Q1 2024 Dundee Precious Metals Inc Earnings Call

May 8, 2024

Operator: 2024 Earnings Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand over to our first speaker for today, Jennifer Cameron, Director, Investor Relations. Go ahead, Jennifer.

Jennifer Cameron: Thank you and good morning. I'm Jennifer Cameron, Director of Investor Relations, and I'd like to welcome you to the Dundee Precious Metals Q1 conference call. Joining us today are members of our senior management team, including David Ray, President and CEO, and Navin Dhiel, Chief Financial Officer. Before we begin, I'd like to remind you that all forward-looking information provided during this call is subject to the forward-looking qualification, which is detailed in our news release and incorporated in full for the purposes of today's call. Certain financial measures referred to during this call are not measures recognized under IFRS and are referred to as non-GAAP measures or ratios. These measures have no standardized meanings under IFRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management's reasonable judgments and are consistently applied.

Jennifer Cameron: These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Please refer to the non-GAAP financial measures section of our most recent MD&A for reconciliations of these non-GAAP measures. Please note that unless otherwise stated, operational and financial information communicated during this call are related to continuing operations and have generally been rounded. References to 2023 pertain to the comparable periods in 2023, and references to averages are based on midpoints of our outlook or guidance. I'll now turn the call over to David Rae.

David Rae: Thanks, Jennifer. Good morning, and thank you all for joining us. As you would have seen from our news release circulated last night, our Q1 was a solid start to the year, a result of strong production, our low-cost structure, and the benefit of higher metal prices, improving our already robust margins. This morning, Navin and I will provide a brief update on our Q1 results and discuss why we believe that DPM continues to be well positioned to deliver value to all of our shareholders now and over the long term. Since the beginning of the year, we've had a significant amount of news flow, and I'd like to take a few moments to provide some strategic context about those developments in our portfolio.

David Rae: First, at the beginning of March, we announced the sale of the Tsumeb smelter to Sinomine, including all assets and liabilities for $49 million. Since we acquired the smelter in 2010, it was viewed as a strategic asset in our portfolio, providing a secure processing outlet for the complex concentrate produced by Chelopech. However, with the developments in our global smelting markets, we've been able to place Chelopech at several other third-party smelters, providing secure and reliable processing at favorable commercial terms without the need to own and operate the smelter. Therefore, Tsumeb is no longer strategic to our portfolio, and this transaction simplifies our portfolio going forward and is consistent with our strategic objective of focusing on our gold mining assets.

David Rae: We're extremely proud of the investments that we have made to transform Tsumeb's operational and environmental performance into a specialized custom smelter with a highly skilled workforce. We'll be working closely with Sinomine to ensure a smooth transition as we advance towards closing the transaction, which is expected in Q3. Second, last week, we were excited to announce a significant milestone with respect to the Čoka Rakita project in Serbia, sharing the results of the preliminary economic assessment, which we completed during the quarter. I'll touch on the results of the PEA and next steps for the projects in more detail in a minute, but at a high level, the results from the PEA confirm our view that Čoka Rakita is a highly attractive project and demonstrates the project's potential to add very high margin gold production growth to our portfolio and generate robust economic returns.

David Rae: Finally, at the end of February, we decided to walk away from an opportunity we saw in the proposed transaction of Osino Resources after Osino received a superior bid. While it was a disappointing development, we firmly believe it was the right decision, one which demonstrates our disciplined approach to M&A and how we prioritize value accretion to our shareholders. We continue to prioritize M&A opportunities that we see as accretive on a NAV per share basis with high-quality assets in prospective regions and where we see a strong strategic fit with our portfolio and our capabilities. DPM has really strong fundamentals, two producing assets, strong free cash flow generation, a low-cost structure, a high-quality growth asset in Čoka Rakita, which we will continue to fast-track for development, and a strong financial position to fund our internal growth pipeline while paying a dividend.

David Rae: We are therefore in a position to be very disciplined as we assess opportunities. Turning now to our results. Highlights from our Q1 include solid production of approximately 63,000 ounces of gold and 7 million pounds of copper, all-in sustaining costs of $883 per ounce, in line with our guidance for the year. Strong free cash flow generation of $62 million, and continued financial strength as we ended the quarter with a consolidated cash balance of $626 million. With higher grades and recoveries expected at both operations over the balance of the year, I'm pleased to say that both mines are on track to achieve the 2024 production and cost guidance.

David Rae: Looking at our operations in more detail, Chelopech continued its track record of strong performance in Q1, producing approximately 37,000 ounces of gold and 6.7 million pounds of copper, with an all-in sustaining cost of $849 per gold ounce sold, within our expectations for the quarter. With improved grades and recoveries forecast for the balance of the year, Chelopech is on track to meet its 2024 guidance for production and costs. We continue to focus on extending Chelopech's mine life through its successful in-mine exploration program and an aggressive brownfields exploration program. I'd like to highlight the Sharlo Dere prospect, which is located within the Chelopech mine concession and proximal to existing Chelopech underground development, where we saw positive results from drilling last year that highlighted potential for further mine life extensions at Chelopech.

David Rae: We plan to follow up on those drilling results with further infill drilling in Q2 to support potential inclusion in a mineral resource for Sharlo Dere in the Chelopech life of mine plan. Ada Tepe produced approximately 25,000 ounces of gold in Q1, in line with our expectations. All-in sustaining costs of $583 per ounce of gold sold, which was below the low end of our Ada Tepe guidance range for the year. Ada Tepe has consistently outperformed our expectations since commissioning in 2019, and we are confident that Ada Tepe will continue to deliver strong results. Turning to our development projects, I'll start with our activities in Serbia. At the beginning of 2023, we were pleased to announce this new high-grade discovery at the Čoka Rakita prospect, located 3km southeast of the Timok project.

David Rae: In the 16 months since that announcement, we have continued an aggressive infill and scout drilling program, completed an initial mineral resource estimate demonstrating a high grade 1.8 million ounce resource, and published the results of the PEA. This rapid progress is not only a testament to the quality of the Čoka Rakita project, but also to our exploration and technical teams. The PEA assumes the start of construction in mid-2026, with the first production of concentrate targeted for H1 2028. We have initiated a PFS, and we are advancing project permitting activities in support of this timeline, with good support and engagement from key regional and national authorities. This includes preparations for the EIA, which we expect to submit in Q1 2026.

David Rae: What makes Čoka Rakita particularly exciting is that not only is it an attractive project on a standalone basis with an IRR of 33% at a $1,700 gold price, but that it's also got significant exploration potential that we see across our four licenses. We are continuing our scout drilling program, which is focused on aggressively pursuing additional scout targets and following up on the positive results we published at the end of February. Overall, we're very excited by Čoka Rakita's potential in a region where we have had a presence for many years and where we've developed strong relationships with local stakeholders. Turning to Loma Larga in Ecuador, we continue to progress activities related to permitting and stakeholder relations, and to support the government in fulfilling the requirements of the August 2023 ruling.

David Rae: During the course of the government-commenced environmental consultation process, completed the informal phase of the process in April. An interim procedure for the prior free and informed consultation process for the Loma Larga project has been outlined by the Ministry of Energy and Mines, and the baseline ecosystem and water studies are currently in progress and expected to be completed by August 2024. At the Tierras Coloradas concession, which is located 200km south of Loma Larga in Ecuador's Loja Province, the 10,000-meter drilling program is nearing completion. This program is designed to further assess the extent and geometry of the Aparecida and La Tuna vein systems and to test other additional epithermal veins.

David Rae: We will continue to take a disciplined approach with respect to future investments in activities in Ecuador, which will be based on the project achieving key milestones, the overall operating environment in the country, and other capital allocation priorities. Before closing, I'm pleased to share that we will be publishing our 2023 sustainability performance data supplement in the next few weeks, which will provide a view into our performance in this key area of our business over the past year. Highlights include our progress towards our greenhouse gas emission reduction targets, environmental performance, and work we've engaged with, in terms of human rights. We look forward to sharing the report, which will be published on our website. To wrap up on the quarter, results demonstrate the strengths that cause DPM to stand out in the gold industry.

David Rae: We are in a unique position in the industry with a strong base of production, attractive all-in sustaining costs, significant free cash flow generation, and the financial strength to fund our growth pipeline and exploration prospects, while at the same time continuing to return capital to shareholders. I'll now turn the call over to Navin for a review of our financial results and the outlook, following which we will open the call to questions.

Navin Dyal: Thanks, Dave. I'll be touching briefly on the financial highlights from the quarter, provide an update on how we are tracking in terms of our guidance for the year, and conclude with some commentary on our balance sheet and return of capital program. All of my remarks will focus on results from continuing operations, and unless otherwise noted, will not include results from discontinued operations, that being the results from Tsumeb. Looking at our financial highlights from the quarter, we achieved solid performance with both mines on track to achieve their respective 2024 production and cost guidance, and we continue to deliver strong financial results supported by a favorable commodity price environment.

Navin Dyal: Highlights for the quarter include revenue of $124 million, comparable to the prior year with lower volumes of metal sold and lower realized copper prices, largely offset by higher realized gold prices and lower treatment charges at Chelopech as a result of securing better commercial terms. Cost of sales of $62 million were also comparable to the prior year, with higher labor costs and the timing of maintenance activities at Ada Tepe, largely offset by lower royalties at Ada Tepe reflecting lower contained ounces mined and lower prices for power and direct materials. Adjusted net earnings of $33 million or $0.18 per share was 25% lower compared to the prior year, due primarily to lower volumes of gold and copper sold and higher exploration and evaluation expenses, mainly related to the Choquehuayota Gold project, partially offset by higher realized gold prices and lower treatment charges at Chelopech.

Navin Dyal: Cash flow from continuing operations of $36 million was $30 million lower than the prior year, due primarily to the timing of collections from customers, partially offset by timing of payments to suppliers. At 31 March 2024, we had approximately $30 million higher than normal receivable balances at Chelopech, which related to sales made in the latter half of the quarter, and all of which were collected by the end of April. Free cash flow from continuing operations of $62 million was 6% lower than the prior year, due primarily to the same factors impacting earnings, partially offset by the timing of cash outlays for sustaining capital expenditures.

Navin Dyal: Taking a closer look at our cost metrics for the quarter, all-in sustaining costs of $883 per ounce of gold sold was comparable to the prior year, with fewer ounces of gold sold and lower byproduct credits, largely offset by lower treatment charges at Chelopech and lower prices for power and direct materials. In terms of our capital spending for Q1, sustaining capital expenditures were $6 million compared to the prior year of $7 million, due primarily to the completion of the planned upgrade of Chelopech's tailings management facility, which was completed in Q2 2023.

Navin Dyal: Growth capital expenditures of $8 million compared to the prior year of $6 million, due primarily to a $4 million expenditure for electric mobile equipment received at Chelopech in Q1 2024, partially offset by lower planned export expenditures related to Loma Larga. Our three-year outlook remains unchanged from that reported in February, except for evaluation expenses in 2024 related to the Choquehuayota project, which is now expected to range between $30 to 35 million, up from the previous range of $10 to 13 million as we advance to the PFS phase for Choquehuayota, which is expected to be completed by Q1 2025.

Navin Dyal: We continue to maintain a strong balance sheet and cash position with a consolidated cash balance of $626 million, which includes the cash held at Tsumeb, no debt, and a $150 million undrawn credit facility. We have the financial flexibility to fund growth opportunities that generate additional value for stakeholders while continuing to return a portion of our free cash flow to our shareholders. Turning to shareholder returns, we continue to deploy our capital in a disciplined manner that balances our desire to reinvest in growing and optimizing our business with our commitment to returning capital to our shareholders.

Navin Dyal: The company renewed its share buyback program towards the end of March, which includes the purchase of up to 15.5 million of the company's shares, representing approximately 9.8% of the public float as of 6 March 2024, and over a period of 12 months commencing 18 March 2024. We continue to pay a quarterly dividend, which currently offers an attractive 2% yield based on last night's closing share price. During Q1, the company repurchased 253,000 shares at a total cost of $1.9 million under the share buyback program and paid $7.2 million or $0.04 per share of dividends, representing an aggregate return of 15% of our free cash flow to shareholders.

Navin Dyal: In closing, we continue to deliver strong performance from our mining operations and are on track to achieve our full-year guidance. We have a solid cash position, and we expect to continue our track record of generating significant free cash flow. With that, I will turn the call back to the operator for Q&A.

Operator: Thank you. At this time, we will conduct our question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Wayne Lam of RBC. Go ahead, Wayne.

Wayne Lam: Hey, morning guys. I'm just wondering at Čoka Rakita, in terms of the permitting timeline that you guys have set forth and, I guess the six months between EIA submission and intended receipt, just wondering if there's any precedent in country in terms of that permitting timeline that kind of informs your confidence on that time frame? Hi, Wayne. Good to talk to you. What we've done is we've been working with the government pretty closely in terms of the timeline. You know, the comment was that we'll submit the EIA in Q1 2026 and anticipate moving forward with construction, sort of at midyear is sort of the thinking. We're working actively with the government, and there's a good intent to try and advance these things.

David Rae: Hi, Wayne. Good to talk to you. What we've done is we've been working with the government pretty closely in terms of the timeline. You know, the comment was that we'll submit the EIA in Q1 2026 and anticipate moving forward with construction, sort of at midyear is sort of the thinking. We're working actively with the government, and there's a good intent to try and advance these things.

Navin Dyal: It's not that it's this point in time, deferring later. We're looking at the opportunities to advance. The other thing is that we're in conversation with the authorities right the way through the activities that we're doing and the work that is required in order to have a consent EIA, which can then get a positive decision. I wouldn't sort of read too much into the six months between those two, and does that then push us back to later in the year in 2026. Our intent is as early as possible in 2026, make that construction decision. Are there precedents? There's been precedents in terms of timing from pre-feasibility through to production, with the last mine that was built, in country.

David Rae: It's not that it's this point in time, deferring later. We're looking at the opportunities to advance. The other thing is that we're in conversation with the authorities right the way through the activities that we're doing and the work that is required in order to have a consent EIA, which can then get a positive decision. I wouldn't sort of read too much into the six months between those two, and does that then push us back to later in the year in 2026.

David Rae: Our intent is as early as possible in 2026, make that construction decision. Are there precedents? There's been precedents in terms of timing from pre-feasibility through to production, with the last mine that was built, in country. You know, as a consequence of that, we're quite confident that we can achieve an accelerated path to a construction decision. Like I said, we're working with the authorities to make sure there are no surprises, and we're well prepared and ready.

Navin Dyal: You know, as a consequence of that, we're quite confident that we can achieve an accelerated path to a construction decision. Like I said, we're working with the authorities to make sure there are no surprises, and we're well prepared and ready.

Wayne Lam: Okay, great. Thanks. Maybe just wondering in terms of smelter terms, given the tightness and concentrate supply, I'm just curious what kind of cost savings you guys are seeing on treatment charges. I guess, more broadly, it seems like a number of factors seem to be going your way on the cost side. Just wondering if in the coming quarters when you guys see higher grades, if you guys might be seeing any upside or improvement versus where guidance would set.

Navin Dyal: Sure. Hi, Wayne. Yeah. With respect to treatment charges, certainly, when it comes to Chelopech, and as we look forward to, you know, their treatment charges that they incur or Chelopech incurs, we're definitely seeing a benefit from the market. You know, the way we typically price or contract out our concentrate with our customers, we start the process late in the previous year, and then we continue that through the current year, and, you know, as we look forward to shipments later in the year. Certainly, as we look to H2, we expect to see a greater benefit from treatment charges, lower treatment charges as we progress through the year.

Navin Dyal: On the flip side, when it comes to Tsumeb, obviously, it's being challenged because of the same market as Dave mentioned earlier. When it comes to cost benefits, certainly, as I mentioned, we are seeing, you know, the benefit of lower power costs, and we are seeing some of the benefit of lower costs for certain direct materials, particularly with respect to cement and certain of our other reagents as well. Yes, we could end up seeing a bit of a benefit on our all-in sustaining costs as we progress through the year. For now, we're maintaining our guidance, you know, just in light of everything else that's going on globally.

Wayne Lam: Okay, great. Thanks. Maybe just last one for me. You know, just given the amount of cash you guys are putting on the balance sheet, at what point do you guys consider increasing the dividend here? Or, is there any potential to even provide a special dividend given the amount of cash building on the balance sheet? Or are you guys kinda saving that for, you know, any future, CapEx needs or potential M&A?

Navin Dyal: Yeah. Yeah, we think about that all, you know, all the time, and especially in the light of this current commodity price environment. Certainly, that's a question that's top of mind for our management as well as the board. You know, we've currently maintained this dividend. We've doubled it actually since we initiated it back in 2021. You know, as we look forward to our capital allocation and, you know, we remain disciplined around ensuring that we have enough cash within the business to, you know, for our projects, for our exploration programs, especially in light of Čoka Rakita. We also have a view of, you know, returning a certain amount of that cash to our shareholders.

Navin Dyal: That is something we consider as we meet with our board and discuss that with management.

Wayne Lam: Okay, great. Well, certainly a great position to be in. Thanks for taking my questions.

Navin Dyal: Thanks.

Operator: Operator, is there another question? I'm sorry. Our next question comes from Raj Ray of BMO. Go ahead, Raj.

Jennifer Cameron: Operator, is there another question?

Operator: I'm sorry. Our next question comes from Raj Ray of BMO. Go ahead, Raj.

Raj Ray: Thank you, operator. Good morning, David and team. My first question is a follow-up on Wayne's question on capital returns. Dave, Q1, the share buybacks were a little on the lighter side compared to what you did over 2023. Is there a reason? I just wanna know that you still see value in the stock at these current prices and whether you expect to keep buying. That's my first question. My second is on your growth pipelines. Great to see Čoka Rakita coming online in 2028. Still have the gap from 2026 to 2028 in terms of potential production drop once Ada Tepe runs its course. Are you still thinking of filling the gap and is there any potential you see in terms of extending Ada Tepe?

Raj Udayan Ray: Thank you, operator. Good morning, David and team. My first question is a follow-up on Wayne's question on capital returns. Dave, Q1, the share buybacks were a little on the lighter side compared to what you did over 2023. Is there a reason? I just wanna know that you still see value in the stock at these current prices and whether you expect to keep buying. That's my first question. My second is on your growth pipelines. Great to see Čoka Rakita coming online in 2028. Still have the gap from 2026 to 2028 in terms of potential production drop once Ada Tepe runs its course. Are you still thinking of filling the gap and is there any potential you see in terms of extending Ada Tepe?

Raj Ray: I know you had said in the past, maybe a few months, but has anything changed? Those are my two, and I do have a third one. With respect to the Sveta Petka commercial discovery license that you received in January 2024, can you touch upon what are the next steps for that? Thank you.

Raj Udayan Ray: I know you had said in the past, maybe a few months, but has anything changed? Those are my two, and I do have a third one. With respect to the Sveta Petka commercial discovery license that you received in January 2024, can you touch upon what are the next steps for that? Thank you.

Navin Dyal: Thanks, Raj. I'll start with the first one. The buyback program started in late March. We only reinstated our program on 18 March. That's why the share buybacks were a bit lighter. As well, you know, the reason we didn't have, like, an automatic repurchase going on during the year, you know, January, February months as well, is we were essentially working towards the Tsumeb sale during that time as well. We were essentially prohibited from making those types of transactions during that time. The buyback is a bit lighter in Q1 because, mainly because we reinitiated that NCIB program late in March. That's an answer to that. And then David?

David Rae: In terms of your question about Sveta Petka, we'll take that one first before the growth pipeline. Sveta Petka, what's happened is we've received the commercial discovery, just projecting that forward with what's necessary to complete. There's an EIA conversation now, but ultimately there's a conversation about receiving the concession. We would anticipate that being late 2025. Now, just coming back to the last point, you're asking about the growth pipeline. We see that as priced in to the stock, so that's the first thing. Having said that, we know from the conversations that we have with the different stakeholders that this is a question that keeps coming up. Now, Asena would have been a great fit for that. It's definitely one of the things that we would keep in mind, but it's not the overriding priority.

David Rae: At the end of the day, we are looking for those options which are a great fit with the organization and which amount to share accretion.

Navin Dyal: Sorry, Raj, just coming back to the latter part of your question on the buyback. Yes, we would expect to continue the buyback program this year. Again, now that we've restarted it at the end of March, we would expect to start making repurchases given where our share price is relative to what we think the value is.

David Rae: Yeah. I think what you've heard previously remains, which is that we project forward the build in cash and then look at cash use. Obviously, we've had the good fortune of having success with exploration and putting some money into that. We, of course, continue the dividend, and this is a conversation. Is this at an appropriate level? Should we be thinking about doing more? The buyback remains an option for us. We're not thinking about doing anything in terms of any special purchase on that. So, you know, buyback's an option too. As we're building cash at a rate higher than we need, the intent is to use the buyback facility in order to provide additional return to shareholders.

Raj Ray: Okay, that's great, Dave and Navin. Thank you. That's it from me.

Raj Udayan Ray: Okay, that's great, Dave and Navin. Thank you. That's it from me.

David Rae: Thanks, Raj.

Operator: Thank you. One moment for our next question. Our next question comes from Don DeMarco with National Bank Financial. Go ahead, Don.

Don DeMarco: Thank you, operator. Good morning, David and team. First question, with the buildup in accounts receivable in Q1, did you say you expect to have this unwound in Q2, potentially lifting the cash balance? Can you reiterate what this consisted of?

Navin Dyal: Sure. Our production for the quarter was essentially back-end weighted towards the tail end of the quarter. When we ship our concentrate, you know, out to our customers, typically what ends up happening is when it's shipped, it's, you know, 15 days before we collect, you know, we can collect the cash on that shipment. We get to recognize the sale at the time it's shipped, but then the collection of cash is typically 15 days. With the production being heavily tilted towards the back end of the quarter, we end up seeing, you know, a lot of our sales recognized towards the back end of the quarter, but then the receivables weren't collected until the following month.

Navin Dyal: That's the main reason for that. It's not expected to reoccur in the coming quarters. To your question around whether or not we might expect to see, you know, essentially, most of the cash coming in from Q1, as well as Q2, there will be some of that. At this point, you know, I wouldn't comment on whether or not there would be essentially a double up in the Q2.

Don DeMarco: Okay. Thanks, Navin. Shifting to the Coquillada PEA, it looks strong. I see AISC is $715 an ounce. This looks like another high margin mine, good replacement for Ada Tepe. Can you provide some of the assumptions that support the low cost outlook?

David Rae: What we've done here, Don, is we're in the fortunate position that we have an operating asset with a long operating history just five hours away. Basically, the way we've done this, all of the assumptions for underground when we look at things like development, and more specifically, we talk about mining costs in terms of what you've asked, all of those are coming from what do we do at Chelopech? What do we compensate for in terms of new asset, new place, training, development, some amount of building efficiencies over time, that type of thing. If you look at some of the other numbers, and you didn't particularly ask this question, but for instance, if you have a look at the ramp development, those are actually external costs, not our costs.

David Rae: Underground, it's all based off Chelopech corrected for scale, corrected for new location, some opportunity for efficiencies. In terms of a lot of the surface stuff at this point, as mentioned, we've still got some trade-off studies. There's some potential, optimization or certainly offsets to any additional inflationary pressures that we might see. I don't know if that answers your question, John.

Don DeMarco: It does to a degree. I think what it lends for certain confidence in those costs because you have Chelopech not far away. In terms of perhaps maybe mining method or grade, any color on either of those?

David Rae: Yeah. Mining method at this point, everything that we've done including the block size in the ore body is leading to a similar practice as at Chelopech, which is one hole open stoping. You know, nothing really out of the ordinary at the mill at all, except it has a gravity concentration as a bigger part than we typically have in other operations.

Don DeMarco: Okay.

David Rae: Anything

Don DeMarco: Okay.

David Rae: For clarity, Don DeMarco?

Don DeMarco: No, that's fine. Thank you. You know, I get it that the resource is still evolving. It's that you're doing more exploration. Are there opportunities to potentially upsize the throughput? I think the PEA had 2,300 tons per day.

David Rae: The way I would look at it at the moment is that we've got one particular type of material at Čoka Rakita. If you go back to February, we announced something that was 1.1km away, in an area north northeast of Čoka Rakita. That was looking at the marbles, which were a level below the skarn which Čoka Rakita is primarily formed of. That is 26m of between 3.5% copper and just over 3 grams gold. That could be something that might require a slightly different circuit. Coming back to your question, can we actually scale Čoka Rakita? The way we would see it is being built in modules.

David Rae: If there is some expansion, it's quite likely that may require a slightly different flow sheet, perhaps crush mill flows, as opposed to crush mill gravity separation flows and this type of thing. If what we find is more of the same, and we're very optimistic there's more there, then that same modular approach could be used to actually increase the capacity on the same flow sheet.

Don DeMarco: Okay, great. Thanks for that, David, and good luck with next steps.

David Rae: Thank you.

Operator: Thank you for your question. One moment for our next question. Our next question comes from Eric Winmill of Scotiabank. Go ahead, Eric.

Eric Winmill: Great. Thank you. Good morning, David and team. Thanks for taking my question. Just to follow up on the Chelopech brownfield. Apologies, I missed it earlier. Do you have any details in terms of number of rigs? You know, is this from surface or underground? Maybe sort of what next steps are, how much drilling you think is gonna be needed, you know, to advance some of those resource targets? Appreciate it. Thank you.

David Rae: Yeah. So far with the activity that we've reported in Q1, the bulk of that work has been underground. The plan is to put some surface rigs on now in Q2. As we mentioned, Sharlo Dere will be doing more work on at this point. I believe we said two rigs earlier, we're gonna put in place primarily. But it will depend on what exactly we're finding and what the opportunity is. You know, there's a couple of things that we're still working on in and around Chelopech, but primarily over the concession, we'll have two rigs. That's the intent at this point. That's in addition, Eric, as I mentioned, to the underground work, which is typically about 45,000 meters per year. There's two different sets of activities going after this.

Eric Winmill: Okay, fantastic. I appreciate the added color. I'll hop back in the queue. Thanks. Cheers.

David Rae: Thanks, Eric.

Operator: Thank you for your question. At this time, we are showing no further questions, and I'd like to turn it back to Jennifer Cameron. Please go ahead, Jennifer, for closing.

Jennifer Cameron: Great. Thank you all for joining us. If you have any further questions, please feel free to reach out, and we look forward to speaking with you over the coming weeks. Thanks and take care.

Operator: Thanks, everybody, for your participation in today's conference call. This now does conclude the program. You may disconnect.

Conference call.

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Speaker Change: I would now like to hand over to our first speaker for today, Jennifer Cameron Director Investor Relations go ahead Jennifer.

Jennifer Cameron: Thank you and good morning Cameron.

Cameron and director of Investor Relations and I'd like to welcome you to the Dundee precious Metals' first quarter conference call. Joining us today are members of our senior management team, including David Ray President and CEO and <unk> Chief Financial Officer before we begin I would like to remind you that all forward looking information provided during this call is subject to the forward looking qualification which is.

Jennifer Cameron: Detailed in our news release and incorporated in full for the purposes of today's call.

Jennifer Cameron: Certain financial measures referred to during this call are not measures recognized under threat and are referring to non-GAAP measures or ratios. These measures had no standardized meanings under IRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management's reasonable judgment and our.

Jennifer Cameron: Consistently apply.

Jennifer Cameron: These measures are intended to provide additional information and should not be considered in isolation or as a substitute for measures prepared in accordance with IRS.

Jennifer Cameron: Please refer to the non-GAAP financial measures section of our most recent MD&A for reconciliations of these non-GAAP measures.

Speaker Change: Please note that unless otherwise stated operational and financial information communicated during the call are related to continuing operations and have generally been around it references to 2023 pertained to the comparable periods in 2023 and references the averages are based on midpoint of our outlook on guidance I'll now turn the call over to David Ray.

Jennifer Cameron: Joseph.

Speaker Change: Good morning, and thank you all for joining us.

Speaker Change: As you would have seen from our news release circulated last month, our first quarter was a solid start to the year. The result of strong production, our low cost structure and the benefit of higher metal prices, improving our already robust margins.

Speaker Change: This morning, the evident I will provide a brief update on our first quarter results and discuss why we believe that DPM continues to be well positioned to deliver value to all of our stakeholders now and over the long term.

Speaker Change: Since the beginning of the year, we've had a.

Speaker Change: Difficult amount of news flow and I'd like to take a few moments to provide some strategic context about those developments in our portfolio.

Speaker Change: First at the beginning of March we announced the sale of the <unk> smelter to funding lines, including all assets and liabilities of $49 million.

Since we acquired the smelter in 2010, it was viewed as a strategic asset in our portfolio, providing a secure processing outlooks for the complex concentrate produced spot Gelowicz. However, with the developments in our global smelter markets. We see we've been able to place <unk> several other third party smelters.

Speaker Change: Biding secure and reliable processing, but favorable commercial terms.

Speaker Change: Without the need to own and operate the smelt.

Speaker Change: Therefore, assuming that there is no longer strategic to our portfolio and this transaction simplifies our portfolio going forward and is consistent with our strategic objective of focusing on our gold mining assets.

Speaker Change: We're extremely proud of the investments that we've made to transform smiths operational and environment performance into a specialized custom smelters with a highly skilled workforce and we'll be working closely with <unk> to ensure a smooth transition as we advance towards closing the transaction, which is expected in the third quarter.

Speaker Change: Second last week, we were excited to announce a significant milestone with respect to the choke or Keta project in Serbia sharing the results of the preliminary economic assessment, which we completed during the quarter.

I'll touch on the results of the PPA of next steps for the projects in more detail in a minute, but at a high level. The results from the PPA confirm our view that charter Akita is a highly attractive project and demonstrates the project's potential to add very high margin gold production growth to our portfolio and generate robust economics.

Speaker Change: Finally at the end of February we decided to walk away from an opportunity. We saw in the proposed transaction of <unk> resources <unk> received a superior bid.

Speaker Change: While it was a disappointing development we firmly believe it was the right decision, one which demonstrates our disciplined approach to M&A and how we prioritize value accretion to our shareholders.

Speaker Change: We continue to prioritize M&A opportunities opportunities that we see is accretive on an NAV per share basis with high quality assets and prospective regions and where we see a strong strategic fit with our portfolio and our capabilities.

Speaker Change: DPM is really strong fundamentals two producing assets strong free cash flow generation, our low cost structure, a high quality growth asset in sugar with Kita, which we believe which we will continue to fast track for development and a strong financial position to fund our internal growth pipeline, while paying a dividend.

Speaker Change: We are therefore in a position to be very disciplined as we assess opportunities.

Speaker Change: Turning now to our results highlights from our first quarter include solid production of approximately 63000 ounces of gold and 7 million pounds of copper all in sustaining cost of $893 per ounce in line with our guidance for the year.

Speaker Change: Strong free cash flow generation of $62 million.

Speaker Change: And continued financial stress stress as we ended the strength.

Speaker Change: As we ended the quarter with a consolidated cash balance of $626 million.

Speaker Change: With higher grades and recoveries expected at both operations over the balance of the year I am pleased to say this both mines are on track to achieve the 2020 for production and cost guidance.

Looking at our operations in more detail.

Speaker Change: <unk> continued its track record of strong performance in the first quarter.

Speaker Change: Using approximately 37000 ounces of gold and $6 7 million pounds of copper with an all in sustaining cost of $849 per gold ounce sold.

Speaker Change: And our expectations for the quarter.

Speaker Change: With improved grades and recoveries forecast for the balance of the year shall Apache is on track to meet its 2024 guidance for production and costs.

Speaker Change: We continue to focus on extending <unk> mine life to its successful in mine exploration program and an aggressive brownfield exploration program I'd like to highlight the show the <unk> prospect, which is located within the <unk> mine concession and proximal to existing <unk> underground development, where we saw positive results from drilling last year.

Speaker Change: He has highlighted the potential for further mine life extension at <unk>, We plan to follow up on those drilling results with further infill drilling in the second quarter to support potential inclusion in our mineral resource.

Speaker Change: Charlotte in the cello virtualize defined plan.

Speaker Change: At a tepid produced approximately 25000 ounces of gold in the first quarter in line with our expectations all in sustaining cost of $593 per ounce of gold sold which was below the low end of our adults have a guidance range for the year.

Speaker Change: <unk> has consistently outperformed our expectations since commissioning in 2019, and we are confident that added to that they will continue to deliver strong results.

Speaker Change: Turning to our development projects I'll start with our activities in Serbia.

Speaker Change: At the beginning of 2023, we were pleased to announce this new high grade discovery at the <unk> prospect located three kilometers southeast of the achievement of <unk> project.

Speaker Change: In the 16 months since that announcement, we have continued an aggressive in a pillow and scout drilling program completed an initial mineral resource estimate demonstrating a high grade $1 8 million ounce resource and publish the results of the PPA.

Speaker Change: This rapid progress is not only a testament to the quality of the charter Ricky the project, but also to our exploration and technical teams.

Speaker Change: Assuming the start of construction in mid 2026 with the first production of concentrate targeted for the first half of 2028.

Speaker Change: We have initiated a PFS and we are advancing project permitting activities in support of this timeline with good support and engagement from key regional and National authorities. This includes preparations for the EIA, which we expect to submit in the first quarter of 2026.

Speaker Change: What makes choker with heat are particularly exciting because that not only is it an attractive project on a standalone basis with an IRR of 33% to the 17 under dollar gold price, but it's also got significant exploration potential that we see across all four licenses we.

Speaker Change: We are continuing our scout drilling program, which is focused on aggressively pursuing additional Scott targets and following up on the positive results. We published at the end of February.

Speaker Change: Overall, we're very excited but sugarcane has potential in a region, where we have had a presence for many years and where we've developed strong relationships with local stakeholders.

Speaker Change: Turning to loan the laundry in Ecuador, we continued to progress activities related to permitting and stakeholder relations and to support the governments in fulfilling the requirements of the August 2023 ruling.

Speaker Change: During the quarter the government commenced the environmental consultation process complete to be informal phase of the process in April.

Speaker Change: An interim procedure for the prior free and informed consultation process for the Loma log project has been outlined by the Ministry of energy and mines and the baseline ecosystem in the water studies are currently in progress and expected to be completed by August 2024.

Speaker Change: At the Trs, Colorado concessions, which is located 200 kilometers south of Loma lager in Ecuador, as local province, the 10000 meter drilling program is nearing completion. This program is designed to further assess the extension in geometry of the apparent cedar and let tuna vein systems and to test other additional equity term.

Speaker Change: Those things.

Speaker Change: We will continue to take a disciplined approach with respect to future investments and activities in Ecuador, which will be based on the project achieving key milestones.

Speaker Change: They're all operating environments in the country and other capital allocation priorities.

Speaker Change: Before closing I am pleased to share that we will be publishing our 2023 sustainability performance data supplement in the next few weeks, which will provide a view into our performance in this key area of our business over the past year highlights include our progress towards our greenhouse gas emission reduction targets and environmental.

Speaker Change: <unk> and we've engaged with in terms of human rights.

Speaker Change: Look forward to sharing the report, which will be published on our website.

Speaker Change: To wrap up on the quarter results demonstrate the strength of that close DPM to standout in the gold industry.

We're a unique position and unique position in the industry with a strong base of production attractive all in sustaining costs significant free cash flow generation and the financial strength to fund our growth pipeline and exploration prospects, while at the same time continuing to return capital to shareholders.

Speaker Change: I'll now turn the call over to <unk> for a review of our financial results and the outlook following which we will open the call to questions.

Speaker Change: Thanks, Nick.

Speaker Change: I'll be touching briefly on the financial highlights for the quarter.

Speaker Change: An update on how we are tracking in terms of our guidance for the year and conclude with some commentary on our balance sheet and return of capital program.

Speaker Change: All of my remarks will focus on results from continuing operations unless otherwise noted we will not include results from discontinued operation that being the results for two months.

Speaker Change: Looking at our financial highlights from the quarter.

Speaker Change: <unk> solid performance with both mine is on track to achieve their respective 2020 for production and cost guidance and.

Speaker Change: And we continued to deliver strong financial results.

Speaker Change: Courted by a favorable commodity price environment.

Speaker Change: Highlights for the quarter include revenue of $124 million comparable to the prior year with lower volumes of metal sold and lower realized copper prices largely offset by higher realized gold prices and lower treatment charges that <unk> as a result of securing better commercial terms.

Cost of sales of $62 million were also comparable to the prior year with higher labor costs and the timing of maintenance activities that are largely offset by lower royalties or other type of reflecting lower contained ounces mined.

Speaker Change: And lower prices for power and direct materials.

Speaker Change: Adjusted net earnings of $33 million or <unk> 18 per share with 25% lower compared to the prior year due primarily to lower volumes of gold to copper, so and higher exploration and evaluation expenses, mainly related to the <unk> project, partially offset by higher realized oil prices and lower treatment charges at shelf.

Speaker Change: Cash flow from continuing operations of $36 million with $30 million lower than the prior year due primarily to the timing of collections per customer.

Speaker Change: We offset by timing of payments to suppliers.

At March 31, 2024, we had approximately $30 million higher than normal receivable balances the cello patch, which related to sales made in the latter half of the quarter and all of which were collected by the end of April.

Free cash flow from continuing operations of $62 million was 6% lower than the prior year due primarily to the same factors impacting earnings partially offset by the timing of cash outlays for sustaining capital expenditures.

Speaker Change: Taking a closer look at our cost metrics for the quarter all in sustaining cost of $883 per ounce of gold sold was comparable to the prior year with fewer ounces of gold sold and lower byproduct credits largely offset by lower treatment charges of <unk>, <unk> and lower prices for power and direct material.

Speaker Change: In terms of our capital spending for the first quarter sustaining capital expenditures were $6 million compared to the prior year of $7 million due primarily to the completion of the planned upgrade of share repurchase tailings management facility, which was completed in the second quarter of 2023.

Speaker Change: Growth capital expenditures of $8 million compared to the prior year of $6 million due primarily to a $4 million expenditure for electric mobile equipment received a cello patch in the first quarter of 2024, partially offset by lower planned export expenditures related to local Argos.

Our three year outlook remains unchanged from that reported in February except for evaluation expenses in 2024 related to the <unk> project, which is now expected to range between 30.

Speaker Change: To $35 million up from the previous range of $10 million to $13 million as we advance to the PFS space for Cobra Akita prediction is expected to be completed by the first quarter of 2025.

We continue to maintain a strong balance sheet and cash position with a consolidated cash balance of $626 million, which includes the cash held it seem that.

Speaker Change: No debt and a $150 million Undrawn credit facility.

Speaker Change: We have the financial flexibility to fund growth opportunities to generate additional value for stakeholders, while continuing to return a portion of our free cash flow to our shareholders.

Speaker Change: Turning to shareholder returns, we continued to deploy our capital in a disciplined manner that balances our desire to reinvest in growing and optimizing our business with our commitment to returning capital to our shareholders.

Speaker Change: The company renewed its share buyback program towards the end of March <unk>.

It includes the purchase of up to $15 $5 million of the company's shares representing approximately nine 8% of the public public float as of March six 2024 and over a period of 12 months commencing March 18 2024.

Speaker Change: And we continue to pay a quarterly dividend, which currently offers an attractive 2% yield based on last night's closing share price.

Speaker Change: During the first quarter the company repurchased 253000 shares at a total cost of $1 9 million under the share buyback program and paid $7 2 million or <unk> <unk> per share dividend, representing an aggregate return of 15% of our free cash flow to shareholders.

Speaker Change: In closing we continued to deliver strong performance from our mining operations and are on track to achieve our full year guidance.

Speaker Change: We have a solid cash position and we expect to continue our track record of generating significant free cash flow.

Speaker Change: With that I will turn the call back to the operator for Q&A.

Speaker Change: Thank you at this time, we will conduct our question and answer session. As a reminder to ask a question you will need to press star one one on your telephone.

Speaker Change: Wait for your name to be announced to withdraw your question. Please press star one one again.

Speaker Change: Please standby, while we compile the Q&A roster.

Speaker Change: Okay.

Speaker Change: And our first question comes from Wayne Lam of RBC go ahead Wayne.

Speaker Change: Hey, good morning, guys.

Speaker Change: I was just wondering at choker at key that.

Speaker Change: In terms of the permitting timeline that you guys have set forth.

Speaker Change: I guess the six months between submission.

Submission.

Intended receipt just wondering if theres any precedence in country in terms of.

Speaker Change: That permitting timeline that kind of.

Speaker Change: Important to your confidence on that.

Speaker Change: That time frame.

Speaker Change: Hi, Wayne.

Speaker Change: Good to talk to you. So it's what we've done is we've been working with the government pretty closely in terms of the timeline. So.

Speaker Change: The comment was that we will submit the EIA in the first quarter of 2026 and anticipate moving forward with construction sort of mid year as sort of the thinking we are working actively with the government and there is a good incentive to try and advance. These things. So it's not that it's this points and drifting later, we're looking at the opportunities to advance.

The other thing is that we're in conversation with deal authorities right. The way through the activities that we're doing and the work that is required in order to have a constant EIA, which can then get a positive decision. So I wouldn't sort of read too much into the six months between those two and does that then pushes back to later in the year in 2012.

Speaker Change: Six our incentives as early as possible in 2026 make that construction decision other precedents.

Speaker Change: Theres been precedence in terms of timing from pre feasibility through to production.

Speaker Change: The last mine that was built in country.

Speaker Change: As a consequence of that we are quite confident that we can achieve an accelerated path to a construction decision with like I said, we're working with the authority to make sure. There are no surprises and we're well prepared and ready.

Speaker Change: Okay, great. Thanks.

Speaker Change: And then.

Speaker Change: Just wondering in terms of.

Speaker Change: Relative terms, given the tightness will concentrate supply and I'm just curious.

Speaker Change: What kind of cost savings.

Speaker Change: Or seeing item charges, and then I guess more broadly it seems like a number of factors, including falling your way.

Speaker Change: <unk> guidance just wondering.

Speaker Change: Yes.

Speaker Change: The coming quarters, when you guys see higher grades that you guys might be.

Speaker Change: Seeing any.

Speaker Change: Sides upside are.

Speaker Change: Improvement versus where guidance was set.

Speaker Change: Okay.

Sure.

Speaker Change: With respect to treatment charges, certainly when it comes to <unk>.

Speaker Change: <unk>.

Speaker Change: As we look forward to.

Speaker Change: Their treatment charges are they incur charges occurs we're seeing we're definitely seeing a benefit for the market.

Speaker Change: The way, we typically price or contract out or.

Speaker Change: With our customers we start the process late the previous year and then we continue that through the <unk>.

Speaker Change: Current year as we look forward to shipments later in the year. So certainly as we look to the second half of the year, we expect to see a greater benefit of treatment charges were retrieved returns as we progress through the year on the flip side when it comes to CMA have obviously.

Speaker Change: It's been challenged because of the same market.

Speaker Change: As Dave mentioned earlier when it comes to cost benefits certainly as I mentioned, we are seeing.

Speaker Change: The benefit of lower power costs, and we are seeing some of the benefit of lower costs for certain direct materials, particularly with respect to cement and certain of our other.

Speaker Change: Reagents as well.

Speaker Change: And so yes, we could end up seeing a bit of a benefit on our all in sustaining costs as we progress through the year, but for now we're maintaining our guidance.

Speaker Change: Just in light of everything else Thats going on globally.

Okay, great. Thanks, and then maybe just last one for me.

Speaker Change: Yes.

Speaker Change: Given the amount of cash you guys are putting on the balance sheet.

Speaker Change: At what point do you guys consider increasing the dividend here or.

Speaker Change: Is there any potential to.

Speaker Change: Even provide a special dividend given the amount of cash building on the balance sheet or are you guys kind of saving that for.

Speaker Change: Any any future capex.

Speaker Change: Capex needs are.

Speaker Change: Mike.

Speaker Change: Yes, yes.

Yes, we think about that.

Speaker Change: All the time and especially in light of this current commodity price environment, certainly that's a question that.

Speaker Change: Top of mind for our management as well as the board.

Speaker Change: We've currently maintained its dividend we've doubled its actually since we initiated it back in 2021.

Speaker Change: But as we look forward to our capital allocation.

Speaker Change: We remain disciplined around ensuring that we have enough cash within the business to for our projects for exploration programs, especially with in light of choke Rachida, but we also have a view.

Speaker Change: Returning a certain amount of that cash to our shareholders. So that is something we are.

We consider as we meet with our board and discuss that with management.

Speaker Change: Okay, great well, certainly, yes, great position with me and thanks for taking my questions.

Speaker Change: Thanks.

Speaker Change: Operator is there another question.

Speaker Change: I'm sorry, our next question comes from Raj Ray of BMO go ahead Ross.

Raj Ray: Thank you operator, good morning, Dave and team.

Raj Ray: My first question is a follow up on <unk> question on capital return so Dave.

Dave: So Q1, the share buybacks, where.

Dave: On the lighter side compared to what you did.

Speaker Change: Over 2020 threes. The reasons wanted to know that Theres still see value in the stock at these prices and whether you expect to keep buying.

Speaker Change: So that's my first question. My second is on your growth pipeline is great to see a parakeet coming online in two.

Speaker Change: 2028 still have the gap from 'twenty to 'twenty six to 2028.

Speaker Change: In terms of potential production drop.

Speaker Change: Terence.

Speaker Change: Its course.

Speaker Change: I was still thinking of filling the gap.

Speaker Change: Any potential you see in terms of extending out a little bit I know you had said in the past.

Speaker Change: Maybe a few months, but has anything changed.

Speaker Change: Those are my two of them I do have a third one with respect to those with a better commercial discovery license that you received in <unk> and 'twenty 'twenty book.

It depends upon what what are the next steps for that.

Speaker Change: Thank you.

Speaker Change: Thanks, Raj I'll start with the first one.

Speaker Change: Buy back program started in late March we only.

Re installed are.

Speaker Change: Our program.

Speaker Change: In our March 18th.

Speaker Change: So that's why the share buybacks were a bit lighter as well. The reason we didn't have like an automatic repurchase going on during the year January February months as well as we were in.

Speaker Change: Essentially.

Speaker Change: We are working towards the <unk> sale during that time as well. So we were essentially prohibited from making those types of transactions during that time. So the buyback is a little bit lighter in Q1, because mainly because we re initiated that NTIA program related marks.

And answer to that.

Speaker Change: Dave So in terms of your question about term instead of pet care.

Speaker Change: Take that one first before the growth pipeline. So it's about a petco and what's happened is we've received the commercial discovery just projecting that forward with what's necessary to complete so theres, an EIA conversation now, but ultimately it is a conversation about receiving the concessions we would anticipate that being late 2025.

Speaker Change: Now I'll, just coming back to the last point.

Speaker Change: Youre asking about the growth pipeline. So we see that is priced in to the stock. So that's a good thing, but having said that we know from the conversations that we have with the different stakeholders that this is a question that keeps coming out now is senior would've been a great fit for them. So it's definitely one of the things that we would keep in mind, but it's not the overriding priority. So.

Speaker Change: So at the end of the day, we are looking for those options, which are a great fit with the organization and which amount per share accretive.

Speaker Change: Sorry, Raj is coming back.

Speaker Change: The latter part of your question on the buybacks. So yes, we would expect that to continue the buyback program. This year again now that we've really started it at the end of March we would expect to.

Speaker Change: To start making repurchases given where.

Where our share price is relative to where we think value. Yes, I think what you've previously remains which is that we project forward to building cash and then look at cash use obviously, we've had the good fortune of having success with exploration and putting some money into that we of course continue the dividend. It is a conversation is this at an appropriate level should we be think.

Speaker Change: And about doing more of the buyback remains an option for us we're not thinking about doing anything in terms of any special purchase all months with buybacks.

Speaker Change: Option number two but as we are building cash at a rate.

Speaker Change: Higher than <unk>.

Speaker Change: Our intent is to use the buyback facility in order to provide additional returns to shareholders.

Okay, that's great So David Levin.

Speaker Change: Thank you that's it for me.

Alright, thank you.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: <unk>.

Our next question comes from Don Demarco with National Bank Financial go ahead Don.

Thank you operator, good morning, David and team.

Speaker Change: So first question with the buildup in accounts receivable in Q1.

Speaker Change: Did you say you expect to have this unwind in Q2 potential lift in cash count.

Speaker Change: Can you reiterate what this consistent.

Speaker Change: Sure.

Speaker Change: So.

Speaker Change: Production for the quarter was essentially a backend weighted towards the tail end of the quarter.

Speaker Change: And so when we have or.

Speaker Change: We ship our concentrate.

Speaker Change: To our customers.

Speaker Change: Typically what ends up happening is when it shifted.

Speaker Change: 15 days before we collect.

Speaker Change: We can collect the cash on that shipment that we get to recognize the sale at the time it shift, but then the collection of cash is typically 15 days and with the with a.

Speaker Change: Production being heavily tilted towards the back end of the quarter, we end up seeing a lot of our sales recognized towards the back into the quarter, but then the receivables were collected until the following month.

Speaker Change: We estimate a reason for that.

Speaker Change: Yes. It is.

Speaker Change: Not expected to reoccur in the coming quarters. So to your question around whether or not we might expect to see essentially.

Speaker Change: Are the cash coming in from first quarter.

Speaker Change: One is the second quarter, there will be some of that but at this point.

Speaker Change: I wouldn't.

Speaker Change: I wouldn't comment on whether or not there would be essentially a double up in the second quarter.

Kevin: Okay. Thanks, Kevin.

Speaker Change: Shifting to the cocoa canopy it looks strong.

Speaker Change: I see.

Speaker Change: 700 clean announced so this looks like another high margin mind good replacement.

Speaker Change: But can you provide some of the assumptions that support the low cost.

Speaker Change: Outlook.

Speaker Change: So what we've done here is when the fortunate position that we have an operating asset with a long operating history. Despite hours away. So basically the way we've done this all of the assumptions for underground when we look at things like development and more specifically, if we talk about mining cost in terms of what you've asked and all of those are coming from what.

Speaker Change: Do we what do we do at cello patch, what do we compensate for in terms of new assets New place training development. Some amount of build inefficiencies over time that type of thing. If you look at some of the other numbers you didn't particularly asked this question, but for instance, if you have a look at the the ramp development those are actually external costs and lower our costs.

Speaker Change: Underground it sold baseball cello purge corrected for scale directed for new location, some opportunity for efficiencies, but in terms of a lot of the surface stuff at this point as mentioned, we still got some trade off studies. So theres some potential optimization will certainly offsets to any additional inflationary pressures that we might see.

Speaker Change: I don't have that answer to your question John.

Speaker Change: It does to a degree I think.

Speaker Change: Atlanta for certain confidence in those costs, because you have travel back to not far away.

Speaker Change: But.

Speaker Change: But in terms of.

Perhaps that may be mining macro or grade and color on either of those yes.

Speaker Change: Yes, so mining method at this point everything that we've done including the block size in the ore bodies is leading to a similar practices cello patch, which is long haul open stoping.

Speaker Change: Nothing nothing really out of the ordinary at the mill at all accepted has gravity concentration is the biggest part.

Speaker Change: And then we typically have another operate below operation.

Speaker Change: Any anything okay for me to clarify.

No that's fine thank you.

Speaker Change: <unk>.

I get it that the resource is still evolving as youre doing more exploration. So are there opportunities to potentially upside for throughput.

Speaker Change: 'twenty 300 tons per day.

Speaker Change: So the way I would look at it at the moment is that we've got one particular type of material chunk of Ricky If you go back to February we announced something that this one one kilometers away.

Speaker Change: In an area slightly it was north northeast of chunk of Akita and that was looking at the models, which sort of a level below the <unk>, which chaga. Ricky. This is primarily for model and that is a 26 meters between office and comprehensive stomach III Gram sold.

Speaker Change: So that could be something that month.

Speaker Change: A slightly different circuits. So then coming back to your question can we actually scale choker Ricky to the way we would see it is being built in module. So if there is some expansion it's quite likely that that may require a slightly different flow sheet perhaps.

Speaker Change: <unk> flows as opposed to crush more gravity separation fluids in this type of thing because what we find is more of the same and we're very optimistic that as more of that.

Speaker Change: They're not saying modular approach could be used to actually increase the capacity on the same philosophy.

Speaker Change: Okay great.

Speaker Change: Thanks, David and good luck with next day.

David Ray: Thank you.

Thank you for your question one moment for our next question.

Speaker Change: And our next question comes from Eric <unk> of Scotiabank go ahead Eric.

Speaker Change: Great. Thank you good morning, David and team.

Speaker Change: For taking my question just a follow up on the cello patch a brownfield apologies I missed it earlier, but Jimmy details in terms of number of rigs.

Speaker Change: Is this from surface or underground and maybe sort of what next steps are how much drilling you think theres going to be needed.

Speaker Change: That some of those resource targets I appreciate it thank you.

Speaker Change: Yes, so so far with the activity that we reported in Q1, the bulk of that work has been underground. So the plan is to put some surface rigs on now in Q2, as we mentioned Charlotte you will be doing more work on that at.

At this point I believe you said two weeks, we're going to put in place primarily but it will depend on what exactly we're finding and what the opportunity is so it is a couple of things that we're still working on in and around the <unk> primarily over the concession will have two weeks that would be in terms of at this point.

Speaker Change: And that's in addition, Eric as I mentioned to the underground, which is typically about 45000 meters per year. So there's two different sets of activities going on.

Speaker Change: Okay Fantastic I appreciate the added color I'll hop back in the queue. Thanks.

Speaker Change: Thanks, Ed.

Speaker Change: Thank you for your question.

Speaker Change: At this time, we're showing no further questions.

And I'd like to turn it back to you Jennifer Jennifer camera on please go ahead Jennifer for closing.

Jennifer Cameron: Great. Thank you all for joining us if you have any further questions. Please feel free to reach out and we look forward to speaking during the coming week, thanks and take care.

Speaker Change: Thanks, everybody for your participation in today's conference call. This now does conclude the program you may disconnect.

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