Q4 2024 OceanaGold Corp Earnings Call
Yes.
[music].
Good morning, ladies and gentlemen, and welcome to <unk>.
Speaker Change: <unk> Corporation fourth quarter and full year 2020 core earnings conference call.
At this time all lines are in a listen only mode.
Following the presentation, we will conduct a question and answer session.
Speaker Change: Anyone has any difficulties hearing to conquer them leased.
Speaker Change: Star Zero for operator assistance at any time.
Rebecca: I would now like to turn the conference call over to Rebecca.
Speaker Change: Please go ahead.
Speaker Change: Okay.
Speaker Change: Good morning, and welcome to Oceana Gold's fourth quarter and full year 2024 results webcast and conference call.
Rebecca Murray Vice President of Investor Relations. We are joined today by Gerri Bond President and Chief Executive Officer, Mary <unk>, Chief Financial Officer give you want on your Chief operating Officer, Americas, Peter Sharp Chief operating officer.
Speaker Change: Debris Chief exploration officer.
Speaker Change: The presentation that will be referenced during the conference call is available through the webcast and on our website.
Speaker Change: I would also like to remind everyone that our presentation will be followed by a Q&A session.
Speaker Change: We will be making forward looking statements during the call. Please refer to the cautionary notes included in the presentation news release and MD&A I suppose the risk factors set out in our annual information form.
All dollar amounts discussed in this conference call are in U S dollars I will now turn the call over to Jerry.
Speaker Change: Yeah.
Jerry: Thank you Rebecca and thank you all for joining at Goldstrike.
Jerry: We are very pleased to report strong Q4 results with a strong production in the quarter driving delivery of a number of records.
Jerry: Record quarterly and half year production at Highland.
Jerry: Record quarterly and annual net profits of the company.
Jerry: And record quarterly and annual free cash flow for the company.
Jerry: I'd like to view the year through the lens of that five pillared strategy.
Jerry: From a production perspective, we finished the year very strongly in line with the updated guidance in.
Jerry: In addition to a production record of child, we also had a much in group fourth quarter Wahid.
Jerry: Best quarter in three years.
Jerry: And that's in the craze with the team delivered record annual mill throughput without any large investment of capital.
Jerry: Which underpinned its strong year.
Jerry: The <unk> team had a number of operational issues in the period, but they're doing a great job of addressing them and positioning that business for long term success.
Jerry: Culture really matters as a result of Oceania Golda delivered bots people and do this and I was proud to see that our employee engagement scores increased significantly in 2020 full to above average levels in our industry assisted by a number of company wide programs.
Jerry: This high level of engagement helps explain both the strong performance and alcohol credits with delivery in the years ahead.
Jerry: In terms of sustaining and growing our business, we released yesterday, our updated annual reserve and resource estimates.
Jerry: And I'm really pleased to share that we increased our reserves by 27% net money depletion.
Jerry: And increase the average grade of those reserves.
Jerry: This was driven by outstanding exploration results at both Haile and very careful on that including an initial mineral reserve declaration at first your opponent.
Jerry: Together with record average realized gold prices strong production performance and the ability to convert most of the high prices to the bottom line Oceania go generated a record $245 million of free cash flow in 2024.
Jerry: To be clear this is real free cash flow operating cash flow minus all investing cash flow such that once that diabetes available to reduce debt pay dividends and return capital to shareholders.
Jerry: That $245 million of free cash flow represents surrounds at 15% after tax yield on the enterprise value based on the gold, which is a great return for investors.
Jerry: So what do we do with a free cash flow.
Jerry: In line with our capital allocation framework, we strengthened our balance sheet by repaying in full our revolving credit facility and getting into a strong $192 million net cash position.
Jerry: Shareholders now own 100% that this business, which is well positioned to grow.
Jerry: And in line with our capital allocation framework, we also deliver shareholder returns via dividends.
Jerry: By actively use nasty, a buyback program and through a 60% increase in the share price, which meant we were among the top performers in that paper.
Jerry: Yesterday, the board of Oceania Gold approved a doubling of the annual dividend and approved up to $100 million of share buybacks in 2025.
Jerry: Specifically as it relates to the fourth quarter, we produced 12% more gold at a 10% level all in sustaining cost per ounce than the previous quarter.
Jerry: Tayo Mccray's and why he older live at high production at significantly lower unit costs.
Jerry: <unk> delivered a record quarterly net profit and record quarterly free cash flow with a free cash flow margin for the quarter of $994 per ounce.
Jerry: It was really pleasing to see our ability to convert most of the strong gold price to the bottom line.
Jerry: And as you know gold prices have increased for the seats.
Jerry: Most importantly, our fourth quarter was a safe quarter.
Jerry: We continue to progress our safety improvement plans.
Jerry: Our people have worked hard to deliver the operational and financial results. We're reporting today and we are all committed to this being done safely.
I'll now turn the call over to Morris, who will discuss our 2020 full financial results in more detail.
Morris: Thank you Jarrod and good morning, everyone.
Morris: As you can see Q4, and 2024 was a continuation of a trend of significant improvement period on period.
Morris: The quarterly revenue was a record taking our annual revenue to another record of $1 $3 billion.
Morris: EBITDA for the quarter delivered a strong 58% margin.
Morris: Adjusted earnings per share of <unk> 15 cents for the quarter was 67% increase on the prior quarter.
Morris: And 40 year, we achieved an adjusted EPS of 29 cities.
Operating cash flow per share was 64% higher for the quarter.
Morris: In Q4, we generated an additional one in it and $47 million of free cash flow, bringing the total for the year to $245 million a record for the company and.
And that was on the back of an every realized gold price of just over $2400 per ounce.
Morris: This record free cash flow was achieved after investing roughly 75% of our capital in opening up new open pit phases.
Morris: Adding underground face positions advancing new projects and investing in our exciting exploration targets.
Morris: Looking at 2020 full from a broader perspective you.
Morris: You can see we've come a long way since 2021 systematically generating free cash flow, reducing our debt and strengthening our balance sheet.
Morris: In line with our capital allocation framework, reducing our data was a key priority for 2020 full.
Morris: I'm very pleased to confirm that we repaid $85 million under our revolving credit facility in the quarter, bringing the outstanding balance of debt pay down to zero.
Our growing net cash position of $172 million allows us to be confident that we can continue to advance Alex I think it's.
Morris: And growth opportunities and to improve shareholder returns.
Morris: Our balance sheet is strong and yesterday, our board committed to double our current dividend.
Akshay: In addition, we also bought back $16 million with Akshay is in Q4.
Akshay: The total value of shares bought back since July $224 million at an average price of $3 70, non Canadian per share.
Akshay: We intend to continue paying our dividend and purchasing shares under the buyback program in 2025, all in service of maximizing shareholder value.
David: I'll now pass it over to David to discuss health.
Akshay: Okay.
David: Thank you Marius and Hello, everyone.
David: Haile produced record gold production in the fourth quarter, we had over 75000 ounces, which contributed to a record annual production up to 15000 ounces.
David: This production performance was in line with that our ETR guidance expectations as well as the profile of decrease in all in sustaining costs.
We expect that throughout the year.
David: Fourth quarter at all in sustaining cost was <unk> 87 per ounce and $16 28 per ounce for the full year, which I sold so in line with our ETR guidance ranges.
David: During the quarter, we benefited from a one gram per tonne increase and Keith great as compared to the third quarter, mostly due to a higher grade mine from Ledbetter phase II.
David: Well get back of 'twenty 'twenty four a neat knowledge stinker enabled work the team has done to safely ramp up the horseshoe underground operation.
David: We ended 20, frankly for having mined over 400000 tons in weight.
David: Full year of production coming from underground in 2025 and beyond.
David: We continue to provide stability to the existing open pit operation for many years to come.
David: Much of our exploration drilling in 2024 was focus on a peeling and expanding resources that have the potential to be mined from underground.
David: We have had great success of Horseshoe and addition of successes drilling ledbetter face to Facebook.
David: The higher grade yourselves from the Israeli will contribute to the ongoing trade off study, we're doing to the timing and final phase of ledbetter can potentially be mined from underground.
David: We look forward to sharing more with you on that study as it progresses.
Peter: I will now turn the call over to Peter to discuss the Asia Pacific operations.
Peter: Thank you David and good morning, everyone.
Peter: During the quarter the DPA delivered gold production of approximately 20000 ounces and copper production of 3100 tons.
Peter: Production continued to be impacted by the lower mining right in the British ozone as a result of the site redesign and reshape.
Peter: Taking the discussed in detail last year.
Peter: The fourth quarter was also impacted by a number of severe weather events, including four typhoon during the month of November resulting in unprecedented amounts of water falling on the property.
Peter: I would like to emphasize that while we recognize that the reduced mining rate in the British ozone has a negative impact on the average grade mined of underground ore over the next two years.
Peter: The overall benefit for the <unk> operation from this change is very positive as it ensures that we can continue to work. This area of the mine safely as well as ensuring that we maximize the overall resource and Goldentree.
Peter: Providing an overall net benefit in medium term foggy horizon.
Peter: In response to the recent with the challenges experienced in late 2020 for a number of critical actions have only the already been completed or in progress of being completed the may include additional mobile pumping capacity to the underground.
Peter: Groundwater system capacity system.
Peter: As well as installation of backup high voltage power capacity for the underground pumping system.
Peter: Now progress towards reaching our targeted underground mining rate of $2 5 million tonne per annum by the end of 2026 remains intact and we will release an updated technical report in 2026 did influence that in our mine plan.
Peter: We then proactive planning place we remain confident in <unk> long term value.
Peter: <unk> delivered another strong result during the quarter producing approximately 38000 ounces of gold.
Peter: Well it was predominantly mind for municipal seven open pit and Golden point underground improving grades to the mill compared to the previous quarter.
Peter: Remarkably the sort continues to push for improvement on the margin and the optimization work that has been ongoing and the process plant. Since early 2023 helped drive record throughput of $6 6 million tons for the year.
Peter: We are continuing to make steroids towards extending the mine life of this asset while maintaining industry, leading low mining unit costs.
Speaker Change: Let me incredibly proud of the team at with cries for continuing to strive for operational excellence and I hope that the dedication to these came through when we took analysts investors to the soil in January.
Speaker Change: Why he produced the ran 18000 ounces of gold in the quarter the best quarter on record since Martha underground began operating again in 2021.
When we brought analysts and investors.
Speaker Change: We were able to demonstrate the complex nature of mining and share some of the learnings we've had in the last full use of money.
Speaker Change: I'm proud of the work the team has done to <unk> in the fourth quarter results is a testament to what why it can be capable of when we were effective at extracting those remnants stopes.
Speaker Change: Yes.
Speaker Change: Mining costs of $1557 per ounce is also significantly below what we've seen from what he recently.
Speaker Change: This demonstrates deliveries the operation has when it has a strong production quarter.
Speaker Change: 2024 was an exciting year for the Whiting as we delivered the 40 <unk>.
Speaker Change: This in an initial reserve it phyrric enrolment underground.
Speaker Change: The pieces fall onto the opportunity to continue here mining operations in Hawaii region for at least another 15 years generating strong returns for our shareholders.
Speaker Change: In early March we expect to submit an application for the warhead.
Speaker Change: Government for approval by the fast track improved prices.
Speaker Change: Our expectation is that we will be by the end of 2020, fives and able to start construction towards spiritual upon the underground in 2026.
Speaker Change: In the meantime, our board has approved $45 million of projects.
Speaker Change: So that the project is shovel ready positively received those approvals.
Speaker Change: We're very excited about the future why and the strong into 2024 and the generation of free cash flow at so it makes the future both midterm and long term very broad.
Speaker Change: I will now turn the call to Craig to discuss exploration.
Craig: Thanks, Peter as Jared mentioned, we increased our total mineral reserves by 27% this year to $6 2 million ounces of gold net of mine depletion. The most reserves we've held on our books today.
Craig: This is a brilliant track record of Reserve addition, replacing 16% more than we mined an average on an annual basis, replacing more than 5 million ounces over the past nine years at an all in cost of around $49 per reserve ounce.
Craig: This includes the first time Reserve addition of $1 2 million ounces at nine two grams per ton goal from the high grade <unk> panga ore body of why he.
Craig: We also increased our measured and indicated mineral resources. This year by 8% to eight 9 million ounces as a result of additions at each of our mine sites.
Craig: Notably the majority of the reserve and resource additions during the year are a direct result of new ounces discovered through drilling with Conservative reserve and resource pricing of $17 50, and 19 $15 per ounce, respectively, providing plenty of upside to today's gold.
Craig: Price.
Craig: These outstanding results are testament to both the quality of deposits, we have within our portfolio and the talent and skill of our exploration team in discovering these exciting opportunities.
Craig: Looking ahead to 2025, we expect continuing.
Craig: Building about exploration success.
Craig: <unk> will continue drilling from surface to extend the existing resource on the EG Bang, which remains open in all directions and is our highest priority exploration opportunity.
Craig: With the new fast track approvals process, we hope to obtain access to additional drill pads and drills.
Craig: This will allow us to accelerate the rate at which we complete drilling of the W. K P system, including the very highly perspective T stream and western veins in 2026 and beyond.
At Haile, we continued to increase underground reserves on the back of exploration success.
Craig: Horseshoe remains our most advanced midterm target, where we remain focused on expanding the reserve based on significant results returning from extensional drilling.
Craig: In parallel we're continuing to advance through drilling compelling early stage targets.
Craig: On the back of excellent results at the dip here our priority is to continue drilling panel three in support of the upcoming pre feasibility study and the planned increase in underground mining rates.
Craig: In addition to the in mind drilling we have several other highly prospective porphyry copper gold targets scheduled for drilling within our FTAA permit.
Craig: These include Napa time, where we identified shallow copper gold mineralization last year.
Craig: True Blue, which is an offset extension of the DPR mine and the Fox that has returned encouraging results in historic drilling.
Craig: Finally at Mccray's, we have a significant opportunity to increase resources that could support further mine life extension.
Craig: As discussed in detail during our recent analyst site visit shear zone hosted deposits that were cries span over 11 kilometers of strike.
Craig: Our plan here is to convert inferred resources across a number of these deposits in support of pit pushback that optimize our mine life at todays gold price.
Craig: So in total we will be investing more in exploration and discovery in 2025 than we have for many years. So I look forward to these new results and sharing them with you as they come to hand.
Gerry: I'll now turn the call back to Gerry Thank you.
Gerry: Thank you Craig and thank you and your team for a simply outstanding year of value creation.
Gerry: Looking forward, we maintain our strong multi year outlook with around 20% growth in gold production from 2024 levels by 2026. This is all organic.
Gerry: In 2025, I hope will progressive waste stripping at stage III. The Ledbetter open pit during the first three quarters to unlock high grade ore from the pit by the fourth quarter.
Gerry: This high level of stripping and of hotter than expected or is one of the main drivers of higher all in sustaining cost of hail and the company in 2025.
Gerry: 2025 production at the <unk> reflects the impacts of the breakfast start redesign and re sequence and the reality of dealing with the elevated water table for much of the year.
Gerry: At Mccray's at 2025 plan includes some mine plan optimization versus the previous technical report in response to much higher gold prices.
Gerry: These optimizations allow us to mine in a way to get some most of the golf results. So we're spending more capital than the cries stripping and.
Gerry: Component replacements not work to unlock this value capital.
Gerry: Why he is 2024 hour production guidance is based on the strong performance from Wahid towards the end of last year, and our increasing confidence in remnant mining.
As was the case in 2024, we expect total gold production for 2025 to be slot feed back half weighted.
Gerry: Our activities and investments in 2025 underpinned the 20% growth in gold production in 'twenty six principally coming from up listing gold production from Haile and Mccray's, resulting from full access to high grade oil from their open pits.
Gerry: Beyond 2026, we will continue to pursue growth via organic growth projects like palomino tile or fare carrier polar Hawaii or haven't paid capex at Mccray's.
Gerry: All of which we will advance over the coming three years and expect to be able to fund from internal cash generation.
Gerry: This is the primary driver of the increase in growth Capex in 2026.
Gerry: This morning, we announced the addition of Stephanie loader to our board of Directors, Stephanie is a highly experienced geologists and mining executive with a track record in mining and mineral exploration and project development.
Gerry: I'm confident that her experience and contributions will add value to us you're an adult and their shareholders.
Gerry: We also announced yesterday that the bid Londono Chief operating officer Americas has decided to move back to Colombia in order to be closer to his family.
Gerry: His last day with <unk>, who is the fourth of April 2025.
Gerry: David has been a valued member of Oceana golf since he joined <unk> in 2021, and as guided hail through operational improvements permanent in the underground expansion and most recently delivering the horseshoe underground mine into production.
Gerry: Since the start of this year and that will be now asset president in charge of tile leading day to day operations.
Speaker Change: Let's begin with Osha on gold for over two years and I've worked with Matt for 13 years, and then confident he will take Kyle into its next phase of the performance uplift in growth and he's made a great start.
Bhubaneswar Malhotra: Matt will report to Bhubaneswar, Malhotra, our chief technical and projects officer, who permanently assumed debates executive accountabilities of the Hyatt Gold mine for.
Speaker Change: For those of you who haven't met Bouguenais is a deeply experienced mining executive with over 25 years of experience as being as oceana gold for around 12 months and prior to that he was with Rio Tinto in a number of global roles for 18 years.
Speaker Change: I'd like to take time, while Davita is here on the call to thank him for his significant contribution both to hail and the company more broadly and to wish him and his family all the very best in these moves back to Colombia and in his future endeavors. Thank you David.
Speaker Change: In summary, Oceana gold has delivered a strong quarter and year, resulting in significant free cash flow generation and returns to our shareholders. We remain committed to safely and sustainably running our operations. So that I workplaces safer, everyone working day and good for our host communities.
Speaker Change: Delivering on our commitments will allow us to consistently generate strong free cash flow, enabling us to reinvest in our exciting growth projects maintain a strong balance sheet and return capital to our shareholders via dividends and buyback programs.
We remain very well positioned with significant opportunities to deliver attractive growth and shareholder returns in 2025 and beyond.
Speaker Change: I'll now turn the call over to the operator and open up the line for any questions.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session. So do you have a question. Please press star followed by the one on you touched on Cowen questions will be taken into your order received.
Speaker Change: Should you wish to cancel your request. Please press the star followed by the Q, if you're using a speaker phone. Please I'll have Dan said before question Amit.
Once again that is star one should you wish to ask a question.
Speaker Change: Your first question is from Wayne Lam from TD Securities. Your line is now open.
Wayne Lam: Hey, yeah. Thanks, guys.
Wayne Lam: I guess first question just wondering on the 2026 guidance. It seems like Theres been a haircut on production to where the updated guide is in line with last year's prior 2025 outlook. So just wondering what's driving that.
Wayne Lam: Just based on their 2020 for Haile mine plan.
Wayne Lam: It was doing.
Wayne Lam: 300000 ounces over the next couple of years and $26, seven which would be over half. The guide. So just wondering if theres been a reset in expectations that those two years won't be quite as.
Wayne Lam: Big of an increase at Haile.
Wayne Lam: Versus prior expectations.
Wayne Lam: Yeah, Hi, Ryan Thanks for the question, yes, highly as one of the drivers of the moderation in outlook and principally that say.
Wayne Lam: The consequence of that delay and stripping that we experienced this year.
Wayne Lam: Two out of 2026, it just kind of got a carryover effect.
Wayne Lam: Thank you.
Wayne Lam: You will see.
Wayne Lam: The Gulf is still guide to be mined, but just over a longer period of time spills into later years also were dealing with hot rolled than we expected and that's been the regulation this year about the.
Wayne Lam: Quantum of hot all but also the intensity of that hard all has slowed al.
Wayne Lam: Bonnie right and also have processing rights like processing.
Wayne Lam: Less tons.
Wayne Lam: And we expected as a result of that that's hard rule, obviously getting the most gold out of the ground doesn't give you. The most gold out of the oil is a is a primary driver of value creation in both the right of getting it up and then also the right processes has slowed as a result of that hot roll.
Wayne Lam: And we also have a lower effects of DPA.
Peter: As Peter mentioned.
Peter: That high grade ore from the British start, which we originally expected to get out over like a three year period as a result of that change in mine sequencing now coming out over a longer periods of time.
Peter: It sounds like it's it's a dent to the near term profile.
Peter: But the Oh.
Peter: Our benefit nobody's going to get it all out with a high degree of confidence. So it is actually the right.
Peter: Thing.
Peter: And then why he is is a little lower as a result of what we thought for us.
Speaker Change: Please go ahead.
Speaker Change: Well the vessels its technical report so if you look at the technical report by the law.
Speaker Change: Latest take a group port has the updated outlook, which is I think around 60 or 70000.
Speaker Change: Ounces, whereas the previous technical report that underpin the outlook was at high level.
Speaker Change: Okay, great yeah, thanks for that color.
Speaker Change: And then maybe just on the reserve update at.
Speaker Change: A couple of questions first at the <unk>. It seems like you've got a lot more tonnage, but at 20% haircut on grade and just wondering if that's being driven by the redesign since I thought that it was just a re sequencing of stopes.
Speaker Change: And then.
Speaker Change: Just wondering with the $250 increase in gold price assumption.
Speaker Change: Just wondering if we should have expected a greater sensitivity announces at Haile and Mccray's just trying to understand how to think about the updated how much offset depletion was driven by the higher gold price.
Speaker Change: Yeah, well I mean, the gold price assumption change had a very little effect overall.
Speaker Change: It had a minor positive effect I think it's around 110000 ounces of the uplift.
Army driver of it all be uplifting.
Speaker Change: Our Reserve addition.
Speaker Change: Was.
Speaker Change: Yes.
Speaker Change: But I'll, let Craig answer that question as it relates to today.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: Thanks Jared.
Wayne Lam: Sorry, Wayne could you could you just come back with the second part of that question. Please.
Speaker Change: Was it the the reduction in total ounces there at <unk>.
Speaker Change: Yeah, just just wondering in terms of the drivers of the increased tonnage.
Speaker Change: The lower grade.
Speaker Change: So it's simply a.
Speaker Change: The matter of what Jared described in in general it's those the ounces of them, but the grade the tonnages increase so it's had a reduction.
Speaker Change: In the grade, but total ounces remain similar.
Speaker Change: But as I heard your question to the breccia redesign has not altered the reserved all that.
Speaker Change: Breccia high grade ore is still in the reserves.
Speaker Change: We actually have greater degree of confidence of getting it out.
Speaker Change: I'll do the reserves.
Speaker Change: And the additions I think to the DPI, where through the drill bit.
Speaker Change: At that time, then towards the bottom of the ore body.
Speaker Change: Okay understood.
Speaker Change: Maybe just last one at Y E.
The PFS I think you guys recently put out.
Speaker Change: Had production.
Speaker Change: In 2025, much similar too.
Speaker Change: What you guys had produced in 'twenty four.
Speaker Change:
And just wondering what's driving your increased confidence in the remnant mining where the 25 guide seems to be a step change higher versus the most recent decker part.
Speaker Change: Yeah. Good good good spot widen it is it is higher the last bit of good news in that that says bone of the confidence that we have.
Speaker Change: In that improvement in remnant mining that Peter spoke about look it has been it has been challenging over the last two years, but if you look at the last quarter.
Speaker Change: Quarter in the last four months of last year and the team there.
Speaker Change: Extracting ore at grade at a rate higher than that hasn't been in shapes is Martha underground and <unk>.
Speaker Change: I started in 2021, so so it is actually I reflection of our confidence.
Speaker Change: It's in the performance of Hawaii still live are higher than what we expected when we prepared the technical report, which is getting on with that eight months ago from the first.
Speaker Change: Is there sort of assumptions for it.
Okay, great. Thanks, Thanks for taking my questions and then David Thanks for everything and wish you the best of luck.
Speaker Change: Okay Thats fine.
Speaker Change: Thank you and your next question is from <unk> Habib from Scotiabank. Your line is now open.
Habib: Thanks, operator, hi, driving that or shall I go team congrats on.
The team on a solid Q4.
Speaker Change: Couple of questions from me a couple of questions have already been answered so.
Habib: Move on to just.
Habib: Just in terms of the guidance provided cap.
Habib: Capex was.
Habib: Higher than our expectations.
Speaker Change: If you can give us a little bit color in terms of the capex.
Speaker Change: Being higher going into 2025 is that mostly a hill and the stripping at that better.
Speaker Change: But all of that good.
Speaker Change: Good to see production, increasing in Capex falling off in 'twenty six.
Speaker Change: Does the 2026 Capex include the Capex for W. P.
Speaker Change: Yeah. Thanks, Thanks for the questions.
Speaker Change: Look the on a seeking better bills.
Speaker Change: The cash cost of the of the company year on year broadly unchanged, which is good with a driver of the increase in all in sustaining costs primarily comes from stripping primarily at Haile for the reasons mentioned, we've just into led better for longer and we have higher oil and hot or hotter wash.
Speaker Change: I'd say that hard rule increased cost of mining at somewhat we also have.
Speaker Change: More stripping and a more.
Maintenance replacement cost.
Speaker Change: The crisis, that's actually helping us unlock our longer term production profile for Macquarie. So a good investment of capital and then so that's the all in sustaining cost element and then from a non I see the growth capital.
Speaker Change: We have a $40 million applied to W. K P. Advancement for the reasons that we outlined in December and we have about $7 million got it into Palomino development and then we have higher exploration at all sorts of people spending more money on exploration at all sites in 2025.
Speaker Change: Done before and then on a multiyear basis.
Speaker Change: And in 2026 W. K P is about $100 million of.
Speaker Change: Capital.
Speaker Change: In line with what it is in the technical report and Palomino.
Speaker Change: We will be spending around $45 million. So it's it's the the big step up in capital is overwhelmingly a funding our organic growth profile.
Speaker Change: Okay got it thanks for the color on that.
Speaker Change: Just kind of sticking with hill.
Speaker Change: Again.
Speaker Change: Been having good results exploration results at.
Speaker Change: Bottom up like bedrock.
Speaker Change: <unk> is a.
Speaker Change: Looking like the next mine to be mined by underground when would you be start being comfortable to talk about ledbetter as an underground contributor.
Speaker Change: Yes.
Speaker Change: <unk> question Luckily, we continue to drill we have a lot of analytical work working on the tradeoff between weather Ledbetter four is going to be best done by.
Speaker Change: Underground mining methods all from an open pit and towards the end of this year likely this time next year, we'll be.
Speaker Change: Unveiling the outcomes of that those findings.
Speaker Change: <unk> shared it via an updated technical report file.
Speaker Change: Got it.
Speaker Change: And then just a quickie moving to Mccray's I think Wayne was asking this question I mean at the site trip. The key takeaway was that there is opportunity to increase the mine life at <unk>.
Speaker Change: Does the gold price that you are using now.
Speaker Change: For the reserves sufficient to start adding to my left or do you need to see additional exploration upside before.
Speaker Change: Starting to give us more color on how the mine life is improving.
Speaker Change: Oh, no it doesn't have to update.
Speaker Change: Do any more desert update the pricing is a big gap between our reserve pricing that results price.
Speaker Change: And current spot or even some moderate outlook from our mine planning perspective of the gold price. So.
Speaker Change: The.
Speaker Change: <unk> investment in stripping the mine plans change would do a little more stripping and because we expect to be money for longer we're doing more we're doing that four or five truck rebuilds next year as I used to basically keep that fleet capable of money that the cries for longer.
But no it's not driven.
Speaker Change: We don't need any increase in reserve to warrant that increase in investment.
Speaker Change: Got it.
Speaker Change: That's it for me Thanks for taking my questions and again also wanted to say all the best to debate.
Speaker Change: Hope, we cross spots in the future.
Speaker Change: Thank you rice.
Speaker Change: Yes.
Speaker Change: Thank you and your next question is from Cosmos <unk> from CIBC. Your line is now open.
Cosmos: Hi, Thanks, Jared and team and all of that debate.
Cosmos: Maybe my first question is on <unk>.
Peter: As Peter mentioned, Jared you mentioned as well as reduce.
Cosmos: As mining.
Cosmos: At the higher grade breakfast stopes and for water management as well.
Cosmos: It sounds like it's been factored into your guidance for 2025 and also 2026.
Speaker Change: But it sounds like it might be a two year sort of issue did I listen correctly.
Cosmos: If that's the case.
Cosmos: Should it improve beyond 2026.
Cosmos: Well I mean, I'll I'll have gone and then pay to feel free to add anything I mean the.
Cosmos: The main drivers to breakfast stope redesign right when in the knee term and you take.
Cosmos: The percentage of high grade ore are lower as a percentage of the overall feed mix that has a.
Cosmos: A moderating effect on this neato production profile.
Cosmos: But again because of the change in mining method way now we have much higher confidence of getting it all out so it's a it's a good business in.
Cosmos: <unk> value oriented decision to do so.
Cosmos: I have to wait for the updated technical report, which pay despite golf that's going to come in this time next year, we'll be looking to share it.
Speaker Change: Where you'll see the benefits of drilling you will see the benefits of that uplift in the underground feed rights to the mill is again, Peter mentioned that we remain confident that by the end of 2026, we would be at that two 5 million tonnes per annum, which is above the 2 million tons per annum. We were doing prior to the rainfall events and that has.
Speaker Change: It's a big impact on the production profile.
Speaker Change: So to answer your question out of the next two years you you've probably got the profile of the DPA are reflected in the guidance, but beyond that we remain confident that the.
Speaker Change: The uplift in mining right will.
Speaker Change: We will give us a net improvement in overall production from deep here because of that great uplift of feed to the mill.
Speaker Change: Sure.
Speaker Change: Hmm.
Speaker Change: Peter It's got nothing else to maybe I can move on.
Speaker Change: Maybe moving to handle.
Speaker Change: As you mentioned, you're encountering harder ore.
Speaker Change:
Speaker Change: Alright, you're looking into like longer term solutions to deal with us.
Speaker Change: Harder ore optimizing drilling patterns.
Speaker Change: Or any equipment or is there anything that you can do with it.
Well look I mean, just.
Speaker Change: The first order of business is just increase the density of explosives. This increase of fragmentation right. So that's.
Speaker Change: That's increases your explosives costs, but that's the first order of business.
Speaker Change: We had a.
Speaker Change: Additional crushing capacity there for purely trial. The crusher, we will continue to look at that we slowed the rate of a.
Speaker Change: Processing down to get a greater recovery because again, we want to get the high recovery levels, we did get higher recovery.
Speaker Change: In the in the year.
Speaker Change: But no. This is this is a.
Speaker Change: Something that that you know.
Speaker Change: It isn't rocket science, it's just the reality of what geology has given us and so we remain confident that we'll be able to.
Speaker Change: I'll get the highest recovery of the gold from the old mine, but it has just slowed the rate of growth don't I'd also say that that the near term effect of the change in.
Speaker Change: Stripping profile.
Speaker Change: Is that a lot of the benefits of this opening up a little bit of three our experience in the years after 2026 as well and we have really good access to ledbetter three or once we complete the stripping campaign in 2025 is about the third quarter and that's what.
Speaker Change: One of the primary drivers of the uplift in 2026, and we will continue to have that benefit and high grade production from Highland <unk> setting as well.
Speaker Change: That sounds great and then maybe that leads me to my next question here sure.
Speaker Change: You know that our phase III.
Speaker Change: Should get a full years worth of contribution in 2026 can you remind me how long you know ledbetter phase three years.
Speaker Change: I expect it to contribute and Wednesday transition to potential Ledbetter phase four.
Speaker Change: Yeah, I think it's about three years Wayne.
Speaker Change: Okay.
Speaker Change: He has a phase III caused us three years of three years of.
Speaker Change: Three years of lead better three and then we get into the.
Speaker Change: So it would be around 2020 idea looking for that.
Speaker Change: That decision to types that have been affected and reflected in your money.
Speaker Change: We do a lot to say.
Speaker Change: So youre not youre not mistaken.
Speaker Change: Hum.
Speaker Change: So maybe I'll ask a question that way what I'm I ask.
Speaker Change: In terms of our guidance.
Speaker Change: Guidance your cost guidance for 2020.
Speaker Change: Five.
Speaker Change: There is an increase.
Speaker Change: From last year.
Speaker Change: 19, <unk> hundred 2050, an ounce last year was 17 77 announced all in sustaining costs.
Speaker Change: What kind of inflationary leavers have you have you factored into your <unk>.
Speaker Change: Your numbers and what are you seeing the highest inflation I guess for example in the U S. There might be inflation, but you don't really get the benefit in terms of a weaker.
Speaker Change: Foreign currency so.
Speaker Change: Help me understand how what factual.
Speaker Change: Yeah, well the most drive up the cost is activity related right. So we can do more stripping.
Speaker Change: And that that stripping is of hot all.
Speaker Change: That that's the primary driver of the costs and then likewise at Mccray's, a greater investment in stripping and does that fleet replacement said the pardon me driver of the increase.
Speaker Change: Is activity.
Speaker Change: You're right Cosmos that the the.
Speaker Change: In currency inoculation of Ohio does not exist, it's a U S dollar business our U S. Dollar costs by contrast, <unk> Zealand dollar in the Philippines peso.
You'll see has they.
Speaker Change: Currencies have softened against the us dollar and that gives us a nice bit of protection against a local inflation inflation Israel.
Speaker Change: We have inflation of around four 5%.
Speaker Change: In labor and that that plays out to about 40 odd percent of our overall cost base and and.
Speaker Change: And that rate of inflation in labor can be it varies according to.
The skills that you're acquiring and in our industry and this is not new news in our industry. There is a shortage of skilled tradespeople and what we do find is that filling skilled trades rolls is a year on year, a little more expensive than above the average rate of inflation, but you know that we do have.
Speaker Change:
Speaker Change: Our best to recruit and retain around but when we have to supplement those with a contract.
Speaker Change: But if that comes to us at a higher cost.
Speaker Change: Great. Thanks, Gerry that team does a lot of questions. Thanks for answering my questions.
Speaker Change: Thank you Cosmos I appreciate that.
Speaker Change: Yes.
Speaker Change: Thank you once again that is star one should you wish to ask a question and your next question is from Mike Parkin from National Bank Financial Your line is now open.
Mike Parkin: Thanks, guys for taking my question just a follow up on Cosmos.
Mike Parkin: <unk> kind of comments around hail and the ore hardness.
Mike Parkin:
Mike Parkin: Is it like the underground mines.
Mike Parkin: All of this harder ore and the bottom of the open pits like do you have a sense of what percentage of your reserves are impacted.
Mike Parkin: This need to kind of tighten up loss patterns and.
Mike Parkin: Incurred slightly higher mining costs to address the ore hardness.
Speaker Change: Yeah, well I think its primarily open pit are they they all hot and this has been the surprise the hardness of the ore from underground has not been.
Speaker Change: As as a surprise, though is and is not the issue, but it would be I think this is a great opportunity to debate on this is final profit pool too to answer that question as well did it.
Speaker Change: Alright.
Mike.
Speaker Change: Yes, it's mostly the upper payback, while refining laboratories that quantity.
Speaker Change: The amount of harder ore that we found.
Speaker Change: Bigger than we'd be in a better one so we expect the same thing to operating live better to run it better.
Speaker Change: So the quantities in the bottom of the pits and in the high <unk>.
Speaker Change: Okay.
Speaker Change: So <unk>.
Speaker Change: No real surprise at the underground that's great.
Speaker Change: Thank you and.
Speaker Change: All the best in your future endeavors are hopefully get to put your feet up and enjoy a drink.
Mike Parkin: Thank you Mike.
Mike Parkin: Oh, yes.
Speaker Change: There are no further questions on the phone lines. We will now proceed with the webcast question. Rebecca. Please go ahead.
Speaker Change: Thanks, Operator, one question coming from online could you. Please talk through the guidance for the GPO whenever they do you expecting much higher production versus this year, given the higher 2 million tonnes per annum underground mining rates and hopefully lower impact of storms.
Speaker Change: Well thanks for the question.
Speaker Change: Yeah the primary.
Speaker Change: The story of a increase in the underground mining rates remains intact.
We expect to be at the $2 5 million tonne per annum mining right by the end of 2026. The primary driver of the change in production is the reshaping of the.
Speaker Change: Timing of the feed from the high grade Breccia zone, and Thats the high grade ore.
Speaker Change: And the uplifting.
Speaker Change: Tons that will come to that $2 5 million tonnes will be from the low grade Monza not stopes. This month's not he's still high grade stockpiles.
Speaker Change: But because if you take out the feed percentage what she thinks about 20% of the feed that was going to come from the branches signs that that gets moderated that's what motivates the overall rate of production in the longer term from the dip here, but we still do expect that that uplift in.
Speaker Change: Our mining rate to have a net positive effect on the.
Speaker Change: Production from the deep here.
Speaker Change: Okay.
Speaker Change: That concludes the questions from the webcast I'll now pass back to Jerry for closing remarks.
Jerry: Well, thanks, everyone for dialing into the Guy and a big Thank you to debate long diner for three and half years of tremendous contribution to I shouldn't go.
Jerry: Wishing him the best thanks, everyone for participating and have a wonderful day. Thank you.
Jerry: Yeah.
Speaker Change: Thank you ladies and gentlemen, the conference has now ended thank you all for joining you may all disconnect your lines.