Q3 2024 i-80 Gold Corp Earnings Call
The
John: Good morning, my name is John and I will be your conference operator today.
John: At this time, I would like to welcome everyone to the IAT Gold Corp Q3 2024 Results Conference Call.
John: All lines have been placed on mute to prevent any background noise.
John: 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 on your telephone keypad.
John: If you would like to withdraw your question, please press star then the number 2.
Thank you. Mr. Yeung, you may begin your conference.
Speaker Change: Well, thank you, John, and welcome everyone. Turning the slide to, I'd like to draw everyone's attention to our Safe Harbor language, as we will be making four looking statements through the course of today's presentation.
Speaker Change: Joining me on the call is our president and COO, Matt Gili.
Our CFO, Ryan Snow.
Speaker Change: and two new hires, Dave Savory, our Senior Vice President, General Counsel, and Leili Mummi, who is our new Vice President, Corporate Development and Strategy.
During the slide three
Before we begin our formal remarks, I'd like to address
today's share price reaction to our announcement.
Speaker Change: And the team internally, we expected the stock could trade down.
for a period of time as the market.
Absorb the new plan and the strategy moving forward.
I think we would say internally that the market's overreacted.
Speaker Change: I think when you look at any company, there are three things that you look at.
The first is equality of the people.
Speaker Change: And I'll tell you that this is a great team that I'm joining.
Speaker Change: As the press release indicated, we've added further bent strength that will address some of the issues that we'll talk about today, mainly the balance sheet.
Speaker Change: But the quality of the asset base and the location are first rate. And we have a new development plan that would see this company move to a mid-tier gold producer with Nevada production of 400,000 to 500,000 ounces per year.
Speaker Change: and the capital intensity for these five projects is very low.
and there's a lot of organic growth.
within the gold portfolio as well as the base metal.
Speaker Change: In terms of the balance sheet, the balance sheet is fixable.
Speaker Change: It's something that we'll work on with our current lenders and we've been in discussion with additional sources of capital.
Speaker Change: and we will resolve it and we will work to minimize dilution of shareholders.
Speaker Change: One of the things that Leili and the team will focus on is working with the STREIT to understand what the NAV of this company is and could be. It will take three to six months as we complete the various studies and we expect to have studies out.
for all five of these gold projects.
before the end of March.
Speaker Change: and with that investors will see what the current value is and what the potential value of this asset base is.
Speaker Change: and then we will make decisions on the restructuring of the balance sheet that minimize shareholder dilution.
Speaker Change: And for the group that's coming in, we've done this in the past where we had a great asset base and a poor share price. So we levered up balance sheet and we executed and we took the stock from $3 to $15. And so
Speaker Change: You know, we believe that that we're going to create significant value and we'll fix the balance sheet and we'll execute and Turn this into a mid-tier goal producer through the balance for the decade
Speaker Change: So with that, I'll now turn to slide four and we'll commence.
the formal part of our call.
Speaker Change: So upon my arrival we conducted a review of the strategic direction of the coming.
Speaker Change: As a result of that review, we have adopted a new development plan.
Speaker Change: which presents our view of the most effective strategy to generate free cash flow while progressing our earlier stage projects.
to provide a pipeline of growth.
in the medium and long term.
Speaker Change: During today's call, in addition to our normal review of the quarterly operating and financial results,
We'll review this new development plan.
Speaker Change: Provide an update on the base metal joint venture discussions at Ruby Hill.
Speaker Change: speak to our recapitalization plans and finally discuss the organizational changes that will enable us to achieve this new plan.
Speaker Change: We're electing to prioritize our most advanced stage gold and silver projects with established resources and technical studies.
Speaker Change: As such, exploration development work on base metal targets have been deferred to focus on projects with the fastest timeline to cash flow generation.
Overall.
Speaker Change: Given the company's balance sheet constraints and additional capital required for the new development plan, all higher-risk projects with lower certainty of economic viability
Speaker Change: have been deferred until the balance sheet is in a stronger position.
and the board approves allocating risk capital to these projects.
Speaker Change: To achieve this, we intend to pursue a recapitalization of the balance sheet, which we believe will be best supported by focusing on our advanced stage goal projects, Granite Creek, Archimedes Underground, which was previously Ruby Deeps and 426 Zone.
as well as McCoy Cove.
Speaker Change: These projects are expected to have low capital intensity and a clear path to cash flow generation.
Speaker Change: What is new is the decision to accelerate permitting and development of the two large oxide open-pit deposits.
Reddick Creek, and Mineral Point.
Mineral Poin
has the potential to become a large-scale heat bleach mine.
Speaker Change: and a PEA is underway, and we'll have that complete for the end of the first quarter.
Speaker Change: While the base metal opportunities at Ruby Hill may ultimately be significant, the project is at a far earlier stage.
Speaker Change: that are other gold projects within i-80 gold portfolio and the timeline to cash flow generation is longer and undefined
Speaker Change: Now, I'd like to turn the call over to our President and CEO, Matt Gili, who will present our development plan in more detail, as well as our third quarter operating results. Matt?
Slide five.
Thank you, Richard.
Speaker Change: The new development plan is focused on near-term cash flow generation, advancing a pipeline of growth.
Speaker Change: We are now focused on the ramp-up, permitting, and development of five gold deposits through the balance of the decade, including three underground mines, and accelerating the permitting and development of two large oxide-open pit deposits, Granite Creek and Mineral Point.
Speaker Change: The Lone Tree autoclave remains the centralized refractory ore processing facility in the new development plan, and management intends to continue its work towards completion of the refurbishment feasibility study next year.
Speaker Change: Following the completion of the study, a series of trade-off scenarios will be considered comparing full autoclave refurbishment
Speaker Change: to alternate tow milling and ore purchase agreement options that could potentially be available.
Slide six.
Speaker Change: Granite Creek is comprised of an underground mine, which is currently ramping up and expected to be in commercial production in 2026.
and Open Pit Project that is in the permitting process.
Titan Seven
as mentioned.
Granite Creek Underground is currently ramping up to commercial production.
Speaker Change: Mining rates and gold production for the quarter in nine months of 2024 were lower than planned due to an increase in groundwater ingress.
Speaker Change: and to the underground working areas, which negatively impacted productivity and development advancement rates.
to address the higher water rates.
The mine is adding additional pumping capacity.
Speaker Change: deepening an existing dewatering well and reworking the dewatering system to allow for additional flow capacity in the water treatment facility on site.
Speaker Change: We expect that production and costs will continue to be negatively impacted until these measures are completed and groundwater flows return to easily manageable levels, which is expected to occur by the end of the third quarter.
2025.
Speaker Change: On a positive note, the ore control reconciliation on a bench level in the two zones mined to date has been positive. In the OG zone, where most mining has occurred, we have seen more tons
Speaker Change: plus 40 percent, better grade plus 37 percent, or more ounces plus 90 percent.
Speaker Change: On the first level of the South Pacific zone, we saw nearly a three-fold increase in tons at expected grade.
for Nearly Three Times More Ounces.
Speaker Change: As a result, we feel confident that once we address the water issues, costs will decline and production will increase.
Speaker Change: This is also the acid that we believe has the most exploration upside, given its location of less than 10 kilometers from a world-class mine with over 25 million ounces discovered to date.
Slide eight.
Speaker Change: The Granite Creek Open Pit is a relatively low capital intensity project given that it is a previously producing mine using heap leach processing.
Speaker Change: The mineral resource sits at over 1 million ounces at an average grade of approximately 1.4 grams per ton, making it one of the highest grade oxide deposits in Nevada.
Speaker Change: The 2021 Preheat Feasibility Study envisioned a heat bleach and mill scenario.
Speaker Change: We are updating the prior technical report, and we will perform trade-off studies of heat bleaching in the entire deposit.
Speaker Change: building an oxide processing facility on site, or utilizing process infrastructure already in place at other properties to process the higher grade material through a mill while continuing to heap leach the lower grade material.
Speaker Change: This study is expected to be released near the end of 2025.
Speaker Change: We have begun the permitting process. We expect the process will take approximately three years followed by 18 months of construction.
Slide nine.
Speaker Change: The Ruby Hill Complex is comprised of the Archimedes Underground, formerly known as the Ruby Deeps.
Speaker Change: the Mineral Point Oxide Open Pit Project, as well as the Gold Hill Oxide Deposit.
Speaker Change: Additionally, the Ruby Hill complex hosts significant base metal potential at the Fad Project, Blackjack, and Hilltop.
Speaker Change: For the time being, basement projects and the Gold Hill Project have been deferred to focus on the more advanced gold projects that have a clear and shorter pathway to generating free cash flow.
Ryan will expand on the Basement LJB.
Later on the call.
Like that.
Speaker Change: We expect permits for underground mining at Archimedes in Q1 of 2025, allowing us to begin development and
achieving production in late 2026.
Speaker Change: Our communities underground is on track to be our second producing asset.
Speaker Change: While it has the lowest grade of our three underground mines, it has the most favorable mining conditions, which will allow us to mine the deposit utilizing more efficient mining methods.
Speaker Change: As we develop the lower portion of the ore body, we will complete the required drilling to permit the lower portion of the ore body over the next few years.
Speaker Change: We will have a PEA for Archimedes Underground by the end of Q1 2025.
Speaker Change: However, we anticipate that we will not issue a feasibility study on the Archimedes Underground until we complete the drilling program, which is currently targeted for 2027, once construction of the underground drill platforms are completed.
Speaker Change: Therefore, we envision the Archimedes feasibility study to be published in late 2027 or early 2028.
Slide 11.
Speaker Change: Mineral Point has the potential to be our flagship mine. It hosts our largest gold and silver resource in the portfolio. Based on the internal scoping study, it has the potential to be a multi hundred thousand ounce mine at solid cost.
Speaker Change: It will be our most expensive mine to build, but the expectation is that by the time we begin construction, targeted for 2030, it will be ready.
Speaker Change: We anticipate to have four producing gold mines generating significant cash flows to fund the development of Mineral Point in combination with a project finance or corporate facility.
We expect to release a PEA in Q1 2025.
Bye, 12.
Speaker Change: Cove is our third underground mine. Like Granite Creek, grades are over 10 grams per ton, making it one of the highest grade underground mines in North America. The mining conditions at Cove were better than Granite Creek, but perhaps not as favorable as Archimedes.
Speaker Change: The baseline work to advance our final permit application is proceeding on schedule. We expect to submit the final permits in mid-2025 and expect final approvals by the end of 2027.
Construction is scheduled to take 18 months.
Speaker Change: Construction scope of work consists of dewatering and portal development with associated infrastructure. There is no planned processing facilities at Cove.
Speaker Change: An infill drill program is underway. It is expected to be completed in Q1 of 2025, which will allow us to finalize the feasibility study for the mine in 2025.
Slide 13
Speaker Change: I've already spoken to the pending feasibility study, which will allow us to optimize the value of the permitted autoclave and loan tree.
Speaker Change: We continue to realize value for the oxide material mined at Granite Creek through the existing ore purchase agreement while we pursue alternatives for the processing of our refractory material, either through an extension of our toe milling agreement or alternate processing solutions.
Speaker Change: The Lone Tree Open Pit Project, however, continues to have a variety of financial, technical, environmental, and social issues to be worked through.
Speaker Change: It is expected that the project will likely remain deferred for another decade.
Speaker Change: We believe new technologies and other solutions may become available in the future to allow us to unlock the value of this large open pit project.
Slide 14.
Speaker Change: We mined over 53,000 tons of Granite Creek Underground, nearly 50% more than Q3 of last year.
Speaker Change: Mining of processing grade material, which is grade equal or above five grams per ton.
is largely in line with last year's production.
Speaker Change: An overall increase in the number of mining headings available has allowed for comparable production in spite of the dewatering issues discussed earlier.
Speaker Change: The significant increase in oxide mineralized material mined, when compared to 2023, is due to the inclusion of oxide material grading between 2 and 5 grams per ton.
Speaker Change: When oxide mineralized material grating in this range is encountered, this material is classified as incremental material and transported to the lone tree facility for leaching on the heap leach pads at that site. For clarity.
Speaker Change: No stopes are planned at less than 5 grams per ton. The incremental material is encountered when developing the decline or while accessing two or between stope blocks.
Speaker Change: Development rates continue to ramp up when compared to the same period in 2023 but still are not meeting our plan, again due to water.
Speaker Change: The sharp reduction in exploration drilling footage is a function of both a large exploration drilling program in 2023, as well as shifting our strategy for exploration drilling from surface to underground in 2023.
Speaker Change: This shift has delayed our timing of drilling as we complete the excavation of the underground drilling platform.
Speaker Change: I will now hand the call over to Ryan Snow to walk us through our financials.
Ryan Snow: Thanks Matt and good morning to our listeners. Yesterday after the market the company reported our financial and operating results and the company's financial statements and MD&A
Ryan Snow: for the three and nine months ended September 30, 2024, can be found on CDAR Plus, EDGAR, and our website.
Ryan Snow: Highlights of our results include revenues in the quarter totaling $11.5 million compared to $13.2 million in the comparative prior year period.
Ryan Snow: This difference is due to lower volumes sold partially offset by higher gold price.
Ryan Snow: Third quarter gold sales totaled 3,063 ounces at an average realized gold price of $2,422 per ounce, resulting in revenue of 7.4 million.
Ryan Snow: Compared to gold sales of 4,585 ounces at an average realized gold price of $1,895 per ounce, resulting in $8.7 million of revenue in the third quarter of 2023.
Ryan Snow: The company recorded a loss per share of $0.10 for the quarter, a decrease from the $0.01 loss recorded in the comparative period a year ago.
Ryan Snow: This change is primarily due to expense recognized in the period of $10.3 million, related to losses on derivative instruments and warrant revaluation, compared to an income of $21.5 million for the same instruments in the comparative period.
Speaker Change: Cost of sales increased by $3.2 million compared to the third quarter of last year, primarily due to an inventory write-down at Granite Creek related to the increased costs for the water issues Matt described earlier.
Speaker Change: We ended the quarter with $21.8 million in cash, representing a decrease of $26 million from the end of the second quarter, primarily due to cash used in operations and capital expenditures.
Speaker Change: In addition to the 2,210 ounces that were delivered to Orion in the quarter relating to the deferred gold deliveries from the second quarter.
Speaker Change: Also during the third quarter, the company began utilizing the previously announced at-the-market equity program to raise capital. In total, 11.5 million shares were issued for gross proceeds of $13.1 million.
As for our recapitalization plan as shown on slide 16,
Speaker Change: As Matt and I have outlined today, our first gold mine and only source of cash flow, Granite Creek, continues to ramp up, and given the water issues Matt described, we currently do not expect the mine to generate free cash flow until late in 2025 or early 2026.
As a result, we need to recapitalize our balance sheet.
Speaker Change: The company's ability to continue to operate and execute its new development plan and fulfill its commitments as they come due is dependent upon its success in restructuring the current debt obligations and obtaining additional financing.
Speaker Change: While management has been successful in raising additional funds in the past, there can be no assurance that it will be able to do so in the future.
Speaker Change: Regarding the recapitalization plan we envisage a two-step recapitalization process which will include demonstrating a viable path to generating free cash flow and rescheduling and or refinancing the existing debt obligations.
Speaker Change: This plan will include finding a solution for our short-term commitments, including the deferral of the upcoming gold and silver deliveries to Orion, scheduled for late December and early January.
Speaker Change: Discussions with Orion have initiated for this deferral and the company expects a positive outcome in the coming weeks.
Speaker Change: This plan will also include further utilization of our at-the-market facility.
Speaker Change: Phase 2 of the recapitalization plan involves working with our current partners, as well as seeking new debt providers, to restructure our existing debt and provide sufficient capital to execute on the company's new development plan, with repayment terms that align with the company's ability to service that debt.
Speaker Change: Management has initiated work on this topic, including discussions with existing and potential new partners, and aims to complete this process in the first quarter of 2025.
Speaker Change: Turning to slide 17, as we discussed in the quarterly press release.
Speaker Change: We believe that a base metal focused joint venture at Ruby Hill no longer makes sense in light of the new development plan.
Speaker Change: As you may recall, in November of 2023, we entered into a non-binding letter of intent with a third party to consider a joint venture for Ruby Hill with a focus on base metal exploration and development.
Speaker Change: It's important to note that in addition to deposits with base metal potential, namely blackjack, hilltop, and fad, the joint venture also included all gold and silver deposits at Ruby Hill.
Speaker Change: The proposed structure of the JV had the potential to impact the timing of the advancement of the existing gold deposits on the property and potentially impact the company's ability to restructure the balance sheet.
Speaker Change: In addition, upon careful assessment of the joint venture terms and economics,
Speaker Change: Considering the potential value of the existing gold resources in a rising gold price environment, and taking into account the limited understanding of the base metal potential, IED's board and management have elected to terminate joint venture discussions.
Speaker Change: We believe the base metal potential at Ruby Hill may ultimately be significant and feel it's prudent to better understand the upside potential prior to a joint venture deal.
Speaker Change: I will now turn the call back over to Richard Young, our CEO, to discuss the company's organizational structure and provide closing remarks.
Richard Young: Well, thank you, Ryan. To support our new development plan, as the company evolves into a developer and producer, the organizational structure and skill sets needed need to evolve.
Richard Young: We envision becoming a mid-tier gold producer of between 400,000 and 500,000 ounces of gold per year by the early 2030s.
Richard Young: The three most significant changes facing I-80 Gold today are one,
Richard Young: The increased emphasis on tactical skills to ramp up, permit, and construct five projects through the balance of the decade.
Richard Young: 2. The requirement to restructure and recapitalize the balance sheet in a manner that aligns the new development plan.
Richard Young: And three, the additional legal and reporting requirements of becoming a U.S. domestic issuer.
Richard Young: To meet our growing and changing demands, the company has promoted four senior technical personnel.
and hired four new senior positions.
Richard Young: We believe these organizational changes include the promotion and new hires, add the necessary experience and bench strength to further de-risk the execution of the development plan.
Richard Young: The cost of these changes is expected to be partially offset by lower third-party consulting costs.
Richard Young: On the operational front, the promotion of four senior technical personnel is a reflection of the importance of these four individuals in reducing our execution risks as we ramp up, permit, and construct five mines through the balance of the decade.
Richard Young: On the legal front, the hiring of Dave Savory as our new Senior Vice President General Counsel will bring in-house industry-specific legal experience, will improve our approach to our compliance,
or, sorry, third-party legal cause.
Richard Young: Further, this addition will immediately reduce the burden on existing management to manage the legal process in an increasingly complex environment while adding additional strength as we execute our new development plan.
Richard Young: On the finance front, the company has added two senior financial roles, a VP of Treasury in charge of Treasury and Financing, Katarina DeLuca, and a VP of Strategic Planning, Curtis Turner, who is transitioning from VP Finance to this new role.
Richard Young: These new positions are required to meet the increased workload associated with the balance sheet restructuring and debt reporting as well as enabling the new development plan to be executed.
Richard Young: The VP Finance Function will be managed by an incoming hire, Cindy Su.
Richard Young: Finally, Leili Umunni is joining the team as Vice President of Corporate Development Strategy and will also be in charge of Investor Relations.
Richard Young: This position replaces the outgoing existing Vice President of Corporate Development, Matt Golan, who was instrumental in the formation of I-80 Gold since its inception in 2021.
Richard Young: Mr. Golat has agreed to remain as an advisor in the transition to focus on the new development plan.
Richard Young: The company would like to thank Mr. Golat for his contribution to the company.
Richard Young: The new VP Corporate Development will execute the new vision of the organization, play a key role in developing and maintaining the company's life of mind models, as well as understanding the value of IAT goal and conveying that message to the market.
Richard Young: Joining Leili will be Jim McKay who will work alongside of Leili.
Richard Young: All of these new hires are people that I've worked with previously, some for nearly 20 years, all of which have the skill set.
Richard Young: required skill sets and values that will round out what is already a very strong team.
Richard Young: With that, I would like to turn the call back over to John, our operator.
Speaker Change: so that we can respond to questions from the listeners. Thank you, John.
Speaker Change: Yes, sir. Thank you. Ladies and gentlemen, we will now begin the question and answer session. And as a reminder, if you wish to ask a question, please press star and one on your telephone keypad. If you would like to withdraw your question, just press star then the number two.
Once again, to ask a question, star and 1.
Speaker Change: And we have questions that came through. We'll now take the first question. This comes from the line of Kent Whitaker from KP7 Investors. Your line is now open. Please go ahead.
Speaker Change: Thank you. A couple questions. Well, first off, congratulations on instilling some discipline in the company there and actually developing a development plan. So, I first of all appreciate that. It seems like the market is
has some questions on survivability, and I know you addressed...
Speaker Change: your reaction to the market's reaction to your development plan but could I just ask as you know as you as you come in and you looked over the balance sheet
Speaker Change: what do you see as the key risks on not just the balance sheet but also the other obligations that you've got and how over the next you know
Speaker Change: few months or quarters or year so will you address those issues? Thank you.
Well, that's a great question. I guess...
First of all, it's Richard Young speaking.
Speaker Change: Myself and a number of people that are now joined today have worked in West Africa.
in much more challenging conditions in terms of fundraising.
Speaker Change: You know, coming in, looking at the balance sheet, these are Nevada projects.
Speaker Change: And I think at the time that we sold Taranga, for those who aren't aware, I think we might have had $600 million in debt.
So, I think the consensus of our team was that
This is a fixable issue that
Speaker Change: When you look at the asset base and you compare it to the balance sheet as it currently stands, the debt levels are actually modest, they just don't match.
the cash flow generation of the assets today.
Speaker Change: And the additional capital required for this new development plan, frankly, is modest in the big scheme of things when you compare it to other projects globally.
Speaker Change: And I think that when you look at Orion, they've been a valued partner. They've got the biggest balance sheet throughout our capital structure.
Speaker Change: and they've got the longest view on value and we will work with them as well as some other partners that the company had been talking to before our arrival and we do we are very comfortable that we will be able to put a
recapitalization plan together over the next three to six months.
Speaker Change: that will address the mismatch that we currently have between, you know, our current obligations and the cash flow generation of the business.
Speaker Change: Do you feel that Orion is part of the solution here, or are they part of the problem?
Speaker Change: than everyone initially expected. But the company has a very good handle on the processes and the timing.
And then, you know...
Speaker Change: Part of the issue is the base metal success. There was so much exploration success through this portfolio. It did cause some strategic direction changes through the course of the last few years.
Speaker Change: But it just really goes to the quality of the asset base and the fact that you have a pipeline of development Not for the next five years, but potentially for the next 15 to 20 years That probably few other companies can match
Speaker Change: But what we've had to do is decide on which projects to focus on so that we allocate capital in the most effective manner, and that's what this plan does.
So, you know, no criticism of...
Speaker Change: the prior strategy or how the balance sheet was constructed. The focus really is now working with our current proposed debt providers on what this plan entails and working with them to reschedule this debt to allow us to be able to
Speaker Change: generate the value for shareholders that all IAD shareholders expected with the formation of IAD and with all the drill success the company's had over the last few years.
Just one more follow-up and I'll pass the line.
Speaker Change: You've got a tremendous portfolio of projects, obviously, and that is a testament to the exploration successes there. I've heard you talk about your excitement about the quality of these assets. Is one option asset sales? I mean, you obviously have five or more projects that have significant value.
Speaker Change: Is that part of the strategic thinking? An asset sale or two to alleviate some of the
Speaker Change: financial strains you're going through now? Are you going to try to get through this without asset sales? Thank you. I'll pass it.
Speaker Change: Well thank you and I think that's a fair question and look I think that the board and management are open.
to anything that creates shareholder value.
Speaker Change: But, and part of the issue for us is the street, whether it's the buy or sell side.
Speaker Change: doesn't have a clear view on value of each of these assets.
Speaker Change: By the end of the first quarter, when we've got PAs out for each of them...
Speaker Change: it will become clear what the value of these assets are.
Speaker Change: and each one individually has a value much higher than our current market cap today.
Speaker Change: but there are tremendous synergies between the three underground mines and Matt could talk about that if you'd like. And then these two open pit mines create so much value and we see
Speaker Change: So much opportunity with the group of five goal projects together.
and we do believe that the recapitalization and the additional
Speaker Change: capital required are quite modest and we don't at this point believe that a buyer could give us fair value that would make sense for shareholders over the medium and long term.
We are taking a longer term perspective with this plan.
Speaker Change: not focused on the short term, and we do believe that we can solve the balance sheet issue.
Speaker Change: I hope that answers your question. We'll open up to the next question if there are any.
Speaker Change: Yes sir, thank you. And the next question comes from the line of Brace Adams from CIBC Capital Markets. Your line is now open, please go ahead.
Speaker Change: So what I'll do is I'll turn over to Matt because you know while we talk about developing five minds
Four of these are very low.
Speaker Change: technically and financial commitment. So, Matt, can you just talk a little bit about what's required for the first four before we get to Mineral Point in terms of work to be done and maybe allude to the cost of that? Absolutely. All right, so thanks for the call, for the question, Bryce.
Speaker Change: When I look at the three underground mines that we're talking about, the Granite Creek, the Archimedes, and the Cove, I really think of them, Bryce, as one.
Speaker Change: mine in summation. There are three portal mines coming out of existing open pits. And if you're if you're coming from the Nevada background, all of our open pits have at least one portal mine coming out of them. In the simplicity of the construction and the ramp up of each of those three underground portal mines,
Speaker Change: Pretty simple. I'm not I'm not understating the challenges that every mine will incur, but the development of three underground portal mines in Nevada is a is a pretty normal process and has been done you know as I said in virtually every open-pit mine in Nevada already.
So...
Speaker Change: It's a big, it sounds like a big number, but I'm really seeing that as one.
Cask.
Speaker Change: The next task is, of course, the Granite Creek Open Pit. This was already an open pit heap leach facility. We're in the process now of permitting for the next stage, essentially a pushback of the existing open pit facility and a new heap leach plant.
Speaker Change: Again, big task, but in the context of where we are in Nevada, this is a pretty normal occurrence. So those are the three underground mines and Granite Creek Open Pit.
Speaker Change: Mineral point is a big chunk and we do appreciate that internally. We see a long process there for completing the technical studies, for the permitting and for the construction of that. That's our last asset on the development chain.
Speaker Change: So, by the time we get to the stage where we are looking at the construction of Mineral Point, we will already have the three underground mines.
Speaker Change: into the production and development stage and the open-pitted Granite Creek will be well advanced. So that's the way we stage it out, Bryce.
That is that
Ryan Snow: addressing your question. I know, Ryan, you want to touch on the cost? I just, I do. Thanks, Matt. This is Ryan. So, Bryce, just to add to Matt's comments there, as he mentioned, the three underground mines are
Ryan Snow: portals out of existing pits and the open pit at Granite Creek is on a brownfield site as well. So really what we're looking at there is low capital intensity for all four of those projects to bring them into production in our new plan.
Speaker Change: Thanks, yeah, that's helpful. Maybe a follow-on to that. It's a little hard to see from the slides and from my recollection from visiting sites a few years ago, but do you foresee any interaction between those open pit heap leach projects and then the undergrounds or are they all distinctly independent of each other?
Speaker Change: Alright, another brilliant question Bryce. At Cove and at Archimedes, there is no interaction between the portals and any plans for open pit mining.
Speaker Change: At Granite Creek, have you been to Granite Creek? Those portals at Granite Creek?
Speaker Change: will need to be reconstructed as part of the open pit mine at Granite Creek. There's a staging of the two pits.
Speaker Change: such that when you finish the first pit and then you develop new underground portals out of that pit to intersect your existing underground development, that's all worked into the PEA, and it adds a little bit level of complexity, but all very easily managed.
Speaker Change: Thanks. I'll look forward to the PEAs next year. All the best. Thanks for taking the questions.
Thanks Bryce
Thank you and the next question comes from the line
John Tomazos, your line is now open. Please go ahead.
Thank you. Bye-bye.
Speaker Change: Richard, it's good to be acquainted again. Thank you for taking my question.
Richard Young: It's more traditional to build mines or reopen mines one by one.
Richard Young: harvest the cash flow from the first project and move on to the second.
Thank you. Bye-bye.
The term in mathematics is linearly sequential, one by one.
I'm
If the market gives you less cash than you want,
or one particular of the three underground gold refractory mines.
that would be the ones to resume first.
I think that
Speaker Change: People might be misunderstanding your presentation, Richard, that the company wants to.
Speaker Change: do all six things at once and get all the cash up capital borrowed up front and all the cash to come later. Maybe that's frightening people.
Well, John, I appreciate that.
Speaker Change: I'm sure that this was a lot to absorb but but you're right so when you when you step back
Speaker Change: We're currently ramping up Granite Creek and expect, as Ryan mentioned, it to be free cash flowing at some point.
in the second half of next year.
We will begin construction of
Archimedes Underground, formerly Ruby Hill Divs.
So we'll be building
those, you know, in sequence.
Speaker Change: And then we'll have both of those underground mines ramped up, generating free cash flow before we start construction of Cove and the Grant Creek Open Pit.
And as Ryan mentioned,
The capital requirements for those are actually very modest.
Speaker Change: and so based on our current recapitalization plan we don't believe we need a lot of additional capital to be able to execute on this plan.
We've been conservative internally in terms of
Speaker Change: The capital and operating parameters, the gold price, and we believe we have cushion. We believe that a lot of the capital required is part of this plan.
Speaker Change: could come from some sort of debt instrument so that we minimize dilution of shareholders.
and MaximizeShareNav.
Speaker Change: But we'll consider as we move forward, but we believe that over the next three to six months, as we put out the five PAs,
Speaker Change: and the market gets a clear understanding of the timing and the cost and the value of these assets.
Speaker Change: because we're not looking to raise equity today. We'll complete the refinancing plan in the first quarter. And our objective as a management group is to have the refinance of the ballot sheet in place.
Speaker Change: and then able to go to shareholders with a holistic plan that basically solves our cash flow requirements to allow us to move forward and build essentially all five mines.
Thank you for that explanation Richard, and good luck.
Thank you, John.
Speaker Change: Thank you. And the next question comes from the line of Jose Camovas from Global Income. Your line is now open. Please go ahead.
Speaker Change: So, Jose, thank you. First of all, as you can see from our financial statements,
Granite Creek Underground
Speaker Change: because of the dewatering issue is generating negative cash flow. So, we do expect that we will continue to assume capital.
Speaker Change: through the fourth quarter. We have put all discretionary expenditures on hold.
Speaker Change: until we complete the refinancing. And we are working with Orion.
to defer the upcoming deliveries, as Ryan mentioned.
Speaker Change: under both the gold prepay and the silver stream that are due in December and January and with that we do expect to have sufficient cash flow.
to move through the first quarter to allow us
a timely and orderly recapitalization
Speaker Change: Perfect. My second question is actually regarding the recapitalization plan. Could you be a bit more specific or what would be the ideal structure for you to be able to announce during the first quarter of 2025?
Speaker Change: You know, it's too early, Jose, to comment on what that will look like, but what we've laid out in the press release in MDA is just looking to match.
our debt obligations with our ability.
Speaker Change: to meet those. And so we have a clear understanding of what we think that should look like, but we've got to work with Orion and others to determine, you know, what those instruments will look like and how.
how we will recast that capitalization.
Speaker Change: But we haven't, we're not specific at this point, we're just, we just got it in various pots.
If that makes any sense. Buckets.
Speaker Change: It does, it does. Thank you. My final question is regarding your current debt structure. Is currently debt correlated with the assets?
Yes, yes.
Speaker Change: It is Ryan or David who would like to address that.
Speaker Change: Yes, certain of our debt commitments, so the gold prepay arrangement with Orion is, has security attached to it, has the silver string.
Speaker Change: and the convertible to Ventures Outstanding has security attached to it with the Koi Cove project.
Jose, did that answer your question?
Speaker Change: Yeah, yeah it does. So the final one would be just to confirm, you were saying you're quite confident you will be able to reach a deal and recapitalize it by first quarter 25, just to confirm this point.
Speaker Change: That's correct and our rationale for that as we pointed out is the quality of this asset base, the location of the asset base, and the low capital required to be able to execute on this plan.
Speaker Change: So, between our current lenders and potential new lenders, there is support to assist us with this recapitalization, as well as providing the additional
financing required to be able to execute on the plan.
Perfect. Thank you. Thank you.
Speaker Change: Thank you. And the next question comes from the line of Jonathan Silas from Brook Capital. Your line is now open. Please go ahead.
Jonathan Silas: Hello, I am very happy to hear there is a plan in place, but unfortunately a lot of damage has been done to shareholders. So I just have two questions.
Jonathan Silas: Why did the team have a pending joint venture for a year? It was in finalization, but ending up there is nothing. And my other question is, did you have any potential M&A deals that you declined throughout 2023 and 2024?
So, Jonathan, thank you. And I'm, I'm sorry for.
for all shareholders on where the share price is today.
Jonathan Silas: All we can do is, look, it's a great asset base that's been put together, and we've laid out a plan that will, we believe, take our share price, even with dilution, with the refinancing, to levels above where it's traded at in the past.
Jonathan Silas: but we'll need time to execute on that. I turn it over to Matt or Ryan to make a comment on M&A.
and...
Speaker Change: Okay so regarding regarding M&E deals that we could potentially have declined I mean as part of as part of the team we always looked at
Speaker Change: proposals and suggestions for M&A activity. We've engaged with those teams but decided through the course of the year that none of them met our objectives for delivery and realized the value of the assets.
Speaker Change: specifically, you know, Ryan's covered the discussion on the JV and this was not a decision that we took lightly.
Speaker Change: We looked at the focus on the JV, we looked at the potential free cash flow generation coming from base metals in the near term.
Speaker Change: as opposed to the generation of free cash flow from the gold assets in the near term and have made a corporate decision on the direction of that joint venture.
Ryan Snow: Ryan, is there anything else you want to add? The only thing I'd add to that is I think it's important to remember that over the course of the last year that the joint venture has been potentially active. The gold price environment has changed pretty dramatically.
Ryan Snow: and looking at that and the economics of the property in light of that changing gold price environment had us take a slightly different view when it comes to the property in general and the JV specifically.
Speaker Change: Okay, okay. Well, I wish you the best of luck, you know.
Thank you. Thank you.
Speaker Change: Thank you and we have a follow-up question from Bryce Adams. Your line is now open. Please go ahead.
Speaker Change: Thanks again. One bonus question from me, the comments around the carrying value and the going concern, is that simply a continuation of the language used by previous management or is there anything new in that?
Speaker Change: No, I'm sorry, can I go ahead? No, there's nothing new, but Bryce, when you look at our balance sheet
Speaker Change: You know, we, you know, are ramping up an asset that is consuming capital, and we finished the quarter with $20 million. So we do need to restructure the balance sheet. We're very confident that we can do that, and we're well advanced.
Speaker Change: But, you know, it's just a requirement under both Canadian and U.S. regulations that we make it clear to investors that we do need to do something, that a status quo.
It just doesn't work.
Speaker Change: Okay, yeah, understood. Just wanted to see if anything had changed.
Speaker Change: Thank you. And also a follow-up question from Jose Camovas. Your line is now open. Please go ahead.
Speaker Change: Yeah, thank you for the follow-up question. Just wondering, I know it's early to talk about the recapitalization plan, but is a debt-to-equity conversion on the table? Is that an option or would that be like a last resort for you?
I'm sorry, what was the? A debt-to-equity conversion.
Is that on the table?
so
Speaker Change: Look, our preference is to, and ultimately the board will make the decision,
but you have an asset base
located in Nevada
that we believe has significant debt potential capacity.
Speaker Change: which we believe will limit, and we will work to limit, any dilution. As a shareholder, we would like to issue as little stock as possible moving forward.
We want to minimize dilution.
Speaker Change: and by leveraging the balance sheet but again putting a debt structure in place that works for the asset base we have.
Speaker Change: and executing as we expect we can. And one of the things that Matt talked about that I just want to highlight.
Speaker Change: is that the development of these five assets is frankly low-risk.
These are, you know, historic operating sites.
We understand the geology, the metallurgy, and the mining.
Speaker Change: And so we don't see a lot of risk within this portfolio. We believe that we'll be able to execute.
Speaker Change: and we do believe that ultimately we'll be able to put a restructuring plan in place that minimizes dilution of shareholders.
as much as possible.
Speaker Change: So converting that to equity is not something we would want to consider.
Great. Many thanks.
Speaker Change: Thank you. And the next question comes from the line of William Heichel, your line is now open, please go ahead.
Speaker Change: Yes, this is Bill Siegel. The question I have relates to the toll milling agreement.
Speaker Change: I was under the impression that the toll milling agreement for a thousand tons a day didn't expire until the new autoclave, or the existing autoclave, had been refurbished.
and Matthew Gili. Thank you.
Can you comment on that?
Speaker Change: Yeah, thank you, Bill. So the there is there's language in the existing toe milling agreement for the autoclave and I'll be very specific to make sure there's no misunderstandings.
Speaker Change: We have a tow mailing agreement for the autoclave that is at 1,000 tonnes per day that had an initial period of three years which expired in October. There is language in the tow mailing agreement regarding the ability to extend that agreement.
There is also some other scenarios that could be
a better and more favorable path.
Speaker Change: for us to process autoclave material in northern Nevada. So we are currently pursuing all of those options and looking at the different scenarios in which it's going to make more sense for both ourselves and any potential business partners with regards to that tow milling.
Speaker Change: The tolling milling agreement for the roaster is a 10-year term that is, and so we're in approximately the fourth year of that 10-year term, so that's not affected by any of the discussions we've had today.
Speaker Change: So, then, in summary, the expiration of the toll milling agreement, do you see that as being or adding a lot of risk to the equation for I-80?
Speaker Change: I believe that through discussions and working with potential partners we will we will very much come to a solution.
Speaker Change: that will be best value for everyone. So it is a risk. I mean, of course, everything is a risk, but I am very confident that we'll be able to reach a solution where both parties are favorable.
Speaker Change: And Bill, could I just add to that, that when you look at production for Granite Creek today,
About 25% of production is affected by the toll milling.
Speaker Change: 75% is addressed through other streams, whether it's heat bleaching where we produce gold bars or an oxide agreement. So it's about a quarter of production that's impacted.
Speaker Change: over the next 12 months, but, you know, as Matt mentioned, you know, we're well underway in discussions.
Richard Young: for a solution for that. Yeah, thanks for that, Richard. I failed to mention that the current oxide processing agreement is still very much in effect, and both parties seem very pleased with the results from that agreement.
Speaker Change: And in the meantime, when you encounter sulfide material, you're just going to probably throw it in a storage area waiting for the agreement to kick in again with whatever party.
Speaker Change: Yes, Bill, we put it into a line storage facility as per our permits.
and that storage facility is on-site.
Okay. Thank you.
Speaker Change: Thank you, and no further questions that came through. I would now like to hand back the call over to Richard DeYoung for closing remarks. Please go ahead, sir.
Richard DeYoung: Well, thank you, John. I, you know, in closing, I would just really like to reiterate
Richard DeYoung: that, you know, please, we look for patience from our current shareholders. Give us an opportunity to complete these five PAs and demonstrate to the market the value of these assets.
We'll move forward with the recapitalization to minimize dilution.
Richard DeYoung: But we believe that we've got the right team in place, particularly with the new hires, with a lot of deep experience.
in debt restructuring that we're going to face.
Richard DeYoung: And we've got a great asset base and a great location. We've got a great technical team and we believe that we will be creating the next mid-tier gold producer here in North America. So, I hope investors will show some patience and support.
Richard DeYoung: over the next six months as we lay that out for everyone.
Thank you.
Speaker Change: and Matthew Gili. And I'm Matthew Gili. And I'm Ewan Downie. And I'm Matthew Gili.
Speaker Change: Thank you, sir. This concludes our conference call for today. Thank you, everyone, for participating. You may now disconnect.
Thank you. Bye-bye.
Thanks for watching!
Thanks for watching!
I-80 Gold
Speaker Change: and the rest of the team. I'm Matthew Gili, and I'll see you next time. I'm Ewan Downie, and I'll see you next time. I'm Matthew Gili, and I'll see you next time.
Thanks for watching!