it is it the view that.

Speaker Change: From a dimension of these zones that both vertically and along strike there.

Speaker Change: The same dimensions as the veins themselves or or are we going greater along strikes or perhaps even greater depth extent dilatant versus veins.

John Derek Lewins: I think I know what you're asking here, but let me answer and if I didn't if I didn't answer it then... just add to it. At this point, we think... And, as you say, we've got limited information so far, it appears that they have more vertical extent than horizontal. It is still early, early days, but it...

Speaker Change: Oh I think.

Speaker Change: And kind of what you're asking here, but let me answer and if I didn't if I didn't answer it.

Speaker Change: Uh huh.

Speaker Change: Just add to it.

At this point, we think and as you say, we've got limited information so far it appears that they have more vertical extent than horizontal.

Speaker Change: And so less along strike more down dip.

Speaker Change: It is too early early days, but.

John Derek Lewins: It appears that you have, you know, Multiple Dilatant Zones. We've seen at least one instance where a dilatant zone in Judd is also in that same northing. We're also seeing a dilatant zone in Cora, which may suggest, obviously, there's some sort of... um, cross-cutting structure that is contributing to that dilatancy. But again, it's still early days, and we're obviously targeting some of those areas with additional drilling so that we can actually, [inaudible] for mining, and will require, potentially, some different design in terms of how we mine them.

Speaker Change: It appears that you have.

Speaker Change: No.

Ralph Grafitti: Yep, that's what I was looking for. Thank you, John.

Speaker Change: Multiple dilatant zones.

Speaker Change: Let me do it certainly we've seen at least one instance, where a dilatant zone in.

Speaker Change: Jud is also in that same northern we're also seeing a dilatant sold in Cora, which may suggest obviously, there's some sort of.

Speaker Change:

Speaker Change: Cross cutting structure that is contributing to that.

Speaker Change: Latency, but again, it's still it's still early days and we're obviously targeting some of those areas with additional drilling so that we can actually fill.

And understand what we've got clear.

Speaker Change: Clearly, though they've got a very significant potential in terms of.

Speaker Change: Within the resource and also areas, which can provide a lot of a lot of tons.

Speaker Change: At a very very good grades for for mining and will require.

Speaker Change: So potentially some different design in terms of.

Speaker Change: Remind them.

Speaker Change: Okay Yep.

Speaker Change: Yeah, that's what I was looking for thank you John.

Operator: The next question comes from Alex Terentiew with Renton Financial. Please go ahead.

Speaker Change: The next question comes from Alex and <unk>.

Alex: <unk> financial please go ahead.

Alexander Terentiew: Hey guys, good morning. First one, on the Trafigura loan. I know that it's been in the works for a while. Any update there you can tell us about? I mean, obviously, $73 million in cash on the balance sheet now, so there's no need to use that soon, but I'm just wondering any insights on the progress there would be appreciated.

Alex: Hey, guys.

Couple of questions first one on the I'm trying to figure alone.

Alex: It's been in works for a while any any update there you can tell us about I mean, obviously is $73 million in cash on the balance sheet now so there's no need to use that soon but I'm just wondering any insights on the progress there would be appreciated.

John Derek Lewins: Well, thanks Alex. Okay, so the traffic loan, as I think you're aware, has two elements. One is the loan itself, and the second is the new offtake. The new offtake provides approximately an extra 3 percentage points of payability.

Speaker Change: Well thanks al.

Okay. So the traffic alone as I think youre, whereas.

Speaker Change: Two elements one is the loan itself the second Dizzy.

Speaker Change: Is the is the new offtake.

Speaker Change: The new offtake provides.

Speaker Change: Approximately an extra three percentage points pay ability.

John Derek Lewins: The system in P&G is that the mine has a gold export license, it has it for life of the mine, and that is issued by the central bank. The central bank then subsequently approves any offtakes, so we have approval for the current trafficker alone, and we have approval for the current ABC Dore offtake. Change it, and you require central bank approval again. And obviously, that's to do things like stop.

Speaker Change: The system in PNG is that.

Speaker Change: The mine okay.

Speaker Change: As a gold export license it has it for life of mine and that is issued by the Central Bank.

The.

With Central Bank, then subsequently approves any off takes so we have approval for the current.

Speaker Change: Trafigura alone and we have approval for the current a b C dori uptake.

Speaker Change: Changes in your car Central Bank approval again, and obviously that has to do things like stop.

John Derek Lewins: Transfer Pricing, for instance, so they review the contract. We've received a draft letter of approval for Comet, which we gave. And so now we're awaiting the final letter of approval for the offtake, and then obviously that will analyze the long term. So it's just a process with the central bank. Same as the Reserve Bank, whatever, and the IRA, quasi-independent government entity, the same lines as you'd see in

Transfer pricing for instance, how they review the contract.

Speaker Change: We received the letter.

Speaker Change: Of approval.

Speaker Change: For comment, which we gave and so now we're waiting the final letter of approval for.

For the offtake.

Speaker Change: Obviously.

Speaker Change: And our lives alone.

Speaker Change: So it's just a process with the central bank.

Speaker Change: Same as the reserve bank.

Speaker Change: Alright.

Speaker Change: Causey independent government entity same lines as you'd see in Australia or Canada.

Alexander Terentiew: Okay, good. Well, it sounds like it's making progress then. Okay, second question I have, guys, and... You know, Q1, obviously, you guys had a bit of downtime there, but despite processing a bunch of stockpile, the grade was still pretty solid, I got to say better than I expected. Any color you can give on grades for the rest of this year or kind of what you're seeing now, are they in line with plan or a little bit better?

Speaker Change: Okay, good well it sounds like it's making progress then.

Speaker Change: Okay second question I have and.

Speaker Change: You know Q1, obviously, you guys had a bit of downtime, there, but display processing a bunch of stockpile.

Speaker Change: The grade was still pretty solid I got to say better than I expected any color you can give us on grades for the rest of this year or kind of what youre seeing now or are they in line with plan or a little bit better.

John Derek Lewins: Look, I think it would be fair to say that the first quarter grade was better than budget, um, and we're not, sort of. And I'm saying that that will continue for the balance of the year. So we'll obviously stick with our... our budget in terms of what we're going to be doing, etc., etc.

Speaker Change: Look I think it would be fair to say that.

Speaker Change: First quarter grade was was better than budget.

Speaker Change:

And we're.

Speaker Change: We're not we're not sort of.

Saying that that will continue for the balance of the year.

Speaker Change: So we are.

Speaker Change: We will obviously stick with.

Speaker Change: Our budget in terms of what we're going to do be doing et cetera, et cetera for the balance of the year.

Speaker Change:

John Derek Lewins: for the balance of the year. I think the positive thing as we go right now is that we do actually have some stockpile. I think we've already developed about 5,000 tons of stockpile. So we do have some stockpile there. We don't see ourselves running with a high stockpile until probably the fourth quarter when our mining rate starts to accelerate, and we start developing the stockpile for the commissioning of the Stage 3 plant. We're certainly starting to see more benefit from all the work that we've put in to open the mine up.

Speaker Change: I think positives and cold right now is that we do actually have some stockpile I think we've already developed about 5000 tonnes of stockpile. So we we do have some stockpile. There. We we don't see yourselves running with the highest stockpile until probably the fourth quarter with our with our mining rates stocks to access.

And we start developing stockpile for the.

Speaker Change: Commissioning all.

Speaker Change: Sure.

Speaker Change: The stage III plant.

Speaker Change: We're certainly still.

Speaker Change: Starting to see more benefit from all the work we've put into open the lineup we have certainly more flexibility than we had 12 months ago.

John Derek Lewins: We certainly have more flexibility than we had 12 months ago, and so that does give you the ability to maintain your grades and offset any lower grade slopes that are part of the plan to combine them with higher grades and maintain a more constant grade. And that obviously helps the plant as well in terms of recovery and operations. I think we're certainly seeing in this quarter, for instance, that... Our grades right now are running fairly much on budget, and our recoveries right now are marginally above.

Speaker Change: And so that does give you.

Speaker Change: Our ability to.

Speaker Change: Uh huh.

Speaker Change: Good.

Speaker Change: Maintain ya.

Speaker Change: Grades.

Speaker Change: And offset any lower grades.

Speaker Change: Stopes that are part of the plan to combine them with highest higher higher grades and maintain a more constant great and that obviously helps the plant as well in terms of.

Speaker Change: Recovery in operations.

Speaker Change: I think we're certainly seeing in this quarter for instance.

Speaker Change: Our grades but an hour.

Speaker Change: <unk> running.

Speaker Change: Fairly much on budget.

Speaker Change: Recoveries right an hour.

Speaker Change: Marginally above above budget.

Alexander Terentiew: Okay, great. You know, just one more, just if I may. I'm just curious, and your comments there kind of lead into this question, made me think about something here.

Speaker Change: Okay great.

Speaker Change: Just one more just if I may just curious in your comments there it kind of leads into this question, maybe think about something here with the phase three for ramp up schedule and are you targeting in mill commissioning in late April but.

Alexander Terentiew: With the Phase 3-4 ramp-up schedule, you know, you're targeting mill commissioning in late April, but what about underground mining? I mean, what's your target to kind of get to the 1.2 million ton per annum rate? I know, obviously, it does normally take some time, but then I'm just also curious, given the success you guys have been having, you already have the 500,000 or whatever, 600,000 ton per year mill at the moment running.

Speaker Change: Whats with underground mining I mean, what's what's your target to kind of get to the 1.2 million tonne per annum rate I know obviously it does normally it takes some time, but then I'm. Just also curious given the you know the success you guys had been having.

Speaker Change: You already have the 500000 or whatever it is 600000 type of your mill at the moment running.

Alexander Terentiew: Are you looking at opportunities to kind of keep that one going, or just kind of shut it down once the other one starts up and then restart it once you have the capacity? I'm just looking to get your latest on the ramp-up schedule and the potential to keep tons even higher?

Speaker Change: Are you looking at opportunities to kind of keep that one going or it's just kind of shut it down once the other one starts up and then restart it once you have the capacity and just just looking to get your your latest on the on the ramp up schedule and potential to keep tons even higher.

John Derek Lewins: So, I think from a mining perspective, you're looking towards the end of the third quarter next year to hit 1.2 million tonnes of ore. So, the idea is you build up a stockpile and start commissioning in the second quarter, you continue that into the third quarter while your mine is still building up, and you build that stockpile to help with that commissioning. I think at this point it's very much the view that we should shut the existing plant down.

Speaker Change: So I think from a mining perspective, you're looking towards the end of the third quarter next year to hit your one 2 million tons per annum or.

Speaker Change: So the idea as you build up the stockpile and you start commissioning in the second quarter, you continue that into the third quarter.

Speaker Change: While you're mining is still moving up you've built that stockpile to help with that commissioning.

Speaker Change: I think at this point, it's very much the view that we would.

Speaker Change: Shut the existing plant that and as you say, it's a 600000 tonnes per annum capacity in and in fact, if you look at.

John Derek Lewins: As you say, it's 600,000 tons per annum capacity, and in fact, if you look at the peak throughput we've achieved on a daily basis, it's over 800,000 tons per annum. And on a weekly basis, it's like 750,000 tons per annum. The throughput of the mill is an interesting... opportunity, almost, if you like, in as much as the design parameters that we've used for the new plant are the same as for the old plant.

Speaker Change: The.

Speaker Change: The peak throughput we've achieved on a daily basis, it's over 800000 tonnes per annum.

Speaker Change: And on a weekly basis, it's like 750000 tonnes. So.

Speaker Change: The the throughput of the mill as an as an.

Speaker Change: Interesting.

Uh huh.

Speaker Change: Opportunity almost if you like in as much as.

Speaker Change: The design parameters that we've used.

For.

Speaker Change: The new plant on the same as for the old plant.

John Derek Lewins: So those design parameters said that the oil plant could do 500,000 tonnes per annum. It's now doing 600,000 tonnes per annum, and it can do more. The design parameters say that the new plant can do 1.2 million tons per annum. As you know, with a plant, the main constraint is your crushing, milling capacity, and your combination capacity. The existing plant has an 875 kilowatt power mill, and it's got a bit over 300 kilowatts of crushing capacity and 40 kilowatts of crushing capacity.

Speaker Change: So those design parameters. It said that the old plant could do 500000 tons front I'm excited and 600000 tonnes per annum and it can do more.

Speaker Change: The design parameters say that new plant can do $1 2 million tonnes per annum.

Speaker Change: No.

Speaker Change: As you know with our plant the main constraint.

Speaker Change: Is your crushing milling capacity combination capacity if you like.

Speaker Change: The existing plant has an 875 kilowatts.

Speaker Change: Mill.

Speaker Change: And it's got a bit of a 300 kilowatts of crushing capacity 40 kilowatts of crushing capacity. So you've got about one three megawatts.

John Derek Lewins: So you've got about 1.3 megawatts of crushing milling capacity, and let's be conservative and say you're doing 600,000 tonnes per annum. The new plant has two 1.85 megawatt mils, that's 3.7 megawatts, and about another 400 in the crusher. So you've got a bit over four megawatts, three times the power, and right now, we're saying it's going to do twice the tonnage. So, one of the things that we've done with GRAZE is that we've redesigned the back end so that we can add additional flotation capacity very easily.

Speaker Change: All the crushing milling capacity and more.

Speaker Change: Let's be conservative and see and say Youre doing.

Speaker Change: 600000 tonnes per annum.

Speaker Change: The new plant.

As two of 185 megawatt mills.

Speaker Change: Three seven megawatts in about another 400 in the crushing so you've got a bit over four megawatts three times the power.

Speaker Change: And right now, we're saying it's going to do twice the tonnage.

Speaker Change: So one of the things that we've done with grades as we redesigned the backend so that we can add additional flotation capacity.

Speaker Change: Pretty easily.

John Derek Lewins: And the idea there is that with the de-bottlenecking and with the comminution capacity that we have, we believe we will get significantly better than 1.2, and that's certainly the initial view of Gray's as well. So right now, we have an integrated development plan that says, get to 1.2, and that's, as I said, around the third quarter, towards the end of the third quarter next year, and then continue to expand underground so that you can get back, so you can get up to a 1.7 million tons per annum towards the end of 26. Bye, and then restart the existing one.

Speaker Change: And the idea there is that.

Speaker Change: With the Debottlenecking and with the comminution capacity that we have we believe we will get significantly better than the 1.2 is that certainly.

Speaker Change: Initially the view.

Speaker Change: Grace is well.

So right now we have an integrated development plan that says get to one two.

Speaker Change: And that's as I said around the third quarter towards the end of the third quarter next year and then continue to expand underground. So that you can get back. So you can get up to a $1 7 million tonnes per annum.

Speaker Change: Towards the end of 'twenty six.

Speaker Change: But.

Speaker Change: And then restart the existing <unk>.

John Derek Lewins: Process Plan. And so you do a step change, if you like, from 1.2 to going up to 1.7 or potentially 1.8. We think it's more likely that you're going to be de-bottlenecking the existing plant and expanding what you can get through there. But that doesn't mean you're going to get to 1.8 in the existing plant. So there may be a step at some point, but you can see that we're starting to look at what the potential for this new plant is.

<unk> plant.

Speaker Change: And so you do a step change if you like from.

Speaker Change: The one point to two going up to $1 seven Oh potentially one eight.

Speaker Change: We think it's more likely that you're going to be debottlenecking, the existing clients and expanding what you can get through there.

John Derek Lewins: And certainly, based on what we're seeing in the existing plant, that you're going to get significantly more than 1.2 million tonnes per annum through it. And so you'll be coming back to, how can you ramp up your underground? And again, things like these dilated zones become an important part of that, as does potentially things like AeroCompa as well.

Speaker Change: Now that doesn't mean, you're going to get to one eight in the in existing plants. So there may be a step at some point.

Speaker Change: But you can see that we're starting to look at it what is the potential for this new plant and certainly we have a view based on what we're seeing in the existing plan that you're going to get significantly more than $1 2 million tonnes per annum through it.

Speaker Change: And so youll be coming back to.

Speaker Change: Hi can you ramp up your underground and again things like these start late in the film has become an important part of that as does potentially things like arrow comp as well.

Speaker Change: Yeah.

Alexander Terentiew: That sounds like you have a lot of good work ahead. Thank you.

Speaker Change: That sounds like a lot of good work ahead. Thank you.

Speaker Change: Thanks Al.

Speaker Change: Yeah.

Operator: The next question comes from Stephen Soock with Steeple. Please go ahead.

Speaker Change: Our next question comes from Steven Let's see.

Paul Please go ahead.

Stephen Soock: Hi guys, congrats on the quarter. Just two quick ones for me here. I guess just on the critical path, you know, with the plants slipping a little bit and the underground obviously shut down for a few weeks, you know, just wondering what kind of critical path items are here. And then, second one for me, you know, do expect to see kind of an elevated ASIC through the next three quarters to try and make up some of that, some of that ground that was lost in Q1.

Paul: Hi, guys. Congrats on the quarter just two quick ones for me here I guess just on critical path with the plants are slipping a little bit down in the underground obviously shut down for a few weeks you know I'm just wondering what kind of critical path items are here and then a second one for me you know do you expect to see.

Paul: End of an elevated <unk> through the next three quarters to try and make up some of that some of that ground that was lost in Q1.

John Derek Lewins: Thanks, Steve. In terms of the critical path, the critical path remains the plant. Obviously, we've got all the long lead items and what have you, and we'll obviously be looking at whether there's potential to bring some of those critical path issues in the construction and what have you back a bit and improve what we've given now, and we're working with CREZ on that. And, as you'd expect, within their contract. They've got a bonus for finishing early and a penalty for finishing late, subject to the usual, usual things of the extensions of time where there are circumstances, and there obviously have been in this case.

Speaker Change: Thanks, Steve.

Speaker Change: In terms of our critical path a critical critical path remains the plant.

Speaker Change: Hum.

Obviously.

Speaker Change: We've got all the long lead items and what have you.

Speaker Change: And we'll obviously be looking at.

Speaker Change: Whether this potential too.

Speaker Change: To bring.

Speaker Change: Some of those critical path issues in the construction and what have you.

Speaker Change: Back a bit and improve.

Speaker Change: We've given that and we're working with with Chris on that and as you'd expect.

Speaker Change: Within their contract they've got a.

Bonus for finishing early in the penalty for finishing late.

Speaker Change: Subject to the usual things that are extensions of time, where there are circumstances.

Speaker Change: I've been in this case.

Speaker Change: Yes.

Stephen Soock: The other critical path is in your paste fill, and the paste fill is commissioning in the third quarter. You absolutely want to have your process plant commissioned and stable before you start trying to commission a paste fill plant. Although unlike many peaceful plants, because we're doing filtration to produce a cake and then transporting that by track up to the mine area and then actually making our paste underground, there is more of a decouple from the plant to the paste tool plant, and that's one of the advantages of it.

Speaker Change: The other critical path is in your pace when the paste fill.

Speaker Change: He is commissioning in the third quarter.

Speaker Change: You're absolutely.

Speaker Change: We want to have you.

Speaker Change: The process plant commissioned and stable before we start trying to commission the paste fill plant.

Speaker Change: Although unlike many tasteful plants, because we're doing a.

Speaker Change: Filtration to produce a cake and then transporting that by truck up to the mining area and then actually.

Speaker Change: Making a paced underground there is more of a decoupled from the plant.

Speaker Change: The paste fill plant and Thats I think one of the advantages of it.

Stephen Soock: So Pasteful is the third quarter, and Pasteful is obviously important in terms of that ramp-up of the underground. So that's a key area for ramping up and maintaining that 1.2 million tons per annum and then building on it in the underground. In terms of costs, yeah, I would certainly expect that we'll see slightly elevated overall sustaining costs, certainly in comparison to what we did in the first course, as we do some of that catch-up as you mentioned. Perfect.

So paste fool third quarter with paste for resolve is important in terms of that ramp up of <unk>.

Speaker Change: Underground.

Speaker Change: So that's a that's a key area for ramping up and maintaining that one 2 million tons per annum and then building on it.

Speaker Change: In the in the underground.

Speaker Change: In terms of costs.

Speaker Change: I would certainly expect that we'll see.

Speaker Change: Finally elevated all in sustaining costs in comparison in comparison of what we've done in the first quarter.

As a.

Speaker Change: As we do some of that catch up as you as you mentioned.

Stephen Soock: Perfect. Great. Thanks so much. That's it for me. I'll open the line to anyone else.

Speaker Change: Perfect great. Thanks, so much that's it for me I'll open the line to anyone else.

Speaker Change: Thanks, Steve.

Speaker Change: Okay.

Operator: The next question comes from Andrew Mikitchook of BMO Capital Markets. Please go ahead.

Speaker Change: The next question comes from Andrew Mckenna check with BMO capital markets. Please go ahead.

Andrew Rostislav Mikitchook: Hey John, um... Congrats on navigating a challenging quarter remarkably well. A lot of great questions have already been asked, just two short ones.

Andrew Rostislav Mikitchook: Hey, John.

Andrew Rostislav Mikitchook: Congrats on navigating.

Andrew Rostislav Mikitchook: Navigating a challenging quarter.

Andrew Rostislav Mikitchook: I think.

Andrew Rostislav Mikitchook: Remarkably well a lot of great questions already been asked just two short ones I just want to come back to this day latent zone.

Andrew Rostislav Mikitchook: I just want to come back to this dilatant zone. Should we... Maybe you could just offer some sort of context as to where the areas where these dilatant structures have been intercepted lie in comparison to the existing mine plan. Like, is that already inside the mine plan, and the mine plan has to be adjusted for these different thicknesses? Or is it, you know, essentially, right next to it like what is the actual logistics, timing, and impact here?

Andrew Rostislav Mikitchook: Should we.

Andrew Rostislav Mikitchook: Maybe you could just offer some sort of context as to where are the areas where these daily structures have been intercepted.

Andrew Rostislav Mikitchook: Why in comparison to the existing mine plan is.

Andrew Rostislav Mikitchook: Like is that already either inside the mine plan and the mine plan must be adjusted for these different thicknesses or is it you know essentially.

Andrew Rostislav Mikitchook: Right next to it like what is the actual.

Andrew Rostislav Mikitchook: Logistics and timing and impact here.

John Derek Lewins: Okay, so, for instance, the most recent dilating zone that we've indicated is not in the resource area, so it obviously won't be in the mine plan. The current mine plan, which is the existing, integrated development plan that was, that forms the basis of our Stage 3 and Stage 4 development, did not have the dilatant salts because they weren't identified at that point in time. They have been identified as part of the updated resource that was put out late last year.

Speaker Change: Okay. So.

Speaker Change: Certainly in for instance, the the most recent Dilatant zone that we've indicated is not in the resource area. So it obviously won't be in the mine plan.

The current mine plan, which is the existing which is based on the existing integrated development plan that was.

Speaker Change: So that forms the basis of a stage three and stage four development.

Speaker Change: Did not have the delay in salt because he was identified at that point in time.

Speaker Change: They have been identified.

Speaker Change: As part of the updated resource who doubt.

Speaker Change: Late last year. So that's when we moved from the $4 9 million ounces to I think the second one.

John Derek Lewins: So that's when we moved from the 4.9 million ounces to, I think, the 7.1 million ounces overall resource. 2.3, I think it was, moving a measure indicated in the balance being inferred. We're updating that integrated development plan, the 43-101, which will have, the same as we have in the past, so it will have the Stage 3 DFS, Stage 4 PEA, take into account the expanded resource. And so the mine plan there will certainly have the dilatant zone that we had identified as part of the resource update in the mine plan, but it will not have the latest one because it's not in the current resource.

Speaker Change: All resource.

Speaker Change: Yes.

Speaker Change: $2 three I think it was moving in emission dedicated and the balance being in food.

Speaker Change: We are updating.

Speaker Change: Integrated development plan, the 43 101.

Speaker Change: Which you'll have.

Speaker Change: The same as we had in the past so it will have the stage three DFS stage four P. A.

Speaker Change: Take into account the expanded resource.

Speaker Change: And so the mine plan there will certainly have that late in the film that we.

Speaker Change: Identified as part of the resource update in the mine plan.

Speaker Change: The latest one because it's not an <unk>.

Speaker Change: In the current results.

Speaker Change: Okay.

Andrew Rostislav Mikitchook: Um, just a quick financial question, um... The Financial Statements have a note disclosing the callers. What level of flexibility do you guys have to reschedule, delay, or adjust delivery on those obligations?

I'm just.

Speaker Change: Financial question.

Speaker Change: The financial statements.

Have a note disclosure in the colors.

Speaker Change: What level of flexibility do you guys have.

Speaker Change: Reschedule delay adjust delivery on those.

Speaker Change: Those obligations.

Justin J. Blanchet: OK, Justin, do you want to answer that one? Um, sure, thanks, John. Ahem, ahem, excuse me.

John Derek Lewins: OK, Justin, do you want to answer that one? Um, sure, thanks, John. Ahem, excuse me.

Speaker Change: Okay.

Speaker Change: Justin do you want to answer that one.

Justin J. Blanchet: Sure. Thanks, Sean.

Speaker Change: Excuse me.

Justin J. Blanchet: The financial colors.

Justin J. Blanchet: But just based upon the QP hedging so for the three months period and they are they are they are required to pay two months after so long.

Justin J. Blanchet: Okay.

Andrew Rostislav Mikitchook: Okay, I guess that's clear. That's all I've got. I'll hand the microphone to the next speaker. Thanks.

Sean: Okay, I guess that's clear.

Speaker Change: It's all I've got I'll hand, the microphone to the next speaker.

Speaker Change: Thanks, Ed.

Operator: Once again, if you have a question, please press star, then 1. The next question comes from Michael Gray with Agentus Capital. Please go ahead.

Speaker Change: Once again, if you have a question. Please press Star then one our next question comes from Michael Gray attempted capital. Please go ahead.

Michael Gray: Morning, John, Dave, Justin. Great to see no LTIs in the last three quarters. Great on the safety performance. Appreciate the answers, the detailed answers, especially on the design of the processing plant and the potential going forward in terms of expansion capacity. My question, just one question on ERCOMPA, the scope of the program. Can you just speak to the philosophy of whether you're going to really, with the three drills, sketch in the size of the system, both the high-grade and the bulk mineable potential, or are you going to systematically step away and build out resources?

Michael Gray: Good morning, John Dave Justin Great to see the no L. T. O is the last three quarters script on the safety.

Michael Gray: Performance I appreciate the answers the detailed answers, especially on the design of the process plant and the potential going forward.

Michael Gray: In terms of expansion capacity.

Michael Gray: My question just one question on the scope of the program can you just speak to the philosophy on whether youre going to really with the three jabil sketch and the size of the system. Both the hybrid and the bulk mineable potential or are you going to systematically step away and build out resources.

Michael Gray: Okay.

John Derek Lewins: Yeah, Airacomba is a bit of a moving feast. So we, we. As we've indicated there, we started off with a single rig. We're currently running two rigs, and we're preparing pads so that we can actually drill. Free Rig, for the balance of 2024. There were 18 holes drilled there previously, I think, over a strike length of about 600-700 meters. 18 holes, 1.8 kilometers of drilling, so the average hole was only 100 meters deep.

Speaker Change: Our accomplished is a it's a bit of a moving feast.

Michael Gray: <unk>.

Michael Gray: Yeah.

Michael Gray: So we we.

Michael Gray: As we've as we've indicated we started off with a single rig.

Michael Gray: We are currently running two rigs.

Michael Gray: And.

We are preparing pads, so that we can actually run three rigs for the balance of 2024.

Michael Gray:

Michael Gray: There were 18 holes drilled.

The previously I think over a strike length of about six 700 meters.

18 holes one eight kilometers of drilling so the average hold was only 100 meters deep.

Michael Gray: Deep.

John Derek Lewins: And as you can see from what we're seeing, we're looking at a corridor which is around 150 to 225 meters wide. And around, you know, one, well, we've seen a surface that goes for up to 1.7 kilometers. So clearly, the work that's been done in the past has not covered even the entire corridor. And in fact, uh...

Michael Gray: As you as you would've seen from from what we were saying we're looking at a corridor, which is which is around 150 to 225 meters wide.

Michael Gray: And will run well.

Michael Gray: Well.

Michael Gray: We've seen.

Michael Gray: Surface that.

Michael Gray: It goes for up to one seven kilometers.

Speaker Change: Uh-huh. So clearly the work that's been done in the past is not.

Speaker Change: How about even the entire.

Speaker Change: <unk>.

Speaker Change: Colorado.

Speaker Change: And in fact.

Speaker Change: Uh huh.

John Derek Lewins: I think to date we haven't drilled anything that's gone through the entire corridor. So, it is still early days in terms of understanding exactly what the potential of ARACOMPA is. Clearly, there are analogies with Khorajat.

Speaker Change: I think to date, we haven't we haven't drilled anything that's gone through the entire Colorado.

Speaker Change: So it is still early days in terms of understanding exactly what the potential of our comp is.

Speaker Change: Clearly there is there is analogies with with Cora chart. If you look at the overall with their on the fact that.

John Derek Lewins: If you look at the overall width there and the fact that, while we have a J1, we've also got a J2, J3, J4, J5, which don't have the same continuity as J1, but we're seeing perhaps areas where J2 comes in and has good continuity or better continuity. And we certainly think that, um... There's probably one or two veins in Aerocompa that have continuity, and that's what's been shown in the past, and maybe the other ones are coming and going, but it's still really early days yet.

Speaker Change: While we have a J one we've also go to J <unk> J <unk> J for which a five don't have the same continuity as J one, but we're seeing crops here is where <unk> comes in and has good continuity or better continuity.

Speaker Change: And we certainly think that.

Speaker Change:

Speaker Change: There's probably one or two veins at Ara composite have the continuity and that's what's been shown in the past and maybe the other ones are coming in and going.

Speaker Change: But it's still really early days yet.

John Derek Lewins: We initially certainly had envisaged that it was very much Chora-style mineralization and that we were targeting a high-grade vein because that's what the previous work had sort of indicated. But we think potentially the previous work may, while it's got continuity and shows a vein, they may not necessarily have drilled the same vein at each time that they've done it. I don't think they... We still don't know.

Speaker Change: We initially certainly had envisaged study was very much.

Speaker Change: Cora style mineralization and that we were targeting a high grade vein, because thats where the.

Speaker Change: Previous work had sort of indicated.

Speaker Change: We think potentially the previous route may wallets called a continuity and showing a vein they may not necessarily have drilled the same vein each time that they have done it.

Speaker Change: Hum.

Speaker Change: We still don't know.

Speaker Change:

John Derek Lewins: So it's still very much developing in our own minds. We are looking at an initial resource. determine how we want to take that forward, because certainly the initial idea was very much a Cora-style development, down to the fact that... You know, it's on top of a hill. We've got over 500 meters of vertical extent and potentially more, and the bottom of that hill is around that 800-700 RL, similar to what we're seeing at Cora.

Speaker Change: So it's still very much developing in our own mind.

Speaker Change: We are.

Speaker Change: Looking at.

Speaker Change: An initial resource.

Speaker Change: We had initially thought towards the end of the year will probably be into the new year.

Speaker Change: Looking to get an initial resource at that point, which will which will then help us determine how we want to take that forward.

Speaker Change: Because certainly the initial idea.

Speaker Change: We're very much core style development.

Speaker Change: The fact that.

Speaker Change: It's on top of a hill.

Speaker Change: We've got over 500 meters of vertical extent and potentially more.

Speaker Change: And the bottom of that Hill is ease Orion that 800, 700 dollar L. Similar to what we're seeing in core.

Speaker Change: And.

John Derek Lewins: So, you know, the idea of replicating the going into the side of a mountain and up on a high grade system was obviously an attractive model, given the proximity to the plant as well, which is actually closer to the plant than Jod and Core, and in fact, it's an easier run. The bulk mining, of course, potentially changes that quite dramatically in terms of just the volume that you'd be... and the fact that you'd have to build.

Speaker Change: So the idea.

Speaker Change: Our replicating the <unk>.

Speaker Change: Going into the side of a mountain and up on a high grade system.

Speaker Change: Was it was obviously an attractive model.

Speaker Change: Given the proximity to the plant as well was actually closer to the plant.

Speaker Change: Jud and Cora in fact, it's an easier run.

Speaker Change: For a gentle run in there there is no major river to cross et cetera et cetera.

Speaker Change: The bulk mining of course.

Speaker Change: Pension changes that quite dramatically in terms of just the volume.

Speaker Change: You'd be in.

Speaker Change: And the fact that you'd have to bill.

John Derek Lewins: A brand new plant, and a big one, high-grade, as I said. We've got this thing where the new plant, certainly, we believe is going to do significantly more than 1.2, and does that give you the potential to have the existing plant sitting there waiting for something like Aracompa to run it and be able to run both of those things at the same time? Early days, and we're, and we're sort of painting pictures right now, yeah, and perhaps sometimes we run ahead of ourselves because this whole region just seems to give and give.

Speaker Change: Brand new plant.

Speaker Change: And a big one.

Speaker Change: High grade as I said, we've got this thing where.

Speaker Change: The new.

Speaker Change: Plant certainly we believe it's going to do significantly more than one point too.

Speaker Change: Does that give you the potential to have a.

The existing plant sitting there waiting for something like a compound to to run it and being able to run both of those things at the same time.

Speaker Change: Early days, and we're and we're sort of painting pictures right now.

Speaker Change: And perhaps sometimes we run ahead of ourselves because this whole region, just seems to give them give.

Michael Gray: Sounds like it's going to be dynamic. I appreciate the background. Very exciting.

Speaker Change: It sounds like it's going to be dynamic and I appreciate a little background and.

Speaker Change: Very exciting thank you.

Speaker Change: Thanks, a lot.

Okay.

Operator: 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: 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: Yeah.

Operator: © BF-WATCH TV 2021 ?? ?? ?? ?? ?? ?? ?? ?? ??

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: Mhm.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: Yeah.

Speaker Change: [music].