Q2 2024 Endeavour Mining PLC Earnings Call
Yeah.
Good day, and thank you for standing by welcome to Endeavour mining second quarter and half year 2024 results webcast. At this time all participants are in a listen only mode.
After management's presentation, there will be a question and answer session. So for those who wish to ask a question. Please dial in to the phone line for questions. Please note that due to time constraints, we will be prioritizing questions from covering analysts todays conference call is being recorded and a transcript of the call.
I'll be available on Endeavour's website Tomorrow, I would now like to hand, the call over to Endeavour's, Vice President Investor Relations Jack Garman. Please go ahead.
Hello, everyone and welcome to Endeavour's quarter, two and half year results webcast.
Before we start please note our usual disclaimer.
in Cocoa: On the call today I'm joined by in Cocoa.
CE Guy young our CFO and Marc Malkin ICR.
Speaker Change: Today's call will follow our usual format.
First go through the highlights of our results guide will present, the financials and Mark will walk you through our operating results by mine.
Speaker Change: Before handing back to Ian for closing remarks.
We will then open the lineup for questions.
With that I will now hand over to Ian.
The call today.
Ian: I'm pleased to report that during my first half year as Chief Executive Officer, and we are continuing to deliver against our strategic objectives.
On the operational side, we remain on track to achieve our production guidance for the 12th consecutive year with all in sustaining costs expected to be near the top end of the range. This is due to the lower than expected power availability in Cote d'ivoire, and Burkina Faso, which resulting in the need.
Ian: For more costly self generation power generation.
Ian: Higher gold prices driving increased royalty costs and.
Ian: The higher cost of silver dollar Massawa ammonia.
Ian: However, we anticipate a reversal of a power issue in the second half and we're already seeing that and we remained focused on bringing down the costs that we can control.
We were pleased to see our net debt and our leverage stabilize is that gross projects approach completion during the quarter, we started paying down gross debt as well.
Ian: We expect our net debt position and our leverage to improve over the coming quarters.
With increased visibility to lower leverage and higher free cash flow generation. We are pleased to announce a new shareholder returns policy.
Speaker Change: And that policy is that we get.
Speaker Change: We are pledging to return at least $435 million in dividends to shareholders in 2024, and 2025, which we expect to supplement with additional dividends and opportunistic buybacks.
For 2024 will pay a minimum of $210 million, which just to put it in context is a 20% increase on a minimum dividend.
<unk> declared for last year.
Speaker Change: We were pleased to declare a $100 million dividend for H. One 2020 for once we also completed $20 million share by buybacks during the period, bringing our total return to $120 million or $255 for each ounce that we produced.
I'm also pleased with the progress we've made during the quarter both of our projects delivering first gold and silver dollar Massawa box expansion in April and then first gold at the <unk> mine in June both on budget and on schedule in less than two years, which is a tremendous achievement.
Speaker Change: We have now shifted our focus towards ramping up these two high quality projects that will continue to improve the geographic diversification and the quality of our portfolio washed underpinning a stronger <unk> performance this year.
We remain focused on growing the business organically and we are continuing to bolster our longer term organic pipeline through our exploration program.
This has made good progress during the quarter by advancing resource to reserve conversion and a keen mines and projects, which is a key priority for us this year.
You probably also noticed our key strategic investment in a.
Speaker Change: Junior Cote d'ivoire explorer Coca Cola cooler gold.
We've also returned strong results of the <unk> deposit.
<unk> tons, a gorilla and several satellite deposits on the tundra Gorilla property and we will provide an update on our positive progress. We've achieved later this year on this specific project.
Finally, we're continuing to progress on our ESG strategy as we focus on those initiatives that protect our people and the places where we operate whilst also supporting the long term success of our business.
But before I walk through the.
Speaker Change: Quarterly details I want to thank our outgoing chief operating officer, Mark Malcolm and EVP exploration general allowance for their years of dedicated service and significant contributions during that time.
Speaker Change: They both decided to leave to pursue other opportunities and we wish them well in menu ventures.
Speaker Change: They will be missed as individuals they leave behind capable teams, who will continue the good work both of them bought to their roles.
Speaker Change: As we transition into a new phase focused on maximizing the performance of our existing operations to support our ambitious capital allocation priorities.
Speaker Change: Taking this opportunity to restructure and reorganize the leadership.
Speaker Change: To strengthen the operational and technical management within the team and to ensure that we can effectively deliver against our strategic objectives.
Speaker Change: I am pleased to welcome Jerry I travel right into her new role as EVP operations and ESG.
Most: Most of them white into his new role as EVP and Chief Technical Officer.
Most: But Jerry in March and have an excellent track record of creating value within endeavor and I have no doubt that this will continue in their new roles.
Speaker Change: Over the next slides I'll touch upon our progress this quarter before handing over to the rest of the team for a more detailed.
Most: Update.
Most: So looking at slide seven.
Speaker Change: Turning to slide seven you can see our quarterly production and all in sustaining margin trend.
Speaker Change: Production increased quarter on quarter to 251000 ounces in Q2 due to increased production at Hyundai as well as server sour.
Most: While our all in sustaining margin also increased largely due to the improved gold price.
Most: Environment.
Speaker Change: This was partially offset by the increase in costs associated with lower grid power availability in Cote d'ivoire, and Burkina Faso, and the higher royalty rates due to the high gold prices, which guy will touch on in more detail as well as the higher costs associated with some of the data and the mono.
Most: Mines.
Guy: On slide eight you can see how our operating performance is tracking on the safety side.
Speaker Change: Industry, leading loss time injury frequency rate remained stable.
Speaker Change: There is always room to improve as we work towards zero harm across all of our operations in.
Speaker Change: In fairness, we are pleased with the level of safety performance that we have in the group.
Speaker Change: Our production remains on track to achieve the guidance range, whilst our all in sustaining cost is expected to be towards the top end of that range.
Speaker Change: As I mentioned, our all in sustaining costs. This year have been impacted by the high gold prices driving higher royalty costs, the cost impact of lower grid availability.
Speaker Change: Grid power availability and increased self generated power in HR as well as lower production and high cost of silver dollar.
Speaker Change: As we said in January of this year, our production performance is weighted strongly towards the second half of the year with increased production expected from Hyundai as well as additional production being introduced from the two projects.
Speaker Change: Ramp up to nameplate capacity in Q3.
Speaker Change: On the cost side, we are also starting to see significant improvements in power grid availability in Burkina Faso, and Cote d'ivoire, Dupont, which will support improved costs in the second half. We're also looking at several measures to improve the performance at $7 a seller.
Speaker Change: On slide nine.
Speaker Change: Operating cash flow increased by $203 million in the quarter and that was due to high production high gold prices.
Speaker Change: Working capital inflow due to an increase in payables.
Speaker Change: Projects advance towards completion and due to the inflow of $150 million gold prepayment that was previously disclosed.
Speaker Change: On slide 10, you can see that despite our continued investment in organic growth and exploration during the quarter.
Speaker Change: Our leverage and our net debt remains stable and healthy.
Speaker Change: We also reduced our gross debt by paying down $70 million on Rcs.
Speaker Change: As our two growth projects ramp up in the second half of the year, we will increase our focus on balance sheet improvement, bringing our leverage lower.
Speaker Change: That will further strengthen our financial position so that we can increase our focus on shareholder returns.
Speaker Change: While remaining well positioned to launch into a next phase of growth most likely with a sofa from 2026.
Speaker Change: Slide 11 shows is the shareholder returns.
Speaker Change: One of our capital allocation priorities and we're delighted to outline our new shareholder returns program.
Speaker Change: We are going to return at least $435 million in.
Speaker Change: In dividends to shareholders over the 2024, and 2025 period, assuming the gold price remains above $18 $50, an ounce and our leverage remains healthy.
Speaker Change: For 2024 will pay a minimum dividend of $210 to $210 million.
Speaker Change: An increase of 20% on last year's minimum dividend. We also expect to supplement that minimum with additional dividends and opportunistic share buybacks in the higher gold price environment.
Speaker Change: During our last program, we returned 78% above the minimum commitment during a capital intensive phase of growth. So we expect to mirror that level of commitment with our updated program.
Speaker Change: On slide 12, you can see that by the end of 2025, we will have returned at least $1 $3 billion to shareholders. That's approximately a quarter of our market cap returned over a five year period, we don't intend to stop there as we believe this business is well positioned to sustain attract.
Speaker Change: Shareholder returns through the cycle as well as beyond 2026.
Speaker Change: For each one of this year, we are pleased to declare a $100 million dividend, which we supplemented with $20 million of share buybacks during the period.
Speaker Change: That's a return of $255 for every ounce produced in each one and its equivalent to an attractive indicative indicative.
Speaker Change: <unk> yield of over four 3%, which reiterates our commitment to supplemental returns and opportunistic buybacks.
Speaker Change: Following our H one dividend, we will have returned over $1 billion to shareholders. Since we first started the scheme in Q1 2021 again equivalent to $223 returned to shareholders every ounce produced over that period and that can only be impossible.
Speaker Change: Because of the high margins that we generate and the healthy balance sheet position, we've been able to maintain.
Speaker Change: Moving onto our organic growth projects on slide 14, we delivered first gold at seven dollar Massawa buyouts expansion in early May after advancing the project from construction launch to Cisco and under two years.
Speaker Change: We delivered the project on budget and on schedule with over three and a half million man hours worked without sustaining any lost time injury.
Speaker Change: We are now shifting our focus to the ramp up and while we are on track to reach nameplate capacity from the box plant of $1 2 million ton per annum.
Speaker Change: In Q3, we're also working on optimizing the existing CIL plant.
Speaker Change: The new box firmed in order to improve both the production and cost outlook.
Speaker Change: Mark will take you through some of those initiatives in his section.
Speaker Change: Moving to our next growth project Lafayette, We delivered first gold in late June a full quarter ahead of schedule.
Mark: Turning to our months after construction loans and the project was also delivered on budget and within schedule.
Mark: We're ramping up the Seagate and we expect to reach nameplate capacity in Q3.
Mark: In July we were processing at close to 90% of nameplate capacity.
Speaker Change: Mine is on track to achieve its guidance within the year not only do we do that nameplate capacity not just once but we were able to do it fairly consistently.
Speaker Change: On slide 15, we can see that as the projects approach completion.
Speaker Change: Wanted to highlight our industry, leading construction track record. We've now built five projects in the last 10 years in West Africa. All of these projects being delivered on budget on schedule and we built them in less than two years.
Speaker Change: What's even more impressive as these mines become established and ramped up we've been able to significantly outperform nameplate capacity due to operational efficiencies and low cost optimization initiatives.
Speaker Change: On exploration during quarter, two we continue to prioritize resource to reserve conversion as well as the high priority a software project and the targets surrounding it we will show a significant reserve increase in our year end update given the success we've seen at <unk>.
Speaker Change: As well as some food where work is underway to convert the sizable measured and indicated resource into reserves with a very high conversion factor.
Speaker Change: We also increased our exploration guidance up or down on massawa to support the near term non refractory ore mine plan, which will provide a high grade ore to the CIL plant.
Speaker Change: We're advancing two deposits he asked to see.
Speaker Change: <unk> west the shallow high grade non refractory oxide opportunities.
Speaker Change: <unk> supports the 2024 mine plan and improve production.
Speaker Change: The CIL plant in H two.
Speaker Change: Due to the exploration success at Hyundai ended <unk> in particular, as we get greater confidence in our larger more cohesive ore body.
Speaker Change: This year as well as <unk>.
Speaker Change: The focus on accelerating the development of these deposits at sub one dollar Massawa, we've increased our exploration budget from $65 million to $77 million.
Speaker Change: A temporary gorilla or as we will now refer to it as a software on slide 17, we have already defined four and a half million ounce resource two grams a tonne.
Speaker Change: We're continuing to see positive results at the deposit.
Speaker Change: And so far we have identified continuations of the mineralization at depth below the current pit shell and.
Speaker Change: Yeah.
Guy: Before I hand over to Guy I wanted to briefly touch on ESG.
Speaker Change: As we continue to provoke progress on ESG strategy, we were delighted to receive an improved sustainability score that ranks endeavor as the highest gold producer in the sector.
Speaker Change: One area. We've expanded on this year is that a reforestation efforts. These include a 40 hectare project at La <unk> with Hawaii Gas Foundation.
Speaker Change: Funding for new auditorium of the University of the law and planting over 3200 trees through our one work at one three initiatives.
Speaker Change: And I am pleased to see the range of initiatives, we have in place to work towards our biodiversity targets and continued support.
Guy: Our local ecosystems.
Guy: And with that introduction, let me hand, you over to Guy who can take you through the financials guy over to you. Thank.
Guy: Thank you Yan and Hello, everyone I'll, let just take you through the Q2 financial highlights.
Guy: To summarize our financial highlights for the quarter, our production from continuing operations was up 15% over the first quarter and our all in sustaining cost was up 9%.
Guy: The stronger production, along with higher realized gold price drove significantly higher EBITDA and also supported higher operating cash flows. In addition to a working capital inflow and the proceeds of the $150 million prepayment that we previously disclosed.
Guy: Our net earnings and adjusted net earnings were lower largely due to higher tax expenses.
Speaker Change: I'll now walk through the details starting with our production and all in sustaining costs.
Speaker Change: Our production increased by 32000 ounces 251000 ounces for the quarter due to stronger production at Hyundai <unk> and <unk>.
Speaker Change: Our all in sustaining costs also increased $101 per ounce during the quarter due to higher than anticipated power costs as well as increased royalty rates due to the higher gold price and higher cost $7 in the solar and manner.
Guy: Looking at our ASIC in a bit more detail on slide 22.
Guy: Our higher operating costs were largely offset by increased volumes of gold sold and lower sustaining capital.
Guy: A significant contributor to the all in sustaining cost increase were the higher power costs and royalties.
Guy: Power cost increased by $52 per ounce due to the lower grid availability during the quarter, resulting in us having to self generate more power and at a higher cost.
Guy: In addition, we incurred higher royalty costs of $27 per ounce given the higher gold prices.
Guy: Together these resulted in the $79 per ounce impact on our all in sustaining cost quarter over quarter and approximately a $100 per ounce impact on the half year.
Guy: Given the impact of the lower availability of grid power I wanted to spend some time going through the detailed on slide 23, as you can see in the top half of this slide our average grade availability at <unk> was 69% last year.
Guy: And in the bottom half of the slides at Hyundai in manner. It was 91%.
Guy: We prioritize using power from the grid, firstly, because it's much lower cost and self generated power. So for example at 80 grid power currently costs around 18 cents per kilowatt hour approximately 60% of the cost of the cost of self generated power.
Speaker Change: Makena faster grid power currently costs around 23 cents per kilowatt hour, which is less than 50% of the cost of self generated power.
Guy: The other reason that we use grid power is because the grid at a 23% renewable contribution in Cote d'ivoire, and 13% in Makena, Factset, which clearly supports our low emissions intensity.
Guy: Yes.
Speaker Change: As a working capital inflow and the $150 million prepayment that we announced our Q1 results.
Speaker Change: Here, you can see a bridge of our quarter over quarter variances in operating cash flow and Youll note that the realized gold price and increased gold sales drove an $87 million increase while operating expenses and income taxes were $160 million higher due to higher mining and processing costs and the timing of payments for the 2023 tax.
Guy: Here in Senegal in Cote d'ivoire.
Guy: The change in working capital increased by $127 million, driven by improved trade and other receivables and an increase in trade and other payables.
Guy: Operating cash flow also benefited benefited from the $150 million in proceeds from the previously disclosed gold prepayments net.
Guy: And that will support the company's offshore cash position during the end of its investment phase for relatively low cost of capital of just over 5%.
Guy: This is expected to reverse in Q4 this year at the time of settlement.
Guy: If we move to slide 26, and take a look through our change in working capital.
Guy: Reverse from an outflow of $82 million last quarter to an inflow of $45 million in the second quarter.
Guy: The inflow was largely driven by trade.
Guy: Trade and other payables of $64 million.
Guy: Due to increased payables across suppliers minority dividends royalties and payroll related liabilities and.
Guy: And an inflow of trade and other receivables of $29 million, which reflect the inflow VAT receivables in Senegal, and the timing of gold sales proceeds.
Guy: These inflows were partially offset by a drawdown on inventories of $31 million and prepaid expenses of $18 million that relate primarily to activities around our projects as they ramp up towards commercial production in Q3.
Guy: As such we would expect these outflows to start to unwind as we move through the second half of this year.
Guy: Turning to slide 27 on net debt was stable in Q2 as we approach the end of our investment phase.
Guy: <unk> activities from continuing operations generating the $250 million as I've just explained.
Guy: Investing activities were $171 million.
Guy: Comprised principally of approximately $22 million of sustaining capital and $52 million of non sustaining capital and $93 million of growth.
Guy: Financing activities was an outflow of $150 million, which included a $17 million repayments of our Rcs minority dividend payments of $37 million and payment of financing fees of $30 million.
Guy: Share buybacks were $8 million in the period and payment of lease obligations of around 6 million amongst some other items.
Guy: The group incurred a loss of $5 million from the foreign exchange re measurement as cash balances due to the increase in the U S dollar to Euro exchange rate during Q2.
Guy: Looking forward, we remain focused on improving our net debt and seeking to delever the balance sheet as quickly as we can.
Guy: Lastly, if we move through to our net earnings from continuing operations on slide 26.
Guy: Overall, our adjusted net earnings were primarily impacted by higher taxes.
Speaker Change: I won't go through each of the line items, but just focused on a couple of the key numbers.
Speaker Change: Our current income tax expense increased to $135 million largely due to an increase in recognized withholding tax expenses, which.
Speaker Change: Which increased to $74 million as a result of the timing of local board approvals for cash upstream.
Speaker Change: In addition to an increase in tax expenses due to higher earnings and the impact of the temporary contribution of 2% of profit before tax to the government of Makena faster, which was introduced in Q1.
Speaker Change: The loss on financial instruments included realized losses on gold hedges of $8 million.
Speaker Change: Unrealized FX losses of 7 million and an unrealized loss on marketable securities of $4 million.
Speaker Change: Along with unrealized losses on NSS and deferred compensation related to asset sales of $2 million amongst some other items.
Speaker Change: The adjustments. We've made include unrealized losses on financial instruments of $12 million largely related to the unrealized loss on gold hedges.
Speaker Change: Other expenses of $19 million, which included legal and other costs for the ongoing arbitration a net loss from discontinued operations of $6 million.
Speaker Change: In association with the settlement of historic liabilities under the sale agreement to the <unk>.
Speaker Change: And the loss on noncash tax and other adjustments of $10 million that relates to the impact of FX re measurement of deferred tax balances.
Speaker Change: With that I'd like to hand over to Mark to take you through the details from an operational perspective Mark.
Mark: Thank you Guy and Hello to everyone joining the call today.
Mark: Before I go into a mine by mine detail, let's look briefly at ESI to performance.
Mark: We've maintained our industry, leading loss time injury frequency rate from continuing operations of <unk>, one one per million hours, while increasing the number of people who thought through the final phases of project construction.
Mark: Bringing efficiently into production.
Mark: Overall, we're very proud of our safety performance, we must remain focused on improving key aspects such as training frontline supervision and operational reviews to ensure that we eliminate all serious injuries and incidents.
Mark: With four out of fall off of a reportable incidents year to date coming from contract workforce.
Mark: Result of higher mining unit costs, driven by increased diesel consumption and higher sustaining capital.
Mark: Following the mining and processing of lower than expected non refractory ore from the <unk> and additional volumes of semi refractory ore from the sale of Central's RMP with lower associated recoveries.
Mark: <unk> is expected to reach eight production for the full year below the bottom end of its production guidance with an all in sustaining cost above the top end of the guidance range.
Mark: Moving onto slide 33.
Abdallah Massawa: Thats Abdallah Massawa were looking to focus on optimizing both the existing cellular plan and the biopsy plan as we ramp up production to improve the outlook for 2024 towards the guidance range.
Abdallah Massawa: Firstly and as a priority we're looking to incorporate some higher grade resources into the near term plan for the CIL plant.
Mark: Our exploration budget at <unk> has been increased by around 20%. This year as we accelerate the grade control definition of the key is to see deposit.
Mark: We are already pre stripping.
Speaker Change: And the nice if youre.
Mark: With the ability to introduce higher grade oxide ore into the CIL fade in the second half.
Mark: Supporting higher grades and higher recovery rates for the CIL plant.
Mark: We're looking to continue improving costs with optimization initiatives like solar power.
Mark: Would reduce power cost at the operation by approximately 20%.
Mark: Tailings in the <unk> pit, which will help reduce by some anti requirements of infrastructure future capital associated with Tcf construction, plus reduced water return to the processing plant and ultimately reduce closure costs and we expect these two initiatives to come into the plan in 2025.
Mark: Yes.
Mark: As we ramp up the buyer's plan. We're also looking at various optimization initiatives to ensure that we are generating the maximum return from the refractory ore that we're mining and processing.
Mark: As we advance through the transitional samira refractory ore and the massawa deposits.
Mark: We're not only recovering the refractory gold through the <unk> plan.
Mark: But we're also separating and recovering the semi refractory ore that does not flow from the flotation under flow and overdoing it to the CIL plant for processing.
Mark: We've been very pleased with the additional answers recovered and look to increases as we ramp up volume throughput.
Mark: We're also looking to accelerate mining activities in the Marcellus and Roseanne pit to get to deeper elevations and gain access to more high grade for sure improve.
Mark: <unk> improved our orebody knowledge through targeted drilling and metallurgical test work.
Mark: Orders and maximize the blend characteristics.
Mark: With the volume of semi refractory ore in stockpile and the remaining to be mined.
Mark: We are planning to increase mill and flotation circuit throughput beyond the nameplate capacity in order to increase the production of concentrate for the biopsy.
Mark: We're very pleased to deliver first call from the box expansion in April and equally happy that the borrowers and neutralization tickets are performing well as we ramp up beyond 50% of nameplate capacity.
Mark: There is still more work to be done to ramp up throughput and have all sections of the plant running smoothly there.
Mark: Many positive signs as we continued to play tough identified through the commissioning process.
Mark: Looking forward the focus for the power plant is on pre stripping in the Massawa Northland Pete to provide another source of ore to blend with the central zone pit and on ramping up mill throughput to improve the outlook for this year and beyond.
Speaker Change: Moving onto slide 34, I want to quickly provide an update on the solar project one of the key optimize optimization initiatives for several elements, our which is expected to reduce energy costs and emissions.
Mark: We launched the construction of the 37 megawatt photovoltaic facility and a 16 megawatt battery system.
Mark: This last year.
Mark: For an initial capital cost of $55 million.
Mark: We're making good progress with 50% of the initial capital now incurred.
Mark: As you can see on the slide we have already installed the first few solar panels, which will continue through to the end of the year.
Mark: We are on track to commission the solar plan in quarter, one 2025.
Speaker Change: Moving onto the wound I'm on slide 35.
Speaker Change: Hyundai is on track to achieve its production and cost guidance for the year with performance strongly weighted towards the second half due to the mining sequence.
Speaker Change: Half one performance was also impacted by lower grid utilization, which had a negative impact on costs as.
Speaker Change: As well as the 11 day strike that occurred in the first quarter.
Speaker Change: During the first half all mining activities were focused on the Kari West pit.
Speaker Change: While stripping activities focused on the high grade Kari pump and Vindaloo mine pits.
Speaker Change: During the second half all mining activities will increase at the Kari pump inventory mine pit supporting higher average grades and production at lower cost.
Mark: In addition, as John mentioned, we've seen significantly improved repower availability, so far in the fourth quarter with the addition of the wet season supporting increased hydro electric capacity in the region, we do not expect further issues with grid availability.
John: At ETE on Slide 36 production increased in the second quarter due to higher average grades processed and higher recovery rates.
John: Partially offset by a slight decrease in tonnes of ore milled.
John: All in sustaining costs remained stable despite the impact of lower grid availability during the quarter due to increased volumes of gold sold.
John: Given the strong first half performance largely due to higher grades mined and processed from the ETE and back to periods.
John: It is on track to achieve production above the top of its guidance range with all in sustaining cost within the range.
John: Construction of the second Psf was successfully completed during the second quarter and deposition has now commenced on the new facility.
John: The minerals odds of construction is also progressing well.
John: Turning to our <unk> on slide 37.
John: The underground ramp up has supported improved overall performance at the mine site.
John: But during the quarter production decreased as a result of lower tonnes milled and lower average grades processed as the focus was on increased development, while access to stopes.
John: Was improved.
John: We will focus on improving costs in the second half, which were impacted by the decreased power availability.
John: During the first half as well as increased development during the period due to a low to getting stuck in a stripe at sea, while performing remote loading which took more than four weeks to get out during the second quarter and necessitated mining of a bypass drive which impacted stope production volume and grade.
John: We have had nice such events like this in the last six years of production at <unk> and importantly, the lighter is now back in service.
John: All in sustaining cost increase as mentioned due to lower gold volume sold and increased development costs as well as the increased reliance on self generated power associated with the reduced availability on the national grid.
John: We expect stronger production in the second half of 2020 for his development activities in half one should enable us to access more stopes at the mine underground deposit sub.
John: Supplemented by consistent stope production from <unk>.
John: <unk> is on track to achieve its full year 2020 full production guidance at an all in sustaining costs near the top end of the guidance range.
John: Moving on to slide 38, and <unk>, we were pleased to deliver first gold at <unk> on the 20 <unk> of June.
Speaker Change: But I need to reconstruct figure analysts in two years, but the first goalposts delivered on budget and ahead of schedule.
Speaker Change: We are now deep into the ramp up phase and it is going well with processing at up to 10000 tons per day equivalent to 90% of nameplate.
Speaker Change: We expect to achieve commercial production in quarter three when we reach the name plate capacity of 4 million tons per annum.
John: Importantly, we have been really place with estimates right. The <unk> is running.
John: The figure is on track to achieve its guidance this year, which is in line with the definitive feasibility study assumptions.
John: I will now hand back to Ian.
Ian: Thanks, very much guy and Marc.
Ian: So despite a challenging H one our operations remain on track to deliver our production guidance for the 12th consecutive year as Mark said previously with costs expected to be near the top end of our guidance range. We've now delivered two growth projects ahead of schedule or in the process of ramping up.
Ian: Up to support a stronger <unk> performance.
Speaker Change: Beyond age to these projects underpin a more diversified and high quality portfolio.
Speaker Change: As we as we transition out of this phase of growth our key capital allocation priorities are delevering, our balance sheet to prepare the business for the next phase of growth and delivering attractive shareholder returns anew.
Speaker Change: Our new shareholder returns program will do exactly that as we continue to increase our minimum dividend commitment, while we remain committed to paying supplemental returns in the form of additional dividend and opportunistic share buybacks.
Speaker Change: A very important and historically successful exploration program continues to generate value supporting our near term outlook, while providing long term growth optionality and we will provide updates later in the year of the progress the sell through in some of our other cornerstone mines such as <unk>.
Speaker Change: We are focused on safely delivering against our key objectives for the benefit of all of our stakeholders.
Speaker Change: We thank you for listening and now I'll hand, you back to the operator and open up for any Q&A. Thanks very much.
Speaker Change: Thank you ladies.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question you will need to press star one one on your telephone and wait for your name to be announced we will be prioritizing questions from covering analysts at this time.
Speaker Change: Do you wish to cancel your request please press star one again.
Speaker Change: Once again, please press star one one if you wish to ask a question. Please standby, while we compile the Q&A roster.
Ovais Habib: Our first question comes from the line of <unk> Habib from Scotiabank. Please go ahead. Your line is open.
Speaker Change: Sure.
Ian: Hi, Ian.
Ian: <unk>.
Speaker Change: Good to hear that bought the growth projects are.
Speaker Change: On track.
Speaker Change: But really excited to hear Mark and Juno are leaving the company.
Speaker Change: Couple of questions for me.
Speaker Change: Number one in regards to the ramp ups.
Speaker Change: Are you at all worried that that ramp ups at chaparral and <unk> are both taking place in Q3, when it's that typically the rainy season at that time.
Speaker Change: Look it's a great question.
Speaker Change: There is no doubt the traditionally that's been a trickier time, I think first and foremost let's talk about the CJ.
Speaker Change: The fee.
Speaker Change: Has closed on 2 million tons of material raw materials sitting literally directly ahead of the plan. So as the plant is being constructed.
Speaker Change: Producing so we've got material literally.
Speaker Change: Our load is distance from from the plant so even if it rains and we can't get into the pits.
Speaker Change: More than enough material available to go into the <unk>.
Speaker Change: <unk>.
Speaker Change: At sub one dollar.
Speaker Change: It's a much driver environment.
Speaker Change: Silver dollar so I will not.
Speaker Change: Unduly worried.
Speaker Change: About that.
Speaker Change: More if I have any concern.
Speaker Change: At $7.
Speaker Change: Making sure that we have adequate access to the fresh ore when there is no doubt that we have been delayed in getting into key ester.
Speaker Change: We had a court ruling so the eviction.
Speaker Change: <unk>.
Speaker Change: The artisanal miners.
Speaker Change: But we were prevented from music enforcing eviction order by the authorities waiting till after the election, and then and then and then that's taking much longer than it should have done and it has not helped us.
Speaker Change: Im pleased to say that that eviction has taken place it took place without any incident.
Speaker Change: The.
Speaker Change: The artisanal has moved our site and we're busy preparing.
Speaker Change: Yes.
Speaker Change: So it's a buildup on production so.
Speaker Change: There's always a risk.
Speaker Change: In quarter, three but I don't think it's going to be too much of a problem for us in those two cases market that you want to add anything to that.
Speaker Change: Okay.
Speaker Change: Hi, Thanks, Thanks for that and then.
Speaker Change: Appreciate the color.
Speaker Change: Just moving on then regarding.
Speaker Change: On the exploration side than the gorilla.
Speaker Change: You've mentioned that you've identified now the pilot trend.
Speaker Change: And discovered that call me and Gary targets as well now that both in close proximity to a thoughtful and now will these targets to be included in that sample PFS. That's expected in Q4 or will this be an additional to that when you released the PFS.
Speaker Change: Yeah.
Speaker Change: Yet.
Speaker Change: Another very good question I mean, the software deposit in and of itself is more than big enough to to run the PFS.
Speaker Change: What the.
Speaker Change: Part of the trend and the other deposit Kingara what that does.
Speaker Change: It certainly adds extra it's a real Hollywood problem, because it adds extra optionality, but it will not.
Speaker Change: <unk>.
Speaker Change: Being included in the PSS because it is not fully defined as yet.
Speaker Change: But certainly the initial work that has been undertaken that.
Speaker Change: Tells us that the our initial optimistic outlook for.
Speaker Change: These little what I would almost call satellite ore bodies.
Speaker Change: Appears to be justified.
Speaker Change: But.
Speaker Change: It would form part of our.
Speaker Change: Our later additional optionality to the PSS to the PFS will take place specifically on the.
Speaker Change: On the SRU deposit John a journalist with me John do you want to add anything else to that.
John: I mean, that's that's very clearly.
John: Early days of the launch of our most advanced product transfer even the.
Speaker Change: <unk> is not to bring those into the PSS this year.
John: Looking further on PFS is focused on in software.
Speaker Change: Bank deposits.
Speaker Change: Perfect. Thanks, guys.
John: Last question on my end.
Speaker Change: Any additional thoughts on Burkina Faso, and or IP cost.
Speaker Change: They're looking to change their mining codes.
John: And also and are these.
John: Countries consulting with endeavor on these potential changes.
John: Yes.
Speaker Change: I think the.
Speaker Change: Proposed changes that.
Speaker Change: Being pulled forward.
John: Bye.
John: Bye.
John: Until we know specifically.
John: With respect to Makena faster.
John: There was a concern when they were first mooted early on this year.
Speaker Change: I remember sitting with the minister of mines, and saying look we respect the fact that as the <unk>.
Speaker Change: <unk> you have the right.
Speaker Change: Lay down the rules of the game that you want for investors.
Speaker Change: Please bear in mind that.
Speaker Change: People have invested in your country on the basis of certain preexisting rules of the game. So if you're going to change the mining code we would strongly.
Speaker Change: It's not insist we strongly hope that you would respect existing conventions.
John: And at the time the proposed changes.
John: Ventilated earlier on in the year.
Speaker Change: Somewhat sort of ambiguous or silent on that point what has come out subsequently.
John: Is that they want to implement the changes in fairness those changes really are.
Speaker Change: Just putting the kina Faso almost in line with the rest of the West Africa in terms of royalties ownerships.
Speaker Change: Investment into local projects and God knows what.
Speaker Change: But more importantly, they confirmed that existing conventions would be respected so us mana that means that mana will operate under existing.
Speaker Change: Agreement until the end of 2027 and Hyundai.
Speaker Change: Its existing agreement until the end of 2029.
Speaker Change: Okay perfect. Thanks for that Ian.
Speaker Change: Thanks for taking my question then.
Mark: First of all that's up to about July Mark. Thanks.
Speaker Change: Thank you.
Speaker Change: We will now take our next question please standby.
Speaker Change: Our next question comes from the line of Raj Ray from BMO. Please go ahead. Your line is open.
Raj Udayan Ray: Thank you operator, and good afternoon, Ian and team.
Raj Udayan Ray: First question is a little more visibility on the ramp ups.
Speaker Change: <unk> silver dollar and I think Mark commented, but I didn't catch the cigarette.
Speaker Change: With respect to your commercial nameplate capacity at Lafayette, what percentage of nameplate capacity are you currently or consistently achieving at this point.
Speaker Change: And secondly on top of the elements our same thing what percentage of nameplate capacity are currently up and then if I look at the recovery for Q2 sub solar Massawa those 59, I do understand it's a commissioning period.
Speaker Change: But can you touch upon if you if youre seeing any issues with the recovery in that pipeline.
Speaker Change: In the living you can recover some old under flow was that a function of.
Speaker Change: What you saw in terms of recovery.
Speaker Change: So im mixing.
Speaker Change: Five on that transition.
John: In Q2.
John: Okay.
Mark: Thanks, It's mark.
Speaker Change: Take us through the <unk> first and then go on to $7.
Speaker Change: Let's see.
Mark: Hi.
Mark: Simplicity and.
Speaker Change: It's the first time, we're using a hedge pgi, but we've actually been very very happy with how that's performing.
Speaker Change: And with sort of at the point now, where we're getting 10000 tons a day, which is about 90% of the nameplate. So now it's a matter of just stabilizing that and then getting the CIO and the gravity circuit stable. So.
Speaker Change: Pretty happy with how <unk> is progressing.
Speaker Change: At <unk> the.
Speaker Change: The box is a more complicated so it does take longer to ramp up.
Speaker Change: Nominally at 50%.
John: The.
Speaker Change: The point you made about the flotation under slightly that was always going to be something that was part of the project and its for the transitional or there is more transitional rule.
John: That was initially envisaged so we can say that as we were mining and as part of the project.
John: <unk> started setting up the pipeline and getting everything ready.
John: So that we could bring the flotation and the flow through to the CIL plant and this is something that you do see in other box plants.
Speaker Change: Certainly from experience at a velocity, we had the same setup. So when you've got a semi refractory or not all of it will float and go to the box.
John: If you just let the tail the floatation tailings rotten to the TSA, if you'd be putting a fair bit of gold in the TSA. So what we do is we run it to the leach tanks.
Speaker Change: It doesn't authority obviously vein.
John: Crushed in ground.
John: It is not an issue.
John: We can introduce it into the leach tanks.
John: <unk> plan.
John: We installed additional capacity there.
John: Years ago as part of that phase one expansion. So it is not upsetting or impacting the CIL plant performance at all of the Shreveport or anything like that which is good and so now.
John: We're getting sort of comfortable with the way that it operates and understanding.
John: What we need today just to.
John: Make sure that we balance the ph in the density control and so forth, but certainly the early days are very encouraging in that respect.
John: And Mark as a as a follow up to that so.
Mark: We are end of July now are you seeing a increasing trend and recovery.
Mark: Also any issues in the box with respect to controlling it.
Mark: Anthony I'll ask Tony can also limit temperature issues, given we are operating in.
Mark: <unk>.
Mark: And so if.
Mark: If we talk about the antimony and ask Nick and so forth. Obviously that is something that we would do three pending.
Speaker Change: <unk> of the antimony issues that we will see will come more once we get into the north line and Thats, obviously, all about blending so it's less of an issue today.
Speaker Change: You mentioned about the temperature.
Mark: Yes.
Mark: <unk>.
Speaker Change: It's in excess limit reaction, so it probably doesn't matter, whether it's minus 30 degrees or plus 80 degrees.
Speaker Change: But they are going to hate up naturally so it's all about the cooling capacity that you have for them and that aspect is running well we've been very happy with the way that the boil circuit is run.
Mark: In General and then following that you've got the kind of current detoxification and the neutralization circuit.
Mark: And that whole part of it is running very nicely.
Raj: I think Raj.
Raj Udayan Ray: Marc is exactly right.
Speaker Change: The second part of the box plant is the complex.
Speaker Change: Plex plant the complex part of the plant.
Speaker Change: And the one where potentially most risk what we're seeing is the recovery of gold from the sulfide concentrate.
Speaker Change: Absolutely coming out spec, we're getting more than 90% recovery. So the complicated side of the plant is working really well.
Speaker Change: Where we have the current issue is in the floatation side, where we're not getting.
Speaker Change: The mass pool of sulfide, because we have insufficient real fresh ore and we're getting this sort of interference from the.
Speaker Change: From the transitional.
Speaker Change: <unk>.
Speaker Change: Mark and team have put in place that initiative to instead of taking that flotation under flow straight to tailings, putting it through the <unk>.
Raj: The original oxide plant and we are seeing.
Raj: A modest increase in recovery, so that that that little should we call. It.
Raj: Yes go ahead.
Raj: One other point about the box plant is when we talk about throughput.
Speaker Change: The throughput that matters is the concentrate generation from the flotation circuit not necessarily what comes in the front end. So we are looking to increase the front end production or capacity. So that we can generate the right quantum of throughput.
Raj: From the flotation circuit.
Raj: Okay.
Speaker Change: Okay. That's great. Thank you and then one last question.
Raj: Full year.
Speaker Change: Our new dividend policy.
Speaker Change: The supplemental dividend or share buyback that you have talked about obviously.
Speaker Change: If you look.
Speaker Change: Back from when we started this program when we started the ship.
Speaker Change: The dividend program, we had a leverage of <unk>.
Speaker Change: Almost three times.
Speaker Change: And then we bought it right down.
Speaker Change: Once.
Speaker Change: And Hyundai.
Speaker Change: Started too.
Speaker Change: To ramp up and then when positive.
Speaker Change: <unk> of going into the build phase for <unk>.
Speaker Change: <unk> and <unk>.
Speaker Change: Our point.
Speaker Change: H, we thought actually we were going to be slightly higher on leverage.
Speaker Change: At the end of Q2, then we are obviously, we have been helped by the by the gold price somewhat but.
Speaker Change: <unk>.
Speaker Change: Certainly, it's always been our desire to be at or around five is.
Speaker Change: Through the cycle.
Speaker Change: It will fluctuate from time to time.
Speaker Change: So.
Speaker Change: If there was a magic Formula said is this and this and this then we're going to be paying out that we look at all sorts of.
Speaker Change: The supplemental dividends I think to put in perspective.
Speaker Change: We're saying that for this year, we're going to be paying out $210 million.
Raj: Last year.
Raj: The guaranteed minimums 175, we paid out a total of $2 66.
Raj: In 2023, which is the supplemental and the buybacks on top of the guarantee and we still want to do that but at the time that we work on our dividends, we will look at all the <unk>.
Raj: Things that we need to do we look at our current performance. We look at the state of our balance sheet will look at capital requirements Importantly.
Raj: All decisions that we make around dividends will be recognizing that shareholders deserve to be paid something today, but not at the detriment.
Raj: The long term sustainability of the business.
Raj: So it's up to us to try and get that balance and its difficult to say.
Raj: What that's going to be and that's why we've couched our policy in terms of there's a guarantee which is a healthy increase from where it was before and we're still committed to supplemental and to buybacks.
Raj: When the opportunity arises.
Raj: That's the way.
Raj: We frame the new policy.
Speaker Change: Okay. That's great. Thank you very much that's it from me.
Speaker Change: Thank you we will now take our next question. Please standby.
Speaker Change: Our next question comes from the line of Wayne Lam from RBC. Please go ahead. Your line is open.
Wayne Lam: Hey, good morning, guys.
Wayne Lam: Maybe just on <unk> on.
Speaker Change: The increased proportion of ore from the main <unk>.
Speaker Change: The past couple of quarters.
Speaker Change: Understanding that you're doing the stripping for future tailings, but just wondering if that's also been driven by the lower amount of available oxide or transition ore from massawa.
Speaker Change: And then and then just wanted to clarify on the comment on a potential throughput expansion was that on the CIL or the buyouts and is this I mean refractory material.
Speaker Change #101: So plan to go through the CIL.
Speaker Change: Going forward.
Mark: Hi, Brian it's mark Thanks for the questions.
Speaker Change: The $7 pit mining is something that we actually started in 2021.
Speaker Change: The reason for that was.
Speaker Change: Firstly.
Speaker Change: It was a decent higher grade ore source for the.
Speaker Change: CIL plant.
Speaker Change: And secondly, we did recognize.
Speaker Change: Back then we had two choices we could either.
Speaker Change #116: Our second Psf and the first tier type of dollar is an upstream rice.
Speaker Change: And.
Speaker Change: We don't want to continue doing upstream PSS and if you convert that to a downstream rightfully line you're talking about by the time you finish all the wall rises.
Speaker Change: You are talking 70 $70 million to $80 million of capital plus a massive plan take.
Speaker Change: Okay.
Speaker Change: We believe firmly that when you look at the geotechnical characteristics of the <unk> and the proximity to the processing plant it was ideal.
Speaker Change: So a significant saving on capital costs.
Speaker Change: Lots of benefits in terms of reduced.
Speaker Change: <unk>.
Speaker Change: Operating cost and also water return and ultimately reduce closer closure costs and it was always going to be a long term proposition two a month.
Speaker Change: And they get it ready.
Speaker Change: It was always part of the plan.
Speaker Change: We were we had less or unfortunately, as we're going through the.
Speaker Change: The bottom end of the pit.
Speaker Change: And then what was in the plan and that's what's necessitated some of.
Speaker Change: The short term short term changes if you like.
Speaker Change #100: And as was mentioned we are moving into the key is to say Pete.
Speaker Change #110: <unk>, which we started the waste stripping and we've got the grade control drilling underway and so forth. So that will come into the into the feed in the second half of the year.
Speaker Change: The expansion that was mentioned or the throughput increase that was mentioned I should say is not the scenario plan. It has to do with the the.
Speaker Change: The <unk> plant and it's basically putting as much all through the front end of the plant as possible through the crushing and grinding circuits because as mentioned the limitation in the plant is.
Speaker Change: The amount of mess pool that you get through the float circuit.
Speaker Change: No.
Speaker Change: With the with the transitional rule that we're talking about.
Speaker Change: The mass pool will be lower because some of the one in Florida and that will go.
Speaker Change: Through to the CIL plant, they're reminded that fluids goes through the <unk> plant and hence by putting a greater volume into the flight ticket, we can get that.
Speaker Change: <unk> nine <unk>.
Speaker Change: By ops feed capacity that we're talking about.
Speaker Change: When we talk about the what.
Speaker Change #111: Transitional goes to which plant will do test work based on sulfide sulfur ratio in particular to determine if it's if we think that the recovery is is acceptable we will put it through the CIL plant. If we think it's unacceptable then we will put it through the bottles plant so there'll be a sort of anything above.
Speaker Change: So 75% will go through the through the CIL plant and below that we would put it through to the box plant.
Speaker Change: And so that now that we've got everything set up we can accommodate all of the transitional.
Speaker Change: Morning.
Speaker Change #115: Okay, great. Thanks for that color and then maybe just following up on the in pit tailings.
Speaker Change #106: When in 2025 is that expected to be completed in terms of the.
Speaker Change #126: Depletion of the pit and then do you have the permitting for the in pit tailings deposition or what are the contingency plans if that doesn't come into place.
Speaker Change #126: That's a very good question. Thanks Lyne.
Speaker Change #148: It's due to come in the second quarter with mining to be completed in the first quarter next year.
Speaker Change #106: We have all of the approvals.
Speaker Change #102: We required to date there is one final piece and that is what we call a stakeholder engagement.
Speaker Change #102: It needs to be done, we basically communicate with the local community.
Speaker Change #102: And take them through all of this and then get the final.
Speaker Change #102: I guess the final check if you like it's.
Speaker Change #102: It's just the way that the processes work and quite rightly.
Speaker Change #109: If on the incredibly high chance that didn't come.
Speaker Change #109: Can always additional raises on.
Speaker Change #122: CSF one.
Dan: As mentioned, it's an upstream rice, Dan, but it's actually a very very large footprint Bam.
Dan: It's a very well managed facility.
Dan: That we would prefer not to do.
Speaker Change #102: We would ultimately like to just run with the <unk> and <unk>.
Speaker Change #102: To be able to close that and to be able to rehabilitate that facility.
Speaker Change #102: But it is always a backup plan.
Speaker Change #105: Okay, great. Thanks, and maybe just last question.
Speaker Change: The ramp up of the box plant Mark obviously, you've been key to the build and the ramp up given your past experience at <unk>.
Speaker Change #119: A broader question.
Speaker Change #119: But just.
Speaker Change #121: Curious about the decision to kind of split the CLO overall now.
Speaker Change #122: What's the kind.
Speaker Change #122: Kind of remaining in house experience with refractory processing.
Speaker Change #122: As the box now moves through the ramp up period.
Speaker Change #122: So one just one thing I guess.
Speaker Change #122: I've been involved with.
Speaker Change #108: And here, but im not on the ground, we've got very very good people on the ground.
Speaker Change: An extensive amount of experience.
Speaker Change: Who is doing the work.
Speaker Change: And im very very comfortable with what I'm seeing there and then we've got some.
Speaker Change: Good.
Speaker Change: Support we've got some.
Speaker Change: Okay.
Speaker Change: Consultant, who has actually worked on every single box plant typically view.
Speaker Change: Who's with us as well.
Speaker Change: And so we've definitely got some some good.
Speaker Change: Capacity.
Speaker Change: Okay got it alright, thanks for taking my questions Mark Best of luck and hope you get some time off after a number of successful belts.
Speaker Change #113: Thank you we will now take our next question. Please standby.
Speaker Change #194: Our next question comes from the line of Kerry Mccrory from Canaccord Genuity. Please go ahead. Your line is open.
Carey MacRury: Hey, good afternoon guys.
Carey MacRury: Maybe just on the deleveraging is there a specific target we should think about it in terms of how much debt repayment you could make in the second half assuming.
Speaker Change #151: Gold prices stay where they are.
Guy: Hi, Kerry Guy here.
Speaker Change #124: Thanks for that.
Speaker Change #138: What we're ultimately looking to do is to try and ensure that we are as de levered as possible ahead of what would be the next phase of build right. So if.
Speaker Change #118: If I look to a more formalized balance sheet target I think we should probably be talking at the end of 'twenty five at which point, we'd like to be as close to completely de levered as possible.
Speaker Change: What remains to be done in the second half of this year.
Speaker Change: Clearly going to be dependent but in terms of ounces in gold price.
Speaker Change: But we should be able to see a fairly significant repayments of the Rcs.
Speaker Change #164: Between now and then just bearing in mind, what I referenced during the slides, which is we do also have a call on cash in terms of the prepaid, which we need to settle in Q4. So on a net basis, we should be seeing our rcs coming down by a couple of hundred million dollars.
Speaker Change #129: And our share by debt reduction more of a priority than share buybacks or should we kind of expect that mix of those going forward.
Speaker Change #127: I think.
Speaker Change #156: We will probably come up with a hybrid solution. So if you ask me personally I'd like to pay back debt as fast as possible.
Speaker Change: Cost.
Speaker Change: Clearly when we talk about overall shareholder returns, we would be looking at capital allocation, along along with our existing policy. So of course, we would consider it.
Speaker Change: I don't believe we're at such a level of leverage that we cant afford an inverted commerce to be making opportunistic buybacks, which is kind of what Ian was referring to.
Speaker Change: We do formally commit to our dividend payments and then we'll be looking to both supplemental and opportunistic buybacks and I don't think thats necessarily going to be.
Speaker Change #135: And all statement in the second half.
Speaker Change #128: Okay, Great and then maybe one last one if I can it looks like your production guidance is kind of 40%, 60% each one versus H. Two just wondering if you can give us a bit of color on.
Speaker Change #103: So the <unk> split I know I think you guys are still Q4 weighted so just maybe high level, what we can expect Q3 versus Q4.
Speaker Change #103: Yes.
Speaker Change #134: We are definitely going to have higher production in Q4, as we go through the ramp up.
Speaker Change #125: II plant in Q3.
Speaker Change #125: We can expect.
Speaker Change #125: Okay.
Speaker Change #125: The delta between the two of sort of in the range of upside 50000 ounces, but we are certainly ramping.
Speaker Change #125: So 50000 higher in Q4 versus Q3.
Speaker Change #144: Yeah, that's correct.
Speaker Change #139: Alright, great. Thanks.
Speaker Change #132: Thank you we will now take our next question. Please standby.
Speaker Change #154: Our next question comes from the line of Richard Hack of <unk>. Please go ahead. Your line is open.
Richard James Hatch: Thanks, and thanks for the cool I appreciate it.
Richard James Hatch: Just a few questions. Please.
Speaker Change #143: Firstly can.
Speaker Change #114: Just on the deleveraging point.
Richard James Hatch: How much sort of deleveraging should we be expecting.
Speaker Change #158: Q3, I think kellogg's investors speak.
Speaker Change #103: <unk>.
Speaker Change #136: Focusing on that that free cash flow generation deleveraging and I'd just be interested to hear you.
Speaker Change #112: Equal go price holds equal.
Speaker Change #191: And what kind of deleveraging should we expect with that.
Speaker Change #165: And can I read into your comments correctly.
Speaker Change #112: Some of that work capsule release that you saw in the second quarter comes back.
Speaker Change #149: If a headwind into the third and saying guys attacks.
Speaker Change #145: Stable cash tax as we go into Q3 Q4, because I think that one Adam.
Speaker Change #107: Ken surprises to the downside.
Speaker Change #137: Depending on how much withholding tax.
Speaker Change #137: The first one.
Speaker Change #137: Okay.
Richard: Thanks Richard.
Speaker Change #142: Yes, I think you've touched on.
Speaker Change #140: Probably all of the key aspects that we are trying to consider.
Speaker Change #171: If I start with our favorite which is which is tax.
Speaker Change #146: We've got.
Speaker Change #152: As I think everyone's mentioned in the notes on us already the higher tax in the first half is predominantly due to withholding tax that.
Speaker Change #152: It's frankly slightly earlier in the year than you would've seen in prior years and Thats essentially is trying to ensure that we had everything.
Richard: Ready in anticipation to make sure that we got the funds repatriated as soon as possible. So arguably withholding tax is not going to be as high in the second half, but you correctly pointed out we are going to have some CRT payments coming through in the second half, which which is a significant.
Richard: It's a significant bill that we're going to need to consider from a cash perspective.
Richard: Clearly, we've got both dividend and then arguably supplemental to be considering in the second half.
Speaker Change #170: At the moment the other thing that I'm, just wanting to ensure that we've got a reasonable groupon.
Speaker Change #155: Is the growth capital that remains outstanding so.
Speaker Change #167: You will have seen from from the balance sheet now.
Speaker Change #155: Words on growth capital there are going to be still some cash outflows associated with our growth capex.
Speaker Change #155: And then last but not least I do have to keep repeating just just to make sure everyone's on the same page.
Speaker Change #155: We do have the 150.
Speaker Change #107: Million settlement requirement in Q4, so when we add all that together given.
Speaker Change #107: What we are anticipating in terms of cash generation in the second half I could certainly see.
Speaker Change #107: Our leverage coming down and I would like to see it coming down from its current levels. We just talk round numbers of <unk> eight.
Speaker Change #107: Much closer towards five but the exact content I'm afraid I was just going to have to be just as we see both production and cash flows and where some of those liabilities and payments of liabilities come out in the second half.
Speaker Change #120: Okay. Thanks, that's really helpful and then secondly.
Speaker Change #166: Second one is just on <unk>.
Speaker Change #120: Seven dollar Massawa.
Speaker Change #147: First half clearly challenging 105000 ounces.
Speaker Change #162: You flagged that you're going to be at the low end wonderfully and above the top end on the Tulsa.
Speaker Change #160: I wonder if I could just push a bit harder.
Speaker Change #147: See if you can quantify.
Speaker Change #150: What kind of content.
Speaker Change #150: Quantum does the low end is that going to be are we talking kind of.
Speaker Change #150: 50 to 75 or a little bit better than that in the same guys that cost you.
Speaker Change #163: Are you in a position to kind of help us to try and get a steer as to where the costs sort of shake out for the full year. Please.
Speaker Change #120: Thanks.
Speaker Change #120: Thank you.
Speaker Change #120: And for that I will leave a lot of the sort of granularity on this discussion to Jack.
Jack: But not on this call I'm sure that you can continue to press him at Florida.
Speaker Change #120: Part of this meeting.
Jack: We are doing what we can to optimize.
Jack: The production and get as close as possible to the lower end of guidance.
Jack: We do have a number of initiatives that have been identified that we've been working on for some time.
Speaker Change #159: Mentioned key ester.
Jack: We've also got the <unk> west.
Jack: <unk>, which we are doing.
Jack: Having a model on that shortly and so there are a number of initiatives, where we can increase the production from the CIL plant.
Jack: Equally we're ramping up.
Jack: <unk> plant.
Jack: It is early days and we will continue to push and to continue to push the throughput with the iam to getting the.
Jack: The <unk> concentrate.
Jack: Volume to the to the 90 level, which all of which will help to get us towards the lower end of production guidance running.
Jack: Running in parallel with that obviously, we've got the other assets.
Jack: Pushing to offset to some extent.
Jack: Including <unk>, which is performing very very nicely.
Jack: And is above the.
Jack: Top end of the guidance range.
Speaker Change #161: Okay understood.
Speaker Change #157: Okay. Thank you and then I mean, we haven't really spoken too much about the lilien situation I appreciate it.
Speaker Change #157: Kind of arbitration at the moment.
Speaker Change #198: Is it prudent to ignore.
Speaker Change #177: That money gets paid to shave I'm, just sort of Phoenix that I wish I could be helpful to you.
Speaker Change #157: Your leverage position and Julien.
Speaker Change #157: Your balance sheet and such like so is there any.
Speaker Change #175: Potentially to add on that scenario you just say, we can just kind of think about how that cash gets received when it does.
Speaker Change #175: Richard I think it's exactly right to be prudent.
Richard James Hatch: And assume no inflow.
Speaker Change #141: That doesn't mean to say that thats, the likely outcome, but from a <unk>.
Speaker Change #141: Modeling and scenario perspective.
Richard James Hatch: Certainly always like to do.
Speaker Change #141: Follow our policy of Understate your revenue and overstate your costs.
Speaker Change #141: We are not certain when there will be final resolution on that.
Speaker Change #141: It is going through the whole sort of legal process and unfortunately that is very much out of our hands.
Speaker Change #141: But.
Speaker Change #141: My sense is that we are closer to.
Speaker Change #141: To conclusion on this unfortunate issue then.
Speaker Change #141: We have been for a long long time, but I don't want to be.
Speaker Change #141: Should we call it either over optimistic or overly negative about where we're going to land up but we will come to a resolution. It's in everyone's interest to get there sooner rather than later.
Speaker Change #141: And I am confident that we will.
Speaker Change #201: Okay understood and then thank you very much and then last one is just.
Speaker Change #141: A few investors sort of expressed surprise Mark Jordan this departure.
Speaker Change #197: Good morning.
Tony: This is Tony.
Speaker Change #173: Got it.
Speaker Change #206: People leave after a period of time is this just simply a case of.
Speaker Change #141: And.
Speaker Change #204: Thank you.
Speaker Change #188: So pretty significant milestones mark and now it's time to be vulnerable.
Speaker Change #196: Can you just perhaps give some market color on your thoughts.
Speaker Change #168: Would be helpful. Thanks.
Speaker Change #169: Okay look thanks.
Speaker Change #187: It is a good question.
Speaker Change #183: Last year.
Speaker Change #168: In January we were having a management Chang breakaway and was part of that.
Speaker Change #168: At the time, so I think there is committed.
Speaker Change #168: For the next five years for Endeavour.
Speaker Change #168: And I think our thought about it for walnuts.
Speaker Change #168: And we didn't actually put my hand up I felt.
Speaker Change #168: Bye.
Speaker Change #168: My this year its five years for me and I'll sort of really just selling my thoughts to get three or five years would be at the point.
Speaker Change #141: And we have.
Speaker Change #195: The two new projects through construction and the ramp up happening so I won't be finishing at the end of quarter. Three if you look at slide 10, the robust financial position evolution of leverage you should also recall that evolution or lifecycle of a CLO because it's basically.
Speaker Change #178: The tenure of time developing an endeavor joined two days prior to the official opening of the <unk> CIL.
Speaker Change #178: I think it's been quite a journey if you look at what we've achieved through that time.
Speaker Change #141: <unk>.
Speaker Change #141: Now that we've got these two projects built and the ramp up is happening we've got very very good people on the ground.
Speaker Change #141: We've got very very good.
Speaker Change #141: <unk> supporting them.
Speaker Change #141: And the original and corporate offices.
Jarrod: Certainly wish Jarrod and mountain all the best and obviously commentary.
Jarrod: It's going to be hanging around a little bit longer but yeah.
Jarrod: Hope that sort of gives a little bit of color.
Speaker Change #207: It does thank you very much.
Jarrod: Yes, thanks for everything and William Sidoti.
William Dalby: Thanks, Ian and thanks for the time.
Jason: It's Jason.
Jason: Richard if I could if I could just add something to that.
Speaker Change #193: How many people on this call.
Speaker Change #193: Actually.
Speaker Change #237: <unk> been in a similar position to what Mark is being as a CEO of <unk>.
Speaker Change #185: Release of high stressed.
Jason: Situation.
Speaker Change #190: It's punishing on individuals.
Jason: And you get to a point, where you think.
Jason: There's a natural cycle as Mark said.
Mark: It's important to take a break otherwise you get complete and utter burn out and you don't want anyone to do that.
Mark: Absolutely no doubt.
Mark: Mark is displayed.
Mark Morcombe: A key role in helping this company get to where it is now.
Speaker Change #208: And we're looking to the future.
Mark Morcombe: Absolute Mark saying this is.
Speaker Change #203: <unk> sort of break it's a start of a new process is looking to the future achieving.
Mark: Its even the same genre I mean, John.
John: Has been with the group even longer the Mark he has been very instrumental in many of the.
Jason: Projects that we've currently built.
John: John and his team.
Jason: Teams.
Jason: Finding those.
Jason: Johnno said that he is the start of this program is getting is.
Speaker Change #214: Non exec directors ticket through the Australian.
Jason: Side of things and that's the way he wants to go.
Speaker Change #186: And I respect that.
Speaker Change #186: And the challenge for US is to make sure that the team going forward is as good hopefully even better than what we've we've had.
Speaker Change #192: I am confident that we.
Speaker Change #192: We have a good team.
Speaker Change #192: Great balance of skills experience.
Speaker Change #192: It's a strong team I don't think any investor.
Speaker Change #192: Should feel unduly concerned there will be a deterioration in standard.
Speaker Change #192: In this company and this company and the team. That's left is absolutely focused on making sure that we deliver the best for everyone.
Speaker Change #192: And I would certainly like.
Speaker Change #192: Again publicly.
Speaker Change #192: I think both Mark and John.
Speaker Change #202: The complete amount of professionalism.
Speaker Change #189: Thrombin cruise with us and.
Speaker Change #209: I, along with everyone else in the company wishes him well.
Speaker Change #200: Thanks, that's very helpful color. Thank you so much.
Speaker Change #205: Thank you we will now take our next question. Please standby.
Speaker Change #218: Our next question comes from the line of Don Demarco of National Bank Financial. Please go ahead. Your line is open.
Don DeMarco: Thank you, operator, and Hello, Ian and team.
Don DeMarco: First of all congratulations on the strong quarter I E T but.
Don DeMarco: My first question, maybe I'll just continue on on the thread.
Don DeMarco: The last question and Ian Thank you for all that color.
Speaker Change #211: But we see that the management changes include the departure of John <unk> EVP exploration and this follows other exploration staff departures, Patrick Sylvia and so on planned or otherwise. So what are your plans to backfill this vertical and do you have.
Speaker Change #217: <unk> exploration dense bench strength as you do with operations and Jerry and Martin.
Don DeMarco: Or will you be looking outside the company.
Don DeMarco: Sure.
Speaker Change #244: First and foremost Patrick's not left Patrick got elevated to the steam sites being a non exec and trust me he is more than capable of interfering.
Speaker Change #210: Not exactly.
Speaker Change #210: Helping guide so we certainly have not lost Patrick one thing I think it's fair to say is that the.
Speaker Change #210: The processes and the approach to exploration that Patrick boards to.
Don DeMarco: To endeavor.
Don DeMarco: Remarkably successful and I would remind people that when Patrick joined the group everyone was very very suspicious guy coming from the oil and gas sector, what the old Zeno about gold mining in West Africa and completely.
Speaker Change #216: <unk> formed re energized the whole exploration program.
Jason: And to date.
Jason: We produced over 19 million ounces in the last seven or eight years.
Jason: At under $25, an ounce, that's a credit to what he did.
Jason: He is still around.
Sylvia: As a natural progression coming through with John John is moving on yes, Sylvia Sylvia.
Jason: Sylvia Sylvia was with us for 11 years.
Speaker Change #221: She decided that she wanted to do something a little bit different people will get scale.
Jason: In jobs after a time.
Jason: So we have made an offer to John's replacement.
Speaker Change #184: That individual has accepted sign the contract is currently still employed by their existing employer and their existing employer has requested that we don't make public.
Speaker Change #213: Who they are.
Speaker Change #213: But.
Jason: When.
Jason: <unk>.
Jason: When the individual is named I think people be comforted that this is someone.
Jason: It was good.
Jason: A good track record good experience is exactly the right sort of individual to lead us into the future Youre exactly right Don exploration is one of the.
Jason: It's part of the USP of Endeavour.
Jason: And one of the key characteristics that we look for.
Speaker Change #181: Sort of.
Speaker Change #225: The replacement head of exploration with some new actually understood that and I'm.
Speaker Change #180: I'm comfortable that this individual will bring.
Speaker Change #180: Exactly the right sort of approach and style.
Speaker Change #180: <unk> and energy to explorations on I'm very comfortable.
Speaker Change #180: We can be in good hands.
Speaker Change #221: Okay. Thank you well certainly we can take a lot of reassurance from that.
Speaker Change #176: So my next question.
Speaker Change #232: Could you comment on the pecking order in your development pipeline after Tandy Iguala.
Speaker Change #215: We got good opportunities in Burkina, but I'm wondering if you'll be prioritizing based on jurisdictional preferences.
Speaker Change #212: It's a great great question.
Speaker Change #172: First and foremost.
Speaker Change #172: Issue.
Speaker Change #231: If you also have a proper curious when it comes to capital allocation you make sure that you look at your best opportunities.
Speaker Change #231: And then you actually have to look at all the sort of the factors surrounding them, which would be.
Speaker Change #172: Say the.
Speaker Change #172: Socio political economic.
Speaker Change #172: The other thing.
Speaker Change #172: And at the end of the day money as a coward money.
Speaker Change #172: Money goes where it feels it's safest where it's been most protected.
Speaker Change #172: It's most secure so.
Speaker Change #172: Im very comfortable.
Speaker Change #172: With.
Speaker Change #172: Our software we have other opportunities in the pipeline spread across various parts.
Speaker Change #172: Of the.
Speaker Change #172: West Africa.
Speaker Change #172: We'll be talking a lot.
Speaker Change #172: In future about what we could how we see things evolving.
Speaker Change #172: So.
Speaker Change #172: There is no certainty as to what the.
Speaker Change #172: Should call it the <unk>.
Speaker Change #172: Sequencing of future organic development.
Speaker Change #172: We actually do have some good opportunities within this group and at the end of the day.
Speaker Change #172: Single biggest factor is which optionality do we have that gives us.
Speaker Change #172: The maximum maximum return.
Speaker Change #172: In the shortest possible time that really is the key.
Speaker Change #172: Key driving factor and Guy and I are very focused on sort of looking at all capital projects and making sure that we don't squander, our money and we put it where it's going to give us.
Guy: A good blended optimal.
Speaker Change #172: Return.
Speaker Change #233: Okay. So I think I heard you say assaf, who might be at least at this point in time next in line after 10 Iguala.
Assaf: It's the obvious one is the obvious one.
Speaker Change #172: But.
Speaker Change #172: There are there other potential opportunities in house, but it's too early to talk about those this year.
Speaker Change #243: Thank you well. Thanks again, that's all for me and good luck heading into the back end loaded year.
Speaker Change #223: Thank you we will now take our next question. Please standby.
Speaker Change #223: Our next question comes from the line line of Lawson Winder of BMO Securities. Please go ahead. Your line is open.
Lawson Winder: Yes, thank you operator.
Lawson Winder: Good afternoon.
Lawson Winder: Gentlemen.
Speaker Change #219: There's not a lot of time.
Speaker Change #219: Yeah.
Speaker Change #219: The allocated time for the call I don't think but.
Speaker Change #172: Things I wanted to touch on quickly so.
Speaker Change #172: One power costs.
Speaker Change #228: So historically, respectively, they've been 60% to 72% in Ivory coast in Burkina I think I think or 91% I think you said they are now at 62% and 72% is that what we assume for the balance of the year and by the way. Thank you for that guidance on how that impacts cash costs.
Speaker Change #234: Yes first question.
Speaker Change #172: Yes.
Speaker Change #172: Okay, I'm going to get Gerry to answer this because this is very much in Jerry is ballpark and it gives you a chance to listen to Jerry are as well.
Jerry: Okay. This is Jerry.
Jerry: So if I understand correctly, you are asking about power cost and looking at Cote d'ivoire.
Jerry: We haven't seen any changes currently in the cost.
Speaker Change #227: I think for.
Speaker Change #227: Yeah.
Speaker Change #236: But the great utilization in terms of our it's still forecast the things about 62% and 72% respectively. So we're not really expecting the actual two really differ from those numbers.
Speaker Change #236: Yeah.
Speaker Change #227: Okay.
Speaker Change #172: And.
Speaker Change #172: Yes, okay.
Speaker Change #172: I'll just leave it there.
Speaker Change #241: Thank you very much for that answer I apologize I got to get to another call. Thank you very much.
Lawson Winder: Lawson just.
Speaker Change #245: To give it a little bit more flavor I mean.
Speaker Change #246: Okay, well for other People's benefit.
Speaker Change #240: We had.
Speaker Change #239: We were down at 20%.
Speaker Change #235: Power from the grid. So we're going to go back to a more normalized situation at around about 60%. So that's why there will be a fairly significant cost savings in the second half of the year and it's what really impacted us in quarter two we did.
Speaker Change #235: We originally were concerned that maybe power costs were going to be Oh.
Speaker Change #235: Grid power was not going to be available in Cote d'ivoire for quite some time, but in fact it came back.
Speaker Change #235: A lot quicker than.
Speaker Change #235: And we have been led to believe it would but anyway.
Speaker Change #235: It's now back to a slightly better position much more in line to what we've seen historically.
Speaker Change #235: Okay. Thank you.
Speaker Change #235: Thank you.
Speaker Change #247: There are no further questions speakers. Please continue.
Speaker Change #242: Okay. Thank you very much everybody. Thanks system, some really good questions and we look forward to speaking to you again, when we come out with with quarter three and.
Speaker Change #242: I've got every confidence that we will be.
Speaker Change #172: Putting back on even better numbers in quarter three thanks, very much and for those you are going on holiday enjoy your holiday and we'll talk again soon thanks very much and goodbye.
Speaker Change #226: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change #172: Yeah.
Speaker Change #172: [music].