Q1 2024 Fortuna Silver Mines Inc Earnings Call
Greetings and welcome to the first quarter 2024 financial and operational results call for Fortuna Silver.
At this time all participants are on a listen only mode on a question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
I will now turn the conference over to your host Mr. Carlos Baca, Vice President of Investor Relations. Sir you may begin thank you. Thank.
Carlos Baca: Thank you Andy good morning, ladies and gentlemen, I would like to welcome you to Fortuna Silver mines first quarter 2024 financial and operational results conference call hosting the call today on behalf of the company will be Jorge was that all in all.
Speaker Change: <unk>, President and Chief Executive Officer, Lisa and also Chief Financial Officer, <unk>, Chief Operating Officer, and Latin America, and David Whittle, Chief operating officer of West Africa.
Speaker Change: Today's earnings call presentation is available on our website as a reminder statements made during this call are subject to the reader advisory as included in Yesterdays News release, the earnings call presentation, MD&A and the risk factors in our annual information form financial figures contained in the presentation and discussed in today.
Speaker Change: Call are presented in U S dollars unless otherwise stated.
Speaker Change: Technical information in the presentation has been reviewed and approved by Eric Chapman Fortuna.
<unk>, our senior Vice President of technical services and <unk>.
Vice versa.
I would now like to turn the call over to Jorge Alonso and also our President and Chief Executive Officer, and co founder of Portola.
Jorge A. Ganoza Durant: Good morning to dwarfs, we continue to report strong operational and financial performance and according to our plans from guidance expect an even stronger second half of the year for production and costs.
Jorge A. Ganoza Durant: $225 million in sales.
Jorge A. Ganoza Durant: Gold contributed 81% and silver 10% with the dialogue has been a microbe same thing with it.
Jorge A. Ganoza Durant: We realized an average gold price in the quarter of $2087 per ounce compared to 1990 in the fourth quarter of 2023.
Jorge A. Ganoza Durant: Silver stayed flat at $23 quarter over quarter.
Jorge A. Ganoza Durant: Or achieve little net income and adjusted net income for the quarter were both a $26 million or nine cents per share.
Jorge A. Ganoza Durant: Cash flow from operations before changes in working capital was $84 million or 28 cents per share.
Jorge A. Ganoza Durant: Both earnings and cash flow were well ahead of analyst consensus figures.
Jorge A. Ganoza Durant: <unk>, six <unk> and 25 cents per share respectively.
Jorge A. Ganoza Durant: All of our mines delivered gold and silver production in line with our plans and within guidance range predictions for the year.
Jorge A. Ganoza Durant: At 112000 gold equivalent ounces production with softer when compared to the previous two quarters, where we had two consecutive record production of 129936.
Jorge A. Ganoza Durant: Thousand gold equivalent ounces in Q3, and Q4 of 2023, respectively.
Jorge A. Ganoza Durant: The reduction against previous quarters is largely explained by lower grade and ounces produced at singular, but well according to plan.
Jorge A. Ganoza Durant: Quarterly production during 'twenty 'twenty four is planned to pick up throughout the year with Q1, having the lowest spread provokes.
Jorge A. Ganoza Durant: All of our mines reported consistent AC tracking well to be within our annual guidance range consolidated cash cost per gold equivalent ounce was $879.
Jorge A. Ganoza Durant: If we adjust for San Jose mine, which is mining on their last year of reserves. The cash cost is a low $744 per ounce.
Jorge A. Ganoza Durant: Consolidated AC at $1495 per gold equivalent ounce is on the very low end of our guidance range for the year, which is between 1485.
Jorge A. Ganoza Durant: And $1640.
Jorge A. Ganoza Durant: And slightly lower than this 1500 <unk>, we reported in Q4 2023.
Jorge A. Ganoza Durant: The low AC is largely explained by singular higher gold production and lower cost per ton against our budgets.
Jorge A. Ganoza Durant: Capital expenditures are building their own mine leach pad expansion.
Jorge A. Ganoza Durant: <unk>.
Jorge A. Ganoza Durant: The largest short thermo Fortuna theme that Bert for you today is it throughput optimization of the mine, which continues to run their fruit.
Jorge A. Ganoza Durant: After realigning over the meal and other minor work. They may from the plant is expected to reach a process rate of 220 dry.
Jorge A. Ganoza Durant: Metrics darts per hour or 42% above nameplate capacity.
Jorge A. Ganoza Durant: And 25% of all for 2024.
Jorge A. Ganoza Durant: Budgets.
Jorge A. Ganoza Durant: Looking forward there is an emerging situation in April in Cote d'ivoire, technical Savior said, two gas plant sourcing power into the national grid has resulted in outages.
Jorge A. Ganoza Durant: I shall level Netease expected power will be restored to normal levels in July.
Jorge A. Ganoza Durant: With information available at this moment, we believe guidance for the year at cigar Lake still achievable with no corresponding impact on consolidated guidance.
Jorge A. Ganoza Durant: With respect to capital allocation management continued during the quarter to focus on three priorities one provide maximum flexibility to our balance sheet. During the period, we paid an additional 40 million on our revolving credit facility totaling 123 million.
Jorge A. Ganoza Durant: It seems when we started the repayments in the third quarter of 2023.
Jorge A. Ganoza Durant: We brought net debt down to $83 million and our total net debt to EBITDA ratio stands at a low 0.221.
Jorge A. Ganoza Durant: Our liquidity position stands at $212 million at the end of the quarter essentially flat with respect to the previous quarter.
Jorge A. Ganoza Durant: Second is the opportunistic return to shareholders management or initiated its normal course issuer bid program in the quarter with the repurchase of 1 million shares for cancellation at an average price of $3.42 in the New York stock exchange.
Jorge A. Ganoza Durant: The normal course issuer bid has been renewed in April for our Navy show a year for up to 5% of the issued and outstanding shares of the company.
Jorge A. Ganoza Durant: And third.
Jorge A. Ganoza Durant: <unk> funding organic growth opportunities in our portfolio, our priority exploration program subscale at the embassy suite, San Jose and yet our local continue to yield positive results and they figure that mining partly why the exploration team is planning to have new resources each year.
Jorge A. Ganoza Durant: The deposits of by your guests through gabbro, Northern Kingfisher of note is a newly discovered kingfisher that lawsuit where drilling continues to return consistent results or is it two kilometer strike length of the identified mineralization.
Jorge A. Ganoza Durant: A fourth drill rig has now being mobilized to say hey, led to further capitalize on these opportunities as well as accelerating the underground potential.
Jorge A. Ganoza Durant: Deposits were weaker in the hold reserves and cooler and CMO sunbird.
Jorge A. Ganoza Durant: And yet our multiple and Burkina Faso, we continued to make marginal gains some of high grade mineralization at the immediate boundaries of resources on solid 55 <unk>.
Jorge A. Ganoza Durant: These gains are potentially helping to reduce the rate of depletion in the life of mine by providing opportunity to sustained 2025 and have over 100000 ounces of gold production.
Jorge A. Ganoza Durant: At San Jose, Mexico, We continue advancing the <unk> exploration with three dedicated drill rigs and planning to add a fourth one in may.
Jorge A. Ganoza Durant: Results to date have defined potentially economic mineralization within that 350 by 450 meter area.
Jorge A. Ganoza Durant: Which remains open to the South east.
Jorge A. Ganoza Durant: Step out drilling holes are being prioritized horribly.
Jorge A. Ganoza Durant: For the second quarter management is planning to drive a 150 meter drift to reach the GOR over identified higher grade so.
Jorge A. Ganoza Durant: And the <unk> in Senegal.
Jorge A. Ganoza Durant: Explore Asian in your technical drilling continues to advance according to plan along with environmental studies.
Jorge A. Ganoza Durant: The allergic drilling is set to begin in the second quarter.
Jorge A. Ganoza Durant: And last but not least we had a difficult start of the year on safety indicators.
Jorge A. Ganoza Durant: Our total recordable and lost time.
Jorge A. Ganoza Durant: Lost time injury rates have been impacted by for lost time accidents in the quarter.
Jorge A. Ganoza Durant: We have now been operating for 15 days without any recordable accidents, and they're doubling down on active leadership on multiple other initiatives that are assessor and David will start shortly with the objective of our steel achieving a third year of continued improvement on key safety metrics.
Speaker Change: I'll now ask.
Speaker Change: And David to provide an update on our West African operations David.
David Edward Whittle: Thanks, Jose and put edge is.
David Edward Whittle: Good morning, everyone.
David Edward Whittle: So again <unk> had a successful first quarter with regards to production.
David Edward Whittle: Kayla, we unfortunately reported one LTI scour monetize continued good safety performance with no LTI as reported.
David Edward Whittle: In the first quarter, IC Gayla and Dr. Michael at the mine plan, reducing 34556, and 27177 ounces of gold respectively.
Kayla: Thank you Gayla production was 20% lower compared to the fourth quarter of 2020, it's great.
Kayla: Head grade to the period became more reflect keeping the license line right.
Kayla: In the quarter to <unk> 421000 tonnes of ore at an average gold price of $3 three three grams per tonne and two.
Kayla: Slide 4 million tonnes of waste strip ratio of six to one.
Kayla: The processing plant at <unk> 395000 tons at an average gold grade of 279.
Kayla: Yes.
Kayla: While expanding operations was centered on the antenna.
David Edward Whittle: 700000 to 90000 tonnes of waste stripping was conducted at the CRM tool of phase III.
David Edward Whittle: Processing plant operations continued to progress beyond the nameplate capacity of 154 tons in L. A.
David Edward Whittle: Television and that reached 395 tons per hour.
David Edward Whittle: Recoveries for the quarter was 94, 4% in line with design.
David Edward Whittle: The second lifted in salaries for each facility was successfully completed in April benefiting the operation with an additional two years of detainees full reach of the antenna.
David Edward Whittle: Right.
David Edward Whittle: So again strong performance resulted in a cash cost of $469.
David Edward Whittle: Now you see in $948 per ounce of gold.
David Edward Whittle: At <unk> mine production in the first quarter was 124000 tonnes at an average gold grade of eight three grams per ton with.
David Edward Whittle: With oil primarily source from the <unk> underground mine.
David Edward Whittle: Development in cycling operations of the legacy SaaS model.
David Edward Whittle: Continuing contributing 16 CASM tunnels are.
David Edward Whittle: Average gold grade of seats one seats.
David Edward Whittle: On the processing plant.
David Edward Whittle: 190000 tonnes of ore were treated in an average gold grade of 879 grams per tonne and recovery at 98, 2%.
David Edward Whittle: The lower processing tons are attributed to a planned plant shutdown for the first two weeks of January 'twenty pool.
David Edward Whittle: Yeah on monetize steady production resulted in cash cost in.
David Edward Whittle: Through Q2.
David Edward Whittle: And then AUC of 1001.
David Edward Whittle: $1373 per ounce of gold.
David Edward Whittle: Development of the 90 climbed another major capital development has a 55 zone mine was completed during the quarter.
David Edward Whittle: While development now is limited to the strike will drugs walls, whilst the whole development continues to intersect wider areas and encounters grades and plant.
David Edward Whittle: As well as further extending the mining boundaries to the east and the west of the ore body amongst spike.
David Edward Whittle: <unk>, who will guide.
David Edward Whittle: Yeah.
Speaker Change: Thank you David.
David Edward Whittle: Please.
David Edward Whittle: Yes.
Speaker Change: So starting in Argentina.
David Edward Whittle: <unk> gold production in the quarter was 23462 ounces.
David Edward Whittle: This is a 21% decrease compared to the fourth quarter of 2023.
David Edward Whittle: Due to the lower head grade before placed on the Leach pads.
David Edward Whittle: And a reduction in the gold reached carbon inventory however.
David Edward Whittle: Gold production remains aligned with the mine plan and mineral reserve estimates for the year.
David Edward Whittle: During the quarter 2 million tons of Florida, where mine had a <unk> ratio of <unk> 64 to one.
David Edward Whittle: A total of 155 million tons of forward placed on the Leach pad at an average gold grade of <unk> 60 grams per tonne.
David Edward Whittle: Containing an estimated 29000 to 106 hundred 70 ounces.
David Edward Whittle: The operation experienced lowered mechanical loader availability, which mainly impacted the waste mining plan for the period.
David Edward Whittle: The mine plan has been adjusted to reflect enhanced waste mining during the next quarters and remains in alignment with the mine plan for the year.
David Edward Whittle: As of April 32024.
David Edward Whittle: The Leach pad expansion project is approximately 44% complete.
David Edward Whittle: <unk> <unk> and <unk>.
David Edward Whittle: Construction of the emotion line at 33% respectively.
David Edward Whittle: Germany is 90, 595% complete.
David Edward Whittle: Complementing current Forex liner installation also commenced in April.
David Edward Whittle: The project is advancing on schedule with operations expected to be in or placements by the end of 'twenty 'twenty four.
David Edward Whittle: <unk> had a cash cost of 1008.
David Edward Whittle: And then AC co 1634 per ounce of gold for the quarter.
David Edward Whittle: The costs reflect timing of sales of 1700 ounces of gold remained in inventory at the end of the period.
David Edward Whittle: In addition to timing of sales the operation experienced higher cost for rental equipment and intensive capex execution related to the leach pad expansion project.
David Edward Whittle: On a general note in country macroeconomic conditions have improved from what we saw in 2023 and.
David Edward Whittle: <unk> allows <unk> to operate more efficiently as a result.
David Edward Whittle: In Mexico at San Jose and Unfortunately, we reported two LTI during the quarter, both incidents were related to employees working at height.
David Edward Whittle: We continue to proactively reinforce our leadership initiatives to improve safety performance throughout all of our operations.
David Edward Whittle: San Jose produced 759111 ounces of silver.
David Edward Whittle: On an average head grade of 147 grams per tonne.
David Edward Whittle: <unk> 4533 ounces of gold at <unk>.
David Edward Whittle: Average head grade of <unk> 90 grams per tonne of gold.
David Edward Whittle: The processing plant milled 181103 tonnes of ore at an average throughput of 2182 tonnes per day in line with the plan for the period.
David Edward Whittle: The mine has less operational flexibility in 2024, when compared to 2023.
David Edward Whittle: The reduced and more dispersed mineral reserves in the Trinidad deposit.
David Edward Whittle: Production stopes in the upper levels contained lower head grades and higher presence of federal's oxides, which impacted recovery by approximately 2% in the quarter.
Speaker Change: A thorough Jose.
Speaker Change: Cash cost of $21 98, and the lasik of $24 20.
David Edward Whittle: Four per silver equivalent ounce for the quarter.
David Edward Whittle: The increase is explained by the lower head grades lower production and.
David Edward Whittle: US 50% of our costs are peso denominated also a stronger Mexican peso impacting.
David Edward Whittle: The company continues preparations to execute our multiyear progressive mine closure and monetary plan well.
David Edward Whittle: <unk> is conducting regular assessments on trade offs between maintaining operations and care and maintenance option as Jorge mentioned before exploration work continues to advance in the year to date.
David Edward Whittle: In Peru.
David Edward Whittle: I think our Yamana mine produced 330.
David Edward Whittle: 315.
David Edward Whittle: 460 ounces of silver at an average head grade of 87 grams per tonne zinc and lead production was $12, two and $9 5 million pounds respectively.
David Edward Whittle: Production is in line with our mineral reserves estimates and <unk>.
David Edward Whittle: <unk> for the period.
David Edward Whittle: Underground development for the quarter was mainly focused on the lower levels of the Animas vein.
David Edward Whittle: Cash cost per silver equivalent for the quarter was $11 61, driven primarily by lower treatment and refining charges.
David Edward Whittle: The all in sustaining cash cost per ounce of payable silver equivalent was $17 $18 back.
Speaker Change: To you.
David Edward Whittle: Luis will now provide a.
Luis: A review of our financial results.
Luis: Thank you. So we we have recorded Nanda attributable income through for two nine shareholders for the period of $26 5 million or <unk> <unk> per share compared to $10 9 million and <unk> <unk> per share in Q1 of 2023 claimed.
David Edward Whittle: The main driver for this 143% increase in net income was a contribution from the <unk> mine, which had its first full quarter of operations in Q3 of 2023.
David Edward Whittle: So you get less has been stressed.
David Edward Whittle: <unk> low cost ounces, which helped lower our consolidated cost per gold equivalent ounce sold from $916 in the prior period to $879.
David Edward Whittle: In Q1 of 2024.
David Edward Whittle: A few comments on the income statement depreciation in the quarter was $50 million, which includes.
David Edward Whittle: $216 million in depletion of the purchase price related to the acquisition of <unk> in 2021.
David Edward Whittle: On General and administration expenses, we recorded $18 $2 million and as shown in the breakdown. We provide of this line item in our MD&A and this was comprised of 10 and a half million dollars of in country G&A at our mining operations eight.
David Edward Whittle: $8 $4 million of corporate G&A, and $2 $2 million of share based compensation.
David Edward Whittle: Our total general and administration expenses were $3 $3 million above the comparable period due.
David Edward Whittle: Due to the added G&A from the tequila mined and higher corporate G&A related to timing of expenses.
David Edward Whittle: On foreign exchange, we recorded a loss of $4 $1 million, which is primarily related to cash balances held in West Africa in the context of two 2% devaluation of the euro.
David Edward Whittle: Versus the U S dollar and.
David Edward Whittle: Cost of foreign exchange trades associated to repatriation of funds from West Africa.
David Edward Whittle: On interest and finance costs.
David Edward Whittle: We recorded $6 $2 million in the quarter of which $4 8 million is interest expense the balance beam accretion of right of use liabilities and asset retirement obligations.
David Edward Whittle: The increase of $3 6 million over 2023 is explained by $2 $8 million of interest capitalized in Q1 with a prior year aspire to those singular construction.
David Edward Whittle: And higher accretion charges related to say again in the current quarter.
David Edward Whittle: Moving onto our cash flow statement, our net cash provided by operating activities was $88 $9 million after $35 $3 million of negative changes in working capital.
David Edward Whittle: A significant portion of this was related to timing of payroll.
David Edward Whittle: I do want to note we have been experiencing challenges in the collection of BNP at our operations in Burkina Faso, and anticipate this may continue to be a challenge moving forward.
David Edward Whittle: In the investing section of our cash flow statement, we recorded $41 $3 million in additions to property plant and equipment, which includes $4 $2 million spent the <unk> project in Senegal.
David Edward Whittle: Over the next two quarters, we expect higher capital expenditure levels, mostly due to the progression of the leach pad expansion at Lynn Liddle.
David Edward Whittle: As a remainder as a reminder, sorry 'twenty 'twenty four is a heavy capex year and later with a total budget, including capitalized stripping of $64 million comprising.
David Edward Whittle: On pricing around 50% of our consolidated capital expenditure budget.
David Edward Whittle: For 2024, excluding exploration activity.
David Edward Whittle: And moving on to our balance sheet of Tokyo has mentioned, we have been paying down debt aggressively with $40 million paid in the quarter and $123 million paid since the first full quarter of production in Q3 of 'twenty two.
David Edward Whittle: 93.
Speaker Change: Thank you and back to your quarter.
Speaker Change: Operator, we can open the floor.
Speaker Change: Questions.
Speaker Change: Thank you Sir.
Speaker Change: At this time, we will be conducting our question and answer session.
Speaker Change: I would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: And you May press Star two if you would like to remove your question from the queue.
Speaker Change: Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: Thank you.
Speaker Change: Our first question is coming from Adrian day, with Adrian Day asset management. Your line is now.
Adrian Vincent Day: Good afternoon.
Adrian Vincent Day: Everybody I.
Adrian Vincent Day: I wanted to ask about San Jose the closure, you're scheduled to close at the end of the year, but obviously you are spending money and having success with yeti.
Adrian Vincent Day: What will they drink why what is required for you to extend.
Adrian Vincent Day: Mining operations, there and when will that decision be made.
Adrian Vincent Day: Yeah.
Adrian Vincent Day: Dan.
Speaker Change: We will have a better.
Speaker Change: Yeah.
Speaker Change: Ah.
Speaker Change: How the situation at San Jose will evolve.
Speaker Change: They are potentially different scenarios, we're looking at right now.
Speaker Change: So one is of course.
Speaker Change: Based on exploration success, we can continue mining.
Speaker Change: It's not just exploration success, but also resources that could not get converted in late 2023.
Speaker Change: Benefiting from higher prices as we get fits our mine plans right.
Speaker Change: So.
Speaker Change: There is one scenario, where we just continues.
Speaker Change: Our mining there.
Speaker Change: There is a second scenario, where we decided to play the mine on care and maintenance.
Adrian Vincent Day: While we continue with exploration.
Adrian Vincent Day: Yes.
Adrian Vincent Day: And the last one is we exhaust reserves.
Adrian Vincent Day: In 2023 and make the decision to just go into sort of in 2024.
Adrian Vincent Day: Roll into a.
Adrian Vincent Day: Richard closure plan right.
Adrian Vincent Day: The San Jose mine has a small footprint.
Adrian Vincent Day: We are currently updating or mine closure plans.
Adrian Vincent Day: And.
Adrian Vincent Day: And but we really will have a better better idea of which of the three avenues three options, we have well Dave.
Adrian Vincent Day: And we need a bit more time and we are you always have to be hopefully in this business and we remain hopeful that yes, you will provide opportunities, but that still needs to be proven.
Adrian Vincent Day: Yes. He has been an exciting discovery at the San Jose mine, but it needs to graduate from an exciting discovery to an exciting resource reserve, we can plug into mice rats, and we're not there yet.
Adrian Vincent Day: Why we continue drilling aggressively and as discussed in the goal.
Adrian Vincent Day: Management is planning to extend a drift.
Adrian Vincent Day: To the core of a high grade area.
Adrian Vincent Day: To get a.
Adrian Vincent Day: Closer to mineralization and a better handle on.
Adrian Vincent Day: <unk>.
Adrian Vincent Day: And on mineralization as well.
Speaker Change: Okay. Thank you. Thank you that's helpful.
Adrian Vincent Day: Okay.
Adrian Vincent Day: Thank you.
Adrian Vincent Day: Our next question is coming from Don Demarco with National Bank Financial your line is life.
Don DeMarco: Thank you operator, good morning, Jorge and team.
Don DeMarco: Maybe just continuing on the last caller's question Jorge.
Don DeMarco: No I saw that there was a response filed an appeals court in February with the decision expected in 12 months could you add more color to this and could this be.
Don DeMarco: Factor into any decision to extend the mine life at San Jose.
Don DeMarco: With respect to the to the court.
Don DeMarco: Ruling as you know we had a favorable court.
Don DeMarco: Court ruling on the first instant on the administrative court in Mexico.
Don DeMarco: That was appealed.
Don DeMarco: We expect the deal to be resolved by year end.
Don DeMarco: Are you know late 2024.
Don DeMarco: Uh huh.
Don DeMarco: We feel even more stronger.
Don DeMarco: Or or stronger on our legal position based on the ruling that basically discarded all the nonsensical argument that were presented in front of us.
Don DeMarco: Yeah.
Don DeMarco: And.
Don DeMarco: We are right now.
Don DeMarco: Not not.
Don DeMarco: Positive that we will get a.
Don DeMarco: This appeal will will will not progress and that is the last week versus the similar net half against our burn rate right now.
Don DeMarco: We are also cognizant that there is a government change coming in in June.
Don DeMarco: Elections.
Don DeMarco: And we are in dialogue with a with a you know.
Don DeMarco: The two leading candidates.
Don DeMarco: And are hopeful that a the investment climate in Mexico for mining.
Don DeMarco: It will improve.
Don DeMarco: As an outcome of this coming election.
Don DeMarco: Okay.
Speaker Change: Fair enough and.
Speaker Change: You know at face value you got good drill results that yes, you've got a higher gold price.
Speaker Change: So both of those higher silver prices of both of those seem to be in your favor.
Speaker Change: You know if you can make a decision to go ahead would it be kind of all works then it one more quarter at a time type thing or would you would you think oh, we might extend it an entire year I mean, what is your preliminary thoughts at this point on a potential extension.
Speaker Change: I'll tell you how we're viewing this as I said previously yes. He has been an exciting discovery because it has.
Speaker Change: <unk> has a very high grade silver substantial with.
Speaker Change: For mechanized mining, so, but we still need to learn.
Speaker Change: And define.
Speaker Change: The type of volumes and advantages that we have available there.
Speaker Change: Today, we have defined mineralization or panel area that stretches for 350 meters by 450 meters.
Speaker Change: You know this is a mine that can take as much as a million tonnes of ore.
Speaker Change: A year.
Speaker Change: And.
Speaker Change: At ESC.
Speaker Change: Napkins.
Speaker Change: They're working them asking you currently probably were getting closer to half a million.
Speaker Change: Alright.
Speaker Change: Okay, well, that's why it's relevant to step out.
Speaker Change: It's taken us a while to understand yes, because he has.
Speaker Change: A strike.
Speaker Change: That's a different to what we are used to this acquisition.
Speaker Change: Fine.
Speaker Change: The strike of this vein is hard with respect to when we were in Miami here for over a decade.
Speaker Change: So it took us a while to figure that one out.
Speaker Change: Now we are drilling for volume.
Speaker Change: And that's why I say that it's going to be probably into the third quarter. When we have a better handle on how big the CS and how meaningful it can be two nine plants. You know again, one thing as an exciting discovery and another one is a resource that you can grow meaningfully into a mine plan, but right now we.
Speaker Change: Do not have something that can go meaningfully into a mine plan, we were working for them.
Speaker Change: Okay sounds good so we'll look forward to that update maybe in Q3.
Speaker Change:
Speaker Change: Across the rest of your portfolio, we've seen Cote d'ivoire, theres been some shortage of electricity due to the national grid.
Speaker Change: Out of your control, but is this you're looking at.
Speaker Change: Different options to two to work around this.
Speaker Change: Does this pose any risk to guidance or <unk>.
Speaker Change: For Q2 Q3.
Speaker Change: Basically the only information we have at this time.
Speaker Change: Our guidance is intact.
Speaker Change: Right so.
Speaker Change: We are benefiting from.
Speaker Change: Having a meal that can do up to 25% higher throughput than what we budgeted for 2024.
Speaker Change: We're benefiting from the fact that David stated.
Speaker Change: The West African region in the first quarter has produced almost 7000 ounces ahead of budget.
Speaker Change:
Speaker Change: And.
Speaker Change: The problem that is the portion of a problem that is out of our control.
Speaker Change: Appears to be.
Speaker Change: Moving.
Speaker Change: One of the power generators that came out of line.
Speaker Change: He is back on line. This was a freak a situation where two on.
Speaker Change: Related power plants game.
Speaker Change: Out of line.
Speaker Change: Power generators came out of line at the same time.
Speaker Change: So.
Speaker Change: We are seeing one already back in line and then the other one is expected to be barking.
Speaker Change: In July so we right now do not see an impact or.
Speaker Change: Our second quarter production.
Speaker Change: Yeah.
Speaker Change: But it's a situation that we monitor closely.
Speaker Change: Okay.
Speaker Change: And.
Speaker Change: What was behind this electricity shortage you. These two incidents that you speak of it the private power generation plants and is there any read through here about the stability of power in Cote d'ivoire. Once these are fixed.
Speaker Change: We need a thorough assessment of.
Speaker Change: The power availability the stability of the agreed.
Speaker Change: When when making the construction decision for circular under assessment was that there was ample power generation capacity and degree to a stable.
Speaker Change: And then this accident happened right.
Speaker Change: So.
Speaker Change: We are sourcing a longer term solution for us, which is a full backup for the entire operation.
Speaker Change: We expect we can have that Oh.
Speaker Change: Yeah. It does.
Speaker Change: Power generators are diesel generators onsite by July.
Speaker Change: So even if these growth related problem drag Sean.
Speaker Change: With the national grid.
Speaker Change: We should be all done on those by July So that's why we say that.
Speaker Change: And that we can control so we're bringing the problem indoor hands rather than relying on them.
Speaker Change: It sounds like that's out of our control.
Speaker Change: Okay. Thanks for all of that congratulations on again, the strong start to the year and good luck with Q2.
Speaker Change: It's all for me Thank you Don.
Speaker Change: Thank you. Our next question is coming from Eric Windmill with Scotiabank. Your line is life.
Eric Winmill: Great. Thank you Hi, Jorge and team I appreciate you taking my question.
Eric Winmill: On Argentina, we're seeing some positive headlines there after the election any comments about what youre seeing on the ground and does this change your view in terms of deploying more capex so within Argentina.
Speaker Change: I think for us.
Speaker Change: <unk> pointed out we're seeing positive signs all across.
Speaker Change: Yes.
Speaker Change: But I think the there are two important things that we look at here Eric that.
Speaker Change: I think the positive signs, we're seeing are building up too while liberating.
Speaker Change: The exchange controls FX controls.
Speaker Change: You know I think what we're seeing is a lot of positive steps from these governments towards that.
Speaker Change: And the second one England that relates to this is country risk right, having our lenders.
Speaker Change: You know look.
Speaker Change: Looking at the.
Speaker Change: Argentina as a place to where they will take collateral.
Speaker Change: Right.
Speaker Change: Moving to Argentina, and Argentina, and the capital projects.
Speaker Change: So we're seeing a lot of positive.
Speaker Change: Messages are followed by a positive actions.
Speaker Change: Country risk has come down from you know 2400 points to around 1200.
Speaker Change: You know to give you a sense of the average for Latin American country risk is our own 400, right. So there's still a long way to go in terms of further country risk perception.
Speaker Change: But it is trending in the right direction we are.
Speaker Change: Hearing the right messages from from government, followed by the right actions, but.
Speaker Change: With respect to our view on investment on new large capital projects Greenfield projects I think we're still in a watch and see mode.
Speaker Change: Alright. Thank you I appreciate that that's helpful. Maybe just one more for me on the financial side. Obviously, you did see some working capital payments in the quarter any sort of view here in terms of an optimal level should we expect.
Speaker Change: No additional working capital payments throughout the balance of this year.
Speaker Change: Capital payments you mean.
Speaker Change: Do you mean that.
Speaker Change: Yes, we I mean, we intend to continue using our liquidity over the next few quarters.
Speaker Change: <unk> to pay down.
Speaker Change: Bank debt.
Speaker Change: Pace at which we do it will be.
Speaker Change: I mean a function of.
Speaker Change: What we decided to do with the convertibles, which as do around October of this year.
Speaker Change: And any.
Speaker Change: Any other competing uses of cash rents overall the pace. We've seen so far is what we expect to soon maintains over the next few quarters.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay, Great. That's helpful. I appreciate that I'll hop back in queue.
Speaker Change: Thank you. Thank you.
Speaker Change: Thank you once again, if we have any remaining questions or comments. Please indicate so now by pressing star one on your telephone keypad.
Speaker Change: Oh, we have a question on the line from Tony Christ with Odyssey investments Your line is nice.
Tony Christ: Thank you. Thank you for taking my question I wanted to congratulate you first of all your team.
Tony Christ: For a great quarter.
Tony Christ: And we're looking forward to the future.
Tony Christ: I wanted to know.
Speaker Change: Color you could give additional comments.
Tony Christ: On your African born and what your hopes are over the next year.
Tony Christ: Realistic hopes for.
Speaker Change: For the mine.
Tony Christ: Is that a level now but.
Tony Christ: <unk> should be consistent this year are there chances equity increase.
Speaker Change: And then any comment any more color you could give.
Speaker Change: Thank you so much and again congratulations.
Speaker Change: Thank you Sir.
Speaker Change: With respect to our African operations.
Speaker Change: I can stress that.
Speaker Change: We see short term opportunities I'd say gayla.
Speaker Change: As stated during the call.
Speaker Change: We are in a position to run our ore mill and the mine.
Speaker Change: At approximately 25% above the throughput rate that we budgeted in 'twenty 'twenty four.
Speaker Change: And that is an outcome of the good work done by the team on Debottlenecking and squeezing.
Speaker Change: We think the lemon if you will.
Speaker Change: On the facility in a risk weighting in the mine plans to source.
Speaker Change: Or the right. So that is a low hanging fruit that we can we can capture throughout the year.
Speaker Change: Yeah.
Speaker Change: No.
Speaker Change: A bit more longer term.
Speaker Change: We continue enjoying the exploration success at singular.
Speaker Change: Ah I cannot stress that enough.
Speaker Change: We are able to not only replace what we've agreed but they expand beyond that we also can see either.
Speaker Change: Oprah communities for further expansions.
Speaker Change: Yeah, there are multiple.
Speaker Change: In Burkina Faso the team.
Speaker Change: Yeah.
Speaker Change: And the maintenance operating at a steady rate.
Speaker Change: But the team continues to capture opportunities on the expansion of the resources and as I said during the call. We continue to see opportunities on the fringes of the deposit on the <unk> 55 from the deeper portion of the mine.
Speaker Change: Yeah.
Speaker Change: As we extend or underground infrastructure drift.
Speaker Change: Deep end up some 55, we continued to finding structure with great, which leads us to think that we have an opportunity to to continue.
Speaker Change: Ameliorating the rate of depletion in the mine and and.
Speaker Change: Supporting the loan right so.
Speaker Change: Those are the big ones and of course, the embassy suite in Senegal, which is a big lever for medium and long term growth in the company.
Speaker Change: We are exploring there and we have a close to a 50000 meter drill program budget that.
Speaker Change: We are well advanced we are advancing with engineering studies environmental studies in parallel to the exploration.
Speaker Change: And.
Speaker Change: If successful with the program. This year, we believe we are in a position to deliver a pea also by year end.
Speaker Change: And updated.
Speaker Change: <unk> been very economic assessment on the project by year end.
Speaker Change: Very good thank you.
Speaker Change: Continue the good work thank you.
Speaker Change: Thank you Sir.
Speaker Change: Thank you.
Speaker Change: We have no further questions in queue at this time I would like to hand, it back to Mr. Carlos Baca for closing remarks.
Carlos Baca: Thank you as there are no further questions I would like to thank everyone for listening to today's earnings call have a great day.
Speaker Change: Yes.
Carlos Baca: Thanks <unk>.
Carlos Baca: This concludes today's conference call and you may disconnect. Your lines at this time, we thank you for your participation.
Carlos Baca: Thank you everyone.
Carlos Baca: Alright.