Q3 2024 Agnico Eagle Mines Ltd Earnings Call
and the
Good morning.
My name is Vincent and I'll be a conference operator today. As this time I would like to welcome everyone to the Agnico Eagle Q32024 conference call.
All lines have been placed on me to prevent any back-on noise.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number 1 in your telephone keypad. If you would like to withdraw your question, please press star then 2.
Thank you Mr. Amar Al-Gindy, you may begin your conference.
Thank you, operator and good morning, and thank you for joining our call today. Before we begin may I ask you to please take note of the forward-looking statements.
I'd like to start this morning by thanking our entire team at Agnika Legal at all sites and across all functions for delivering another solid operating quarter. For doing it safely, for doing it responsibly, all while contributing to the communities in which we operate.
This Consistent and Reliable Operational Performance
with an emphasis on cost control and capital discipline has allowed us to deliver tremendous margin expansion for our shareholders.
and to deliver record financial results.
for the fourth consecutive quarter, including record-operating cash flow and record adjusted net income. All while strengthening the balance sheet, buying back shares and paying a strong dividend.
We firmly believe the benefit of arising gold pressure to go to our owners, not to increase costs, not to poor capital, to deploy them, but to our owners.
with this in mind.
During this call, we will talk not only about our record financial results.
but also about our record operation results, at our minds, in our meals and throughout the organization, from exploration to procurement, to treasury and beyond. All as a result of continued efforts to optimize our business.
As you see on the chart to the left, 75% through the year, we're at 76% of our midpoint of our full year production guidance.
It's impressive to be within 1% of midpoint of guidance as this demonstrates not only strong operational capabilities, but also strong planning and forecasting.
We remain confident in meeting our production and cost guidance this year.
I'm pleased in particular with our cost control.
Our year to date costs are at $897 which is $3 below the midpoint of our cost guidance.
That's pretty good considering that the increased royalty payments associated with the higher gold prices year to date versus our budget assumption of $1800 has added approximately $20 to our reported cash costs.
One of the best measures of cost control is cost per ton in local currency. I looked at this number this morning.
Our Company White Average Cost-Pretone in local currencies has not moved in over a year.
That's impressive and congratulations to the team.
In a year of record, gold prices and record financial margins, we have not grown complacent. Rather, we have reconfirmed and accelerated our efforts on operational improvements. Next page, please.
You will all have seen our results in our press release and we'll go through them in more detail over the next 25 to 30 minutes.
But really there are three key messages we want to leave with you. One strong financial results and returns to shareholders.
2 continued optimization of our operations and 3 exciting exploration and pipeline projects.
On financial results, the increase in gold price, along with solid production and cost control, has led to expanded profitability and cash flow.
Here today we've returned approximately $700 million directly to our shareholders through dividends and share buybacks.
We've returned approximately a billion dollars indirectly to our shareholders to a reduction of net debt representing a roughly two-thirds reduction of net debt since the start of the year. Jamie Porter, our CFO, will go through some of those numbers in more detail in a moment.
On Continued Operational Optimization, we're not standing still.
Domin Natasha will discuss not only our operating results this quarter, but also some of the many initiatives our teams are working on to continue our focus on improving our operations.
On Exploration and Pipeline, we're leaving significant amount of time for Gide to talk about some of the continued outstanding exploration results we're getting.
at Dieter, at Odyssey, and at Hope Bay, but also at Makasa, at Millidine, and at Fosterville.
Outstanding Exploration Results, All at Existing Assets, Leveraging Off Existing Infrastructure and Existing Teams, in Safe Gyrestictions.
Next slide please.
But before I turn this presentation over to Jamie, I'd like to spend a moment on safety.
Safety is always our most important priority and on this call I'd like to take the opportunity to congratulate our Nunavit Mind Rescue team. Through last month
won the 2024 International Mind Rescue Competition in Colombia against 21 other mind rescue teams from all over the world.
Winning the title of overall champion is impressive on its own.
But it's not just what you do, but how you do it. Our team shared a lot of specific rescue knowledge with several teams from other countries, a share of knowledge that could well mean live saved in some of those countries at some point in the future.
Remember, these minor skew teams are the teams that minors depend on when things get difficult.
These are people who devote hundreds of hours of their own personal time to train and who are volunteering by definition to go into dangerous environments under dangerous conditions should the need arise to save the lives of their workmates and their friends.
That's an important job, that's an important responsibility.
So a big congratulations and an even bigger thank you to our mind rescue teams. And with that, I will now ask Jamie Porter our CFO to present our third quarter financial results.
Thanks very much to Amar. Good morning everyone.
Jamie Porter: A results this quarter really demonstrate a track record of reliable operational and cost performance that continues to translate into very strong financial results.
If you recall earlier this year, the theme of our first quarter conference call was on Coss Control. In the second quarter conference call we focus more on capital discipline, reinvesting and growing the business of a steady and measured pace.
This focus on cost-controlled capital discipline is clearly paying off. With a third quarter being characterized by record financial results across the board.
By keeping costs and check, we are ensuring that the benefit of higher-volt prices translates into higher margins, that ultimately accrued the benefit of our shareholders.
Jamie Porter: I'm pleased to report record adjusted EBDA of approximately 1.26 billion and record free cash low for the fourth consecutive quarter of 620 million.
Revenue is increased by 31% over the 3rd quarter of 2023 to approximately 2.2 billion. Importantly, our adjusted EBITDA increased by 64%. And free caselo increased nearly 7fold compared to the prior year period.
Jamie Porter: We are also reporting another record quarter of a juxtap to that income of a dollar, 14 cents per share, which is another significant increase relative to the prior year period.
Apart from the gold price, a key driver of our strong financial result is this continued focus on cost control and continue to optimize issues.
If you look at our cash costs, we came in at $920, $921 per ounce in the quarter, within our cash cost guidance range.
Cash Cots were slightly higher relative to prior quarters driven by lower production volumes as was planned. And higher royalties as Ammar indicated in his comments.
On a year-to-date basis, we remain below the midpoint of our cash-boss guidance range at 897 dollars per ounce.
Jamie Porter: With respect to all of this sustaining costs, in Q3 we came in at 1286 for us, driven by higher sustaining capital spending, again as expected. We were 1169 in Q2 and in our Q2 call we discussed that we needed to catch up on sustaining capital in the third quarter and we did that.
on a year-to-day basis, however, we remain within our guidance at 1234 per ounce.
Jamie Porter: are all in sustaining cost continuing to be hundreds of dollars per ounce below those of our peers.
During the quarter, our all-insistaining cost margin was 48% which is amongst the best in the industry.
and on a year over year basis, the gold price has increased approximately 30%, while our all is sustaining cost margin has increased 70%. That is exactly the leverage that our investors expect.
With respect to operating costs, we definitely benefit from our regional approach. We are the employer of choice and many of the regions which we operate, which helps to keep employee turnover low.
Over 80% of our gold production is in Canada, where we benefit, we are currently benefiting from a relatively weak Canadian dollar. And we're very focused on continuous improvement to increase productivity and make our minds of efficient as possible. And Domin will touch on that shortly.
Jamie Porter: These factors all contribute to very strong cost control.
For the full 20-24 year we expect to be within our guidance range for cost, which is 875-925 per ounce and 1200-1250 per ounce for all of the standing costs. Overall we've had excellent financial results for the quarter, had first nine months of the year.
We move on to slide six
We significantly strengthen our balance sheet and reduce our net depth in the quarter to 490 million.
Jamie Porter: from 1.5 billion at the start of the year. So we've improved our net deposition by over a billion dollars in the first three quarters of 2024. All supported by record operating margins free cash flow.
In July we repaid 100 million of senior notes on maturity. We also made accelerated payments totaling 275 million on our 600 million term loan facility. Bringing our total debt repayment in the quarter to 375 million.
Jamie Porter: We also continue to prioritize returns to shareholders for the first nine months of the year. We've returned approximately 45% of the free cash flow that we've generated through the dividend. We've returned that to shareholders of the dividend and share by-backs.
We plan to continue this, continue to strengthen our balance sheet, continue to reinvest in our business and be opportunistic with respect to buying back shares.
Speaker Change: We move on to slide 7. This slide presents a good overview of our continued discipline approach to capital allocation.
As you can be seen on the pie chart, we're ensuring that the record-free cash flow that we're generating ultimately accrues the benefit of our shareholders. Again, directly through dividends and share by-backs, and indirectly through the strengthening of our financial position. With that, I'll turn the call over to Natasha, who will provide an overview of our consultative operational results.
Natasha: Thanks, Jamie and good morning everyone. Today I have the pleasure of covering the operational highlights on behalf of Dominique and myself.
So in the third quarter, our region delivered another solid operating and cost performance, which, along with the higher gold price, led to record operating margins of $1.4 billion for a fourth consecutive quarter.
Now you can see on the table here, but our goal production was 860,000 ounces for the quarter and the total cash cost were $921 per ounce.
Both are in line with our expectations and they reflect the plan shutdown and a lower grade sequence at Canadian Mallartek and at L'Alon.
Speaker Change: Now in terms of the operations, I'll start with Nine of It. They performed really well this quarter again with record throughputs at both sites and the cost.
that came in lower than expected.
Speaker Change: metal bank also reached an impressive milestone. They produced their fifth millionth ounce of gold in September, so big congratulations to metal bank and in fact both operating teams in Nunavut for a solid quarter.
Moving to Micaça and Fosterville. They were also strong performers this quarter. Micaça had another solid cordly production of 71,000 ounces of gold, largely driven by productivity improvements at the mine.
The focus now at Macassa is to transition to mill optimization.
Posterville, they said another record for Cordley Orton's mind, very part of the team here as well. They also had one of their best Cordley Mill throughputs in their operating history.
This focus on productivity and cost control are paying off as a site continues to work on its full potential model Last but certainly not least, I just want to say a few words about detour They set a record quarterly to put rate of approximately 77,000 times per day This is ahead of the targeted rate of 76,700 times a day
This performance was largely due to a stable male runtime at around 93% for a second consecutive quarter and also due to a number of small optimization initiatives conducted during the planned shutdown in August.
If you look back at the first nine months of 2024, our sites continue to show a strong, operational and financial track record. And as Ammar mentioned, year-to-date, we have produced 76% of the midpoint of our four year goal production guidance. And our cash cost remain within guidance range.
Speaker Change: As a result, we feel confident to meet our goal production and cost guidance for 2024.
Speaker Change: So to conclude, I just want to highlight and want to recognize again the multiple performance records set at multiple sites. These records are a direct result of the continued focus and commitment on increasing operational efficiencies and costs control at all of our sites.
Speaker Change: So thank you. Thank you to all our sites for your efforts in achieving our objectives to date, but also your focus on business improvement, not just on costs, but on all fronts, including safety. And with that, I'll pass a call over to Dom to present some of our improvement initiatives.
Thank you, Natasha. Good morning, everyone. Today, I will present our approach to continuous improvement at our site as well as some of the positive outcomes we have achieved.
On this slide, you can see many examples which are led by the sites that are positively impacting our costs.
Speaker Change: They are direct customer reduction initiative like on performance listed on a right, but the main gains are coming from productivity improvements, this thing and the mining and processing columns.
As you can see and you hear from Natasha, there are many sites or improving productivity.
Looking to at some of our successes like MedoBank is a clear success story.
That starts as an example in 2020-23. They identified a long-haul trucking as a but on-neck for the operation.
For middle bank, long haul trucking is like a shaft for another ground mine. Transporting the ore from the mine to the mill located 480 km away.
with the team and focus up ropes involving truck drivers, mechanical maintenance team.
Roadminton and team in training department, the name proves the trucking by 18% the first 3 months or the first 3 quarter of 2020-4 compared to the same period last year.
Speaker Change: The also achieved quarterly record production on the ground and at the meal the set the new record of 529 tons per hour this quarter So more tons, more tons transported and more tons meal
All these initiatives, initiative or securing middle bank 2020 for Gold Production Target of 480 to 500,000 on the best cost than planned.
Our other Nunavut operation, Mideon is also performing very well, both on mining and milling front. In Q3, the Nunavut platform generated over a quarter of a billion after tax free cash flow.
Our new never to success showcase our ability to mind in remote artic conditions.
and it contributes to extending middle bank and milled in life of mine and it is also positively impacting our hopey project which could become our next 400,000 on this per year mine in the nevot.
Guy will provide an update on the recent positive exploration results later in the presentation.
On Procromancy by consolidating contracts at car across Canada, we've been able to leverage our size by entering the availability of materials and services and to control input prices.
Finally, on workforce, we benefited from having loads of employee to anerver, as well as a low contractor ratio. It is difficult to put an overall dollar value on this, but it provides more stability to our operation, helping our continuous improvement effort.
For instance, at Detour, we've internalized work for equipment rebuild, truck maintenance, tire service and training construction work, resulting in a saving of over 17 million.
Thank you to our operating and technical teams for the commitment to realize the full potential of our asset to optimization.
Speaker Change: We, you can make the difference as we continue to focus on delivering strong operational performance and cost-want control.
Speaker Change: Moving now to a DC and can enjoy Marlartec next slide.
Speaker Change: At the DC the development rate continues to be better than expected.
The ramp has now reached the depth of 700, 800, 73 meters.
Shafsinking is also advancing well, reaching the depth of 899 meters at the end of September. And thank you for the Shafward Tazer ramp to become the deeper than the ramp.
The work at the level 364 Temple Youth Loading Station is on target and is expected to be commissioned in mid-25. And on-surface, the construction is also advancing on schedule with a focus on main-oiz building and operational complex.
Speaker Change: Overall, the construction of the mine is on-cast and on-scadles will become the largest underground coal mine in Canada by 2020.
But what gets me more excited is about this project, is the huge geological potential.
We all pass on to the present some of the results from our logistics exploration program ever at ODC and Kennedy Minority Complex.
Thank you Dominique and good morning everyone. I would like to start by thinking all of the exploration team and drilling contractors across our site as we are inventing well into this very large 2020 for exploration program.
We have an excess of 100-dimensional rig in operation at our various sites.
and we have recorded so far in 2024, our best L-1050 performance ever since we started tracking those indicators.
Speaker Change: and also.
Thanks to our exploration team, our DroneX7 team and our proper team, we have worked very closely with the drill contractor and we are very pleased that we've seen an overall unit cost reduction of 8% compared to our budget.
Speaker Change: and 16% lower unit cost compare to what we experienced in 2022 after COVID, demonstrating our ability to control cost while maintaining high-altern safety performance, so thanks to all of you that are making it happen every day.
Then moving to key specific driver project at Byge 12.
in Monarch Dick.
At the Odyssey Mine, we continue to see strong exploration result. First of all, we have extended East Goldies' own in the upper eastern extension of the deposits.
Speaker Change: and we see those results having a positive potential and you can attempt back for near-term resources and reserves.
Speaker Change: and the development of a new mining area improving the ramp up of the upper portion of the Eastwood, the positive considering their proximity to the infrastructure.
and in the Eastern extension of depth.
We continue to seek very strong exploration result to up to 700 meters outside of the Mineral Resources.
Arturo Case, by example, Andrew Holds, Rist 16, where that return 3.4g of 16m into the main physical zone. But also very interesting result into a parallel zone that is continuing to shape up.
Speaker Change: That we turned 3 gram over 51 meter estimated through thickness at around 1400 meter. Demonstrating the potential to continue to grow. The main goal be deposit.
and the potential to add significant additional mineral reserve and resources in those spiral zones to the east.
Speaker Change: A Page Start D.
and Aditya Olegmine. We come to see cutting you to see strong results in the area we are in filling that is part of the Advanced Underground Exploration Project that was communicated in June of the June of date.
Speaker Change: Strong-in-fill result up to 15g over 19m and 22g over 13m, not only confirm the presence of wide, higher-grade rise corridor, within the large mineralized envelope.
Speaker Change: But we also, I'm also very pleased to see how they confirmed the continuity of the zone previously drilled at a larger drop facing.
Speaker Change: As we continue to integrate those new results into updated mineral resources and mineral reserves, and we see though the potential.
for those recent results and overall on the ground project addition to the current open bit mind to bring the deteriorate mind to our vision of a one million ounces of gold per year operation in the future.
Danut page 14 at O'Bay Project.
Speaker Change: In the Madrid Zone, in the Madrid Deposit area, the Pat Shiven Zone continued to deliver some excellent result up to 16g over 27m through thickness at 430m depth.
We anticipate that those results will have a significant impact on the Mineral Resources at
and we continue to see this new discovery at Pat Chevin to be a real, new mover for the economy of the project.
Speaker Change: And with the support of our Purbiting team, I would also like to highlight the fact that we recently managed to complete a 2.3-kilometer exploration track towards Spat7.
Speaker Change: That will now allow to continue the agressively drill this area during Q4 at all, where weather transition to winter has historically limit the surface exploration capacity.
We anticipate those results along with the ongoing exploration work in Q4 and Q1.
We will allow you to enhance the project development scenario currently being studied And in light of those reasons, result and passion, we continue to see a potential project update by the end of 2025 or early 2025
Speaker Change: Finally at Pitch 15.
Speaker Change: Positive Resolve, at several other operations such as Noghideen, Makas Fusterville, where we continue to see the potential to extend the deposit that depth in literally.
All of that shows a potential for a bright future for exploration of fight.
As we are in the process of preparing our 2020-25 exploration program and developing a long-term strategy to maximize the value of those existing infrastructure in addition to our strong project pipeline presented in the previous slide.
So thanks to all of our exploration team that continued to create a lot of value through the drill bit in a cup-difficion matter, a part of an important reinvestment in our business.
and even more importantly with the best Elton Safety Performance ever for our exploration group. And on that, I would like to return the microphone to Amar.
Thanks, Guy and thanks to everyone and congratulations Guy, not only on the exciting drill results but for the...
Amar: tremendous cost control efforts and most importantly on the safest quarter ever as we're measuring safety in our exploration team. So, well done on that.
I'll conclude by saying that, Egnico, we're going to continue the same strategy.
that has for over 60 years.
Amar: Delivered Consistent Reliable Operating Performance.
with an emphasis on growing per share of value. And we do that.
One by with our regional focus.
We focus on regions that A have the geologic potential for multiple minds over multiple decades and B have the political stability to allow us to operate multiple minds for multiple decades.
and through that to establish a competitive advantage in the areas we operate and to the extent possible a better cost control and less volatility and we're seeing that in this environment.
2, we want to be the highest quality gold company that we can be. We are focused on quality, on per share metrics, more than we are on size. For us that means not just excellent operational performance, but the highest ESG standards.
Speaker Change: We all do the best job we can, but if you plan to be in a place for 60 years and build your second third and fourth mind, you take a much longer term approach to environment to your communities you're in and to good governance.
We have discipline capital investment.
That discipline capital comes largely from a knowledge advantage. In the areas we operate, where we've been, we typically have a very good insight into the investment opportunities. It's much easier for a person like me to make a decision to invest.
In a place where I have people who have been operating for decades, then it is to invest in a country I've never been to in a place where we really don't have any particular skill.
We believe we are uniquely positioned. We are in good regions, we have good assets, good long life assets, and we have demonstrated an ability to leverage off those assets to not only return good, return on capital.
but excellent risk adjusted return on capital. And then finally, consistently for over 41 years we've paid a dividend. We believe in having the strong balance sheet we believe in per-share metrics that's always what's driven us.
So that's the strategy we've had since 1957, it works for us and we're going to continue to do that. And so with that operator, let's open it up for questions.
Thank you ladies and gentlemen, we will now begin question and answer session. Could you wish to ask a question?
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Your first question comes from Ralph, Ralph of the with.
Speaker Change: 8. Capital, please go ahead.
Ralph: Thanks for our great good morning everyone. Two questions. Maybe if I could start with G, just on Detour Exploration.
You know, that long section, social, strong intercepts below the 600 meter horizon. My understanding was that future targeting for resource updates were going to be sort of above the 600 meter level. Just wondering, is that still the case? And how are you thinking about the sort of the depth extent?
of the three year program announced in June. Thanks.
Thanks for the question. We're working on the BBC from Surface. We're going to be focusing on the 0600 meter.
and Alex, we're going to be progressing with the ram.
Speaker Change: We're going to be moving forward, that infilling the drill spacing to the desire spacing for indicated resources classification.
Speaker Change: So we are doing a little bit of the shallow portion and we're going to continue to do large real-spacing for the deep extension to the west.
But for us following the delivery of our study in June, we really want to increase level of confidence into the resources that were part of the P.E.A. that was producing June to support the underground project.
Speaker Change: Okay, yep, helpful. And then just falling up for Dominique Girard, Natasha on the prepared comments on Makas and Milo optimization as the constraints move from from mind to Milo. Just wondering, is this a deep auto-neaking effort looking at higher throughput? Are you looking to sort of increase baseline male availability or increase a coverage just a little bit on that will be helpful? Hi, thanks to Maralf, yes. So what's the the mill? So we are optimizing, we're continuing to optimize the mine. We have the new infrastructure at Makas, so with the shaft and then nation. So now the bottleneck is moving more towards the mill and with that we're looking at maximizing or squeezing the tower with the infrastructure that we currently have at the mill. So the grinds.
Speaker Change: and I'm also working on the secondary, or sorry, the tertiary mill, looking at upgrading conveyors, crushers, just to see, to seek the, this is them to see how much we can put through the mill.
Speaker Change: Hi, I'm Kathy. Okay, there are no sea hard targets on recoveries or throughput in terms of where we could be looking at. No, no, we're still targeting 1650 times. Okay, thanks to the team. Thank you.
Speaker Change: Your next question comes from the line of it.
Speaker Change: Lawson Winder with Bank of America Securities, please go ahead.
Thank you, operator, good morning and we're very nice to hear from you all and thank you for today's update. Could I ask on the contemplation and just with respect to some recent contemplation news in the...
in the industry. Specifically on labor, are you seeing any above average labor inflation? And then, could you split out the labor inflation you're seeing between?
between your employees and contracted labor and it would also be very helpful to remind us what is the split that you can go between employees and contracted labor.
Hey, Lofton, it's Jamie here. So maybe I'll start and take the first part of the question with respect to our workforce. And I'll turn it over to Dominique Tashins, up and what we're seeing on the contractor side.
Speaker Change: But we're in the middle of our budgeting process now. We're assuming in around a 3% increase which would be consistent with K and CPI on labor.
Speaker Change: and then I'll answer the question in terms of the percentage of our workforce that's labored versus contractor. We're about two-thirds our Agneco employees and one-third contractors.
Overall, let's see the same inflation on our employees and the contractor in Canada where we operate.
Speaker Change: and then to the significant increase on the contractor side.
Speaker Change: We always try to maximize or to sometimes we're moving in the percentage of contractors that's the depending of the site I was going.
I mean if we're closing a site we might increase more the contractors but when we have in operation it is lower overall we're 35% of an in operation of a contractor based.
and just on that, the contractor-based we're having, a contractor for me, just like an economic employee, it is the same.
People and in fact our contractors are often the kids of our employees because it is the way to start and to get into the business and with time with experience where we hire them.
Speaker Change: Um
So, on the safety side and the way we treat them at the end of the day is to work together to be more productive and to get the results. So, we should know which you would contract or.
Speaker Change: Okay, fantastic. And then, did I just clarify the point you made, the 3% is that looking into 2025 or is that what the real edge experience has been for 2024?
Yeah, so from 2023 into 2024 we were closer to 4.5% going into 2025. Again, we're currently budgeting 3%. That doesn't mean that we'll end up exactly at 3%. It could be 2.5 to 3.5. But we're currently forecasting at 3% increase.
Speaker Change: 224 going into 2025.
and that's just laborers, is that overall inflation.
Speaker Change: So that's Labour and as Dom said we're seeing the same on the contractor front. So about 45% of our cost structure is Labour and contractors. So on that 45% we're forecasting again and around a 3% increase.
Speaker Change: Okay, that's perfect and if I could also just ask on, on Hope Bay, really, really exceptional drilling results. I'd be curious to know how that's informed and your latest thinking on the project. Are you seeing any change through the timing of the construction could start or even the scope of the project? Thanks for your attention.
Speaker Change: Yes, Larson Dominique's being.
Well, it's quite a positive news, the past seven is a game changer and now we just need to resize or refocus on the project for example now with this in place, should we move the meal to Madrid? It was not the plan but the time the team need a bit of time to reassess and to do some trade-offs on this.
Speaker Change: It is easier to mind, it's going to require less development for, let's say, more answers, it is large zone, higher grade, slightly higher grade than the other one that we have.
and as Dimension we're looking at the end of the 25 beginning of the 26th together into a full-mostody and an announcement on construction. Potentially.
Sorry, what was the timing of the construction there? Just a pretty totally clear.
L825 early 26 of a start of contract. Okay, that's great. Thanks for those comments.
All for a study, okay.
Speaker Change: Okay, and that's great. Thank you so much for the color today in Solid Quarter.
Your next question comes from the line of Daniel Jarkus Gronick with Scosure Bank. Please go ahead.
Oh great, I've been morning, everyone, thank you for taking my questions and congratulations on the Detour Coin that uses your tools for that coin that's exciting. I have three questions if I could.
The first one I just want to follow up on Lawson's question on that labor. So thank you for that. It looks like 15% of your cost structure is contractors. Just want to review a few things on the...
The late Ammar Crosst Number 1, can you just remind me, and Jamie is a film's 3% for there about inflation in the 2025 Crosst for your budgeting?
Can you just confirm with me that that's, um, hopefully you're not seeing any major changes in consumables and others, that's about 25% of the cost structure.
I got a donut.
Sorry, hey, I just want to clarify first your comment. I think you said that 50% of our workforce was contracted. That's that's it.
1.5% yeah 45% is labor and then a third of that concept. So that's correct. That's right. So on that 45% of you factor in.
Labor and our contracted workforce on that 45% of our costs were again, you know, forecasting about a 3% increase. If you look across the rest of our cost structure, I mean, we have seen lower energy prices, so there's actually a bit of a decline with respect to diesel and power, which is...
Another 12% of our overall costs.
Speaker Change: on everything else that consumables its inflation's running around at a 5%.
Speaker Change: But again, we're in the process of going through our budgets currently. If you look back to what we did in 2024, inflation was running closer to 6 to 7% and our guidance was up to 3%. So that's our job that you know to try to make the my subscription is possible to combat cost inflation where we can and we'll work to do that going into 2025 as well.
and just on your Labour contract, can you just remind me some of your keymines, you have any up for renewal?
Speaker Change: in 2020-85.
Yes, in fact, Daniel Dominique, we are renewing contract every month. It's not the one shot deal, so depending of the contractors, Black years were two years ago, it was more to put together including...
Speaker Change: and the former Curtain Naked, the division this year we see more including Kennedy's Democratic division, but there's no specific date, they each contract our different and for example, this month I saw two of them coming on my address and nothing major intermorphin
Okay, and I guess just the final off the slide just on the, because obviously another thing that's impact cost of course is cut off gray, so I have to ask on the reserves and resources that you think about the year and all price and cut off gray than input cost.
You know, this may be from high level. How do we look at in terms of the grades going and are we keeping our cut off break constant?
Yep, that's the plan, we'll see, we are as...
Speaker Change: Discuss with Jim, Dominique, Finchuning, our operation cut, so the Opix and our plan is to maintain cut off great table. Obviously an I-Rigo price environment should we have spare milling capacity at some of the operation we may take the advantage.
of adding, but the plan, our plan remain always the same, and things got upgrade, and the right done, the right grade to the mill. And when we have extra capacity, try to leverage the new individual opportunity.
Speaker Change: Okay, and just to conclude on the cost, if I could, and then I'll just ask one more question, which is on tailing. So Jamie, if I was to think of it from a very high level and assume I'll say you cost $900 an ounce total cash cost and you've got that 3, 4% inflation on that sort of cost structure into 2025 and make adjustments on the gold price $300, it's $3 per ounce on your oil teeth.
Speaker Change: Would I be a reasonable assumption assuming no change in cut-off grades, no volume, and no Canadian dollar change? Would that be a reasonable assumption?
Yeah, I'd say again, we're writing the middle of our budgeting process. The way I look at it, similar to what we did last year, right in relation was running 67% and we did better than that. So we're seeing, you know, if you factor in the higher royalties and everything else, our costs are up maybe 5% year over year and we'll try to meet that or do better.
Yes, I know I appreciate it. Thank you. And just my final question is just on tailings if I could. Just if someone could just review with me, this is you look at your tailings. I know you spend a billion dollars in cat access, so there are about. So someone just remind me how much of that is just for your annual tailings. And you have...
To be any of your operations, having above and beyond, tailings, expenditures in the next couple of years. I know that we work Canadian Malaristic in Utah. We have enough tailings to have that use of those operations, but just wondering if you're seeing additional spending on your tailings. Thank you.
Yeah, I don't have the specific breakdown in front of me but all I'll show Ammar here are ready to get back to with that information. Okay, perfect, thank you so much.
Speaker Change: Your next question comes from the line of Josh Wolpsen with RBZ Capital Market. Please go ahead.
Yes, first question is on fosterville. It looks like there's been some very good progress with these higher-volume efforts.
You know what I look at the production rate today, it looks like everyone in annualized over 250,000 answers versus the guidance going forward for 150.
I want to point there is the scarth of updating the mind plane or providing new information on what the forward-looking expectations are there. Wankily expect that information and it would be reasonable to extrapolate some of
Hi, this is Natasha. Thanks for the question. So with Paul Sivil, yes, they're continuing to work on the full potential model or the study associated with it. And this is where some of the productivity improvements are coming in. They're working to maximize what they can do with the mind and building that into their mind-plan latest and greatest life of mind-plan. So we expect to see that both results sometime in early 2025.
Speaker Change: Ok.
and then a question may be on some of the recent equity investments and some of the media speculation on M&A in the third quarter.
I'm wondering if there's some comments here that can be provided on, you know, with the Crite Theory, is the company looks at for transactions, you know, how that's evaluated against the suite of the development projects that Dominique Girard has.
and then the most recent deal, how the company frames that investment with historical emphasis on established my impressions with this one being a new one.
MAR: Josh, it's a Mar here.
You know we're pretty consistent in our approach to capital investment whether that's organic or external.
Our Capital Investment is always as you would for your own personal account. What gets you the best return on your investment with the least risk?
and so for us there's always an advantage and we've set this and you can see by our strategy. There's always an advantage to organic growth.
Speaker Change: In that you have, in most cases already spent a lot of the capital, you can leverage off existing capital.
and you have a much better level of confidence with regards to it. And so that's always worked for us. The other thing we always do, and this is tied to your second part of your question with A-Texes,
We, to the extent it's external, we have a long history of taking small strategic positions.
Toleran more about what we've got. Sometimes we'll have a position for years and it's again to get that knowledge advantage so that we can make a more disciplined capital investment to us.
A big part of discipline.
isn't just saying it's going to be a 15% return, it's actually doing the homework and getting the knowledge. So our investment in ATEC...
Think about what we do. We want regions. First of all, we look for high geologic potential.
and then we look for political stability to be able to operate.
Now we're a gold company but we are focused on making our shareholders money. And in the space of copper based on geologic areas that have a long history of being able to operate.
Let's say the Chile is on top of the world, well, literally up in the end. But it is the best place and has been for decades. It would be a new jurisdiction for us, but it is a good jurisdiction. But let me be clear.
We are not building anything there, we don't plan to do anything. This is a early stage investment, and we'll see where it goes from there. But I just want to be clear, it's not like we're rushing in to build a project at the top of the end.
Speaker Change: Thank you very much.
Speaker Change: Good next question comes from Mike Parken with National Bank. Please go ahead.
Speaker Change: Thanks for taking my question and congrats on the solid quarter. Just a question for G. The lower Phoenix Zone, you've got it there in your presentation. Very high grade hit.
Speaker Change: Quite deep. But if that in a zone, the cardinal structure that you're highlighting on slide 15, that is the zone that's kind of new to you or what you thought on that is that.
You know, got you excited that there's smoke with a high-grade hit and just kind of thinking around like this.
Maybe the signs of another Swan Zoner, any kind of commentary you can provide there with the E appreciated.
Okay, thanks, well, as you...
I know if you know the deposit quite well, it's structurally controlled deposit that goes along that plan and there's plays that are
The vlogging through the system, it was part of the reality in 2D upper part. And then at depth while looking at the lower phynics, the bottom of the swan zone, at certain point down into the swan, we started to see that parallel split that started to develop.
Speaker Change: that is a...
Speaker Change: A couple of tens of meters away from the typical hour-understanding of the typical carger swan and extensions of the main deposits.
Speaker Change: but...
This is completely normal for that kind of deposit. There's kind of an issue on structure on plunge. Or quite please, to see those kind of results. And we see that, and at some point in time, you want to understand that on a floundt feature. Maybe the main structure could end it up moving into that space. So therefore our interest and obviously that recent result with an 072 gram over 5 meter is quite exciting and within it, there was a narrow, I would see a couple of tens of centimeter, which super high grade at 1300 gram, that has sort of similar.
Look, then the Swan, it's a bit smaller yet. So we continue to see here and there, some ear and there, through the deposits, some smaller version of this one. And it's still already days and it just shows that the system remains open at that. And we're going to continue to pursue the investigation of that going down the plunge of the old body.
Speaker Change: And is that the first kind of drill hole with that kind of grate in that or forgets office not only did you know we've been getting, you know sometimes we got some 10 grams over 10 year in a previous quarter so if you look backwards into our work
and what say we six most recent press release, we've been reporting in intercept that were specifically identifying to the cardinal split.
and it's continued to shape up as we continue to go at depth and locally there will be some air-grade hotspot into the system like that. It's one of the good ones from a factor of great thickness 10 point but there's been some other pretty good one.
Okay, thanks, Amatsky. One last question, I guess probably Amar, maybe some of them more, and chair is the back focus, leadership.
In terms of staff, we've seen a couple new minds and a material come on mine and ramping up.
Speaker Change: We're hearing there is still fairly decent labor tightness. And you know, recognize you guys are winning from being an employer of choice.
But can you speak to if there are any programs or discussions being had with government officials where we're seeing an immigration policy bring what seems like fairly fast numbers, but more into the urban centers and not.
You know, is there any kind of program to bring them to the resource extraction industry? And if there is, you know, what's the kind of barriers that housing like it is down here? Skill, they're lacking any kind of comments there would be appreciated.
You know, I mean that's a very good question. What I'd like to do is I'd like to ask Natasha to talk about some specific things we're doing and then maybe I'll talk about
Speaker Change: The latter part about...
Because it's a good question, are you also looking at urban areas to see if you can resource there in the answer, yes, but I'll let Natasha go first. Yeah, so yes, Mike, thanks for the question. So yes, we're still seeing a tightness in the market, but on the other hand, because we are the employees of choice, or we can see you later relatively low, we are.
The Marcus particularly tight on trades and so what we are looking at is I think we had mentioned this earlier but we have a pilot program on going. It's a targeted immigration program with our colleagues in Mexico. We've brought 12 families over earlier this year to evaluate how the conditions didn't occur on Lake and if it's...
and if they're they'll integrate well so far it's going really well we were on site a month ago talking to the team really appreciated they come with a lot of skills a lot of ideas and it's really going well. On the government side we're working with them actively on the critical infrastructure like you mentioned focusing on housing particularly in the Cauqueen area in the Cricle Lake area medical care, specialised facilities on that end and just educational centers for children.
The other side of it is earlier this year we received a skills development fund from the government in the order of $10 million to help with the development and training of individuals in the North.
and then on Mike just with regards to Urban.
Speaker Change: It's not just a mining industry, it is a buying large...
Traged deficit in Canada. And we are working with others.
in urban areas to look at opportunities to take.
Speaker Change: Young people who may not want to go down the post-secondary education track, but our frankly kind of lost of what they want to do. We're working to see if we can get them interested in the trades.
Speaker Change: which has certainly helped Agnecobot would help a lot of other industries in Canada.
Speaker Change: Great, happy to hear that things are happening. So thanks again and congrats again on the good quarter.
Speaker Change: and the
Next question comes from Daniel Major with UBS, please go ahead.
Oh, yeah, thanks very much.
Daniel Major: It's a few for my side. It's actually operational side, foster build, quite strong through put, even the kind of grades are coming off. Can you give us a sense of profile, key for and in the next year and in that operation?
Hi, Daniel. So with Fosterville, as with the other sites, we were just working on our budgets and life of mine plan. So we'll be in a better position early next year to provide more guidance.
Speaker Change: Ok, now where is the second one we talked quite a lot about.
Labour and operating cost insulation. Can you make any comments on CapEx? You see any pressures there and then again, if we think about the positive drilling results you've seen and the project pipeline and you steer on the directional shape of CapEx into next year.
Yeah, we're not seeing any particular...
On usual inflation on the cap-back side, it's more in line with everything else.
You know we have had some good results and on the drilling side.
But we are going to be disciplined and spread out how we spend the capital.
You know, if you take a look at what we're doing with the tour under Ghanwood and Upper Beaver.
and we're spending it for both total about $100 million a year over the next three years.
to kind of de-risk those.
Speaker Change: The biggest shoe for cap-backs always is how you've done enough engineering.
and it's better want to have a good team and to take your time to get the engineering, right? Otherwise it'll just cost you way more than any inflationary impact and our team does a pretty good job of that.
Speaker Change: Ok.
Thanks, Scott Morford, if you think about the quarter, the cash flow.
Speaker Change: was relatively strong benefited to some degree from some working capital, particularly 96 million of tax variants. Can you get a clear on where you would expect that to add in the fourth quarter with respect to the working capital and the free cash flow?
Yeah, it's Jamie here. It's really hard to predict what our working capital change is going to be for the fourth quarter. So, you know, often in the third quarter working capital is actually a use of cash just given some of the spending required for our note of it operations. It worked out to be the other way in Q3, but hard to provide you with any specific guidance on where we'll be for Q4. It depends a lot on the timing of tax and solvent payments, the accounts payable and everything else. So, yeah, we'll see.
Speaker Change: Ok, and then just one more, if it is there any update on Santa Nicholas discussions, discussions there.
Hi Daniel, um, nothing new to update we're still working on permitting and the feasibility study.
Speaker Change: Ok, thanks a lot.
Speaker Change: Your next question comes from John to Mazos with John to Mazos very independent research. Please go ahead.
Speaker Change: and Graduation Sign All The Good Things.
I noticed that the grades fell at 10 of the 12 minds and 5 of the minds to grades fell by over 10%.
and instead of having a hundred dollar cost hike from lower grades in a large production fall.
Speaker Change: You milled 18,000 tons per day more across the company.
with five of the sites having mill throughput records.
Tom Hatchmore: Tom Hatchmore
Can you raise the mill through put at Fosterville or Melia Dine or
Speaker Change: McCasher.
How did you get 18,000 tons a day more without spending a half a billion or a billion dollars for a new mill?
were the prior capacities understated Earth.
Speaker Change: Walk us through the process. It looks like you saved up you bypassed a hundred dollar cost like by milling more and Cudos for the good work. Thank you.
Hi John Dominique speaking, I will take a part and I mean Natasha could take the other one But where we have capacity as you know the main one, the biggest one is Kennedy Martin where
and the throughput is now in the 60,000 ton per day and we're going to get more capacity as we move to underground.
We have one two-thirds of the male capacity available and we're working on that. It's a lot about exploration But the one may be a current operation that will say, Miliadhi, have some capacity that we're working to...
We just started the new virtual mill and the new filter press and we see that we've reached a 6500 tons per day. Now we just need to make it happen on the calendar day but there's opportunity at that site.
Speaker Change: Middle Bank, well since 2020 they are increasing year after year so we're going to keep continued pushing on that.
Speaker Change: But dear to one I vote, you guys
Speaker Change: and we had a great quarter in June. We actually had a record about averaging about 2700 tons per day. Really strong on that end and more than what we expected that that milk can do. It taught us a few things and we're learning a little bit more to see what we can do to
The Stain Egg
with Macassa, as I mentioned earlier, we're targeting the one rate of 1650. But again, here we're looking at what we can do to, with the existing infrastructure to squeeze it so it's still early days, but the team is developing a plan to see if we can do anything more than that.
And then at Detour, this was at Perplant. We had targeted a run rate equivalent to 28 million times a year towards the end of this year. We're here, we're getting this. Now we just need to continue to maintain these rates for more than just one quarter and we keep on working to increase it. So as we released in our in our technical report, we are working on increasing that to 29 million times a year by the end of.
Speaker Change: 28
and so we're looking at modifying the VFDs or installing VFDs on the secondary crusher putting in a more artic style discharge box for the sag, advanced process controls as we have at other mills. So there's still a little bit work to do there, but again we're progressing and we see there's potential.
Speaker Change: Foster Vows, particularly complex with the white quartz free gold and the black sulfides that require the heated bio-leach.
How did you get so much more capacity so quickly at all the different?
Speaker Change: and aspects of the foster-gold mill.
Hi, so with respect to it we did have a little bit of capacity. Overall we're running at the rate that the site did expect because June was a bit of an anomaly for us. We are investigating that further and understanding it. But if we were to potentially increase beyond the 9 or 50,000 tons a year at Fosterville, you're right, John, we would have to increase the capacity at the Vialk circuit.
Speaker Change: and get those bugs gone. Thank you.
Speaker Change: The End
Speaker Change: He next question comes from Martin Perdeo with Fairtas, please go ahead.
Thank you very good, my question is mainly on the capital allocation site.
Speaker Change: Would you be continuing using that or do you think that will end at the end of the year? And now that you have almost...
500 million dollars test of net debt. I will go to see higher dividend going forward. I will go and see more share-by-bikes.
Jamie Porter: Yes, it's Jamie here. Thanks for the question. I do think we will continue to strengthen the Balucheet. We have 325 million outstanding on the terms of the facility that's due in April of next year. We may consider repaying some of that on an accelerated basis in the fourth quarter. We'll work to, I think, at current gold prices, we've...
We've got a shot at actually being in a net cash position at the end of this year But the focus in the near term is on continuing to strengthen the balance sheet With respect to dividends and share by-backs
I mean a significant portion of our cash flow is being returned to shareholders based on our forecast to about 45 percent of the cash that we're generating for the year will flow directly to shareholders through dividends and share by-back.
will continue to pay a strong dividend and we will look for...
Speaker Change: You know, opportunities with respect to the share of my back really and intended on minimizing delusion. The one thing I would add and then maybe I guess we're running out of time is...
This is our, the money belongs to our shareholders, to belong to our owners. And we are not going to take even if there's access money, we're not going to take our owners money and spend it on something that doesn't make sense.
We are going to continue to be disciplined. We're proud of 41 years of dividend payments and at these gold prices, if it continues I would expect an increase in return to our shareholders over time.
Thank you.
Speaker Change: and maybe who?
Speaker Change: Sorry, Alperator may be one more question and then we'll wrap it up.
Sure, your next question comes from Anita Sonne with CIBC World Market. Please go ahead.
Anita Sonne: Hi, most of the questions have been asked and I think the last one would cap the allocation with my last remaining questions so congrats on a good quarter, that's all it had.
Speaker Change: Thanks a lot.
Speaker Change: Happy Halloween everyone.
Speaker Change: is Nick.
Thank you for joining us and maybe operator with that will end the call.
Ladies and gentlemen, this concludes the race conference call. Thank you for your participation. You may now disconnect.
Speaker Change: The End
Speaker Change: The End.