Q1 2024 Orezone Gold Corp Earnings Call
Thank you for standing by my Name's, Hermione and that would be a conscious operator today.
Operator: Thank you for standing by. My name is Hermione, and I will be your conference operator today. At this time, I would like to welcome everyone to the Orezone Q1 2024 Results Webcast and Conference Call.
Operator: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to reserve a question, press star 1 again. I would now like to turn the call over to Patrick Downey, President and CEO. Please go ahead.
At this time I would like to welcome everyone to our adult Q1, 'twenty 'twenty four there so webcast and conference call. All lines have been placed on mute to prevent any background nice after the Speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one any telephone Keith.
If you would like to withdraw your fresh in their press star one again.
I'd now like to turn the call over to Patrick Downey, President and CEO. Please go ahead.
Peter Tam: Thank you very much and welcome to the ore zone in Q1 2024 results conference call with me today will be Peter <unk>, CFO, who will be going through.
Patrick G. Downey: Thank you very much and welcome to the Orezone Q1 2024 results conference call. With me today will be Peter Tam, CFO, who will be going through the financial aspects of the quarter. So during Q1, we had gold production of 30,139,000 ounces, which was right on plan. Gold sales of 31,229 at an all-in sustaining cost of $1,324 per ounce sold. Cash at the end of the quarter stood at $15.6 million
Patrick G. Downey: We also paid down a further $5 million of senior debt, which on top of the $34 million we paid in 2023, leaves us with approximately $56 million of senior debt remaining. We had zero LTIs during the quarter and worked 1.4 million hours, which is another strong reflection of the operational excellence at the Bombore mine. We also essentially completed the MV3 RAP, I'll talk about it a little bit later on, but that now allows us access to mining in the south.
Peter Tam: Financial aspects of the quarter.
Peter Tam: So during Q1, we had gold production up $30 139, <unk>, which was right on plan.
Peter Tam: <unk> sales up 31229 at an all in sustaining costs of $1324 per ounce sold.
Peter Tam: Cash at the end of the quarter stood at $15 $6 million.
Peter Tam: We also paid down a further $5 million of senior debt, which are top of the 34 million. We paid in 2023 leaves us leaves us with approximately $56 million of senior debt remaining.
Speaker Change: We have zero LTI is during the quarter are worked up $1 4 million hours.
Speaker Change: Which is another strong reflection of the operational excellence at the <unk> mine.
Speaker Change: We also are essentially completed the mp3 wrap I'll talk about it in a little bit later on but that now allows us access to mining in the south and we're on track to meet full year guidance for 2024.
Patrick G. Downey: And we're on track to meet fuzzier guidance for 2024. We also announced that we'd be doing a Phase 2 hard rock expansion. It'll be completed in two stages. We announced that last week. I'll talk about that later in the presentation. And, very importantly, we will be commencing another phase of exploration, which will be ongoing, likely for several years, which will further unlock value at the operation. I'll now hand it over to Peter.
Speaker Change: We also announced that we'd be doing it phase two hard rock expansion it'll be completed in two stages, we announced that last week I'll talk about that later and later on in the presentation.
Speaker Change: And very importantly, we will be commencing.
Peter Tam: Another phase of exploration, which will be ongoing likely for several years, which will further unlock value at the operation I'll now hand over to Peter.
Peter Tam: Thanks, Patrick.
Peter Tam: Our financial and operating highlights for the first quarter, we produced 30139 gold ounces consistent with our mine plan and grades and sold 31229 gold ounces at a realized gold price of $2066 per ounce.
Peter Tam: Our financial and operating highlights For the first quarter, we produced 30,139 gold ounces consistent with our mine planning grades and sold 31,229 gold ounces at a realized gold price of $2,066 per ounce. Cash cost was $1,127 per ounce sold, and all-in sustaining cost was $1,324 per ounce sold for a healthy cash margin of $742 per ounce or 36%. Gold production in the first quarter was lower than the comparable quarter in 2023, as the prior period mill feed benefited from the reclaim of high-grade stockpiles, which were fully depleted by the end of June 2023.
Peter: <unk> cost was $1127 per ounce sold and all in sustaining cost was $1324 per ounce sold for healthy cash margin of $742 per ounce or 36%.
Peter Tam: Oil production in the first quarter was lower than the comparable quarter in 2023 at the prior period's mill feed benefited from the reclaim of high grade stockpiles, which were fully depleted by the end of June 2023.
Peter Tam: Revenue from gold sales was $64.7 million, resulting in earnings from mine operations of $26.9 million after cost of sale of $37.8 million. Cost of sale was comprised of $30.1 million in production costs, $5.1 million in government royalties, and $5.7 million in depreciation and depletion, partially offset by a $3.1 million write-down reversal to our long-term or stockpile inventory, driven by an increase in Pre-tax income was $20.4 million, and then after-tax net income was $13.6 million. Net income after minority interest was $11.7 million, and basic and diluted earnings per share were both $0.03 for the quarter.
Speaker Change: Revenue from gold sales were $64 7 million, resulting in earnings from mine operations of $26 9 million after cost of sale of $37 8 million.
Speaker Change: Cost of sales was comprised of $30 1 million in production costs $5 $1 million in government royalties and $5 7 million and depreciation and depletion, partially offset by a $3 1 million write down reversal to our long term ore stockpile inventory driven by an increase in that consensus long term gold price during the quarter.
Speaker Change: Pretax income was $20 4 million and after tax net income was $13 6 million net income after minority interest was $11 7 million and basic and diluted earnings per share were both <unk> <unk> for the quarter.
Peter Tam: In terms of cash flows, operating cash flows before changes in working capital were $20.4 million, and after working capital was $13.6 million. Cash used in investing activities was $11.6 million, which included growth spending of over $6 million for the ongoing RAP, finalization of the grid power connection, and early works for the Phase II hard rock expansion. This resulted in free cash flow of $2 million for the current quarter. As stated by Patrick earlier, cash at March 31, 2024 stood at $15.6 million after principal repayment on a Corusbank senior debt of $5 million in the first quarter. To improve its cash position and near-term liquidity, the company closed and drew upon an XOF-denominated bridge loan of approximately $20 million U.S. with Coors Bank after the end of the quarter on May 10.
Speaker Change: In terms of cash flows operating cash flows before changes in working capital was $24 million and after working capital of $13 6 million cash used in investing activities was $11 6 million, which included growth spending of over $6 million for the ongoing wrap finalization of the grid power connection and early.
Speaker Change: It works for the phase two hard rock expansion.
Speaker Change: This resulted in free cash flow of $10 million for the current quarter.
Speaker Change: As stated by Patrick earlier cash at March 31, 2024 stood at $15 6 million after principal repayments on our core bank senior debt $5 million in the first quarter.
Patrick G. Downey: To improve our cash position, our near term liquidity the company closed and drew upon an excellent app denominated bridge loan of approximately 20 million U S with horse bank. After the end of the quarter on May 10th.
Peter Tam: We are in advanced discussions with Coors Bank for the project loan on our Phase 2 hard rock expansion and expect to conclude a binding debt commitment before the end of June in order to allow the expansion to proceed. Next slide: production and unit cost summary Operationally, for Q1, we mined 5.5 million tons at a strip ratio of 1.3. These tons were 20% higher than the same quarter in 2023 as mining rates in the current quarter were increased with the assistance of a second mining contractor that mobilized the site in July of last year in order to help keep pace with the mine plan.
Kors bank: We are in advanced discussions with Kors bank for their project loan on our phase two hard rock expansion and expect to conclude a binding that commitment before the end of June in order to allow the expansion to proceed.
Speaker Change: Slide.
Peter Tam: For processing, we processed 1.36 million tonnes in Q1 2024 at an average head grade of 0.78 grams per tonne gold with a recovery rate of 89%, resulting in gold production of 30,139 gold ounces. When compared to Q1 2023 gold production of 41,301 gold ounces, gold production declined by 27% due to an 18% decrease in head grades, a 6% decline in plant throughput, and a 3% The reclaim of higher grade stockpiles as supplemental mill feet contributed to the higher head grades in 2023.
Speaker Change: Production and unit cost summary, operationally for Q1, we mined $5 5 million tonnes at a strip ratio of one three.
Peter Tam: As for plant throughput and process recovery, they are lower in the current quarter due mainly to the greater proportion of transition ore as mining deepens in certain pits, and the Lower Plant Availability Experience in the Quarter. Specifically, the presence of harder transition ore results in slightly lower metallurgical recoveries, lower plant throughput, and additional plant maintenance, while plant availability was also impacted from commissioning activities to connect to the national grid in January, followed by the unexpected shortage of grid power from Sauna Bell beginning in March.
Kors bank: <unk> were 20% higher than the same quarter in 2023 as mining rates in the current quarter or increased by the assistance of a second mining contractor that mobilized to site in July of last year in order to help keep pace with the mine plan.
Speaker Change: For our processing, we process 136 million tonnes in Q1 2024 at an average head grade of <unk> 78 grams per tonne gold with a recovery rate of 89%.
Peter Tam: We do expect, however, plant throughput, head grades, and recoveries to improve from a greater blend of oxide ore once mining commences at Sea to East in Q3 2024. From a cost perspective, all-in sustaining costs per ounce sold were $1,324 in Q1 2024, a 43% increase when compared to Q1 2023 all-in sustaining costs of $924 per ounce. The higher all-in sustaining cost is attributable to lower gold production, greater per ounce royalty costs from the new royalty rates that came into effect in October 2023, and increased mining costs.
Peter Tam: Unit cash costs covering mining processing site GeneA were $21.05 per ore ton processed in Q1 2024, an increase of 11% from $18.96 per ore ton in Q1 2023. The increase is due to higher mining and processing site costs and from fuel ore tons processed. Mining costs have moved higher as lower benches are mined resulting in longer hauls and more transition material that requires drill and blast prior to excavation, combined with a higher strip ratio and more contractor management fees with the use of two mining contractors. Site Gene Acosts reflect greater security spending as mining and RAB activities progressively increase in the southern half of the Bumbray Mining Permit.
Peter Tam: Processing costs per ore ton have remained relatively steady from $9.21 per ton in Q1 of 2023 to $9.24 per ton in Q1 2024. However, unit processing costs were expected to decline in Q1 2024 from 2023 levels upon connecting to the national grid at the end of January. However, power cost savings were offset by the greater blend of transition ore, resulting in higher per ton consumption of power, grinding media, and main reagents; more plant maintenance to address higher equipment wear and lower plant throughput.
Speaker Change: Resulting in gold production of 30139 gold ounces.
Peter Tam: Furthermore, the mine relied on more self-generated power using diesel beginning in March due to the lower than expected availability of the national grid towards the end of the quarter. We do expect unit cash costs to improve once full mining access commences at TIEC, with greater release of near-surface oxide ore from the started pits in this area, beginning in the second half of 2024. With that, I'll hand it back to Patrick. Thanks, Peter.
Speaker Change: Compared to Q1 2023 gold production at 41301 gold ounces.
Speaker Change: Gold production declined by 27% due to an 18% decrease in head grades a 6% decline in class III foot and a 3% decrease in plant recoveries.
Speaker Change: The reclaim of high grade stockpile as supplemental mill feed contributed to the higher head grades in 2023.
Speaker Change: As for planned throughput and process recoveries. They are lower in the current quarter due mainly to the greater proportion of our transition or as mining deepens and certain pit.
Speaker Change: And lower plant availability experienced in the quarter.
Speaker Change: Typically the presence of harder transition or result in slightly lower metallurgical recoveries lower plant throughput and additional pipe maintenance while plant availability was also impacted.
Speaker Change: Commissioning activities to connect to the national grid in January followed by the unexpected shortage of grid power from <unk> beginning in March we do expect however, planned throughput head grades and recoveries to improve from a greater blend of oxide ore once mining commences at sika ease in Q3 2024.
Speaker Change: From a cost perspective, all in sustaining cost per ounce sold was $1324 in Q1, 2024, 8% to 43% increase when compared to Q1 2023, all in sustaining costs of $924 per ounce.
Speaker Change: The higher all in sustaining cost is attributable to lower gold production greater per ounce royalty costs from the new royalty rates that came into effect in October 2023, and increased mining costs.
Speaker Change: Unit cash cost covering mining processing site G&A was $21 five per ore tonne process. In Q1, 2024, an increase of 11% from $18 96 per ore tonne in Q1 of 2023. The increase is due to the higher mining and site G&A costs from fewer ore tonnes process.
Speaker Change: Mining costs have moved hired as lower benches are mined resulting in longer haul to more transition material that requires drill and blast prior to excavation.
Speaker Change: By with a higher strip ratio and more contractor management fees with a use of two mining contractors.
Speaker Change: G&A costs reflect greater security spending as mining and Rab activities progressively increase in the southern half of the Bombay mining permit.
Speaker Change: Processing costs per ore tonne have remained relatively steady from $9 21 per ton in Q1 of 2023 to $9 24 per ton in Q1 2024.
Speaker Change: Unit processing costs were expected to decline in Q1 2024 from 2023 levels upon connecting to the national grid at the end of January however.
Speaker Change: However, our power cost savings were offset by the greater blinder transition or resulting in higher per ton consumption of tower grinding media and main reagents more planned maintenance to address higher equipment wear and from lower plant throughput.
Speaker Change: Are there more than mine relied on more self generated power using diesel beginning in March from the lower than expected availability of the national grid towards the end of the quarter.
Speaker Change: We do expect unit cash costs improved once full mining access commences at CES.
Speaker Change: With greater release of near surface oxide ore from the start of pits in this area beginning in the second half of 2024.
Patrick G. Downey: With that I'll hand, it back to Patrick Thanks, Peter.
Patrick: I'd now like to walk through their expansion plans and our exploration plans for the coming year and beyond that so obviously, we felt the oxide plant is up and running running well we did it on time under budget. We're now planning for a phase II stage, one hard rock plant.
Patrick G. Downey: I'd now like to walk through their expansion plans and their expiration plans for the coming year and beyond that. Obviously, we built the offsite plant, it's up and running, running well. We did it on time, under budget. We're now planning for a phase two, stage one hard rock plant. It is completely independent at the front end, and it integrates the back end.
Fleet: Fleet the independent at the front end and it combines the backend I'll show you a little bit of it.
Patrick G. Downey: I'll show you a little bit of a simplified flow chart later on. And then stage two will take us to above 225. But we're not exactly sure what the full run rate will be, but it'll be better determined by ongoing exploration. And in the exploration, we're really looking at how do we unlock the value of this project. We had some phenomenal drill results right up to the end of 2022. But we've done no drilling really since then.
Patrick: A simplified flow sheet later on.
Fleet: And then stage two will take us to above $2 25, but we are not exactly sure. The full run rate will be but it will be better determined by ongoing exploration.
Speaker Change: The exploration, we're really looking at how do we unlock the value of this project. We are we had some phenomenal drill results right up to the end of.
Speaker Change: 2022, we've done no drilling really since then.
Patrick G. Downey: And we're looking forward immensely to restarting exploration in Q3 of this year. So we announced last week our staged expansion plans, strong production growth up to above 170,000 ounces a year by 2026. It'll take about a year to build this phase one plant. The focus will obviously be on deleveraging the balance sheet and building an ongoing strong treasury.
Speaker Change: And we're looking forward immensely restarting exploration in Q3 of this year.
Speaker Change: So we.
Speaker Change: We announced last week, our stage is staged.
Speaker Change: Expansion plans.
Speaker Change: Strong production growth above the 170000 ounces a year by 2026, it will take about approximately a year to build this phase one plant.
Speaker Change: The focus will obviously be on deleveraging the balance sheet building, an ongoing strong treasury theres, obviously, a renewed focus on exploration and then we'll evaluate the timing and size of phase two as we unlock the value from the exploration and and look at how phase one performs.
Patrick G. Downey: There's obviously a renewed focus on expiration, and then we'll evaluate the timing and size of Phase 2 as we unlock the value from the expiration and look at how Phase 1 performs. So stage one, a very simple flow sheet, somewhat mirrors the oxide plant. The only real difference is we've got a jaw crusher in the front end.
Speaker Change: So stage, one very simple flow sheet debt's somewhat mirrors.
Speaker Change: The oxide plant the only real difference is we've got a jaw crusher in the front end, we have a sag mill, which we have identified now and we will once the debt packages sign we will move on that very quickly.
Patrick G. Downey: We have a sag mill, which we have identified now, and once the debt package is signed, we'll move on that very quickly; five leach tanks, which will be exactly the same size as those in the existing plant. And then the existing gold recovery circuit is capable of processing all the carbon from both the stage one hard rock and the oxide plant, so no further modifications are required there, and no further infrastructure is required.
Speaker Change: Five leach tanks, which will be exactly the same size as those in the existing plant and then the existing gold recovery circuit is capable of processing all the carbon from both the stage one hard rock and the oxide plant. So no further modifications required there and no further infrastructure.
Speaker Change: Acquired so it's a very modest capital cost to add $2 5 million tonnes of high grade hard rock through the plant.
Patrick G. Downey: So it's a very modest capital cost to add 2.5 million tons of high-grid hard rock, and then we can expand it by adding a ball mill and a pebble crusher and a number of other tanks, etc., and we can bring it up to 5 to 7 million tons depending on what size this looks like in a couple of years' time. So very flexible from the point of view of expansion. So we're really positioning ourselves for growth going forward as Solid Q1 sets the platform for 2024. The wrap is now complete.
Speaker Change: And then we can expand it by adding a ball mill and a pebble crusher and a number of other tanks et cetera, and we can bring it up to $5 million to $7 million, depending on what size is it looks like in a couple of years' time, So very flexible from the point of view of expansion.
Speaker Change: Yes.
Speaker Change: So we're really positioning ourselves for growth going forward a solid Q1.
Speaker Change: Set the platform for 2020 for.
Patrick G. Downey: We actually had the key handovers over to Cermony this past weekend. We've been able to get in and put in some of the mine infrastructure, including the mine hall roads and do the advanced grade control. The community was very accommodating to us in that regard. They will now start moving to their new houses.
Speaker Change: The ramp is now complete we actually had the key handle wings over ceremony. This past week and we've been able to get in and put in some of the mine infrastructure, including the mine haul roads and do the advanced grid control.
Speaker Change: The community, where we're very.
The community: Accommodating to us in that regard they will now start moving to their new houses the cheapest taken there.
Patrick G. Downey: The Chief has taken the keys in that Ceremony, which gets the move going. It may get us in a bit earlier, so we're hoping to do that, to get into that softer, higher grade ore in the south for the second half of the year. As I said, stage one is announced, and we will start construction. We have started early works already. We have done upfront engineering. We have identified our sag mill, I think we've got our jaw crusher vendor selected, and then the rest is exactly the same equipment as the oxides we would just be buying from those vendors.
Speaker Change: The keys in that ceremony, which gets the move going with May get us in a bit earlier. So we're hopefully hoping to do that to get into that software higher grade ore in the side for the second half of the year.
Speaker Change: As I said stage one is a non stem we will start construction. We have started already works already we have done the upfront engineering.
Speaker Change: <unk> identified our Sag mill I think we've got our jaw crusher vendor selected and then the rest is exactly the same equipment as the oxides, who will just be buying from those vendors.
Patrick G. Downey: So it should take about 12 months to build. The same team has built phase one. So right on cue to get going here.
Bell: Should take about 12 months to Bell <unk> team has built.
Bell: The phase one so right on cue to get going here approximately $80 million of Capex, which will be funded from debt and cash flow with first gold in late 2025, which will push our production to above 170000 ounces a year probably closer to $1 82.
Patrick G. Downey: Approximately 80 million dollars of CapEx, which will be funded from debt and cash flow with first gold in late 2025, which will push our production to above 170,000 ounces a year, probably closer to 180 in 2026. And then, excitingly, we'll be starting an exploration campaign in Q3. We identified some great targets from our drilling in 2022, some brand new targets to follow up on what we did at P17, which we expect to add high-grade ounces there.
Speaker Change: <unk> thousand 26, and then Excitingly, we starting an exploration campaign in Q3, we did we identified some great targets from our drilling in two.
Speaker Change: 2022, some brand new targets to follow up on follow up on what we did at <unk> 17, which we expect to add a high grade ounces there.
Patrick G. Downey: The phenomenal thing about this deposit, we've got 2.3 million ounces of reserves at an average depth of less than 40 meters, which really gives you an idea of the strike extent and the footprint of this project. The multi-million, approximately five million ounces of resources, done to a depth of less than 200 meters.
Bell: <unk>.
Speaker Change: The phenomenal thing about this deposit we've got two 3 million ounces of reserves to an average depth of less than 40 meters, which really gives you an idea of the strike extent in the footprint of this of this project.
Bell: A multimillion.
Speaker Change: Approximately 5 million ounces of resources done to a depth of less than 200 meters.
Patrick G. Downey: And during that drilling in 2022, we identified several high-grid targets along strike, mainly around P-17, P-8, P-9, and MAGA, which we want to now follow up on by doing this project in stages, which will give us the opportunity to do that. And we will go after that starting in Q3, which will really, I think, start to open up the exploration and size potential of Bonvore. So it should be an exciting year. We are positioning ourselves for growth. We've got the support and strong support of our local bank, Corus, and the plant is running and running well.
Speaker Change: And during that drilling.
Speaker Change: In 2022, we identified several high grade targets along strike, mainly around <unk> 17, <unk> nine and Mega, which we wanted to follow up on by doing this project and stages, which will give us the opportunity to do that and we will go after that starting in Q3, which will really I think start to.
Speaker Change: Open up the exploration and size potential outbound already so it should be an exciting year, where we are positioning ourselves for growth, we got the support and strong support of our local bank chorus.
Peter: And the plant is running and running well so we're pretty happy with that as Peter said, we have a little blip with the power that was that was not nothing to do with our power supplier was really to do with the feed from Garen I think everybody else experienced it in the areas. The first time that it happened. So we hope that that smooth out here and keeps us running smoothly for the.
Patrick G. Downey: So we're pretty happy with that. As Peter said, we had a little blip with the power, but that was nothing to do with our power supplier. It was really to do with the feed from Ghana. I think everybody else experienced it in the area for the first time that it happened.
Patrick G. Downey: So we hope that that smooths out here and keeps us running smoothly for the rest of the year. I'd also want to take this time to announce a board change with Mike Halverson stepping down. I really want to thank Mike. He's been at my side now the whole time I've been at Orezone. He's been a phenomenal guy to work with. He will remain as Chairman Emeritus, which is a testament to how well he has served this company, and I look forward to working with Mike in the future. But a big thank you out to Mike there for his stellar work throughout his time at Orezone since its formation. Thank you, and I'll hand you back to the operator for questions.
Speaker Change: For the year I'd.
Speaker Change: I'd also want to take the time, we announced our board change with Mike Halliburton stepping down and I really wanted to thank Mike He's been at my side now that the whole time I've been at <unk>, It's been a phenomenal guy to work with he will remain as chairman Emeritus, which is a testament to.
Mike: Well. He has served this company and I look forward to working with Mike in the future, but I think big Thank you I'd like there for his stellar work through.
Speaker Change: His time at horizontal thrombus formation.
Operator: Thank you and I'll hand, you back to operator for questions.
Operator: Yes.
Operator: We will now begin the question and answer session. If you have dialed in and we would like to ask a question. Please press star one on your telephone keypad Q&A. Thank.
Operator: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and turn the key. If you would like to ask a question, simply press star 1 again. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your headset and ensure that your phone is not on mute when asking a question. Again, press star 1 to join the queue, and your first question comes from the line of Jerry Mahoy with Kanaka Geniki. Please go ahead.
Operator: Thank you like you with your question Sandeep.
Sandeep: One of them.
Sandeep: I called up wanted to ask a question in a listening via loud speakers.
Sandeep: Please pick up your handset and ensure that your phone is not on mute.
Operator: Again first of all I want to join the queue and your first question comes from the line of Jerry Maguire with Canaccord Genuity. Please go ahead.
Jerry Maguire: Alright, Thanks for taking my question.
Jerry Mahoy: Hi, thanks for taking my questions, Addy. A quick question on the WRAP program. There was just a bit of a delay due to some blessing ceremonies for MV3, which is the first of three stages. Any impact expected for the second two stages from having to do similar ceremonies?
Operator: Yes.
Operator: Quick question.
Jerry Maguire: On the rap program, there's just a bit of a delay due to some blessing ceremonies for MB threes, which is the first of three stages.
Jerry Maguire: Any impact expected for the second two stages from Shaw.
Jerry Maguire: Having to do similar ceremonies.
Patrick G. Downey: Not that we know of, but you can never really plan these things. I mean, we were, it didn't really affect phase one because of COVID, so we had a lot of extra time to get it done. So it never really came up on the agenda. But now that we know about it, obviously, we'll be looking to start it earlier. And these things are really down to the community. Germany, they, Jeremy, will determine when the various people can come out to bless the ground, etc. And I don't know how it all works, to be honest.
Shaw: And now that we know, but you can never really plan. These things I mean, we were didn't really affect phase one because of COVID-19. So a lot of extra time to get it done. So it never really came up on the agenda, but now that we know about it obviously will be.
Jerry Maguire: Into started earlier and these things are really down to the community Germany day Jeremy.
Jerry Maguire: We'll determine when the when the various.
Jeremy: People can come out <unk>, the ground et cetera, and I don't know how it all works to be Frank with you, but you have to respect all of their customers in which we do.
Patrick G. Downey: To be frank with you, but you have to respect all of their customs, and which we do. But we caught up on most of it. To be honest with you, our guys did a hell of a job in terms of the construction, etc. And the key ceremony, which again, takes a bit of time with the chief, but that happened very quickly; they were very cognizant of our timing. So we will look into it; we don't expect it to delay anything.
Speaker Change: But we caught up most of it to be honest with you guys did a hell of a job in terms of the construction et cetera.
Frank: And the key ceremony, which again takes a bit of time with achieved that happened very quickly. They were very cognizant of our of our timing. So we will look into it we don't expect it to to delay anything the other key thing is that they are very small villages. Further on so we're not we're not expecting a major delay there. We you learn you learn.
Patrick G. Downey: The other key thing is that they are very small villages further on, so we're not expecting a major delay there. We know you learn more about this construction as you go on and what you can do. So we're pretty comfortable we can deal with it.
Frank: More about this construction as you go on and what you can do so we're pretty comfortable we can deal with it.
Jerry Mahoy: Hey, that's a helpful color. Thanks. My next question is on stage two of the phase two expansion. So, I think it's pretty clear what to expect from stage 1 and, you know, we'll look for finalization of the debt financing from Chorus. But on stage 2, I was hoping for a little more color on how you're thinking about that. Is that contingent on finding additional resources? Or, you know, does that look attractive, you know, even with current resources? And when could we expect to see a potential capex number for that and additional technical details? Any color you have on how you're thinking about stage 2 would be helpful. Thanks. Okay, well.
Jerry Maguire: That's helpful color. Thanks.
Speaker Change: My next question is on <unk>.
Speaker Change: Stage two of the phase two expansion.
Speaker Change: I think it's pretty clear what to expect from stage, one and we'll look for finalization of the debt financing from chorus, but but on stage. Two just was hoping for a little more color on how youre thinking about that is is that contingent on finding additional resources or.
Speaker Change: Does that look attractive even with current resources.
Speaker Change: And when could we expect to see potential capex number for that and additional technical details any color you have on how youre thinking about stage two would be helpful. Thanks.
Patrick G. Downey: Okay, well, stage one right now is 2.5 million tons per annum; we can expand that up to around six or seven; we could do it very simply at five by just adding a ball mill and tanks and another elution columns. That would be a fairly cheap may be less than 100 million, maybe less than that. But obviously, with the drilling, we may, you know, right now, we've got a large resource base; we're redoing all of our reserves at 1700 or just around 1700, sort of a lot less below the long-term gold price, but still reasonable.
Speaker Change: Well stage one right now is $2 5 million tons per annum, we can expand that up to around six or seven we could do it very simply a five by just having a ball mill and tanks and another elution column would be a fairly maybe.
Speaker Change: Maybe the last $100 million, maybe less than that but obviously with the drilling we may right now we've got a.
Speaker Change: A large resource base, we're redoing all of our reserves at 1700 or just around 70 to 100.
Speaker Change: Less below the long term gold price, but still reasonable.
Speaker Change: That has probably added close to 40 million tons to our reserve base. So.
Patrick G. Downey: And that has probably added close to 40 million tons to our reserve base. So we can go to probably around 6 or 7 million tons. It's really round about where do we see the upside. I mean, we had a couple of big hits outside of the foot wall of P8, P9, and a large granite diorite block.
Speaker Change: So we can go to likely around six or 7 million tonnes, it's really round about where do we see the upside and we had a couple of big heads outside of in the footwall of PHP nine at a large granodiorite block, we really don't know what that is and where it's going to go and how it size is up that pad.
Patrick G. Downey: We really don't know what that is and where it's going to go and how it sizes up that pit. So it could be larger, but it likely will be between five and seven million tons per annum. If it's five, it'll be somewhere around 100. If it's seven, it'll likely be something around 140. That would be our current sort of rough estimate.
Speaker Change: So.
Speaker Change: It could be larger but likely will be between.
Speaker Change: Five to 7 million tons per annum, EBIT, five, but it'll be somewhere around 100, <unk> seven would likely be something around 140 that would be our current sort of rough estimates.
Speaker Change: Okay. That's really helpful color Paddy, Thank you and Thats It for me.
Jerry Mahoy: Yeah, that's a really helpful caller, Patty. Thank you. And that's it. OK.
Operator: Okay, thank you. And if you would like to ask a question,
Speaker Change: Okay. Thank you.
Speaker Change: And if you would like to ask a question press star one on your telephone keypad.
Operator: And if you would like to ask a question, press star 1 on your telephone keypad. There are no further questions, or has someone popped in? Our next question comes from Allen. And Harkand, with Orezone Mining, please go ahead.
Speaker Change: Okay.
Speaker Change: There are no further questions alright somewhat.
Speaker Change: Our next question comes from the line of Shannon.
Shannon Hawkins: Hawkins with Arizona mining. Please go ahead.
Allen Harkand: Yes, good morning. I'm saying we should be happy the price of gold is up, but I'm wondering with the $80 million in expansion plus the debt you already have. With the low cash flow, how long do you think it'll take to pay back the debt?
Speaker Change: Yes, good morning.
Shannon Hawkins: I am sorry, yeah, we should be happy the price of gold is up but I'm wondering with the <unk>.
Shannon Hawkins: Expansion $80 million plus that you already have.
Shannon Hawkins: With a low cash flow how long you think it'll take to pay back the debt.
Patrick G. Downey: Well, obviously, the cash flow goes up with the expansion because we're pushing production, we're pushing the grade goes significantly up with that hard rock, but particularly coming from p17. So all of that revenue has gone to the debt provider, and so that's where the debt package comes from. So they understand and use a different gold price than we do. Obviously Alan, they don't use it. They take a bit more conservative approach to these things.
Hawkins: Well, obviously the cash flows it goes up with the with the expansion because we're pushing the production we're pushing the grade goes significantly up but that hard drop, particularly coming from <unk> 17.
Speaker Change: So all of that model has gone to the debt provider and so.
Shannon Hawkins: So thats, where the debt package comes from so they understand and they use a different gold price that we do obviously Alan they don't use.
Alan: They take a bit more conservative approach to these things. So we're fairly confident on that debt to debt packages provided by the lender based on the model that we give them that they review and they put their gold price to it. So that's where we see that so we're pretty confident and comfortable our sales with it and I think the bank is very comfortable with it.
Patrick G. Downey: So we're fairly confident in that debt. The debt package is provided by the lender based on the model that we give them that they review, and they put their gold price on it. So that's where we see it. So we're pretty confident and comfortable with it, and I think the bank is very comfortable with it.
Allen Harkand: I'm just wondering how many years you think it'll take to pay it back at the price of gold at $2,300. Have you made any calculations?
Alan: So I'm just wondering how many years you think it'll take to pay it back at the price of gold.
Speaker Change: <unk> thousand 300 <unk>.
Speaker Change: Have you made any calculations at 'twenty 300 that would be very quick, but we're just working on that to finalize all of that.
Patrick G. Downey: At 2300, it'd be very quick, but yeah, we're just
Patrick G. Downey: We're just working on that to finalize all of that, but I would say, look, if we get the Phase 2 expansion Stage 1 completed in late 2025, we'll be generating significant production and cash flow starting in 2026, and I would expect, with the debt we have now and the additional debt we expect to receive from Chorus for this expansion, we'll have the combined debt repaid sometime in 2027.
Speaker Change: But I would say look if.
Speaker Change: If we get the phase II or the phase II expansion stage when completed in late 2025 will be generating significant production and cash flow starting in 2026, and I would expect with the debt we have now and the additional debt we expect to receive from course for this expansion will have.
COURSE: The combined debt repaid sometime in 2027.
Allen Harkand: and lastly, I just want to know about the grades. Are you going to be able to bring it up to one gram with the exploration you've done for the oxide?
Speaker Change: And lastly, I just wanted to know about the grades are you going to be able to bring it up to one gram would be will.
Speaker Change: It will be.
Speaker Change: Exploration you've done for the oxides.
Patrick G. Downey: There's very little exploration in the oxide. We're really focusing on hard rock. There are other oxide targets that we have not really fully drilled. We will look at those at some later date. That's not the focus at this point in time, but we're generally comfortable with the oxide grades in terms of production now and what they do. It's really the focus on hard rock which will drive the cash flow as we go forward.
Speaker Change: No the outside raised Theres very little exploration in the oxide, we are really focusing on the hard rock. The oxide. There are other oxide targets that we have not really fully drilled we will look at those at some later date, that's not our focus at this point in time.
Speaker Change: While we are generally comfortable with the oxide grades in terms of production now and what it does it is really the focus on the hard rock, which will drive the cash flow as we go forward.
Allen Harkand: So the grades will stay around a 0.8. 0.7, 0.8 Okay. Thank you.
Speaker Change: So as the grades will stay around the <unk> and <unk>.
Patrick G. Downey: 0.7, 0.8 Okay. Thank you. Okay.
Shannon Hawkins: Seven eight.
Shannon Hawkins: Okay.
Shannon Hawkins: Okay.
Shannon Hawkins: Yes.
Shannon Hawkins: Okay.
Speaker Change: Again, if you'd like to ask a question press star one on your telephone keypad.
Operator: Again, if you would like to ask a question, press star 1 on your telephone keypad. There are no further questions. I will now turn the conference back over to Patrick Downey, President and CEO, for closing remarks.
Shannon Hawkins: Yes.
Speaker Change: There are no further questions I will now turn the conference back over to you.
Patrick G. Downey: Patrick Donnie.
Patrick G. Downey: Thank you very much.
Patrick G. Downey: Yeah.
Patrick G. Downey: Okay. Thank you everyone.
Patrick G. Downey: Okay, thank you everyone for listening in, and we look forward to a strong 2024 and commencing the phase two expansion and the drilling in the second half of this year should be a very exciting news flow-filled year.
Patrick G. Downey: Who are listening in and we look forward to a strong Q3, 2024 and commencing the phase III expansion and the drilling in the second half of this year should be a very exciting news flow.
Shannon Hawkins: Well the year thank.
Shannon Hawkins: Thank you.
Jamie: And gentlemen that concludes today's call. Thank you all for Jamie you may now disconnect.
Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining us. You may now disconnect.