Q1 2024 Centerra Gold Inc Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the Centerra Gold first quarter 2024 conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations, and Corporate Communications, Centerra Gold. Please go ahead.

Thank you for standing by this is the conference operator, welcome to the center, a cold first quarter 'twenty 'twenty four conference call.

Speaker Change: A reminder, all participants are in listen only mode and the conference is being recorded.

Speaker Change: After the presentation, there will be an opportunity to ask question to join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator of a pressing star then zero I would now like to turn the conference over to Lisa Wilkinson, Vice President Investor Relations and corporate communications.

Lisa Wilkinson: The temporary uncle.

Lisa Wilkinson: Please go ahead.

Lisa Wilkinson: Thank you, operator, and good morning everyone. Welcome to Centerra Gold's first quarter 2024 results conference call. Joining me on the call today are Paul Tomory, President and Chief Executive Officer, Paul Chawrun, Chief Operating Officer, and Ryan Snyder, Chief Financial Officer. Our release this morning details our first quarter 2024 results. It should be read in conjunction with our MD&A and financial statements, both of which can be found on CDAR, EDGAR, and on our website. All figures are in U.S. dollars unless otherwise noted.

Speaker Change: Thank you operator, and good morning, everyone. Welcome to you some terrible first quarter 'twenty 'twenty four result conference call joined.

Lisa Wilkinson: Joining me on the call today are Paul Tamari, President and Chief Executive Officer, Paul Charron, Chief Operating Officer, and Ryan Snyder Chief Financial Officer.

Our release this morning details our first quarter 'twenty 'twenty four results should be read in conjunction with our MD&A and financial statements both of which can be found on SEDAR Edgar and on our website.

unknown: All figures are in U S dollars unless otherwise noted presentation slides accompanying this webcast are available on <unk> website.

Lisa Wilkinson: Presentation slides accompanying this webcast are available on Centerra's website. Following the prepared remarks, we will open the call for questions. Before we begin, I would like to caution everyone that certain statements made today may be forward-looking and are subject to risks, which may cause our actual results to differ from those expressed or implied. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. Certain measures we will discuss are non-GAAP measures. Please refer to the description of non-GAAP measures in our news release and MD&A issued this morning. I will now turn the call over to Paul Tomory.

Speaker Change: Following the prepared remarks, we will open the call for questions.

Speaker Change: Before we begin I would like to caution everyone that certain statements made today, maybe forward looking and are subject to risks, which may cause our actual results to differ from those expressed or implied please.

Speaker Change: Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form.

Speaker Change: Certain measures, we will discuss our non-GAAP measures. Please refer to the description of non-GAAP measures in our news release and MD&A issued this morning.

Speaker Change: I will now turn the call over to Paul Tamari.

Paul Botond Stilicho Tomory: Thank you, Lisa, and good morning, everyone. We delivered another strong quarter of operating performance, and we're on track to deliver our full year guidance. The US continues to generate significant free cash flow. Our cash balance increased by $35 million to end the quarter at $648 million.

Paul Botond Stilicho Tomory: Thank you Lisa and good morning, everyone.

Paul Botond Stilicho Tomory: We delivered another strong quarter of operating performance and we're on track to deliver our full year guidance.

Paul Botond Stilicho Tomory: He used to generate significant free cash flow, our cash balance increased by $35 million in the quarter at $648 million.

Paul Botond Stilicho Tomory: We remain on track to meet our guidance in 2024, and at Milligan, we continue to advance the site-wide optimization program, implementing tangible improvements in all areas of our operation. At Exit, as previously disclosed, we expect to have elevated production in the first half of the year. Paul Chawrun will speak to our operations in more detail later in the call.

Paul Botond Stilicho Tomory: We remain on track to meet our guidance for Mount Milligan, We continue to advance the state wide optimization program implementing tangible improvements in all areas of our operations.

Paul Botond Stilicho Tomory: As previously disclosed.

Paul Botond Stilicho Tomory: To have elevated production in the first half of the year.

Paul Botond Stilicho Tomory: I will speak to our operations in more detail later in the call.

Paul Botond Stilicho Tomory: Last year, we published our strategic plan that was focused on maximizing the value of each asset in our portfolio. Since then, we have worked diligently to execute on that plan. Specifically, in the first quarter, we announced an additional agreement with Royal Gold, which allows us to assess Mt. Milligan's potential to be a multi-decade operation.

Paul Botond Stilicho Tomory: Last year, we published our strategic plan that was focused on maximizing the value of each asset in our portfolio.

Paul Botond Stilicho Tomory: Since then we have worked diligently to execute on that plan.

Paul Botond Stilicho Tomory: Specifically in the first quarter, we announced an additional agreement with Royal Gold, which allows us to assess.

Royal Gold: Milligan has potential to be a multi decade operation.

Paul Botond Stilicho Tomory: This was a key first step in our strategy to realize the full potential of this cornerstone asset in the top tier mining jurisdiction. Since the mine restarted full operation in June of 2028, We have generated three quarters of very strong free cash flow as we work through the elevated levels of in the. The mine remains a strategic asset in our portfolio, and we believe that OVC will continue to generate positive free cash flow for its remaining mine owners.

Royal Gold: This was a key first step in our strategy to realize the full potential of this cornerstone asset talk to your mining jurisdiction.

Royal Gold: At.

Royal Gold: The mine restarted cooperation with June FY 'twenty, three we have generated three quarters of very strong free cash flow as we worked through the elevated levels of inventory.

Royal Gold: <unk> remains a strategic asset in our portfolio. We believe that it will continue to generate positive free cash flow for its remaining mine life.

Paul Botond Stilicho Tomory: We are focused on maximizing the value of our malignant business unit assets, Surprise at the Thompson Creek and Endoco Mines and the Langeloft Metallurgical Facility. Concurrent with assessing all strategic options for these assets, we recently completed a commercial optimization plan at Langelob geared at increasing profitability and evaluating its future potential. We are encouraged by the value opportunity at Langelot, and we intend to provide additional details in conjunction with the Thompson Creek Mine Feasibility Study. We intend to release it later this summer.

Royal Gold: We are focused on maximizing the value of our molybdenum business unit assets.

Royal Gold: Prices of Thompson Creek, and Endako mines, and the landlord metallurgical facility.

Royal Gold: Hey girl with assessing all strategic options for these assets. We recently completed the commercial optimization plan in light of law, you're not increasing profitability and evaluating its future potential.

Royal Gold: We are encouraged by the value.

Royal Gold: Sure.

Royal Gold: We intend to provide additional details in conjunction with the Thompson Creek mine feasibility study.

Royal Gold: Which we intend to release later this summer.

Paul Botond Stilicho Tomory: Finally, I'd like to provide an update on our ES unit. As we advance our climate and nature strategy, our focus is now shifted to conducting site-level investigations to understand, at a high level, our material exposures to climate and nature risks and opportunities. We will use this information to support strategic decision making to identify feasible emission reduction pathways and emissions.

Royal Gold: Finally, I'd like to provide an update on our ESG initiatives.

Speaker Change: As we advance our climate and nature strategy. Our focus has now shifted to conducting site level of investigation to understand at a high level, our material exposure to climate and nature risks and opportunities.

Speaker Change: We will use this information to support strategic decision, making identified feasible emission reduction properties initiatives.

Paul Botond Stilicho Tomory: Meanwhile, we continue to maintain our commitment to our local communities by actively engaging in various partnerships, collaborations, and community-driven projects. This dedication is reflected in the positive impact observed, in particular, at the Exit Mine, where approximately 5,000 students and young athletes benefited from the diverse sporting collaboration facilitated by our site. These notable initiatives are implemented in cooperation with the local government. I support youth and sport. I support youth and sport. With that in mind, I'll pass the call over to Paul Chawrun. Discuss our operation performance.

Speaker Change: Meanwhile, we continue to maintain our commitment to our local communities by actively engaging in various partnerships collaborations.

Speaker Change: Driven projects.

Speaker Change: This dedication is reflected in the positive impact of observed in particular mine we.

Speaker Change: Approximately 5000 students and young athletes benefited from the diverse 40 collaborations facilitated by our site team.

Local governments: These notable initiatives are implemented in cooperation with the local governments and to support youth sports.

Speaker Change: With that I'll pass the call over ultra.

Speaker Change: Discuss our operational performance.

Paul Chawrun: Thank you, Paul. I'd like to start with Mount Milligan Safety Performance. The operating team has embraced the Sitewide Optimization Program, which starts with continuous improvement in our safety performance. They have been fully engaged, which is demonstrated through on-site and in-the-field interactions focused on safety leadership.

Paul: Thank you Paul I'd like to start with Mount Milligan safety performance.

ultra: The operating team has embraced the site wide optimization program, which starts with continuous improvement since our safety performance.

ultra: <unk> been fully engaged which is demonstrated through on site and in the field interactions focus on safety leadership we.

Paul Chawrun: We have started 2024 with improved safety performance and are committed to our journey towards zero harm. On slide five, we show operating highlights at Mount Milligan for the quarter. Mount Milligan started the year strong, producing over 48,000 ounces of gold and over 14 million pounds of copper in the first quarter. Mount Milligan is on track for its full year of production guidance of 180,000 to 200,000 ounces of gold and 55 to 65 million pounds of copper.

ultra: We have started 2024 was improved safety performance and are committed to our journey towards zero harm.

ultra: On slide five we show operating highlights at Mount Milligan for the quarter.

Speaker Change: Mount Milligan started the year strong producing over 48000 ounces of gold and over 14 million pounds of copper in the first quarter.

Speaker Change: Mount Milligan is on track for its full year production guidance of 180000 to 200000 ounces of gold.

Speaker Change: And 55 to 65 million pounds of copper.

Paul Chawrun: As we've previously disclosed, both gold and copper production is expected to be evenly weighted throughout the year, but sales in the second half of 2024 are expected to contribute approximately 55% of annual sales. In the first quarter, all sustaining costs on a by-product basis were $688 per ounce, 27% lower than last quarter due to lower sustaining capital spending and higher by-product credit. We are starting to see benefits from the implementation of cost savings initiatives and production and productivity gains from the Site Optimization Program. Looking ahead, we expect costs in the second quarter to be higher than the first quarter due to the lower percentage of annual sales in the first half of 2024, along with expected higher sustaining capital expenditure.

Speaker Change: As we've previously disclosed both gold and copper production are expected to be evenly weighted throughout the year, but sales in the second half of 2024 are expected to contribute approximately 55% of the annual sales.

Speaker Change: In the first quarter all in sustaining cost on a byproduct basis were $688 per ounce, 27% lower than last quarter due to lower sustaining capital spending and higher byproduct credits.

Speaker Change: We are starting to see benefits from the implementation of cost savings initiatives and production and productivity gains from our site optimization program.

Speaker Change: Looking ahead, we expect costs in the second quarter to be higher than the first quarter due to the lower percentage of annual sales in the first half of 2024, along with expected higher sustaining capital expenditures.

Paul Chawrun: Mount Milligan is still on track for its full year 2024 cost guidance range. After the agreement with Royal Gold was announced in February, we initiated a preliminary economic assessment at Mount Milligan to update the large resource to include all of the drilling completed to date, identify value-added initiatives at the plant, such as throughput and flow sheet modification, and Optimize the Mind Plan. As a reminder, in addition to the 250 million tons of reserves at Mt. Milligan, we also have identified 260 million tons of resources, most of which have been classified as indicated, as well as significant additional drilled inventory, which has not been incorporated into the resources yet.

Speaker Change: Milligan is still on track for its full year 2024 cost guidance ranges.

Speaker Change: After the agreement with Royal Gold was announced in February we initiated a preliminary economic assessment at Mount Milligan to update the large resource to include all of the drilling completed to date identify value added initiatives to the plant such as throughput and flow sheet modification.

Speaker Change: <unk> and optimize the mine plan.

Speaker Change: As a reminder, in addition to the 250 million tons of reserves at Mount Milligan. We also have identified 260 million tons of resources, most of which has been classified as indicated as well as significant additional drilled inventory, which has not been incorporated into resources yet.

Paul Chawrun: We intend to incorporate these additional resources into an optimized mine plan to support a PEA. Our work on the study is progressing, and we expect to complete the PEA to demonstrate an operating concept in the first half of 2025. During the first quarter, we have continued with our progress on the site-wide optimization program at Mount Milligan that was initially launched last year. This program has been focused on analytic assessment of occupational health and safety, as well as improvements in the mine and plant operation. Notable achievements in the first quarter were observed in key areas of the operation that provided tangible results. A few highlights include.

We: We intend to incorporate these additional resources into an optimized mine plan to support a P. A.

Speaker Change: Our work on the study is progressing and we expect to complete the P. A to demonstrate an operating concepts in the first half of 2025.

Speaker Change: During the first quarter, we have continued with our progress on the site wide optimization program at Mount Milligan that was initially launched last year.

Speaker Change: This program has been focused on analytics assessment of occupational health and safety as well as improvements in the mine and plant operations.

Speaker Change: Notable achievements in the first quarter were observed in key areas of the operation that provided tangible results a.

Speaker Change: A few highlights include.

Paul Chawrun: An improved safety record, including an increase in proactive safety interactions, fewer incidents, and a much lower severity rate when compared to the same period last year. An increase in the mining fleet's mechanical availability, utilization, and overall productivity of the load haul cycle. These strategies have contributed to higher tons mined compared to the same period last year, while simultaneously lowering the unit operating cost. Increased mill throughput per operating day due to consistent ore supply, renewed operating strategy of the flotation circuit, and equipment modifications installed during the planned shutdown.

Speaker Change: An improved safety record, including an increase in proactive safety interactions fewer incidents and a much lower severity rate when compared to the same period last year.

Speaker Change: An increase in the mining fleet mechanical availability utilization and overall productivity of the load haul cycle.

Speaker Change: These strategies have contributed to higher tonnes mined compared to the same period last year, while simultaneously lowering the unit operating costs.

Speaker Change: Increased mill throughput per operating day, due to consistent or supply renewed operating strategy of the floatation circuit and equipment modifications install during the plant shutdown.

Paul Chawrun: And finally, the plan has implemented strategies focused on increasing copper and gold recovery. This includes real-time adjustments to the flotation circuit for improved stabilization with optimal grind sizing and throughput, producing a higher volume of gold copper concentrate with lower copper grades, as well as ore blending initiatives to improve the processing of elevated pyrite bearing, high-grade gold, low-grade copper ore. Now moving on to IRC-2. I would like to commend the site team for achieving 3 million hours without a lost time injury in January.

Speaker Change: And finally, the plan is implemented strategies focused on increasing copper and gold recoveries.

Speaker Change: This includes real time adjustments to the flotation circuit for improved stabilization with optimal grind sizing is throughput.

Speaker Change: Producing a higher volume of gold copper concentrate with lower copper grades as well as ore blending initiatives to improve the processing of elevated pyrite very high grade gold low grade copper ore.

Speaker Change: Now moving onto <unk> suite.

site team: I would like to commend the site team for achieving 3 million hours without a lost time injury in January.

Paul Chawrun: Our top priority is the health and safety of our workers, and we remain committed to our journey towards zero harm. On slide 9, you can see the first quarter operating highlights etered suit, which had another quarter of strong operating performance. First quarter production was over 63,000 ounces, and we are on track to achieve our full year production guide, with approximately 60% of the annual production weighted towards the first half of the year.

Speaker Change: Our top priority is the health and safety of our workers and we remain committed to our journey towards zero harm.

site team: On slide nine you can see the first quarter operating highlights Saturday suite, which had another quarter of strong operating performance first.

Speaker Change: First quarter production was over 63000 ounces and we are on track to achieve our full year production guidance with approximately 60% of the annual production weighted towards the first half of the year.

Paul Chawrun: In this quarter, all sustaining costs on a by-product basis were $823 per ounce, which is higher compared to the last quarter due to increased mining and hauling costs and higher weighted average costs per ounce in the remaining inventory, as well as lower gold production and sales. RICSUT is on track to achieve its cost guidance ranges for the full year 2024.

Speaker Change: This quarter, all sustaining cost on a byproduct basis were $823 per ounce, which is higher compared to the last quarter due to increased mining and hauling costs and higher weighted average cost per ounce in the remaining inventory as well as lower gold production and sales.

Speaker Change: Eric Suite is on track to achieve its cost guidance ranges for the full year 2024.

Speaker Change: I'll now pass it on to Ryan to walk through our financial highlights for the quarter.

Ryan: Thanks, Paul Slide 10 details our first quarter financial results first quarter net earnings were $66 million or <unk> 31 per share there were several adjusting items in the quarter, including $25 million of reclamation provision revaluation recovery at $9 million of unrealized foreign currency exchange gains among.

Ryan Snyder: Slide 10 details our first quarter financial results. First quarter net earnings were $66 million, or $0.31 per share. There were several adjusting items in the quarter, including $25 million of reclamation provision, revaluation recovery, and $9 million of unrealized foreign currency exchange gains, among others. As a result of these one-time items, adjusted net earnings in the first quarter were $31 million, or $0.15. In the first quarter, sales were 104,313 ounces of gold and 15.6 million pounds of copper. The average realized price was $18.41 per ounce of gold and $3.12 per pound of copper. Both of these incorporate the existing streaming arrangements at the moment.

Speaker Change: Other things.

Speaker Change: As a result of these onetime items adjusted net earnings in the first quarter were $31 million or <unk> 15 per share in.

Speaker Change: In the first quarter sales were 104313 ounces of gold and $15 6 million pounds of copper.

Speaker Change: The average realized price was $18 41 per ounce of gold and $3 12 per pound of copper both of these incorporate the existing streaming arrangements at Mount Milligan.

Ryan Snyder: At the molybdenum business unit, approximately 2.9 million pounds of molybdenum were sold in the first quarter at the Langlois facility. This annualized throughput rate of approximately 12 million pounds represents utilization of approximately 30% of the facility's capacity. Consolidated all-in sustaining costs on a byproduct basis for the first quarter were $859 per ounce, and we remain on track to meet our full year guidance for all production and unit costs. In the first quarter of 2024, additions to property, plant, and equipment were $15 million, and total capital expenditures were $7 million. Sustaining capital spending at Mt. Milligan was relatively low in the first quarter, but we maintain our full-year guidance and expect sustaining capital expenditures at Mt.

Speaker Change: At the molybdenum business unit, approximately $2 9 million pounds of molybdenum was sold in the first quarter at the landmark facility.

Speaker Change: This annualized throughput rate of approximately 12 million pounds represents utilization of approximately 30% of the facility's capacity.

Speaker Change: Consolidated all in sustaining cost on a byproduct basis for the first quarter were $859 per ounce and we remain on track to meet our full year guidance for all production and unit cost metrics.

Speaker Change: In the first quarter of 2020 for additions to property plant and equipment were $15 million and total capital expenditures were 17.

Speaker Change: Sustaining capital spending at Mount Milligan was relatively low in the first quarter, we maintained our full year guidance and expect sustaining capital expenditures.

Speaker Change: Milligan to increase throughout the year.

Ryan Snyder: Milligan to increase throughout. Slide 11 shows our financial highlights. In the first quarter, we continue to generate strong free cash. Cash provided by operating activities was $99 million in the quarter, and free cash flow was $81 million. In the first quarter, Oxford generated $101 million in cash from operations and $90 million in free cash. Now Milligan generated $30 million of cash from operations and $24 million. The Molybdenum Business Unit as a whole used $7 million of cash from operations and had a free cash flow deficit of $7 million.

Speaker Change: Slide 11 shows our financial highlights for the quarter.

Speaker Change: In the first quarter, we continued to generate strong free cash flow.

Speaker Change: Cash provided by operating activities was $99 million in the quarter and free cash flow was 81 million.

Ochs: In the first quarter Ochs, who generated $101 million in cash from operations of $90 million in free cash flow now.

Speaker Change: Mount Milligan generated $30 million of cash from operations and 24 million of free cash flow.

Speaker Change: The molybdenum business unit as a whole you $7 million of cash from operations and had a free cash flow deficit of $7 million this quarter.

Ryan Snyder: This related primarily to activities at the Thompson Creek mine, as land loss operating cash flows were slightly positive. Interest income was $8 million in the first quarter, which primarily included interest on bank term deposits which continue to generate significant interest income on our cash flow. In the first quarter, our cash balance grew by $35 million to $648 million. Despite making the $24.5 million payment related to the additional agreement with Royal, this provides us with total liquidity of over $1 billion and positions us well to execute on our strategic plan and deliver shareholding.

Speaker Change: This related primarily to activities at the Thompson Creek mine as landlord operating cash flows were slightly positive for the quarter.

Speaker Change: Interest income was $8 million in the first quarter, which primarily includes interest on bank term deposits. We continue to generate significant interest income on our cash balance.

Speaker Change: In the first quarter, our cash balance grew by 35 million to $648 million, despite making the $24 5 million payment related to the additional agreement.

Speaker Change: This provides us with total liquidity of over $1 billion and positions us well to execute on our strategic plan and deliver shareholder value.

Ryan Snyder: Given our strong financial position, the board declared a quarterly dividend of $0.07 per share. We were active in share buybacks in late February and through March, repurchasing 1.8 million shares for a total consideration of $10 million in the first quarter. Returning capital to shareholders remains a key pillar in our capital allocation strategy, and we expect to remain active in the share buybacks dependent on market demand. Looking ahead, the annual Turkish royalty payment relating to 2023 performance. And the income tax payments related to the 4th quarter of 2023 and the 1st quarter of 2024 will be made in the 2nd quarter of 2023. We expect these payments to be approximately $105,000.

Speaker Change: Our strong financial position the board declared a quarterly dividend of <unk> <unk> per share.

Speaker Change: We were active on share buybacks in late February and through March repurchasing, one 8 million shares for total consideration of $10 million in the first quarter.

Speaker Change: Returning capital to shareholders remains a key pillar in our capital allocation strategy and we expect to remain active on the share buybacks dependent upon market conditions.

Speaker Change: Looking ahead, the annual Turkish royalty payment relating to 2023 performance and the income tax payments related to the fourth quarter of 2023 in the first quarter of 2024 will be made in the second quarter of this year.

Speaker Change: Expect these payments to be approximately $105 million.

Paul Botond Stilicho Tomory: As a result, our cash flow in the second quarter of 2024 will be impacted by these routine statutes. However, as discussed by Paul Chawrun earlier, OxyContinues to deliver strong operational results, and we are on track to achieve our full-year production targets, ignoring the timing impacts related to working capital. We expect strong cashflow from operations before working capital at OCU in all quarters. I'll pass it back to Paul for some closing. Thanks, Ryan. Our site teams have worked diligently to deliver strong performance to start the year.

Speaker Change: As a result, our cash flow in the second quarter of 2024 will be impacted by these routine statutory rate.

Speaker Change: As discussed by Paul Charter on earlier Oxy continues to deliver strong operational results and we are on track to achieve our full year production guidance.

Speaker Change: Ignoring the timing impacts related to working capital movements, we expect strong cash flow from operations before working capital at Oxy in all quarters. This year.

Speaker Change: Pass it back to Paul for some closing remarks, thanks, Brian.

Paul Botond Stilicho Tomory: Our focus remains on delivering safe and consistent operating results each quarter and maximizing the value of each asset in the portfolio. We expect you to continue to deliver our strategic plan that will drive future value and growth for Centerra over the remainder of 2024 and beyond. With that, Operator, I'll open the call to questions.

Speaker Change: Our it teams have worked diligently to deliver strong performance to start the year, our focus remains on delivering safe and consistent operating results each quarter.

Speaker Change: Maximize the value of each asset in the portfolio.

Speaker Change: We expect it to continue to deliver our strategic plan that will drive future value and growth for since they're over the remainder of 'twenty 'twenty four and beyond.

Speaker Change: Operator, I'll open the call to questions.

Speaker Change: Thank you Hey join the question queue. You May Press Star then one on your telephone keypad, you really can't tell them acknowledging you have a cool.

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're 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 Raj Ray with BMO. Please go ahead.

Speaker Change: You're using a speakerphone please pick up your handset before pressing any key cause me telling you a question. Please press Star then two.

Speaker Change: The first question comes from Raj Ray with BMO. Please go ahead.

Raj Udayan Ray: Thank you, Alberto. Good morning, Paul and team. My first question is about the Mount Milligan Optimizer Initiative that you've been working on. Compared to last year, it's almost a 10 to 15% cost decrease in terms of part-time costs from both mining and processing. Can you comment on how sustainable this level of costs is, and do you expect to see further potential reduction in your unit costs and non-MOLLE? And then, secondly, with respect to the MOLLE business unit, can you comment on – I know you're working on a feasibility study, but are you also running a strategic process at this point, or will you wait for the feasibility study results to be out before you run a strategic process? Hi Raj, I'll address the Malibu question first, and I'll pass it to Paul for the Mammalian Cost point.

Alberto: Thank you Alberto Good morning, Paul and team. My first question is on Mount Milligan Optimizes, our initiatives that he had been working on it seems like.

Speaker Change: Third to last year's almost of that 10 to 15 person.

Speaker Change: Cost decrease.

Speaker Change: In terms of part time caused from both mining and processing can you comment on how sustainable this level of costs do you expect to see further potential reduction in the new need costs on Mount Milligan, and secondly, with respect to the multi business unit.

Speaker Change: Can you comment on I know Youre working on the feasibility study that you're also running a strategic process at this point or are we really wait for the feasibility study was supposed to be out before you Robin Shih-tzu classes.

Speaker Change: Okay.

Paul: Hi, Raj I'll address the molybdenum question first and I'll pass it to Paul for the Mount Milligan cost point so.

Unknown Executive: So with a militant business unit, we have a threefold program right now. Number one is advancing the feasibility study, and we're on track to deliver that towards the end of the year. The second, and this was in the prepared remarks, is we've completed the commercial optimization program at Langelof, which helped us establish a framework for contracts this year that improved the potential profitability of the roaster. And that's in preparation for the ramp-up associated with a potential notice to proceed on the mine.

Speaker Change: With the with the molybdenum business unit.

Unknown Executive: And third, as you pointed out, we continue to run a strategic process, and that is advancing well. But, as you can appreciate, a lot of that is tied to the results of the feasibility study and more detail being provided on both the mine itself and the operating model for Langeloft, which we intend to do later this summer. So just to recap, threefold initiatives. One is completing the technical studies on the mine reopening plan, continuing to work on commercial optimization and contracting strategy at Langeloft, and third is to continue to advance the strategic process. So, unless you have a follow-up on that, I'll hand it over to Paul on the Milligan cost.

Speaker Change: We have a threefold program right now number one is advancing the feasibility study and we're on track to deliver that.

Paul Chawrun: Okay, thanks, Raj. Yeah, I just, in summary, we're very, very pleased with the progress of what we're calling the M plus program to put Mount Milligan into the upper quartile of world-class assets. And that starts with operations. And we're seeing gains across the board, particularly in safety. The team is fully engaged. And nothing really happens unless we work with that. In terms of hardcore cost savings, yes, probably a reasonable number is around 10%.

Speaker Change: At the end of the year the second.

Speaker Change: And this was in our prepared remarks.

Speaker Change: We've completed the commercial optimization program at landlord.

Speaker Change: That helped us establish a framework for contracts this year that improves the potential profitability of the roaster and thats in preparation for the ramp up associated with.

Speaker Change: A potential notice to proceed on the mine and third as you pointed out we continue to broaden our strategic process.

Speaker Change: And that is advancing well, but as you could appreciate a lot of that is tied to the <unk>.

Speaker Change: Results of the feasibility study in more detail being provided on both.

Speaker Change: The mine itself in the operating model for Langill off which we intend to do later this summer. So just to recap three three fold initiatives. One is completing the technical studies on the minor reopening plan.

Speaker Change: To work on commercial optimization and contracting strategy of Mangalore.

Speaker Change: Third is continuing to advance the street strategic process.

Paul Botond Stilicho Tomory: So unless you have a follow up on that I'll hand, it over to Paul on the Milligan cost question.

Paul: Okay. Thanks Raj yes.

Paul: I just in summary, we're very very pleased with the progress of the of what we're calling the EM plus program to put Mount Milligan into the upper quartile of.

Paul: Of our world class assets and that starts with the operations.

Paul: We're seeing gains across the board, particularly in safety the team.

Paul: It was fully engaged.

Paul: And nothing really happens unless we worked with that in terms of hardcore cost savings yes.

Paul Botond Stilicho Tomory: I'm cautious with actually saying a number, just because it's an ongoing continuous improvement process. We've more or less completed wave one, we're in wave two now, there's a litany of continuous improvement initiatives working on the mine and the plant, and all facets of the load haul productivity cycle, the operating costs, looking at some of our supply chain recovery, reagent consumption, overall consumables with the steel, just on and on So this is an ongoing process. If you take a snapshot, that's a reasonable estimate of where we're at. But we're continuing.

Paul: Probably a reasonable numbers around 10% of cautious with actually saying a number just because it's an ongoing continuous improvement process with more or less completed wave one where in wave two now there's a there's a litany of <unk>.

Speaker Change: Continuous improvement initiatives are working on the on the mine the plant and.

Speaker Change: In all facets of the load haul productivity cycle, the operating costs looking at some of our our supply chain recovery.

Speaker Change: Consumption overall consumables with the steel.

Speaker Change: Just on or not so this is this is an ongoing process. If you take a snapshot that's a reasonable estimate on where we're at but we're continuing to focus.

Speaker Change: Long term.

Raj Udayan Ray: Paul, just to follow up on that, the process optimization, is there a target that you have with respect to where you expect to see recovery gold and copper recovery go based on the optimization initiatives you guys are working on?

Speaker Change: Paul It's just a follow up on the process optimization is that a target that you have with respect to where you.

Speaker Change:

Speaker Change: Expect to see recovery of gold and copper recoveries go to based on the optimization and she leaves you guys are working on.

Paul Botond Stilicho Tomory: There is, Raj, but it needs to be integrated with throughput gains to optimize that trade-off, the grind size, the overall recovery, some of the changes with the ore body itself. We have a geology model we're working through, and so it targets, but it's on a curve, so it's not just one hard number. And we are seeing significant gains. The other major aspect is that we can improve our overall recovery by optimizing our sales. If we have a lower copper concentrate, we can actually improve our overall recovery. So there are definite targets, but it's not just one number. Roger, I'll add a point here.

Speaker Change: There there is raj but.

Speaker Change: It needs to be integrated with throughput gains to optimize that bat tradeoffs. The grind size. The overall recovery some of the changes with the ore body itself are.

Speaker Change: We have a jewel net model, we're working through and so it is targets, but it's on a curve. So it's not just one hard number.

Speaker Change: And we are seeing significant gains the other major aspect is we can we can improve our overall recovery by optimizing our sales if we have lower copper.

Speaker Change: Concentrate we actually can then improve our overall recovery.

Speaker Change: So.

Speaker Change: There are definite targets, but it's not just one number.

Paul Botond Stilicho Tomory: The overall program is advancing. We're very encouraged by the results, and I'd say that they're probably ahead of where we were expecting. And a lot of the gain is related to recovery, particularly understanding the ore body better and adjusting performance in the process plant on dosing and various times and set points to ensure that we maximize throughput and recovery. We're very happy with the results to date, and we expect to continue to deliver gains there. But as Paul said, it's a very dynamic system. So there aren't individual pinpoint answers to these questions.

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: The overall program is advancing.

Speaker Change: We're very encouraged by the results and I'd say that they're probably ahead of where we were expecting and a lot of the gain is related to recovery, particularly understanding the ore body better and adjusting performance and the process plant on dosing and the.

Speaker Change: Various times and set points to ensure that we maximize throughput and recovery.

Speaker Change: We're very happy with the results to date and we expect to continue to deliver.

Speaker Change: Again, there, but as Paul said, it's a very dynamic system and so there aren't individual pinpoint answers on these questions.

Raj Udayan Ray: Okay, that's good. Thanks, Paul.

Speaker Change: Okay. That's good thanks a lot.

Operator: The next question comes from Mike Parkin with National Bank. Please go ahead.

Speaker Change: The next question comes from Mike Parkin with National Bank. Please go ahead.

Michael Parkin: Hi guys, congrats on a solid Q1.

Speaker Change: Hey, guys congrats on the solid Q1.

Michael Parkin: Just following up on the Lang Law commercial optimization plan. What were some of the key kinds of What is there that you're focusing on?

Michael Parkin: Just following up on the the lane La <unk>.

Michael Parkin: Commercial optimization plan, what were some of the key kind of it.

Paul Botond Stilicho Tomory: Is that something that's, you know, it's booked in place, or are these some improvements that we can expect to see going forward? So the commercial model at Langeloft, just to remind you, is we purchase third-party concentrates, and then we sell the final molybdenum product principally to steel producers. We did a comprehensive review of how we enter into those contracts and established minimum criteria for a contract to be acceptable. So all new contracts that we awarded this year conform to that minimum acceptable framework that we have.

Speaker Change: Wins, there that you're focusing on is that something that you.

Speaker Change: It's booked in the in place or easier some improvements that we can expect to see going forward.

Speaker Change: So the commercial model of Langill off just to remind as we purchased third party concentrates and then we sell final molybdenum product principally to steel producers.

Michael Parkin: We did a comprehensive review of how we enter into those contracts and established minimum.

Michael Parkin: Writing for a contract to be acceptable.

Michael Parkin: So all new contracts that we awarded this year.

Michael Parkin: For him to that minimum acceptable framework that we have.

Michael Parkin: And the contracts we have now in 2024 set the basis.

Paul Botond Stilicho Tomory: And the contracts we have now in 2024 set the basis for the profitability model we have at Langelot. So in other words, the contracts we've awarded this year are commercially more attractive than they have been in the past because we adhere to this minimum criteria. And given those contracts we now have in place with the roaster running at approximately one third of its ultimate capacity, by grossing that number up to include the feed that will come from Thompson Creek, as well as for further third-party material, we are very confident in the profitability of the roaster.

Michael Parkin: For the profitability model, we have at Langill out so in other words the contracts. We've awarded this year are commercially more attractive than they had been in the past because we adhere to the minimum criteria and given those contracts. We now have in place with the roaster running at approximately one third of ultimate capacity.

Michael Parkin: By grossing that number up to include the feed that will come from Thompson Creek as well as for further third party material, we're very confident in the profitability of the roaster I should add that the profitability of the roaster.

Paul Botond Stilicho Tomory: I should add that the profitability of the roaster is not so dependent on the price. We basically clip a dollar per pound that is largely insulated from the prevailing spot price. So just to recap, we have a new framework for minimum acceptable contracts. We have implemented those.

Michael Parkin: He is not so dependent on molybdenum price.

Michael Parkin: We basically clip a dollar per pound that is largely insulated from the prevailing spot price. So just to recap we have a new framework for minimum minimum acceptable contracts. We have implemented those were live on those contracts this year and when grossed up to full capacity.

Paul Botond Stilicho Tomory: We are live on those contracts this year, and when grossed up to full capacity, they yield a very profitable model at the roast. So, if I go back to 2023, there was a big working capital hit that was less likely to be an event going forward? That was all kind of dependent on just how metal prices shifted. You've recouped that through the latter part of 2023.

Speaker Change: Yield a very profitable model at the roaster.

Michael Parkin: So if I go back to 2023, there was a big working capital hit.

Speaker Change: Got it.

Michael Parkin: Less likely to be an event going forward like that was all kind of dependent on just how metal prices shifted you recoup that.

Michael Parkin: Through the latter part of 2023, well this new contract.

Michael Parkin: Is that kind of risk that we can.

Michael Parkin: Will this new contract minimize that kind of risk of happening? We can't insulate fully against working capital movements because the working capital injection or release is driven by the molybdenum price associated with both the purchase of the concentrate contract and the sale of the final molybdenum product. We don't take very much price risk because the quotation periods are pretty closely aligned, but we do take working capital risk. So if we're buying a concentrate which has a high molybdenum price associated with it and then selling it at a lower price. Then we have that working capital movement.

Michael Parkin: We can insulate fully against working capital movements because.

Michael Parkin: The working capital injection of relief is driven by the molybdenum price associated with both the purchase of the concentrate contract and the sale of the final molybdenum product, we don't take very much price risk because the quotation periods are pretty closely aligned but we do think working capital of a sofa or buying concentrate.

Michael Parkin: <unk>.

Michael Parkin: Which has a high molybdenum price associated with it and then selling lower priced.

Michael Parkin: Then we have that working capital is the reason that there hasnt been working capital movement over the last several months and I.

Paul Botond Stilicho Tomory: The reason that there hasn't been a working capital movement over the last several months, and, in any case, not a substantial one, is that molybdenum has been roughly flat at $20 a pound. We will have working capital movements when there's a mismatch between the price established for a concentrate purchase and that associated with the sale of the final product, but those are transitory events. And as we saw last year, we had a big working capital movement into the roaster, and then it was, in large part, released through the rest of the year.

Michael Parkin: I think he has got a substantial amount of molybdenum has been roughly flat at $20 a pound.

Michael Parkin: We will have working capital movements. When there is a mismatch between the price established with the concentrate purchase and that associated with the sale of the final product, but those are transitory events and as we saw last year, we had a big working capital movement into the roaster and then it was in large part relief through the rest of the year.

Michael Parkin: Year.

Paul Botond Stilicho Tomory: Now, as we ramp up capacity, the utilization of the roaster, and if we do green light the Thompson Creek plan, a large portion of feed going to Langeloft will be our own concentrate from Thompson Creek, with which there will be no working capital associated. So as we ramp up utilization on the roaster on a pound-to-pound basis, the working capital requirements will be lessened, though in aggregate terms, they will still be increased. Okay. No, that's great, Keller. Thanks, Paul.

Michael Parkin: Now as we ramp up capacity utilization and the roaster.

Michael Parkin: And if we do Greenlight the Thompson Creek plant, a large portion of the feed going to lag a lot will be our own concentrate from Thompson Creek with which there will be no working capital associated so as we as we ramp up utilization on the roaster on a pound for pound basis, the working capital requirements will be lessened, though in <unk>.

Michael Parkin: Aggregate terms, they will still be increasing.

Michael Parkin: Okay.

Speaker Change: That's great color. Thanks, Paul.

Unknown Executive: I'm just on the timing of sales versus production at Mount Millie. What is it that you know, given that the second half is out there? What is it that you know today that determines that your sales versus your production weighting? It is mismatched a bit. Is it just simply the no one kind of shipment dates of future freight? Hi there.

Michael Parkin: Hum.

Speaker Change: On the <unk>.

Speaker Change: Timing of sales versus production at Mount Milligan.

Speaker Change: It's what is it that you know given the second half is out there.

Speaker Change: What is it that you know today that determines that your your sales versus your production waiting.

Speaker Change: It isn't.

Speaker Change: This masked a bit is.

Speaker Change: Is it just simply that they know when kind of shipment dates of the future.

Speaker Change: Great.

Unknown Executive: It is predominantly that. Our last shipment of the first quarter was right at the end of the quarter, and the way the boats are lining up, we'll likely have a shipment in early July instead of the end of June. And so when we look at our shipping schedule and everything tied to our concentrate and the number of boats you have, you have extra boats in Q3 and Q4, but not really in Q2.

Speaker Change: Yes, Hi, hi, there. It is predominantly that are our last shipment of the first quarter was right at the end of the quarter and the way the boats are lining up.

Speaker Change: Like we have a shipment in early July and set up the end of June and so when we look at our shipping schedule and everything tied to our concentrate.

Speaker Change: And in the number of votes you have you have extra boats in Q3, and Q4, but not really in Q2. So you will see a bit of a step down in gold and copper sales I think it's possible that the shipment timing can move around a little bit, but what we're seeing right now is a slightly lower sales in Q2.

Unknown Executive: So you will see a bit of a step down in Gold and Copper sales. I think it's possible that the shipment timing can move around a little bit, but what we're seeing right now is slightly lower sales in Q2 and then stepping up again. It really is just a timing thing between June and July, and then just sticking with Mount Milligan, your TCRCs, and refining costs, generally shown to be pretty flat.

Speaker Change: And then stepping up in Q3, and Q4, but again with pretty flat production quarter by quarter throughout the year. So it really is just a timing thing between June and July.

Speaker Change: Okay.

Speaker Change: And then just sticking with Mount Milligan your TCR season refining costs.

Speaker Change: But generally shown to be pretty flat is that something.

Unknown Executive: You're expecting to continue going forward like this.

Speaker Change: You're expecting to continue going forward like when the U S dollar per pound or per ton basis.

Unknown Executive: Going forward, like on a US dollar per pound or per ton basis, sitting in around 45 cents for the last few quarters, fairly, you know, only a penny or two difference quarter to quarter. Is that something we could expect? to go, you know, sustain going forward, or some of this optimization might make the concentrate, You know, TCRCs actually drop off a bit. Yeah, I think you can view them as fairly flat.

Speaker Change: You're sitting at around 45 since it was few quarters fairly you owned it.

Speaker Change: A penny or two difference quarter to quarter or is that something we could expect.

Speaker Change: You know a sustained going forward or some of this optimization might make.

Speaker Change: The concentrate.

Speaker Change: TCR seems actually drop off a bit.

Ryan Snyder: We have a mix of contracts. Some are long-term smelter contracts. Some are trader contracts that are more based on spot TCRCs. Spot TCRCs for copper are very low these days and negative, but when you average that with our benchmark prices on our longer-term contracts, it's averaging out to about that level. I think when we look at concentrate in general, and one of the points that Paul made, if we're able to sell a lower-grade Coppercon, we may have more concentrate in total, and that may increase the total TCRCs that we pay if we're shipping more concentrate, but it'll be more than offset with increased recoveries and metal gains from doing that analysis.

Speaker Change: Yes, I mean, I think you can you can view them as fairly flat, we have a mix of contracts. Some are long term trader smelter contracts. Some are trade or contracts that are more based on spot Tc Rcs spot <unk> for copper very low these days.

Speaker Change: Negative in some cases.

Speaker Change: But when you average that with with our benchmark prices on our longer term contracts, it's averaging out to about that level I think when we look at concentrated in general and one of the points that Paul made if we're able to sell a lower grade copper con. We may have more concentrated in total and that may increase total TCR fees that we pay if we're shipping more concentrated.

Speaker Change: But it'll be more than offset with increased recoveries and metal gains and we've done that analysis. So I think through this year looking at it is about flat quarter over quarter makes sense, but there may be some scenario where that moves up a bit in the future.

Ryan Snyder: So I think through this year, looking at it as about flat quarter over quarter makes sense. But there may be some scenario where that moves up a bit in the future to get the full benefit of recovery. This is an important point, Mike, that the initiative that Paul referenced and Ryan elaborated on here is that we have been trialing shipments of lower copper content in the concentrate, which drives better recovery, and there will be costs associated with that, higher TCRCs, logistics, and warehousing, but the point is that we've done these trials, and we've seen improved recoveries in both copper and gold.

Speaker Change: You get the full benefit of recoveries.

Speaker Change: This is an important point, Mike the initiatives that Paul referenced Bryan.

Speaker Change: Library on here as we are.

Speaker Change: We have been trialing shipment of lower copper conflict cotton copper content in the concentrate which drives better recovery.

Speaker Change: And there will be costs associated with that higher <unk> logistics and warehousing, but the point is where we've done these trials and we've seen improved recoveries in both copper and gold.

Michael Parkin: Okay, so it's a little bit of pain for a lot more gain. That's right, that's right. Okay, great. Thanks very much.

Speaker Change: Okay. So it's a little bit of pain for a lot more game. So.

Speaker Change: That's right that's right.

Michael Parkin: Okay, great. Thanks very much, guys.

Speaker Change: Okay, great. Thanks, very much guys.

Speaker Change: Okay.

Operator: Once again, if you have a question, please press star, then 1. The next question comes from Anita Soni with CIBC. Please go ahead.

Speaker Change: Once again, if you have a question. Please press Star then one.

Speaker Change: Question comes from Anita Soni with CIBC. Please go ahead.

Anita Soni: Good morning, Paul and Paul. A couple of questions. I think Mike has asked most of mine, but I just wanted to get an idea of how the CapEx plays out at both assets. There was a little bit of underspend this quarter, but I just wanted to understand, you know, specifically at Mount Milligan.

Anita Soni: Good morning, Paul and Paul.

Anita Soni: A couple of questions I think Mike asked most of mine, but I just wanted to get an idea of how the capex plays out at both assets there was a little bit of understand this quarter, but I just want to understand.

Anita Soni: You know specifically at Mount Milligan Ah like where is the capital spend would be in the summertime in there in Q2 and Q3 and then tapers off in Q4, how does it work.

Ryan Snyder: Yeah, I'll speak first, Anita, and then Paul can chime in if he wants to elaborate. It's going to be quite heavy in Q2 and Q3, so a lot of the Milligan CAPEX is focused on the tailing storage facility, required lifts and activity there this year, as well as a pumping station for water. You couldn't really do some of those things in Q1. I would say the vast majority of the CAPEX at Mount Milligan is planned for spring and summer, but then Q4 trailing off a little bit, modeling the majority of Milligan CapEx, say 75% throughout the two middle quarters. Oxford is a little more even. Q1 is pretty representative of what you'll see. There'll be little movements quarter over quarter, but that one's more or even throughout the year.

Speaker Change: Yeah, I'll speak first of all I need it and then Paul can can chime in if.

Speaker Change: He wants to elaborate it's going to be quite heavy in Q2 and Q3. So a lot of the Milligan Capex is focused on the tailing storage facility required lifts.

Speaker Change: Activity there this year as well as a pumping station for water.

Speaker Change: You couldn't really do some of those things in Q1, I would say the vast majority of the Capex that Mount Milligan is planned for spring and summer.

Speaker Change: Within Q4 trailing off a little bit so.

Speaker Change: A lot of way the majority of Milligan, Capex say, 75% of the heater throughout the two middle quarters.

Speaker Change: Oxy, we there's a little more even you know Q1 is pretty representative of what you'll see it'll be a little movements quarter over quarter, but that one's more or even throughout the year.

Anita Soni: And then the last one was all of the, sorry, care and maintenance and militant and business unit capital. It was, I can't remember exactly where it was, but there was some significant understanding in some of that.

Speaker Change: Okay and then the last one was all of the.

Speaker Change: Sorry carry maintenance and molybdenum business unit capital with them I can't remember exactly where life, but there was some significant understanding some of that.

Speaker Change: Yeah.

Ryan Snyder: Yeah, so I think if we look at the molybdenum business units, the one capital item at Langloth is the acid plant shutdown, which is happening in Q2. It's happening right now.

Speaker Change: Yes, so I think if we look at the molybdenum business unit. The one capital item that landmark is the acid plant shutdown, which is happening in Q2, that's happening right now.

Ryan Snyder: When we look at Thompson Creek, just a reminder, we've only guided for the first half of the year. They did understand a little bit in Q1. We still expect their first half spending to be similar to what we have out there in terms of guidance-wise, and then we will re-guide the second half of the year when we put out the results. So, I don't think we're expecting big changes in Thompson County. Okay, that's it for my questions.

Speaker Change: When we look at Thompson Creek, just a reminder, we've only guided the first half of the year they did.

Speaker Change: Spend a little bit in Q1, we still expect their first half spending to be similar to what we have out there guidance slides and then we will re guide.

Speaker Change: The second half of the year, when we put out the results of the feasibility study so.

Speaker Change: I don't think were expecting big changes on Thompson Creek from what's out there through through the first half.

Anita Soni: Okay, that's it for my questions. Congratulations on a good quarter.

Speaker Change: Okay. That's it for my questions Congrats on a good quarter.

Speaker Change: Thank you.

Operator: This concludes today's question and answer session and today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.

Speaker Change: This concludes today's question and answer session and today's conference call. You may disconnect. Your line. Thank you.

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Speaker Change: Kim for participating and have a pleasant day.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.