Q3 2024 Eldorado Gold Corp Earnings Call
Thank you for standing by this is the conference operator, welcome to the Eldorado Gold third quarter 2024 results Conference call. As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation there'll be an opportunity to ask questions.
Speaker Change: She joined the question queue.
Speaker Change: All right then one on your telephone keypad.
Speaker Change: Should you need assistance during the conference call you May signal, an operator by pressing Star then zero.
Speaker Change: I would now like to turn the conference over to Lynette Gould, Vice President Investor Relations Communications and external affairs.
Speaker Change: Nicole.
Lynette Gould: Thank you operator, and good morning, everyone I'd like to warmly welcome you to our third quarter 2024 results conference call.
Lynette Gould: Before we begin I would like to remind you that we will be making forward looking statements and refer to non EIOPA rescue measures during the call.
Lynette Gould: Where did the cautionary statements included in the presentation and the disclosure of non ISR measures and risk factors in our management's discussion and analysis.
Lynette Gould: Joining me on the call today, we have George Burns, President and Chief Executive Officer.
Lynette Gould: Oh for Anyhow, Executive Vice President and Chief Financial Officer, Low Smith Executive Vice President development grief, and Simon Hilli Executive Vice President operations and technical services.
Lynette Gould: Our news release yesterday details of our third quarter 2024 financial and operating results. This should be read in conjunction with a third quarter 'twenty three 'twenty four financial statements and management's discussion and analysis, both of which are available on our website.
Lynette Gould: So both been filed on SEDAR and Edgar.
Lynette Gould: All dollar figures discussed today are U S dollars, unless otherwise stated will be speaking to the slides that accompany this webcast and you can download a copy of the slides from our website.
Lynette Gould: After the prepared remarks, we will open the call for Q&A at this time, we will invite analysts to queue for questions.
I will now turn the call over to George.
George Burns: Thanks, Linda and good morning, everyone.
George Burns: The outline for today's call.
I'll provide a brief overview Q3 results and highlights I will then pass the call over to Paul to go through our financial results and then onto long assignment to review our operational performance.
George Burns: Turning to slide four during the third quarter, we achieved safe gold production of 125195 ounces aligning with our progress towards our full year guidance at Olympias. We successfully concluded the CBA negotiations and reached a mutually beneficial agreement with the Union workforce.
George Burns: In early August.
Three year agreement combined with increased productivity in our underground operations and is contemplated in our guidance. Some parts of the 650000 tonne per annum expansion an increase from the 5000 tonnes per annum positioning us.
George Burns: For long term profitability.
George Burns: Total cash costs and all in sustaining costs were in line with our expectations at $953 per household.
$835 per ounce sold respectively.
George Burns: Costs increased primarily as a result of higher royalties driven by higher gold prices. In addition to higher labor costs during the quarter.
George Burns: I'll touch on our cost in more detail later in the call.
George Burns: We're in a strong position as we get into the fourth quarter was our year to date production, having increased 7% compared to the same period in 2023 and increased 12% compared to the same period in 2022.
George Burns: We have maintained and tightened our guidance ranges on both production and costs.
George Burns: Slightly lowering the bottom end of the <unk> capital investment and depreciation expense.
George Burns: We also increased the upper end on capital investment at our operating mines, reflecting our full year expectations.
The operational and financial performance to date.
George Burns: We now anticipate total production to be between 505 and 530000 ounces.
George Burns: Previous guidance of 505 to 555000 ounces.
George Burns: As a result of inventory build up I guess about caused by lower slower Leach life cycles and work stoppages totaling 17 days in Q2 at Olympias.
George Burns: Total cash costs to be between 910 at $940 per ounce sold versus the previous guidance of 840 to 940.
George Burns: All in sustaining costs are expected to be between 12, <unk> and 12 90 per ounce sold versus previous guidance of 1100 19 at 12 under $90 per household.
George Burns: Titan cost guidance is towards the high end of our previous guidance.
George Burns: Primarily the result of lower production and higher royalties in Greece, and Turkey due to increased gold prices.
George Burns: Depreciation is expected to be between 250 and $260 million.
George Burns: From $280 million to $290 million as a result of lower depreciation and <unk> and olympias.
George Burns: Combined with favorable adjustment to erode appreciation of that some chew through.
George Burns: Q1, 'twenty 'twenty four.
George Burns: Sustaining capital guidance are expected to be between 175 and $145 million versus previous guidance of $135 million to $160 million.
George Burns: Primarily due to deferral of projects at all of them yes.
<unk> capital is expected to be between 300 and $380 million versus previous guidance of $375 million to $425 million. The lowering of the guidance is driven primarily by work that is not on the critical path and that has been rescheduled to a later.
George Burns: The project phase.
George Burns: Slower than expected mobilization of contractors on site during the first three quarters of 'twenty 'twenty four.
George Burns: Our growth capital is the operating mines is expected to be between 145 and $160 million versus previous guidance of $122 million to $144 million.
George Burns: Capital has increased over the prior guidance, primarily driven by waste stripping and accelerated spending for the second phase of the north the leach pad and picks it up.
Yes.
George Burns: At <unk>, we remain on track for first production in Q3 2025.
George Burns: Significantly derisked the project since we've put it back into construction in April 2023, with all major contracts signed including filtered tailings building structure, which is on the critical path.
George Burns: We have approximately 1000 people at site, including our operational readiness team, which is in the process of operational Isaac both the surface and underground mine.
George Burns: Thus far we are seeing productivity slightly beating our assumptions we are steadily progressing towards year end target of 1300 workers on site.
George Burns: Our focus.
George Burns: Once we have the additional personnel on site will turn to integrating them tour assumed productivity levels to maintain our schedule and budget we.
George Burns: We're managing this closely and taking proactive measures such as rescheduling. Some noncritical work on process control facilities to mitigate potential challenges in a tight construction labor market.
George Burns: Turning to slide five year to date, our lost time frequency rate increased to 0.91 per million hours compared to 0.71 in the same periods in 2023.
George Burns: Positively our total reportable incidents for the first nine months of 2024 have just decreased to three one from $4 seven zero per million hours work compared to the same periods in 2023.
George Burns: Our commitment to providing and sustaining a safe healthy workplace remains steadfast and we acknowledge that this is an ongoing journey of continuous improvement.
George Burns: Health and safety focus in 2020 forward continues to be based on preventing high potential incidents and further empowering our employees to promote a positive health and safety culture.
George Burns: I would also like to congratulate our team in Quebec or number of Supervisors were recently recognized for leading their teams to achieve between 50000 and 200000 hours without a lost time incident.
George Burns: <unk> is a testament to their dedication to maintaining a safe and healthy workplace.
George Burns: Additionally, congratulations to members of our guests at our <unk> mine rescue teams in Turkey.
With collaborators in the third mine rescue competitions organized by the Turkeys Miners Association tying for first place in the best buy and rescue team Award.
Speaker Change: I'll stop there and turn the call over to Paul for a review of our financial results.
Paul: Thank you George.
Paul: Slide six provides a summary of our third quarter results.
Paul: Our operations delivered in line with our guidance and we continue to be encouraged by high coal prices that contributed to our strong overall financial results.
Paul: Quarter.
As George highlighted we've tightened our annual guidance ranges and continue to see potential upside and cash flow generation if gold prices remain at their current levels.
Eldorado reported net earnings attributable to shareholders from continuing operations of approximately $100 million.
Paul: <unk> 49 per share in the quarter.
Paul: This compared to the same quarter in 2023 net earnings were positively impacted by higher revenue due to higher volumes sold prices realized.
Paul: On deferred consideration G from G mining that was recognized in the quarter.
Paul: The deferred consideration related to the sale in 2021.
Paul: <unk> mine.
Paul: Flowing G mining's declaration of commercial production.
Paul: But we are set to receive $60 million in September 2025 on the first anniversary of the declaration.
Paul: It should be noted that <unk> has the auction.
Paul: <unk> million dollars as a consideration for one additional year after which the balancing tightened will increase to $75 million.
Paul: Following the inclusion of one time non recurring items adjusted net earnings was $71 million or 75 per share for the quarter.
The adjustments in the quarter accounted for the reversal of the two principal items.
Paul: Firstly, a $50 million net of withholding tax gain on the G mining deferred consideration and.
Paul: Secondly.
Paul: $33 million unrealized loss on derivative instruments.
Paul: Our free cash flow in the quarter was negative $4 8 million.
Paul: All positive $98 3 million.
Paul: Excluding the capital investment in the Sirius project.
Paul: The strong performance of our underlying operating assets.
Paul: In the third quarter cash flow generated by operating activities before changes in working capital was $166 5 million compared to $97 5 million in the second quarter in the prior year.
Paul: The increase was principally driven by revenue, which increased by $87 million.
Paul: Driven by higher volumes in realized gold prices.
Paul: Partially offset by higher production costs, they increased by $26 million $10 million of wage related to higher royalties.
Paul: Third quarter total cash costs were $953 per ounce sold.
Paul: All in sustaining costs were $1375.
Paul: Okay.
Our costs increased compared to Q3 2023, primarily as a result of higher royalty expenses.
Paul: Increased labor costs.
Paul: The higher royalty expense in Q3 impacted ASIC by approximately $70 per ounce when compared to our original full year guidance.
Paul: In addition increased sustaining capital investment at La back essentially correct.
Contributing to high <unk> for the quarter compared to the same period in the prior year.
Paul: Capital expenditures on a cash basis flat $169 million in the third quarter.
Paul: Including investment in growth projects.
Paul: Where we focused our plan is by stripping and the north heap Leach pad and related infrastructure.
Speaker Change: I was curious we continued to advance major earthworks and infrastructure construction.
Paul: <unk>.
Paul: Approximately $83 million in the quarter.
Paul: It's worth, noting we have restarted investing our own equity in the project in the fourth quarter. This year.
Paul: Following the catch up of the project finance funding to our agreed 80 20 split.
Paul: Current tax expense of approximately $40 million for the third quarter.
Increased from approximately $21 million compared.
Compared to the same period in 2023.
Paul: The increase is primarily due to firstly capital gains tax of $9 9 million on the recognition of the deferred consideration related to the sale of the <unk> mine.
Paul: And secondly, <unk>.
Turkish taxes.
Paul: $5 million.
Paul: And finally increased binding gtx on Kodak is $3 4 million.
Paul: Deferred income tax was reported at $11 $4 million recovery in Q3, 2024 compared to an expense of just over $30 million in the comparable quarter in the prior year.
Paul: In the quarter that deferred tax included in.
Paul: And $8 2 million dollar expense, reflecting the use of tax pools in excess of accounting deductions in Canada.
Paul: A one time $5 $9 million expense Dutch tax exposure accruals.
Both of these were offset by an $8 $3 million net recovery primarily related to local currency asset revaluation.
Paul: The weakening of the Turkish lira against the U S dollar.
Turning to slide seven our balance sheet remains well funded to meet our investment requirements.
Paul: We ended the quarter with total liquidity of $895 million.
<unk> $677 million cash and cash equivalents and $208 million available credit capacity.
Paul: Cash increased during the quarter.
Paul: As a result of positive cash flow from our producing mines.
Paul: Bind with drawdowns from the project finance facility.
Paul: Curious developers we.
Expect to build cash during the remainder of 2024 as we benefit from strong gold prices.
Paul: The drawdown of our project financing.
Paul: This build will be partially offset by the restarts of equity contributions from Eldorado serious projects as mentioned earlier.
Paul: In summary, we're focused on maintaining a solid financial position.
Paul: Riding El Dorado with the flexibility to respond to opportunities whilst delivering a growth strategy.
Paul: All while continuing to be committed to responsible mining as a foundation for our business is encapsulated in our values of aberration.
Paul: Integrity dies and agility.
Speaker Change: With that I'll now turn the call over to load to go through the Greek asset highlights.
Speaker Change: Thanks, Paul and good morning, starting on slide eight that was goodyear's called Gold project.
Speaker Change: At the end of Q3 overall project progress was 79% when including the first phase of construction.
Speaker Change: This compares to 76% at the end of the second quarter.
Speaker Change: During the summer months, we anticipate a slower progress due to vacations and the rescheduling of noncritical work, but we are now seeing an upward trend and expect this momentum to continue over the next three quarters.
Speaker Change: Detailed engineering is advanced and is now 70% complete.
Speaker Change: <unk> continues to be focused on the critical items, we are expecting additional progress over the balance of the year and expect to be approximately 90% complete by the end of the year.
Work continues to ramp up on construction of much of what structures, including the whole roads water management pond low grade stockpile the integrated.
Speaker Change: Waste management facility primary crusher, prophage facilities and filter tailings facility.
Speaker Change: Productivity improvements initiatives by the earthworks contract, including a partial second shift.
Speaker Change: <unk> to yield improvements.
Speaker Change: Work continues to advance on our filter tailings building, which is on the critical path in September the first contract for the building was awarded.
Which included the building structure and mechanical installations.
Finding has completed for.
Speaker Change: For the full tailings building and concrete work is progressing to enable construction of the structural steel.
Speaker Change: With three active dose on site the pilots for the <unk> pulled to buildings and utility buildings continue to put great.
Speaker Change: Work on the process plant is progressing well.
Speaker Change: The realigning of the flotation tanks was completed as planned and structural and mechanical work that's in progress.
Speaker Change: Pipe spool fabrication continues and delivery of ICP piping to site has commenced.
Kept holding us advancing to support electrical cable players piping installations and the contractor continues to ramp up to support increasing levels of activity.
Speaker Change: Work is also progressing on the underground development to support kits for mining in 2025.
Approximately 70% of the equipment to operate the licenses has been received to date and development mining is ramping up.
Speaker Change: While we have lowered our underground development for 'twenty 'twenty four to between 506 hundred meters. We are still on track for ore from the pit stops during the plant commissioning period in 2025.
Speaker Change: Moving on to slide nine.
Speaker Change: During the third quarter the capital investment that's kudos to was $82 $7 million slightly less than our spend during the second quarter.
Speaker Change: This brings our year to date spent that studios to two under the $27 1 million. In addition, our overall commitment committed spend for the project is $788 million.
Speaker Change: As George mentioned earlier, we have lowered and tightened our guidance range to be between 350 and $380 million and do not expect it will have an impact on first production in Q3 2025.
Speaker Change: The photos on the slide and the next few slides will show the advancement of work underway. In addition, we have provided a link of a progress update video in our Q3 news release.
Speaker Change: Shown here construction of the three thickness progressed on plan during the quarter on.
Speaker Change: On the right side of this slide there are serious of photos showing the progress in the interior of the mine plant.
Speaker Change: Slump.
Speaker Change: Turning to slide 10, the two photos on the left hand side of the primary crusher progress continued to advanced on the construction of the foundation with retaining walls and stabilized excavations nearing completion construction of the customer building both commenced in November.
Speaker Change: On the right hand side, just the filter tailings area, where you can see three drove active leave working the contract with productivity has continued to increase and to date three under the pilots have been completed out of a total of approximately 871 at the filter facility.
<unk>.
Speaker Change: On the next two slides you will see the advancement of work on the 14th restructure including the proceeds control room building process plant substation water pumps sensation line Plumped Air Blowers building and flotation reagent plumped areas.
Speaker Change: On slide 11 infrastructure on the west side of the building the Sherman.
Speaker Change: Including the secondary substation Foundation, and steelwork is progressing well alongside advancements at the pump health and the control building. We work commenced earlier this year.
Speaker Change: On slide 12 infrastructure on the east side of the mine proceeds building the shogun, including construction works progressing underlying plant air Blowers building compressor building and flotation the agent area.
Speaker Change: We expect to provide progress updates as we advance towards the first production in the third quarter of 2025.
Speaker Change: Moving to Olympias on slide 13.
Speaker Change: The third quarter gold production was 21211 ounces and total cash costs were $1210 per ounce sold.
During the third quarter as George mentioned, we successfully signed a three year CBA agreement in August and they will know what stoppages during this period compared with the second quarter.
Speaker Change: With the planned expansion of the mold to 650000 tons per annum from 500000 tons per annum. We.
Speaker Change: We have started ordering the long lead items, including the grinding mill thickness and flotation cells totaled.
Speaker Change: Total cash costs were impacted by increased labor costs, which included.
Speaker Change: One of Ambac paid payments.
Speaker Change: And Tayo royalty expenses.
Speaker Change: Out of higher realized gold price.
Speaker Change: As well as higher gold ounces sold I will stop there and hand over to Simon to discuss the cookies and Canadian operations.
Simon Hilli: Thanks, Thanks, a lot.
Simon Hilli: Take you in slide 14.
Simon Hilli: You see that third quarter production was 41084 ounces.
Simon Hilli: Total cash costs of $899 per ounce.
Of note.
Simon Hilli: Total cash costs were primarily impacted by increased royalties as a result of increased average realized gold price.
Simon Hilli: Production was slightly blood clients.
Simon Hilli: As a result, and a few contributing factors.
Simon Hilli: The crushing executive viability has been impacted due to maintenance issues.
Simon Hilli: Leading to slightly lower tons for the year to date.
Simon Hilli: We are working on a solution and expect to have that modified H block and stone in the first quarter of 2025.
Simon Hilli: In addition, a small portion of the ore coming from the center portion of the <unk>.
Simon Hilli: Contains particles that are greater than 10 meals.
Simon Hilli: Slightly reduced recovery due to the larger party size.
Simon Hilli: As we continue to analyze data.
Simon Hilli: Following the ramp up of the HD, Jarrod and E comm pricing drop.
We have seen weak stock with extending beyond the planned 220 days, which has led to an increase in gold inventory.
Simon Hilli: We have responded to these operating challenges.
Simon Hilli: Optimization activities, which has demonstrated positive results through a drawdown in inventory.
Simon Hilli: Ashley offsetting the longer Lin song.
Simon Hilli: Additionally, we've previously as we've previously discussed the GMA logical study has commenced with drilling currently underway.
During the year, we had.
Simon Hilli: Being constructing the absorption diesel option and recovery plan.
Simon Hilli: Became operational this week with the same scope pool.
Simon Hilli: No idea.
Simon Hilli: Our plan is expected to provide a number of benefits, which will be realized at both facilities.
Simon Hilli: Including.
Simon Hilli: Reduced carbon handling requirements.
Simon Hilli: <unk> snacking irrigation and instruction cycle.
And decoupling of the nose and SaaS heap Leach facility the maximum cost efficiency.
Simon Hilli: Gratulation T <unk>.
The drive to achieve this significant milestone.
Speaker Change: Anything to crew on slide 16.
Speaker Change: Second quarter Gold production was 19794 ounces at a total cash cost.
Speaker Change: A webcast and $325 per episode.
Speaker Change: Production throughput and average Bob Brian. This is J crew are in line with the plan for the quarter.
And now moving to the La Mac complex on slide 17.
Speaker Change: Believe it or not.
Speaker Change: 43160 ounces at a total cash cost of $728 Brent sold.
Speaker Change: A slight decrease in the quarter compared to the prior year's quarter, primarily due to lower grades processed.
Speaker Change: <unk> offset by increased throughput.
Speaker Change: Titled Cash costs increases were affected by high volumes slightly higher royalties due to higher average realized gold price and additional costs.
Speaker Change: Viva contractors and equipment rentals.
Speaker Change: <unk> remains focused.
Speaker Change: On driving productivity.
Speaker Change: Development rates, increasing insights triangle womack mines during the quarter.
Speaker Change: This positive trend is expected to carry forward into the fourth quarter.
We remain on track to tank bulk sample from the <unk> deposit in advance no growth by the end of 2024, we.
Speaker Change: We had developed.
Speaker Change: Develop ment.
Speaker Change: Two 173 meters compared to our plan of 150 made it.
Speaker Change: September.
Speaker Change: The 200 meters in October.
Speaker Change: To date, we have stockpiled.
Speaker Change: 500 <unk>.
Speaker Change: All material of the targeted 25 tons.
Speaker Change: We were planning to put through the mill in December from Ooma office.
Speaker Change: Stop there.
Speaker Change: Turn it back to George feeds closing remarks.
George Burns: Thanks team as we head into the fourth quarter are in a strong position to achieve our tightened gold production and cost guidance.
Reduction levels are up 7% year to date compared to this time last year and we continue to build momentum towards first production at <unk> next year.
George Burns: Our record high gold prices has significantly boosted our margins and the regions, where we operated have also benefited from higher royalties and increased tax payments.
George Burns: By maintaining disciplined cost control and capital allocation alongside elevated gold prices. We expect continued margin expansion driving further growth in free cash flow from operations.
George Burns: You for your time I will now turn it over to the operator for questions from our analysts.
Speaker Change: Thank you we will now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad God well here.
Speaker Change: Hear a tone acknowledging your request if you're using a speakerphone. Please pick up your handset before pressing any Keith Joseph.
Speaker Change: Your question. Please press Star then two.
Speaker Change: Our first question is from Cosmos <unk> with CIBC. Please go ahead.
Speaker Change: Thanks, George and team maybe my first question is on securing is in progress Thats curious.
Speaker Change: As you mentioned underground development.
Speaker Change: Now targeted for 500 to 600 meters previously 2200 meters fairly sizable gap I would say, but as you said George it's not going to impact Q3 to five.
Speaker Change: First production.
But my question is.
Speaker Change: It's not going to impact the timing of first production, but could this impact.
The ramp up and the speed of that ramp up after first production is there a way for you to catch up on underground development.
Speaker Change: Yes cosmos. Thanks for the question so look.
Speaker Change: I I would describe it as a <unk> underground really isn't an important part of the production profiles in the first several years and in fact, it ramps up over say the next seven or eight years.
Speaker Change: At the end of the decade becomes the sole feed to the plant so yes.
Speaker Change: Yes.
Speaker Change: We really put an emphasis on getting the underground going as part of the initial construction.
Speaker Change: Really checked the box on all of our technical assumptions the size of the stopes.
Speaker Change: And we wanted to get an early information so that we can further optimize we have hope still that we can make the stopes.
Speaker Change: And whats currently in our feasibility study.
Speaker Change: The reason for the.
Speaker Change: Slower ramp ups and the development really was our transition from a great contract or had been doing the development to date to our finished contractor that's really going to ramp it up and do the test stope mining, we're bringing in European expertise on underground mining to be able to.
Speaker Change: Combined these large more technical stopes that are part of the series design. So yes.
Speaker Change: I can tell you the delays were related to getting our European workers and their equipment certified and licensed to operate in.
Speaker Change: But the.
Speaker Change: The initial productivity, we're seeing out of this workforce is pretty fantastic.
Speaker Change: We'll be able to continue to catch up.
Speaker Change: As they deploy more workers and it really has no material impact on the next several years on screens operations.
Speaker Change: Mhm yeah.
Speaker Change: Good to hear maybe not detail well into my next question here as you mentioned.
Total Capex of this project is $920 million you've spent slight.
Slightly over $410 million, so far with 770 committed so in terms of that.
920, <unk> versus the 411 million that spent the difference can we expect that to be spent in 2025 or it sounds like maybe not given that some of the underground might be.
Pushed out a little bit in terms of development I'm just wondering.
Speaker Change: The timing of the spend and then the $920 million is still a good number to use.
Speaker Change: Yes, we're still.
Speaker Change: Confident and comfortable with the $920 million.
Speaker Change: Our employee count on construction has been rising all year.
Speaker Change: As we said we're expecting.
Speaker Change: A further increase over the fourth quarter, and then larger workforce will continue.
Speaker Change: To execute construction.
Speaker Change: Through into the third quarter, so youre going to see a significant ramp up in spending.
Speaker Change: In Q4 and then.
Speaker Change: Even more in Q1.
Speaker Change: <unk> through into commercial production.
Speaker Change: Regarding.
Speaker Change: A few things that might not happen.
Speaker Change: Commissioning time, yes. There is some there is some non protocol infrastructure, that's been delayed a bit from archeological studies that were done some of that might spill.
Speaker Change: Later into next year, and perhaps even beyond but.
Speaker Change: It will have no impact on our ability to operate.
Speaker Change: And then on the underground piece, we're still going to get to.
Speaker Change: My attitude test stopes.
Speaker Change: On the mill in the third quarter fourth quarter of next year. So no impact on the underground portion of production next year.
Speaker Change: And.
Speaker Change: We will update the market in the new year with with guidance on everything but.
Speaker Change: Again.
Speaker Change: The underground spend next year isn't material to our commercial production or even the next couple of years of operations.
Speaker Change: Really another year of test stoping in 2026.
Speaker Change: And then ramp up of infrastructure and support higher mining levels in over the next five years or so.
Speaker Change: All of that but I, just said is not very material to.
Speaker Change: The project for next year.
Uh-huh of course.
Speaker Change: Maybe one last question George as you mentioned, you've tightened in your 2024 production guidance.
Speaker Change: If I take your tightened guidance.
Speaker Change: It implies that you'll be increasing in Q4 production by about more than 10% quarter over quarter I think Simon you kind of touched on it but could you maybe again summarized which ones will be the drivers in terms of that potential higher production into Q4.
Sure so far.
Speaker Change: First thing I would say is far in a better position this year.
Last year with our year to date production.
You know we've been growing production over the last couple of years and Youre going to see that expand even further ultimately the 45% production growth by 2027. So we are on track to deliver that at high quality growth in terms of the fourth quarter.
Speaker Change: And even the year and our production.
Speaker Change: Mark and <unk> are going to be stronger relative to original guidance and we are a bit weaker at <unk> and olympias for the reasons we noted.
Speaker Change: And you're going to see a strong quarter at <unk>.
Speaker Change: <unk> with prior years.
Speaker Change:
Speaker Change: And.
Speaker Change: At Olympias.
Speaker Change: Collective bargaining.
Speaker Change: And a good position now and we're expecting a strong quarter out of olympias in the fourth quarter relative to the <unk>.
Challenge as we get to Q2 so.
Speaker Change: Any rigs.
Speaker Change: Comfortable with our updated guidance.
Speaker Change: Thanks, Good fourth quarter.
Speaker Change: Great. Thanks, George and team goes all the questions I have have a good weekend.
Speaker Change: Thank you.
Speaker Change: The next question is from Mike Parkin with National Bank. Please go ahead.
Okay.
Mike Parkin: Hey, guys. Thanks for taking my question.
Mike Parkin: On slide 14.
Speaker Change: You're doing some sub sell collections.
Collection system deep ripping procedures, new approach the solution I cant remember off top of my head, but you guys use stock.
Speaker Change: For placing.
Speaker Change: Agglomerated well I guess, it's a mix of Obama great.
Speaker Change: <unk> and non <unk>.
Speaker Change: Ore on the pad so.
Speaker Change: What.
Speaker Change: Cause you to add ripping on I assume it's on the new patio did you do that on the old part and what's making you decided to do that youre using like a grasshopper system I think youre not worried of a compression.
Speaker Change: Great Great question, Mike I mean, yes, we use a conveyor system.
Speaker Change: It takes the crushed and agglomerated ore from the crushing facility outdoor heap Leach pad and at the end of the grass offers we have a radio stacker.
Speaker Change: So youre right that radial stacker, minimises compaction of say haul trucks delivering the ore to the pad in our case. We've got these are Robert tire grasshoppers and retire.
Speaker Change: And Bayer so theres a bit of compacts and you've got maintenance and other light vehicles.
Speaker Change: It's a typical practice, where you do ramping to try to.
Speaker Change: Crushed ore and maximize the ability to get good permeability throughout Europe.
Speaker Change: So.
Speaker Change: I can just tell you in all copper and gold leaching roofing is a pretty important part of those.
Speaker Change: Efficient and good permeability.
Speaker Change: The challenge was a dozer doing that ripping.
Speaker Change: Is it does it in one direction and you can pull it.
Speaker Change: Multiple directions, but what we can do with these track hose is rapid.
Speaker Change: Every direction.
Speaker Change: And we can do some ramping without removing drip of matters. If we have a particular path.
Speaker Change: But seeing a bit of partnering or not getting good permeability. So it just is a lot better job.
They are in maximizing permeability through the path.
And I think you know, we only agglomerate roughly a third of the total crushed material.
Third that goes to the agglomeration drum, it's mixed with the other two thirds and we're kind of counting on the transfer points between grasshoppers to mix and further agglomerate the entire feed to the pad.
Speaker Change: I mean, that's one of the things we're studying over the next several quarters as.
Speaker Change: And what happens if we add more collaboration drums.
Speaker Change: And we're also looking at particle size what could.
Speaker Change: We do the crusher bit finer, that's probably more screening.
Speaker Change: And at the end of the day.
Speaker Change: Is there an ability to further optimize recovery and total production, including even debottlenecking. The plant. So that's the study underway back here.
Speaker Change: Yes.
Speaker Change: Specific question.
Speaker Change: It's just a better way to.
Speaker Change: The surface.
Speaker Change: So further optimize permeability in the pad.
Speaker Change: And are you seeing any concerns around structural integrity or when we were there a year ago you.
You had samples of Brady.
Speaker Change: Column tests, showing that the agglomeration really did well on a structural kind of integrity in terms of <unk>.
Speaker Change: Resist income action is that kind of proving up in a pad application versus since the column tests.
Speaker Change: Yeah over to you Simon.
Yes, Thanks, Mike.
Simon Hilli: Yes, we continue Brian too.
Simon Hilli: Putting vehicles Jeremy.
We didn't have a lot of.
Speaker Change: Asthma is defined.
Speaker Change: To create stability, so we can become an IC.
Speaker Change: We do.
Speaker Change: That's correct.
Speaker Change: Oklahoma and bowls as well as.
Since it is the strength.
Speaker Change: Pat.
Speaker Change: Yeah.
Speaker Change: Okay. That's it for me guys. Thanks.
Speaker Change: Thanks, Mike.
The next question is from Tanya Please connect with <unk>.
Speaker Change: <unk> Bank. Please go ahead.
Speaker Change: Great. Good morning, everyone. Thank you so much for taking my question, maybe George I, just wanted to come back to the non clinical work.
Speaker Change: Thank you kind of get ferric.
Speaker Change: Correct.
Speaker Change: Can you just review with me, what you have with deferred maintenance.
Speaker Change: The underground development.
Speaker Change: What else has been deferred.
Speaker Change: Yes, so the other.
Around development was deferred really just due to delays in getting licensing of the workforce and permitting it equipment.
Speaker Change: Logical impacts are non critical infrastructure, such as R. R truck shop for the open pit.
Speaker Change: So we have workarounds for that.
Speaker Change: We will use.
Speaker Change: I've used it many startup operations <unk>.
<unk> painters.
Speaker Change: All in a little over the top for doing maintenance until we can get.
Speaker Change: Shop constructed so.
Workarounds are in place depending on the timing of.
Speaker Change: Getting this archaeological clearance.
Speaker Change: Yeah, It might still get done next year, it might it might not but it will not impact our ability to operate.
Speaker Change: And I think he can remember.
Speaker Change: Cerro <expletive> operation in Argentina, when we built that.
Speaker Change: Prior company. It was two years before the truck shop was built.
Speaker Change: Had no impact on the operations.
Speaker Change: So it's a truck shop.
Speaker Change: Are the issues and the other one we have.
Speaker Change: In office plan for both the underground and open pit separate facilities.
Speaker Change: The open pit office is also being delayed by these archeological studies, so we'll be using the underground.
Speaker Change: Office and other.
Speaker Change: Their facilities during the interim phase, while we when we get that office constructed. So again, it's not in preclinical infrastructure that was planned to be worked on this quarter.
Speaker Change: Next.
Delayed to some degree.
Speaker Change: Okay. So really what I'm, taking time here is that it's certainly the top part of the answer.
Speaker Change: But you can operate from.
Speaker Change: Other area I guess as an aside what's taking so long for the oxide logical format.
Speaker Change: Alright.
Speaker Change: Amanda.
Speaker Change: I think north veins are something that we work with Yale.
Speaker Change: Hi, Matt.
Speaker Change: Thank you for profound.
Speaker Change: Yeah, well I mean.
Speaker Change: So in the open pit nearly outcrop.
There was a furnace that was deemed to be back in the days of Alexander the great were late for processing or our crops. So we move that a couple of years ago in this case.
Speaker Change: On kind of the edge of the pit.
Speaker Change: Whereas this infrastructure was going to be put in they have been doing these archeological studies.
Speaker Change: Unlike North America, Okay, there's a long history of civilizations.
Speaker Change: In Greece.
European countries and Theres lots of artifact. So even though this is up in the foothills of AGM they have found.
Speaker Change: Some things.
Speaker Change: They want to make sure that.
Speaker Change: Areas cleared appropriately and so just to describe as you've got I don't know around $40 50 people.
Speaker Change: Flavors with wheel barrels and archaeological and are assisting through the sands on the surface.
Speaker Change: Obviously, finding some things because we've got a lot of activity, but they really have to complete the work to determine.
Speaker Change: What's there how significant is it could it be moved.
Speaker Change: Or are we going to have to work around and leave it in place those are the sort of things that happen typically in Greece on any construction project.
Speaker Change: Fortunate to say.
Speaker Change: The only activity and it's not critical to our startup and will have workarounds for it so.
Speaker Change: I'd say a normal process in Greece.
Speaker Change: Okay.
Speaker Change: From that foreign expert Alexander.
Speaker Change: Okay.
Speaker Change: Okay, just wanted to come back to them and I don't know who wants to take the question Jeff.
Speaker Change: On the inflation you mentioned that.
Speaker Change: That you know you're seeing.
Speaker Change: Seeing high higher labor costs. So I just wanted to review with you I have in my notes from previous calls that about in.
Speaker Change: Maybe if I can correct me, if I'm wrong I had about 30% of your.
Speaker Change: Cost of labor.
Speaker Change: Employed and then about 40% that I included the contractors. So I'm going to start first is that a correct number that I have.
Speaker Change: I think 27% since a number of sites.
27% in Q3.
Speaker Change: Okay, sorry did I hear 47 or 27.
Speaker Change: <unk> thousand $700 seven okay.
Speaker Change: Okay. So two seven all of your employees.
Speaker Change: Paul for Labor, Yes.
Speaker Change: And does that also include contractors or has that background.
Speaker Change: Its contractors or separate that gets built.
Speaker Change: So that's <unk>.
Speaker Change: 97% as our workforce.
Speaker Change: And what would be the percentage that would be contractors and the reason I'm asking do I guess I'm just trying to understand if you have different inflation and New York.
Speaker Change: Our own workforce at 27% and how is that different from the contractors.
Speaker Change: I'm trying again.
Speaker Change: I don't have the contractor percentage, but I would tell you there isn't.
Speaker Change: <unk> difference other than timing, obviously, where we have union operations in Turkey and Greece.
I mean, we do our collective bargaining immediately there is a change in labor cost the contractors are on different schedules.
Speaker Change: So timing would be a bit different but I would say that.
Speaker Change: Inflationary pressures are very similar.
And when you take your current agreements.
Speaker Change: Olympia flipside of inflation rate.
Speaker Change: There are labor.
Speaker Change: So we signed a three year agreement on Olympias and it averages about 3% over the three year contract.
Speaker Change: So.
Speaker Change: Fairly consistent with inflation in Europe right. Yeah. That's good to hear Okay. And then the other thing that I wanted to make sure I understood. There was such a big I think.
Speaker Change: I think we've mentioned that $70 an ounce.
Speaker Change: The impact from increase in gold price and your royalty.
Speaker Change: It was this quarter.
Speaker Change: I can remember correctly and I just need to understand my attempt at Kennedy again, I think you did get budget 19 hundreds.
Speaker Change: And I think for every $100 news it was about $20 per ounce impact on your cost.
Maybe I could get hot that confirmed and just so that I understand that when you go to give guidance next year.
Speaker Change: I can kind of understand what the coal price impact would be on your costs.
Speaker Change: It's Paul here.
Speaker Change: In the third quarter compared to our budget just to give you a sense and the royalty cost is around $105 per ounce more.
Speaker Change: So we had a budget set at 19 $100 in our realized prices were 2492, I am sorry, the difference that $600 increase in realized prices gave us $105, an ounce more and royalties.
Speaker Change: Okay, perfect Thats correct, great factor activity, perhaps and then finally I know their numbers that would be by yourself or how are you thinking and I. Appreciate all of your reserve based on you know looking at cut off grades etcetera, Im thinking youre going to be reporting every therapy very shortly I'm using early December the wagon.
Speaker Change: Two months away.
Speaker Change: I need a few months.
Speaker Change: Thanks.
Speaker Change: Can we just maybe talk a little bit about how you're thinking about.
Speaker Change: When you cut off grade then.
Speaker Change: Ultimately I think I heard a $1400 both high for you right there.
Speaker Change: Maybe someone can share how you're thinking about that as well.
T O.
Sure. So yes, we are.
Speaker Change: Reserves are 1400.
Speaker Change: We do expect to obtain our reserve statements for the end of the year.
Speaker Change: We're not looking at a material change in price assumption and we essentially look to our peers.
Speaker Change: Take a look back three five year look back on metal prices.
Speaker Change: But we continue to believe it's.
Speaker Change: Appropriate to stay conservative on metal price and reserves to ensure we have solid margins in any gold price environment.
Even though we're in a pretty good run and it appears to be continuing.
Speaker Change: Not going to count on that from a reserves.
Speaker Change: And resource statement perspective, so as you say, we will be updating the market with.
Speaker Change: The center of price assumptions for this year's reserve update just don't expect any material change.
Speaker Change: And when you say material change.
Speaker Change: Right.
Speaker Change: I'm, assuming if I can.
Speaker Change: You know less than 10% with that Pete.
Speaker Change: Okay.
Speaker Change: Less than 10% would be not material.
Speaker Change: Okay. Thank you and thank you. Thank you for all my questions I really really appreciate it and I'll, let someone else ask.
Speaker Change: Thank you thanks Scott.
Speaker Change: Once again, if you have a question. Please press Star then one the next caller is Lawson Winder with Bank of America Securities. Please go ahead.
Lawson Winder: Thank you very much operator, and good morning, George and team to you guys in Vancouver.
Lawson Winder: Thank you for the update very comprehensive today.
Lawson Winder: One thing I wanted to follow up on with respect to <unk> questioning on on.
Lawson Winder: Labor inflation is.
Lawson Winder: I.
Lawson Winder: I might've missed it but did you disclose what is the built in annual increase in our labor.
Lawson Winder: Labor inflation with the new CBA.
Lawson Winder: And if not can you share that and whether there is any difference year to year or is it consistent.
Lawson Winder: Each year of the contract.
Speaker Change: Yes, so for our collective bargaining agreement on Olympias, it's a three year agreement over.
Over the three years, that's kind of averaging 3% each year, so fairly close to inflation.
Speaker Change: In addition, additionally, a one off payment that isn't cumulative.
Speaker Change: Other base that was tied into our decision to move forward with the expansion of Olympias, So anyway I'd say.
Speaker Change: It was it was a good win win agreement with our workforce.
Speaker Change: And the salary.
Speaker Change: Wage increases consistent with inflation in Europe.
Speaker Change: Fantastic Thanks for that and then.
Speaker Change: Just looking at and thinking about capital allocation.
Speaker Change:
Speaker Change: In.
Speaker Change: The gold prices, obviously significant you guys are clearly benefiting from that.
Speaker Change: Fight the spending on Fountain square East.
Speaker Change: Is there any thought internally to potentially reinstating the dividend near term or is that a decision that just has to wait until the completion of construction at our scores.
Yes, I mean divvy.
Dividend definitely is a focus of the company.
Speaker Change: Our view is when we said that.
Speaker Change: Reestablish our dividends and our dividend policy, we wanted to be sustainable and so for us the focus will be in 2026.
Speaker Change: We are in commercial production.
Speaker Change: Okay, and probably an obvious answer to my final question on capital allocation, but just.
Speaker Change: As you look at the potential.
Speaker Change: Potential options for growth, obviously, you have a lot in the portfolio.
Speaker Change: What about external options for growth it does.
Speaker Change: El Dorado, what's your stance on M&A is really the question I mean, theres Eldorado feel that that you could be opportunistic should opportunities come along or is that something that's just off the table for now.
Speaker Change: Well I mean, we have a corporate development team and like every company, we're always looking for opportunities.
Speaker Change: Obviously with our focus on securities that's priority one.
It's an exceptional opportunity came along we are definitely going to look at it we'd be opportunistic. So I'd say, it's not our primary focus it's a secondary focus for us.
Okay. Thanks, very much George I appreciate it.
George Burns: Thank you.
Speaker Change: That is all the time, we have for questions. Today. This concludes the question and answer session and today's conference call. You may disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change: [music].
Okay.
Speaker Change: Yeah.
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Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Hum.
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Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Yeah.