Q2 2024 Alamos Gold Inc Earnings Call
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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.
All participants, please stand by. Your conference is now ready to begin.
Speaker Change: Good morning to all participants. I will now turn the call over to Mrs. Scott Parsons, Alamos' Senior Vice President in Investor Relations.
Speaker Change: Please go ahead, Mr. 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.
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.
Scott Parsons: 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 necessary. Now, John will provide you with an overview.
Scott Parsons: 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.
Scott Parsons: 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 Magino 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.
Scott Parsons: We delivered an outstanding second quarter marked by numerous records.
Scott Parsons: This included record production of 139,100 ounces, exceeding guidance for the quarter.
Scott Parsons: 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 Mojino 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.
Scott Parsons: With the closing of the Argonaut acquisition three weeks ago, the integration of Mojino and Island Gold is well underway.
Scott Parsons: 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 3 expansion is complete.
Scott Parsons: 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.
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 lower cost, beyond that.
Scott Parsons: Now turning to slide 5.
Scott Parsons: 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 lower cost.
John McCluskey: There is a considerable amount of upside, both on the expiration of FONTAS 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 one million ounces per year. I'm turning to slide six.
Scott Parsons: beyond that
Scott Parsons: There is a considerable amount of upside, both on the expiration of FONTAS through a potential longer-term expansion of the Island Gold District.
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 operation. In May, we announced the discovery of a new style of higher-grade gold mineralization in the Hanging Wall of Yonge-Davidson.
Scott Parsons: 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.
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.
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 toward the end of the year. We plan on releasing the results of a study incorporating burnt timber and link wood 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.
Scott Parsons: Towards the end of the year, we plan on releasing the results of a study incorporating burnt timber and lindquid into the Linn Lake project, outlining another value driver as upside to the 2023 feasibility study.
Greg Fisher: 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, 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 production and cost guidance, given the solid first-half performance.
John: Thank you, John .
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. 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.
Speaker Change: Our balance sheet continued to strengthen in the quarter, with our cash balance growing over 30% to $314 million. At quarter end, we remained debt-free. However, subsequent to quarter end, we withdrew $250 million on our credit facility to pay off Argonaut's term loan involving credit facility that were inherited through the acquisition.
Greg: 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.
Scott R.G. Parsons: Costs also improved with total cash costs down 13% and mine site all-in sustaining costs down 19%, quarter over quarter. Island Gold delivered a solid quarter with production increasing 25% from the first quarter to 41,700 ounces and mine site all-in sustaining costs decreasing 27% to $805 per ounce. This more than offset lower mining rates earlier in the quarter as we focused on maximizing the extraction of significantly higher-grade ore within the 1025 mining horizon.
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 tons per day, the operation is on track to achieve full year guidance.
Scott Parsons: In the second quarter, the operation delivered record mine site free cash flow of $40 million.
Scott Parsons: 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.
Speaker Change: Island Gold delivered a solid quarter with production increasing 25% from the first quarter to 41,700 oz and mine site all-in sustaining costs decreasing 27% to $805 per oz.
Speaker Change: Mine grades averaged 14 grams per ton in the quarter, above the annual guidance range reflecting the planned mining of higher grade stopes as well as positive grade reconciliation.
Speaker Change: This more than offset lower mining rates earlier in the quarter as we focused on maximizing the extraction of significantly higher grade ore within the 1025 mining horizon.
Speaker Change: The ventilation upgrade was successfully completed earlier this week with mining rates expected to increase to an average of 1,200 tonnes per day in August and through the rest of the year.
Speaker Change: With a strong operational performance, Island Gold generated $15 million of mine site free cash flow while continuing to fund the Phase III Plus expansion.
Speaker Change: Production increased 36% quarter-over-quarter to 22,700 ounces.
Speaker Change: Mills throughput also increased 33% to 8,400 tons per day relative to the first quarter, and recovery is improved to 94%.
Speaker Change: These improvements are expected to positively impact the fourth quarter and ongoing production and costs.
Scott R.G. Parsons: During the second quarter, we made considerable progress, including completion of the buried services at the shocked area. We expect this will outline another attractive project. I will now turn the call over to our VP of Exploration, Scott R.G. Parsons.
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.
Speaker Change: Detailed engineering for the paste plant is now 90% complete and earthworks are currently underway with construction activities expected to ramp up in the second half of the year.
Speaker Change: With the acquisition of Mageno now complete, we no longer need to expand the Island Gold Mill or tailing facility.
Speaker Change: Over to slide 13.
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: Minesite free cash flow increased to $70 million in the second quarter, net of $15 million of cash tax payments.
Speaker Change: For the first half of the year, Mulatto's generated $120 million of mine-site free cash flow, an impressive performance considering this was net of $60 million of tax payments.
Speaker Change: Work on our development plan for the Puerto del Air deposit is advancing and we plan to release that in September . We expect this will outline another attractive project and significantly extend the mine life of the Mulatos District.
Speaker Change: This mineralization is hosted in conglomerates, whereas the majority of the current reserves and resources at Young-Davidson are hosted within cyanide.
Speaker Change: Last week, we provided a comprehensive exploration update at Island Gold, where we highlighted the broad-based exploration success we're experiencing across the district.
Speaker Change: Some of the highlights in the main island gold structure include 37 grams per ton over 7 meters in island west and 17 grams per ton over 10 meters to the east.
Speaker Change: both beyond existing reserves and resources.
Scott R.G. Parsons: Within the annual footwall, we continue to find new zones of higher-grade mineralization and expand upon recently defined zones across the main island gold deposit. This included multiple intercepts from recently defined zones grading above 70 grams per ton over two meters. These zones represent significant opportunities to continue to grow near mine reserves and resources, which are low-cost to develop and produce, given their proximity to existing infrastructure. In 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: These zones represent significant opportunities to continue to grow near-mine reserves and resources, which are low-cost to develop and produce, given their proximity to existing infrastructure.
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.
Scott R.G. Parsons: Highlights from the zone include 102 grams per ton, over 17 meters; 135 grams per ton, over 8 meters. The North Shear is another near mine opportunity as a potential source of additional mill feed for an expanded Maginot milling complex.
Speaker Change: Moving to slide 16.
Speaker Change: We are also starting to define longer term upside opportunities through the integration of Island Gold and Mochino.
Speaker Change: One of those opportunities is the expansion of the Magino Open Pit.
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: The North Sheer Corridor is 20 to 30 meters wide near the surface, appears to widen the depth to 60 meters, and has been interpreted to be over 1,000 meters in strike, and has been drilled to a depth of 600 meters, and remains open at depth.
Speaker Change: Higher grade mineralization has been intersected within the North Shear, both this year as well as historically, and we plan on following up with additional drilling and modeling to continue to evaluate the potential for underground bulk mining.
Speaker Change: Given the larger capacity of the Maginot Mill with further expansion potential, the North Shear will be one of the many opportunities we will be evaluating as sources of higher grade feed for the centralized mill.
Speaker Change: With that, I'll turn the call back to John .
John: Thank you, Scott. So that concludes the formal presentation. I'll now turn the call over to the operator who will take your questions.
Speaker Change: Thank you. We will now take questions from the telephone lines. If you have a question, please press star 1 on your device's keypad.
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 Ovais Habib from Scotiabank. Please go ahead. Your line is open.
Oveis Habib: Thanks Operator. Hi John and Alamos team and congrats to you and your team on a really a great quarter in the first half.
Scott R.G. Parsons: Our grades in the second half of the year are going to be more in line with our reserve grades. So about 11 grams is what our expectation is for the second half of the year.
Speaker Change: Our grades in the second half of the year are going to be more in line with our reserve grades, so about 11 grams is what our expectation is in the second half of the year.
Speaker Change: Any sort of potential positive reconciliation going into the second half as well? Similar mining areas, yes. I mean, there's a 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, I got it. Thanks, Lou, for that. And just a second question from me. Again, you know, very early days regarding Mojino. Have there been any surprises so far, either from an operating or financial standpoint?
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?
Speaker Change: The $756 million, knowing that that's going to be adjusted once you incorporate the Regino mill and no tailings.
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: last couple of years, and we expect that to persist. So overall, you know, we're looking at the updated estimates, but I suspect that, you know, if anything, we'll have a modest increase compared to the $750 million that we had released a couple of years ago.
Speaker Change: No mill expansion in the tailings though, 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 Maginot Mill, we'll come in somewhere around the original budget of $750 million, potentially a modest increase.
Greg Fisher: 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 Maginot Mill, we'll come in somewhere around 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?
Greg Fisher: Okay, that's helpful. And, Just so I'm clear, the, let's call it 756 million capital expenditure, it might be slightly higher than that. Will that number, when you update it, will it include the cost to expand the genomill to the 15 to 20,000 ton per day rate? I assume not, but just to be sure.
Speaker Change: Okay. Okay, that's helpful.
Speaker Change: Just so I'm clear, the...
Speaker Change: Let's call it 756 million CapEx. It might be slightly higher than that. Will that number, when you update it, will it include the cost to expand the Genome Mill to the 15 to 20,000 ton per day rate? I assume not, but just to be sure.
Greg Fisher: 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.
Speaker Change: And 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.
Speaker Change: Objective is to find the extent of the conglomerates, which we're making good progress on, and then those holes will continue to be targeting the continuity and the plunge of the mineralization within the conglomerates. So it's looking positive. It's still early days, and we're continuing to evaluate. There's about 15 holes in 5,000 meters.
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.
Cosmos Chiu: Thanks, John, Greg, Luke, Scott, and Scott. Again, congratulations on a very strong quarter and congratulations on closing the Pacino deal.
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 in capex?
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.
Speaker Change: Perfect. And then I guess, you know, the blotters.
Speaker Change: here
Speaker Change: You need to get comfort on.
Speaker Change: Head of the guide.
Speaker Change: Cosmos? Sorry, your phone is breaking up.
Speaker Change: Thank you for joining us. Thanks for having me. I'm Scott Parsons. I'm Greg Fisher. Thanks for having me.
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 tier is, to an extent, making sure?
Speaker Change: Sluke here, Cosmo. I think I got your question there. It's a little bit difficult to hear you, but, you know, with regards to Maginot, certainly through the second half of the year, there's continuous improvement with regards 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.
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.
Speaker Change: On the milling side...
Speaker Change: 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 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.
Speaker Change: 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...
Unknown Executive: Uh... with the grizzly arrangement, the crushing conveying arrangement, and some uh... some configuration changes to the mill liner design with pulp lifters and operating parameters of that mill itself, we'll get it to eleven thousand two hundred tons per day by the end of the year or early twenty twenty five at the latest.
Speaker Change: 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 into 2025 at the latest.
Speaker Change: Mm-hmm.
Speaker Change: And maybe just, you know, talking about the reporting here.
Speaker Change: 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 Amogeno 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.
Speaker Change: Refresh.
Speaker Change: I think two haul trucks had to be renewed or replaced.
Luke: So, Luke, 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 Magino?
Luke: Well, in relation to Magino, no change. Our fleet replacement is really based on operating hours of that equipment. So as those haul trucks...
Speaker Change: reached 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.
Speaker Change: 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 .
Speaker Change: We do have two more trucks that are scheduled to arrive this year, in the second half of the year.
Speaker Change: 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...
Unknown Executive: And that would be the full replacement as far as our requirements for 2024. But obviously, as we move forward in 2025-2026, 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: 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 at YD. I see that you started using some hybrid production scoops.
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?
Unknown Executive: 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, and they've been performing very well; availability has been very high on them, plus 80%, which is what we would expect as far as availability on those units. They've been very productive for us, so as we continue to move forward 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: 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.
Cosmo: Correct Cosmo. I mean, you know, obviously as these older units start to get aged out from the hours point of view of operating hours There's there's more cost to maintain these units. There's less availability on these units So which obviously affect the overall productivity of of the operation so by replacing them with new units with higher availability and lower maintenance costs
Cosmos Chiu: Great. Thanks once again, John and team. Those are all the questions I have.
Operator: Thank you. Once again, please press star 1 on your 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, I'm Michael Scott. What initially prompted it, I mean, obviously 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 in...
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. It wasn't obvious, I mean, it's associated with pyrite, not quartz vein, like you typically see, but certainly high-grade. So that's initially what led us into targeting in the Hanging Wall.
Unknown Executive: 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, given the grade and the proximity to infrastructure, it would seem like you would allocate more resources there versus chasing something at depth. Just give
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
Speaker Change: Given the grades and the proximity to infrastructure, it would seem like you would allocate more resources there versus chasing something at depth just.
Unknown Executive: 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: That's the correct assumption, I think we're taking a balanced approach to, you know, continued expansion of the resource, but obviously given the great 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: Yeah, 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 a mine plan or is the way the mill is set up actually good for that different style of mineralization?
Speaker Change: Hi Mike, it's Luc here. No, I mean, certainly early, 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, treat that new zone from, uh,
Speaker Change: What we're seeing is free gold associated with that pyrite, so it's pyrite in a major conglomerate with gold around the margin, so I don't anticipate it being an issue from a metallurgical perspective.
Unknown Executive: Okay, and just one last question there. Yeah, Mike, you're so
Speaker Change: Okay, and just one last question there. Your current TSF permit and design, is that in excess of your current reserves?
Speaker Change: Just kind of getting at, could you either make it bigger, or if this additional zone proved to be a size, would you have to look for potentially another TSF site?
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, hi, it's Mike. You're still referencing YDA, I assume, right?
Mike: Yeah, so with regards to these new finds, I mean, 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.
Speaker Change: Okay, great.
Speaker Change: Okay, that's it for me. I had something else, but I forgot what I was gonna ask. So I'll jump back in and see if I remember.
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.
Operator: Extension 5439, and we thank you for your participation.
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.