Q2 2024 Alamos Gold Inc Earnings Call
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Speaker Change: This conference is being recorded.
Operator: All participants, please stand by. Your conference is now ready to begin. Good morning to all participants. I will now turn the call over to Mrs. Scott Parsons, Alamos' Senior Vice President in Investor Relations. Please go ahead, Mrs. Parsons.
Speaker Change: All participants, please stand by. Your conference is now ready to begin. Good morning to all participants. I will now turn the call over to Mrs. Scott Parsons, Alamos' Senior Vice President in Investor Relations. Please go ahead, Mrs. Parsons.
Scott Parsons: Thank you, Paul, and thanks to everybody for attending Alamos' second quarter 2024 conference call. In addition to myself, we have on the line today John McCluskey, President and Chief Executive Officer, Greg Fisher, Chief Financial Officer, Luc Guimond, Chief Operating Officer, and Scott R.G. Parsons, Vice President of Exploration.
Scott Parsons: Thank you, Paul, and thanks to everybody for attending Alamos' second quarter 2024 conference call.
Speaker Change: In addition to myself, we have on the line today, John McCluskey, President and Chief Executive Officer, Greg Fisher, Chief Financial Officer, Luc Guimond, Chief Operating Officer, and Scott R.G. Parsons, Vice President of Exploration.
Scott Parsons: We will be referring to a presentation during the conference call that is available through the webcast and on our website. I would also like to remind everyone that our presentation will be followed by a Q&A session. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release, and MD&A, as well as the risk factors set out in our annual information form.
We will be referring to a presentation during the conference call that is available through the webcast and on our website. I would also like to remind everyone that our presentation will be followed by the Q&A session.
As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release, and MD&A, as well as the risk factors set out in our annual information form.
Scott Parsons: The technical information in this presentation has been reviewed and approved by Chris Boswick, our Senior VP of Technical Services, and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in U.S. dollars unless otherwise needed. Now, John will provide you with an overview.
Speaker Change: Technical information in this presentation has been reviewed and approved by Chris Boswick, our Senior VP of Technical Services, and a qualified person. Also, please bear in mind that all of the dollar amounts mentioned in this conference call are in U.S. dollars, unless otherwise noted.
Speaker Change: Now John will provide you with an overview. Thank you, Scott.
John McCluskey: We recently announced the closing of the Argonaut Acquisition, and I'll start off by welcoming all of the Mageno employees to the Alamos family. The uniting of the Maginot and Island Gold Mines to form the Island Gold District is a pivotal moment for the company. Together, we are building an even brighter future by creating one of the largest and lowest cost operations in Canada, led by an even stronger workforce. We delivered an outstanding second quarter marked by numerous records.
John: We recently announced the closing of the Argonaut Acquisition, and I'll start off by welcoming all of the Magino employees to the Alamos family.
John: The uniting of the Maginot and Island Gold Mines to form the Island Gold District is a pivotal moment for the company. Together we are building an even brighter future by creating one of the largest and lowest cost operations in Canada, led by an even stronger workforce.
John McCluskey: This included record production of 139,100 ounces, exceeding guidance for the quarter. Our costs also declined from the first quarter, and combined with the rise in gold prices, we generated record revenue, cash flow from operations..., and free cash flow of $107 million. With a solid first half of the year, we are well positioned to achieve full year production and cost guidance. Now turning to slide four.
Speaker Change: We delivered an outstanding second quarter marked by numerous records.
Speaker Change: This included record production of 139,100 ounces, exceeding guidance for the quarter.
Speaker Change: Our costs also declined from the first quarter, and combined with rising gold prices, we generated record revenue, cash flow from operations, and free cash flow of $107 million.
Scott Parsons: With a solid first half of the year, we are well positioned to achieve full year production and cost guidance.
John McCluskey: With the closing of the Argonaut acquisition three weeks ago, the integration of Mageno and Island Gold is well underway. The combination of the two mines will create one of the largest operations in Canada, with annual production of more than 400,000 ounces of gold at first quartile costs once the Phase III expansion is complete. Two deposits host over 11 million ounces of gold, and given the exploration success we are seeing, we expect the reserve and resource base to continue to grow. Given the proximity of the two operations, the utilization of one centralized mill and tailings facility will result in a considerable amount of capital and operational synergies, totaling $515 million.
Scott Parsons: Now turning to slide 4.
John McCluskey: The combined operation also unlocks significant longer-term upside opportunities through the further expansion of the Maginot Mill to accommodate the large and growing reserve and resource base and other near-mine opportunities such as the North Shear. With the inclusion of Begino, we expect production to increase to a new record of between 145,000 and 155,000 ounces in the third quarter. We will produce additional details in September on our second half outlook as part of our updated consolidated guidance incorporating the genome. Now, turning to slide 5.
John McCluskey: The addition of the Maginot Mine has increased company-wide gold production to a rate of approximately 600,000 ounces per year. In 2026, the completion of the Phase III Plus expansion at Island Gold is expected to drive annual production closer to 700,000 ounces per year, and at a lower cost. We expect the PDA project in the Mulattoes district to take us to over 700,000 ounces per year. The Lynn Lake project provides additional growth as early as the second half of 2027 and will take us to a long-term rate of around 900,000 ounces per year. All of this growth can be funded internally, and all of this growth is at a lower cost beyond that.
Scott Parsons: Now turning to slide 5.
John McCluskey: There is a considerable amount of upside, both on the expiration of FONTAS as through a potential longer-term expansion of the Maginot Mill to 12,400 tons per day in 2026, and we've started evaluating a longer-term expansion scenario of 15,000 and 20,000 tons per day. Ultimately, this could increase our consolidated production to closer to 1 million ounces per year. I'm turning to slide six.
John McCluskey: We continue to add value in the second quarter. In addition to the Argonaut acquisition, we also completed our acquisition of Orford Mines, through which we acquired the highly prospective Kikavik project in Quebec. We have our largest exploration budget ever planned for 2024, at more than $60 million, and we are seeing the benefits with exceptional results across our operations. In May, we announced the discovery of a new style of higher-grade gold mineralization in the hanging wall of Young Davidson.
Speaker Change: I'll turn to slide 6.
Speaker Change: We have our largest exploration budget ever planned in 2024, at more than $60 million, and we are seeing the benefits with exceptional results across our operations.
Speaker Change: In May, we announced the discovery of a new style of higher-grade gold mineralization in the Hanging Wall of Young Davidson.
John McCluskey: More recently, we outlined the broad-based exploration success we are having across the Island Gold main structure and within the hanging wall and footwall. We expect this will drive another year, another increase, in high-grade reserves and resources at Island Gold for the ninth consecutive year. Last month, we released our 2023 ESG report outlining our progress on several key metrics. This included an 8% decrease in Scope 1 and Scope 2 greenhouse gas emissions and a 5% reduction in our total recordable injury frequency rate.
Scott Parsons: More recently, we outlined the broad-based exploration success we are having across the Island Gold main structure and within the hanging wall and footwall. We expect this will drive another year, another increase.
John McCluskey: We have a number of catalysts coming in the second half of the year. We expect to release our PDA development plan and provide updated consolidated guidance incorporating the Gino in September. We also expect to provide additional exploration updates outlining the success we are having at Mulatos and other operations towards the end of the year. Additionally, we plan on releasing the results of a study incorporating burnt timber and linkwood into the Lynn Lake project, outlining another value driver as upside to the 2023 feasibility study. I'll now turn the call over to our CFO, Greg Fisher, to review our financial performance.
Greg Fisher: On to slide 7. In the second quarter, we sold 141,000 ounces of gold at an average realized price of $2,336 per ounce, a record quarterly revenue of $333 million. Total cast costs of $830 per ounce and all-in sustaining costs of $1,096 per ounce were down 9% and 13%, respectively, from the first quarter. We remain well positioned to achieve our full year of production and cost guidance given the solid first half performance.
John: Thank you, John . On to slide seven. In the second quarter, we sold 141,000 ounces of gold at an average realized price of $2,336 per ounce for record quarterly revenues of $333 million.
Greg Fisher: Our reported net earnings of $70 million in the first quarter, or $0.18 per share, included unrealized foreign exchange losses of $16 million, recorded within deferred taxes in foreign exchange, and other adjustments net of taxes of $11 million. Excluding these items, our adjusted net earnings were $97 million, or $0.24 per share. Operating cash flow before changes in non-cash working capital increased to a record $191 million, or $0.48 per share. Freecast totaled a record $107 million, a significant increase from the first quarter.
Scott Parsons: included unrealized foreign exchange losses of $16 million recorded within deferred taxes in foreign exchange, and other adjustments net of taxes of $11 million.
Greg Fisher: All three operations generated solid, mind-safe, free cash flow, including a record $40 million from Young-David. The impressive Free Castle generation occurred while continuing to fund the Phase 3 Plus expansion at Island Gold and is net of $15 million in cash taxes paid in Mexico in the quarter. Capital spending totaled $88 million in the quarter and included $21 million of sustaining capital and $59 million of growth capital, the majority of which was focused on the Phase 3 Plus expansion.
Greg Fisher: With the acquisition of Maginot completed in July and the Island Gold Mill expansion no longer required, we are in the process of updating capital estimates, which will also include required upgrades to the Maginot Mill, as well as the impact of ongoing inflationary pressure.
Scott Parsons: With the acquisition of Maginot completed in July , and the Island Gold Mill expansion no longer required, we are in the process of updating capital estimates, which will also include required upgrades to the Maginot Mill, as well as the impact of ongoing inflationary pressures.
Speaker Change: Thank you, Greg. Moving to slide 8. Young Davidson delivered a strong quarter with production of 44,000 ounces, a 10% increase over the first quarter on higher mining rates and grades processed.
Speaker Change: Costs also improved with total cash costs down 13% and mine site all-in sustaining costs down 19%, quarter over quarter.
Speaker Change: With grades expected to continue to increase in the second half of the year and milling rates expected to remain at 8,000 tonnes per day, the operation is on track to achieve full year guidance.
Speaker Change: and $55 million for the first half of the year. Young-Davidson is well-positioned to generate over $100 million in pre-cash flow for the fourth consecutive year, as well over the long term given its 15-year mineral reserve life.
Greg Fisher: Mining rates are expected to average similar levels in the third quarter, reflecting planned downtime in the latter part of July to upgrade the underground ventilation infrastructure, and will support increased development rates in the near term and higher underground mining rates over the longer term following the completion of the expansion. Given the strong performance in the first half of the year, the operation is well positioned to achieve annual guidance. While the Maginot Mine was not under our control in the second quarter, the operation continued to show improvement.
Speaker Change: Given the strong performance in the first half of the year, the operation is well positioned to achieve annual guidance.
Speaker Change: Over to slide 10. While the Maginot Mine was not under our control in the second quarter, the operation continued to show improvements.
Speaker Change: We expect similar production in the third quarter reflecting downtime to implement various improvements to the grizzly, crushing and conveying ore flow, and mill liner design.
Speaker Change: These improvements are expected to positively impact the fourth quarter and ongoing production and costs. As John noted, we will be providing more detailed guidance on Mageno as part of our updated consolidated guidance to be released in September .
Speaker Change: Moving to slide 11, the phase 3 plus expansion continues to move along with the shaft sink advancing to a depth of 403 metres as of June 30th and tracking towards the 1000 metre level by year end.
Speaker Change: During the second quarter, we made considerable progress including completion of the buried services at the shaft area, commissioning of the upgraded voltage regulation facility, and we commenced construction on the bin house.
Greg Fisher: Over to slide 12. The expansion remains on track for completion during the first half of 2026. The Mulatto district had another solid quarter with stronger than expected production of 53,400 ounces at costs below full year guidance.
Speaker Change: Over to slide 12.
Speaker Change: The expansion remains on track for completion during the first half of 2026, but will be a significant driver of our expected production growth and declining costs over the next several years.
Speaker Change: Over to slide 13.
Speaker Change: The Mulatto's district had another solid quarter with stronger than expected production of 53,400 ounces at costs below full year guidance.
Speaker Change: This was once again driven by Layaki Grande, which benefited from both grades and stacking rates coming in at or above the top end of guidance.
Speaker Change: With the onset of the rainy season, stacking rates are expected to decrease to an average of 10,000 tonnes per day in the second half of the year.
Speaker Change: Grades stacked are also expected to decrease slightly through the remainder of the year, leading to declining production and costs increasing to be consistent with guidance.
Speaker Change: For the first half of the year, Mulatos generated $120 million of mine-site-free cash flow, an impressive performance considering this was net of $60 million of tax payments.
Speaker Change: I will now turn the call over to our VP of Exploration, Scott R.G. Parsons, to review our exploration success through the first half of the year.
Speaker Change: Thank you, Luke. Moving to slide 14. In May, we announced the discovery of a new style of higher grade gold mineralization within the hanging wall of Young Davidson.
Greg Fisher: The zones are located 10 to 200 meters south of existing infrastructure, with grades intersected well above the current reserve grade. Gold mineralization has been intersected east of the Imagino Open Pit Reserve, supporting the potential for extension of the Imagino deposit to the east beyond the previous property boundary.
Speaker Change: The zones are located 10 to 200 meters south of existing infrastructure, with grades intersected well above the current reserve grade.
Speaker Change: Drilling is ongoing and is focused on testing the extent of the conglomerates and to evaluate the controls and continuity of this higher-grade mineralization.
Speaker Change: Moving to slide 15.
Speaker Change: and 17 grams per ton over 10 meters to the east, both beyond existing reserves and resources.
Speaker Change: Given our ongoing success, we expect these zones to be a significant factor in Island Gold's continued growth.
Speaker Change: Within our delineation drilling program, which is focused on resource conversion in Island East, we've defined a significantly wider and higher grade zone than typically seen within the deposit, over an 80 by 130 meter area.
Speaker Change: Collectively, these exploration results are expected to drive further growth in high-grade reserves and resources with the year-end update for what continues to be one of the highest-grade and fastest-growing deposits in the world.
Speaker Change: We are also starting to define longer term upside opportunities through the integration of Island Gold and Mochino.
Speaker Change: Gold mineralization has been intersected east of the Imagino Open Pit Reserve, supporting the potential for extension of the Imagino deposit to the east beyond the previous property boundary.
Speaker Change: The North Shear is another near mine opportunity as a potential source of additional mill feed for an expanded Maginot milling complex.
Speaker Change: Given the larger capacity of the Maginot Mill with further expansion potential, the North Shire will be one of the many opportunities we'll be evaluating as sources of higher grade feed for the centralized mill.
Speaker Change: With that, I'll turn the call back to John .
Greg Fisher: Thank you.
Speaker Change: You also can cancel your question at any time by pressing star 2. So again, please press star 1 at this time if you have a question. There will be a brief pause while the participants register.
Speaker Change: The first question is from Oveis Habib from Scotiabank. Please go ahead. Your line is open.
Oveis Habib: Thanks, Operator. Hi, John and Alamont's team, and congrats to you and your team on really a great quarter in the first half.
Oveis Habib: John, a couple of questions from me.
Oveis Habib: What was the average grade you were expecting in Q2? I mean, I'm trying to figure out what was expected and how much was actually positive grade reconciliation. And the second part of that is also, are these higher grades expected to persist in the second half?
Oveis Habib: Hi, it's Luke here. I can take the first part of the question. I think I missed the second part, so I'll get you to repeat that. As far as the forecasted grades for Ireland in Q2, we were looking to be about 12 to 12.5 grams in the quarter. I didn't catch your second question. Maybe if you can repeat that for me, please.
Speaker Change: I just wanted to understand, are these grades expected to persist going into the second half?
Speaker Change: Any sort of potential positive reconciliation going into the second half as well? Similar mining areas! Yes, I mean there's the high grade complex at $1025 that we're mining in. We'll continue to mine there in the second half of the year. But I mean the positive reconciliation we have seen has been not just specific to that high grade zone, but some of the other areas that we're mining with some of the other mining fronts as well.
Speaker Change: Okay, got it. Thanks, Lou, for that. And just a second question from me. Again, very early days regarding Mojino. Have there been any surprises so far, either from an operating or financial standpoint?
Speaker Change: From an operating standpoint, based on our due diligence, no surprises, I think as we mentioned on the call, through Q3 we're looking to make some continual improvements certainly through the mining operations as well as milling operations.
Speaker Change: and then looking to obviously pick up production as we move into the latter half of the year and then as we move forward into 2025.
Speaker Change: Sounds good. Again, that's it for me guys. Thanks for taking my questions and look forward to the PDA study.
Speaker Change: Thank you. The next question is from Kerry Smith from Haywood Securities. Please go ahead, your line is open.
Kerry Smith: John, I may have missed it in the release, but you had mentioned that the Phase III plus expansion was still on schedule. Is it still on budget as well with the CapEx?
Greg Fisher: Hi Kerry, it's Greg here. I'll grab that question. Yeah, obviously, there's savings that we expect as a result of not needing to expand the Island Mill. But we do have costs that we will need to incur to expand the Maginot Mill to hit that 12,400 tonnes per day by mid-2026 when we complete the Phase 3 expansion. But we've also seen inflationary pressures, especially around labor, over the last couple of years, and we expect that to persist. So overall, we're looking at the updated estimates, but I suspect that, if anything, we'll have a modest increase compared to the $750 million that we had released a couple of years ago.
Speaker Change: We do have costs that we will need to incur to expand the Maginot Mill to hit that 12,400 tons per day by mid-2026 when we complete the Phase III expansion.
Speaker Change: But we've also seen, you know, inflationary pressures, especially around labor over the
Greg Fisher: Okay, and that modest increase would not reflect the $140 million savings obviously for
Speaker Change: Okay, and that modest increase, that would not reflect the $140 million savings, obviously, for.
Speaker Change: No mill expansion, the tailings are right, just on an apples-to-apples basis, it would be modestly higher. No, no, no, on an overall basis, including the savings that we have on the mill, but also including the additional capital that we need to spend on the Magino mill, we'll come in somewhere around the set of the original budget of $750 million, potentially a modest increase.
Speaker Change: Okay, gotcha. Okay, perfect. That's helpful. Thanks.
Speaker Change: You had kind of guided earlier in the year that production would be second-half weighted. With the better first half than I guess you were expecting and you were guiding, are you still expecting second-half production to actually be higher than first-half production?
Speaker Change: I mean, the biggest driver of this, you know, the higher production in the first half was in Mexico. But with the onset of the rainy season in Q3, as well as, you know, we're expecting some lower grades in the second half of La Hacienda Grande, we're going to see a potential decrease in Mexico. So, overall, you know, we're comfortable with the guidance that we have. That said, you know, we're releasing an updated three-year guidance in September , and we'll continue to monitor that.
Greg Fisher: Okay, that's helpful.
Speaker Change: Okay.
Speaker Change: okay that's that's helpful and and
Speaker Change: Just so I'm clear, the, uh, that...
Speaker Change: Let's call it 756 million CapEx, it might be slightly higher than that.
Speaker Change: Will that number, when you update it, will it include the cost to expand the Genome Mill to the $15,000 to $20,000 per day rate? I assume not, but just to be sure.
Greg Fisher: No, it will not. It will include the cost to expand to 12,400 tons per day, which is inclusive of, you know, bringing the island ore into the Maginot Mill.
Speaker Change: No, it will not. It will include the cost to expand to 12,400 tons per day, which is inclusive of, you know, bringing the island ore into the Maginot Mill.
Speaker Change: Gotcha. Okay, perfect. And then while I've got you, Greg, what is the rough interest rate that you... Just remind me the interest rate on the debt on your facility that you drew down. It's based on SOFR, but right now we're paying just over 7% of the interest rate on the credit facility.
Scott RG: Okay, okay, perfect. And then just one first, Scott RG, how many holes at wide did you have in that hanging wall conglomerate so far?
Scott RG: We've drilled from two drill bays. We're about 5,000 meters of drilling.
Speaker Change: We continue to be targeting the continuity and the plunge of the mineralization within the conglomerate. So it's looking positive. It's still early days and we're continuing to evaluate about 15 holes in 5,000 meters.
Greg Fisher: Okay, that's perfect. Thank you very much.
Speaker Change: Okay, that's perfect. Thank you very much and congratulations on a great quarter.
Operator: The next question is from Cosmos Chiu from CIBC. Please go ahead; your line is open.
Speaker Change: Thank you. The next question is from Cosmos Chiu from CIBC. Please go ahead, your line is open.
Speaker Change: Thanks John , Greg, Luke, Scott, and Scott. Again, congrats on a very strong quarter and congrats on closing the Mochino deal.
Cosmos Chiu: Maybe my first question is on guidance again, just to confirm, I guess I heard it, so in September coming up, you're going to be putting out three-year guidance. Is that on production, cost, and capital expenditures?
Speaker Change: Maybe my first question is on guidance again just to confirm I guess I heard it so in September coming up you're going to be putting out three-year guidance is that on production cost and in CapEx?
Greg Fisher: That is correct, Cosmos. I mean, the main triggers are the fact that we've obviously acquired Mageno and need to incorporate that over the next little bit, as well as the PDA study that we plan to put out in September. So those two items are the main triggers for putting out that updated three-year guidance.
Speaker Change: That is correct, Cosmos. I mean, the main triggers being the fact that we've obviously acquired Mageno and need to incorporate that over the next little bit, as well as the PDA study that we plan to put out in September . So those two items are the main triggers for putting out that updated three-year guidance.
Luc Guimond: perfect, and then I guess you know the blotters here.
Cosmos: Perfect. And then I guess, you know, some broader...
Speaker Change: Chair.
Speaker Change: You need to get comfort on.
Speaker Change: Adam Lee.
Speaker Change: The mail is just caught.
Speaker Change: Cosmos, I'm sorry, your phone is breaking up.
Speaker Change: Yeah, we missed the question. Yeah, we missed the question. Apologies.
Speaker Change: Yeah, sorry. I'm just wondering which...
Speaker Change: you'll need to get comfort on ahead of the September update. Is it, you know, the cost? Is it the grade? Is it milling? Mining? Like, which key areas, to the extent they can show?
Luc Guimond: It's Luke here, Cosmos. I think I got your question there. It's a little bit difficult to hear you. But, you know, with regard to Maginot, certainly through the second half of the year, there's continuous improvement with regard to mining operations. I mean, there was increased performance from Q1 to Q2. We expect that as we continue to move through Q3 and Q4 to get to our, you know, ultimate mining rates by the end of the year at about 64,000 tonnes per day, which is ore and waste combined.
Sluke: It's Luke here, Cosmos. I think I got your question there. It's a little bit difficult to hear you, but, you know, with regards to Mageno, certainly through the second half of the year, there's continued improvement with regards to mining operations. I mean, there was increased performance from Q1 to Q2. We expect that as we continue to move to Q3 and Q4.
Speaker Change: to get to our ultimate mining rates by the end of the year at about 64,000 tonnes per day, which is ore and waste combined.
Luc Guimond: On the milling side, as we've mentioned in the call, there are some improvements that we're going to continue to make through the course of Q3. So, we look at that from a processing and gold production point of view to be pretty flat line relative to Q2 results, but then looking to increase that as those improvements are completed in Q3 to see better performance in Q4 towards the end of the year.
Sluke: On the milling side...
Sluke: As we've mentioned in the call, you know, there's some improvements that we're going to continue to make through the course of Q3, so we look at that from a processing and goal production point of view to be pretty flat line relative to Q2 results, but then looking to increase that as those improvements are completed in Q3.
Luc Guimond: And our ultimate objective, as we've talked about since we announced this deal, was to, we think with these improvements that we're going to make, with, you know, the grizzly arrangement, the crushing conveying arrangement, and some configuration changes to the mill liner design with pulp lifters and operating parameters of that mill itself, we'll get it to 11,200 tonnes per day by the end of the year or early in 2025 at the latest.
Sluke: to see better performance in Q4 towards the end of the year. Our ultimate objective, as we've talked about since we announced this deal, was to, we think with these improvements that we're going to make...
Sluke: With, you know, the grizzly arrangement, the crushing conveying arrangement, and some configuration changes to the mill liner design with pulp lifters and operating parameters of that mill itself, we'll get it to 11,200 tonnes per day by the end of the year, or really early into 2025 at the latest.
Speaker Change: And maybe just talking about the reporting here, how are you going to be presenting guidance in terms of Formagino slash Island Gold?
Speaker Change: Is it going to be as an integrated basis, is it going to be one number, or are you going to be giving us separate numbers for the different operations in terms of island gold and imagino separate?
Speaker Change: Yeah, I mean we're still working through that. I think the thought process is for 2024 it would be separate because they're running under separate mills. As we move into 2025 and it's operating out of an integrated mill, we'll look at it as one operation.
Speaker Change: Great.
Speaker Change: And maybe quickly on Island Gold, just to follow up, I saw that I guess the throughput was lower.
Speaker Change: in Q2 as part of the equipment.
Sluke: Refresh.
Speaker Change: I think two haul trucks had to be renewed or replaced.
Luc: So, Luc, maybe if you can talk a little bit more about your refreshment cycle here in terms of machinery and equipment on site at Island Gold. Is there anything else planned for Q3 and Q4? And how has that plan changed now with Mochino?
Luc: Well, in relation to Maginot, no change. Our fleet replacement is really based on operating hours of that equipment. So as those haul trucks...
Speaker Change: reach their maximum operating hours over their life cycle, then we actually change them out and replace them as part of our fleet replacement strategy with new units.
Sluke: So the two new units that we were expecting earlier in the quarter ended up arriving later in the quarter, which is what affected the overall mining rates in the quarter.
Speaker Change: But we did receive those in early June . We do have two more trucks that are scheduled to arrive this year, in the second half of the year, which was also part of our fleet replacement strategy. And that would be the full replacement as far as our requirements for 2024. But obviously as we move forward and...
Speaker Change: 25-26, as these older units age out based on operating hours, then we would have new units coming into the mix to replace those older units as part of our fleet replacement strategy. So it's always an ongoing thing, Cosmo, year over year, depending on the operating hours of the equipment.
Speaker Change: And then maybe one last question, I see that you started using some hybrid production scoops.
Luc Guimond: Is that a transition, you think? You're going to, you know, bring on more hybrid scoops, and it seems like they're working out pretty well so far.
Speaker Change: Is that a transition, you think? You're going to, you know, bring on more hybrid scoops, and it seems like they're working out pretty well so far. Is that what I'm reading, and would it be a full transition later on, you think?
Speaker Change: Yeah, I mean, it's the new phase, obviously, with the technology coming in with that equipment. We did get two new units this year. They've been actually performing very well. Availability has been very high on them, plus 80 percent, which is what we would expect.
Speaker Change: As far as availability on those units, they've been very productive for us, so as we continue to move forward again with our fleet replacement strategy for our production scoops at Young-Davidson, we would start to probably lean more towards these hybrid units moving forward.
Speaker Change: And does that help on cost as well? I guess it does, because efficiency, if it's going up, that could help with cost as well.
Speaker Change: Great, thanks once again John and team, those are all the questions I have.
Speaker Change: Thank you. Once again, please press star 1 on the device's keypad if you have a question. The next question is from Mike Parkin from National Bank. Please go ahead, your line is open.
Michael Parkin: Hi guys, thanks for taking my questions and congrats on the big quarter. Starting at YD, can you just revisit what made you look for that conglomerate zone?
Speaker Change: Hi Mike and Scott, what initially prompted the search for higher grade in and around Young-Davidson is a key objective for our exploration group. So we basically compiled all historic exploration results and recognized opportunities from limited sampling that occurred.
Speaker Change: 2008 surface drilling to the south of the deposit in the hangwall, and there was...
Speaker Change: High Grade Mineralization Intersect did not follow it up on, so we had drill bays available from underground to initially follow up on that intersection.
Speaker Change: in the Hanging Wall and sampled from top to bottom of the hole and sure enough started getting high-grade mineralization in conglomerate that wasn't obvious, I mean it's associated with pyrite and not quartz vein like you typically see but certainly high-grade, so that's initially what led us into targeting in the Hanging Wall.
Speaker Change: Okay, and is that kind of taking precedence over, you know, like the YB West? I remember that was kind of a bit of a higher grade zone, but obviously down near the bottom of the reserve.
Michael Parkin: You know, given the grade and the proximity to infrastructure, it would seem like you would allocate more resources there versus chasing something at depth, just given
Speaker Change: You know, given the grade and the proximity to infrastructure, it would seem like you would allocate more resources there versus chasing something at depth, just
Michael Parkin: That's a correct assumption. I mean, we're taking a balanced approach to, you know, continued expansion of the resource. But obviously, given the grades and the proximity of this gold mineralization in the conglomerates to our existing infrastructure, it has now shifted to more of an area of focus for us for the balance of the year.
Speaker Change: That's a correct assumption, I think we're taking a balanced approach to continued expansion of the resource, but obviously given the grades and the proximity of this gold mineralization in the conglomerates to our existing infrastructure, it has now shifted to more of an area of focus for us for the balance of the year.
Speaker Change: Okay.
Speaker Change: And then one last question, might be a little too early for this one, but...
Speaker Change: You know, obviously it's just a recent discovery, but any thoughts towards...
Speaker Change: Metallurgy. Would there be mill modifications required to bring that material into the mine plan or is the way the mill is set up actually good for that different style of mineralization?
Luc Guimond: Hi Mike, it's Luc here. No, I mean certainly early stages, but I mean based on the early results that we've seen, no, we don't expect any real challenges from a metallurgical point of view to be able to treat that new zone from
Speaker Change: Hi Mike, it's Luc here. No, I mean, certainly early stages, but I mean, based on the early results that we've seen, no, we don't expect any real challenges from a metallurgical point of view to be able to treat that new zone from a metallurgical point of view.
Mike: within the existing plant that we have at YD currently. What we're seeing is free gold associated with that pyrite. So it's pyrite in a matrix of conglomerates with gold around the margin. So I don't anticipate it being an issue from a metallurgical perspective.
Michael Parkin: Okay. And just one last question there. Your current TSF permit and design, is that in excess of your current reserve? You know, just kind of getting at, could you either make it bigger, or would you have to, if this, you know, additional zone proved to be a size, would you have to look for potentially another?
Speaker Change: Okay, and just one last question there. Your current TSF permit and design account, is that in excess of your current reserves?
Speaker Change: If this additional zone proved to be of size, would you have to look for potentially another TSF site?
Michael Parkin: Chia Saksite
Speaker Change: To store the added potential reserve upside here, you know, good problem to have obviously, but just kind of wondering longer dated future, what things might look like.
Speaker Change: Yeah, Mike, you're still referencing YDS, right?
Mike Parkin: So with regards to these new finds, we would certainly have capacity under the existing footprint that we have for the new construction facility that we built a couple of years ago. It certainly handles all of our reserve and resource base, and we have some upside to that as well. So capacity-wise, we would be okay.
Michael Parkin: That's it for me. I had something else, but I forgot what I was going to ask, so I'll jump back in and see if I remember.
Speaker Change: Okay, that's it for me. I had something else, but I forgot what I was going to ask, so I'll jump back in and see if I remember.
Operator: There are no further questions at this time. This concludes this morning's call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at 416-368-7000, extension 5439.
Speaker Change: Thank you.
Speaker Change: There are no further questions at this time. This concludes this morning's call. If you have any further questions that have not been answered, please feel free to contact Mr. Scott Parsons at 416-368-8888.
Speaker Change: 9932 Extension 5439
Speaker Change: Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.