Q1 2025 New Gold Inc Earnings Call
Good morning, My name is Chester and I'll be your conference operator today.
Speaker Change: Welcome to the new Gold's first quarter 2025 earnings call and webcast.
All lines have been placed on mute to prevent any background noise.
Speaker Change: Be advised that today's conference call and webcast is being recorded.
Speaker Change: The speakers remarks, there will be a question and answer session.
Speaker Change: If you would like to ask a question. During this time simply press the start button then the number one on your telephone keypad.
Speaker Change: If you would like to withdraw your question. Please press the star button that the number too.
Speaker Change: I would now like to hand, the conference over to I get Shah Executive Vice President of strategy and business development. Thank you.
Speaker Change: Thank you operator, and good morning, everyone. We appreciate you joining us today for new Gold's first quarter 2025 earnings conference call and webcast.
Patrick <unk>: Our lives and we have Patrick <unk>, President and CEO Keith Murphy our CFO. In addition, we have tried as Harvey Vice President of operations.
Speaker Change: Buchanon, Vice President of technical services, and John Fry, So Robyn no brace president geology available to assess during the question and answer period should you wish to follow along with the webcast. Please sign in from our homepage at new gold Dot com.
Speaker Change: Before the team begins the presentation I would like to direct your attention to our cautionary language related to forward looking statements found on slide two of the presentation.
Speaker Change: Today's commentary includes forward looking statements relating to new gold in this respect we refer you to our detailed cautionary note regarding forward looking statements in the presentation.
Speaker Change: You are cautioned that actual results and future events could differ materially from those expressed or implied in forward looking statements slide. She provides additional information. It should be reviewed we also refer you to inspection entitled risk factors in new Gold's latest yeah, and DNA and other filings available on SEDAR class, which set out certain material factors that could cause actual results.
Speaker Change: To differ.
Speaker Change: In addition at the conclusion of the presentation. There are a number of end notes that provide important information and should be reviewed in conjunction with the material presented.
Speaker Change: Slide four highlights some of the key accomplishments during the first quarter of 2025.
Speaker Change: Over the first four months of the year, we have made excellent progress on advancing and completing many of the objectives. We presented at the beginning of the year safety highlighted by our courage to care culture continues to be a focus and strength for the company.
Speaker Change: During the quarter, we delivered a low total recordable injury frequency rate of 0.55% to 40% improvement compared to the first quarter of last year and continuing the downward trend over the last three years.
Speaker Change: During the quarter. The company produced just over 52000 ounces of gold and $13 6 million pounds of copper at an all in sustaining cost of $1727 per ounce.
Speaker Change: First quarter gold production represented approximately 15% at the midpoint of the consolidated production guidance of 325 to 365000 ounces of gold slightly ahead of our planned first quarter guidance of 14%.
Speaker Change: The company generated over $170 million in cash flow from operations and 25 million in free cash flow with new I think contributing an impressive $52 million in quarterly free cash flow.
Speaker Change: The company successfully achieve cetera, several critical path items, which will enable us to realize the increased production profile throughout the year.
Speaker Change: At New Afton Cape construction progress is now more than 50% complete facilitating the ongoing ramp up in the mining rate towards the target of 16000 tonnes per day by early 2026.
Speaker Change: At rainy River. The first four months of the year have focused on waste stripping. The pit is now positioned to deliver or at a low strip ratio through to the end of the year in.
Speaker Change: In the underground mine, we achieved an important milestone with the pit portal breakthrough, allowing for increased underground development in production rates as a result rainy river is on track to deliver higher gold production and lower costs in the upcoming quarters in line with our 2025 guidance.
Speaker Change: The quarter was also successful improving our financial flexibility the company refinanced and extended its senior notes to 2032 and amended and extended the revolving credit states credit facility to 2029, both at lower rates, thereby increasing new gold's financial flexibility.
Speaker Change: And lastly in April we announced a new goal would acquire the remaining 19, 9% free cash flow interest at new Afton consolidating our interests to 100%.
Speaker Change: We successfully delivered the fourth first quarter as planned with the primary goal of creating meaningful value for our shareholders.
Speaker Change: Before getting into the quarterly details I would like to take a moment on slide five to reiterate the April transaction, where we announced that new Gold's would acquire the remaining 19, 9% free cash flow interest on new Afton Hell by Ontario teachers for $300 million.
Speaker Change: Transaction will be funded with a mix of cash on hand, our credit facility and 100 million calls prepay.
Speaker Change: This was an excellent transaction for vehicles and its shareholders for many reasons.
Speaker Change: There was no equity dilution and no detailed due diligence risk the.
Speaker Change: Consolidated 100% of the free cash flow as we enter a period of strong free cash flow at both new Afton and that new boat and it provides the company with full exposure to the significant exploration upside and mine life extension possibilities at new Afton.
Speaker Change: This transaction concludes a five year journey that these new Gold's free cash flow interest returned to 100% the.
Speaker Change: The initial transaction in 2020 was one of the critical first steps to improve <unk> balance sheet. Following two successful transactions for our shareholders. We enter an incredibly exciting period of free cash flow generation with a strong balance sheet and financial flexibility to continue to build from here. We would also like to thank teachers for their support and partnership over the last five years.
Keith: With that I will now turn the call over to Keith.
Keith: Thank you I guess I'm on slide seven which has our operating highlights.
Keith: Didn't get noted Q1 delivered production and cost on plan.
Keith: <unk> totaled approximately 52200 gold ounces and $13 6 million pounds of copper.
Keith: This decrease in gold production compared to Q1 2024 was driven by planned lower feed grades at both sites.
Validated all in sustaining costs for the quarter were $1727 per hour or go down on a byproduct basis due to the lower plant production in Q1 cost will continue to trend down throughout the year as production increases.
Keith: You are asking delivered an excellent quarter <unk> continued to deliver strong grades better than plan.
Keith: As a result, new Afton achieved an all in sustaining cost of negative $687 per ounce after considering the copper credits.
Speaker Change: Randy we over delivered on plan with the focus on waste stripping to set up the open pit for lowest trip high or a distraction for the balance of phase four.
Speaker Change: All in sustaining costs were $2758 in the quarter and should trend lower throughout the year as production ramps up.
Speaker Change: Our total capital expenditures for the quarter were approximately $75 million, but 42 million spent on sustaining capital and $33 million on growth capital.
Speaker Change: At new Afton sustaining capital is primarily related to equipment and vehicles, while growth capital primarily related to C Zone underground mine development in Cape construction.
Speaker Change: At rainy river sustaining capital primarily related to capitalized waste tailings dam raise capital component growth capital related to underground development of underground, Maine and Intrepid.
Speaker Change: Turning to the assets, starting with new Afton on slide eight.
<unk> delivered another strong quarter.
Speaker Change: The <unk> performed better than plan and seize on oil production continued its ramp up following commercial production and crusher commissioning in early early in the fourth quarter of 2024.
Speaker Change: First quarter production represented approximately 28% and 25% at the midpoint of guidance of $60 to 70000 ounces of gold and 50 to 60 million pounds of copper respectively higher than that.
Speaker Change: Quarterly guidance of 20% due to those higher <unk> grades.
Speaker Change: The <unk> is expected to be exhausted by the end of the second quarter and annual production is expected to be in line with the guidance profile previously provided.
Speaker Change: All in sustaining costs for the quarter decreased substantially compared to the prior year period, driven by lower operating expenses lower sustaining capital spend and higher byproduct revenues.
Speaker Change: With increased production at lower cost new Afton generated an impressive $52 million of free cash flow, while continuing to complete the construction of the C Zone block cave.
Speaker Change: Turning now to rainy river on slide nine.
Speaker Change: Production in the first quarter was in line with plan producing 33900 ounces.
Speaker Change: First quarter production represented approximately 12% at the midpoint of guidance of 265 to 295000 ounces of gold slightly ahead of the quarterly guidance of 11%.
Speaker Change: Production in the first quarter was lower than prior period as planned as the majority of the ore process was from the lower grade stockpile, but phase four stripping was at Baxter.
Speaker Change: With the quarter delivering as planned production is expected to step up meaningfully going forward and we remain on track to deliver our production and cost guidance for the year.
Speaker Change: Our financial results can be found on slide 10.
Speaker Change: First quarter revenue was $209 million higher than the prior year quarter due to higher metal prices and higher copper sales slightly offset by lower gold sales.
Speaker Change: Cash generated from operations before working capital adjustments was $90 million or 11.
Speaker Change: I appreciate your for the quarter.
Speaker Change: This was higher than the prior year period, primarily due to higher revenues.
Speaker Change: New Gold's generated quarterly free cash flow of $25 million as higher revenue was only partially offset by the higher capital expenditure as key growth projects where advanced.
Speaker Change: The company recorded a net loss of approximately $17 million or <unk> <unk> per share during Q1.
Speaker Change: After adjusting for certain of the charges net earnings was $12 million or <unk> <unk> per share in Q1.
Speaker Change: Acute care quarterly adjusted earnings include adjustments related to other gains and losses.
Speaker Change: Turning to slide 11.
Speaker Change: Q1 was a very productive quarter as we continued to strengthen our balance sheet and increase our financial flexibility.
Speaker Change: In March we completed a 400 million senior notes offering with an interest rate of 687, 5% in June 2032.
Speaker Change: This was used to tender approximately $289 million of the $400 million 2000, 2017 year notes with the remainder to be redeemed in mid July when the call price steps down.
Speaker Change: This five year extension as well as the lower interest rate significantly enhances our financial flexibility.
Speaker Change: We also executed an amendment to our existing revolving credit facility with strong support from our syndicate of lenders under the amendment. The term has been extended by four years now maturing in March 2029, and accordion feature is also been added which will allow the principal amount of the credit facility to increase by up to $100 million. So Victor.
Speaker Change: Certain conditions.
Speaker Change: Lastly, as <unk> mentioned after the quarter, we announced plans to acquire the remaining $19 nine free cash so.
Speaker Change: First in new Afton. This is expected to close in the coming days and as part of the financing new gold entered into a prepaid gold prepayment in mid April.
Speaker Change: Company has agreed to deliver approximately 2771 ounce of gold per month over the July 2025 to June 2000, 2006 period at an average price of $3157 per gold ounce.
Speaker Change: We will utilize cash on hand, and the revolving credit facility to pay the remaining $200 million with the expectation of the credit facility will be fully paid off by year end from the meaningful free cash flow, we expect to generate throughout the year.
Speaker Change: At the end of Q1, we had cash on hand of $213 million and our liquidity liquidity position of $590 million with a credit facility Undrawn.
Speaker Change: To sum up we are in a very healthy financial position by utilizing our balance sheet to consolidate our interest in new apps into 100%.
Pat: With that I'll turn the call over to Pat.
Pat: Thanks, Keith Slide.
Speaker Change: Slide 13, reiterates, our three years old books.
Speaker Change: We expect continued growth in gold and copper production over the next two years.
Ron: We have been increasing production unit cost, Ron silver gold or expected to be reduced.
Ron: Softening in growth capital costs are expected to taper off over the next three years.
Ron: Finally, due to the completion of major reserves what reduction that's terrific for Europe.
Ron: We are an ingredient production combined with the reduction in unit costs and capital costs.
Ron: The company is well positioned.
Ron: We did have a significant.
Ron: Okay.
Ron: Okay.
Ron: I want to reintroduce the feed Josh this free cash flow slide this was a focal point of our original awkward presentation back in February.
Ron: Has been updated to include new Gold's, 100% free cash flow into us and Europe.
Ron: The nuclear or expect to generate significant free cash flow.
Ron: Yes.
Ron: Current consensus commodity price this translates to approximately a one point.
Ron: $1 billion in free cash flow over to Peru.
Ron: Current spot prices, the figure exceeded $2 $5 billion over 90% of our market cap.
Ron: Yes.
Ron: Touching on the exploration briefly on slide 15.
Ron: Newark.
Ron: The <unk> zone exploration drift is progressing as planned.
Ron: With more than 65% of our best Advancement and I'm happy to report that we started drilling for the FERC for extrusion and we allow for additional drills and the drip by the end of Q2.
He is on drilling activities will therefore ramp up significantly throughout the year with the objective of defining Keystone indicated resources by year end.
Ron: In addition, we all kinds of things exploration drilling from surface to develop new near mine targets.
Ron: During the quarter. We also continued to advance technical studies published new mining so luxuriantly in blue.
Ron: For reliance of mine plan.
Ron: These are <unk> hanging wall zone and diesel.
Ron: Our focus continues to be on its noisy existing infrastructures and advancing growth project in Mexico net asset value and extend the mine life to 2040 generating significant free cash flow and revenue for our shareholders.
Ron: So it's really a river first one focus during two one was on the northwest trend, which based on last year drilling of the potential of presenting open pit reserve in the short term.
Ron: And sales will grow proportionately.
Ron: The first one was I think it also target the bone cloud extension.
Ron: From surface as part of the company's strategy to explore for additional high grade and enroll.
Ron: This year's program at the northwest trending through the combination of Diamond drilling to test the down dip extension of Jerusalem.
Ron: North sea drilling to infill and drove this all along strike spending up exploration spending August sorry, and saving on costs.
Ron: We continued our work in open pit express.
Ron: As mentioned above.
Ron: <unk> potential.
Ron: So the bill for.
Ron: Additional studies on the underground mine design and the transition of those will have tailing storage also continues to make progress.
Sure.
Ron: In closing.
Ron: Q1 was positive for new gold and we're going to need to deliver on our stated strategy goals.
Ron: We will continue to build on this goes from here.
Ron: Include delivering on Switzerland, prior production and cost guidance.
Ron: Same attention to health and safety.
Ron: Our continuous.
Ron: Total total reportable incident frequency rate performance is a direct indicator of the support from our employees for their coverage to cure sugar.
Ron: So at new Afton, we will ramp up seasonal and in terms of development of this extension.
Ron: Trinity River, we will continue to ramp up the underground mine mining phase four phase four and advanced space via open pit development.
Ron: Okay.
Ron: Lastly, we are continuing to increase our exposure in Florida bauxite with a combined $13 million of investment for 2025 targeting further reserves replacement.
Ron: This is a very exciting time for new gold with increasing production and silicon free cash flow generation.
Speaker Change: Robert commodity cycle.
Speaker Change: And that's with our safe what established mining as a reduction in exposure to what we view are perfect perfect middle and gold and copper and new Golar further competing investment proportion.
Speaker Change: The remainder of 2020 will see the company built on first quarter result, which is expected to create meaningful value for our shoulders and provide increased financial flexibility in OXXO to upsell of a need for new gold moving forward.
Speaker Change: Before I turn the call over to questions I will like to just take a minute to welcome Travis we refer you to our team.
Travis: Travelers has joined the <unk> team as our VP operation in late March.
Travis: His first month at site.
Travis: Service will take a more active role in our quarterly calls as it settles in.
Travis: But for now I Hope you will join me in welcoming him to our team.
Travis: This completes our presentation I will now turn it back to the operator for the Q&A portion of the call operator.
Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: Should you have a question. Please press the star followed by the number one on your telephone keypad.
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Speaker Change: If you are using a speaker phone please lift the handset before pressing any key.
Speaker Change: One moment for your first question.
Speaker Change: Your first question comes from Michael <unk> from RBC capital markets.
Speaker Change: Please go ahead.
Speaker Change: Thanks, very much for taking my question.
Speaker Change: Maybe starting with the <unk>.
Speaker Change: New Afton exploration update that you provided.
Speaker Change: And in the context of the.
Speaker Change: A two part question I guess in the context of the.
Speaker Change: And the additional consolidation.
Speaker Change: New afton getting up to 100%.
Speaker Change: And maybe the gold price.
Speaker Change: Well over the last few months does anything change in terms of how you're approaching about exploration in the outlook for the <unk> zone.
Speaker Change: Potential next block cave and the second part is can you give us maybe an indication of the cadence.
Speaker Change: What we should expect in terms of a potential for a resource Ah study how are you mapping that out over the next little while.
Speaker Change: Thank you.
The first the first quarter.
Speaker Change: Sure.
Speaker Change: We consider it features a partner.
Speaker Change: The way that I think we'll start to know each other the way that I am working in <unk>.
Speaker Change: <unk> been working and I am fully engaged.
Speaker Change: And so we will.
Speaker Change: We will not change to bring the mine life.
Speaker Change: Beyond 2040, so we're investment.
Speaker Change: So we cannot spend more money for now that what we are doing because we are mainly limited by.
Speaker Change: By the <unk> itself.
Speaker Change: Our capacity to add more drill but vote, but we are pretty aggressive and will continue to be aggressive. He is all for us is the potential to.
Speaker Change: So we wanted to.
Speaker Change: Our objective is to find and others is omer.
Speaker Change: The team out sorry, all working extremely hard for this.
Speaker Change: The drift is going as expected.
Speaker Change: We needed to two other two intersecting the orebody and to go deeper and to grow more is we need to put our grief this risk.
Speaker Change: We'll be I think we originally we plan to have three drills in the draft. We got our first to file growth.
Speaker Change: Here are believed to complete the drilling as much as we can for the beginning of Q4 to be able to Aaron's given resources in Keystone for Europe.
Speaker Change: Thus, we are doing but in parallel Java as well and the team are looking for targets.
Speaker Change: So I hope that is before yearend, we will be able to disclose few of the discovery of Rio Tinto.
Speaker Change: We still have a lot of financial on our property and we want to maximize that.
Speaker Change: And we for all providers as far as an update.
Speaker Change: End of Q3.
Speaker Change: It's mostly we are targeting that for September.
Speaker Change: So would it be reason I know I'm skipping ahead of it here, but would it be reasonable if you have let's say the success that that you think youll have.
Speaker Change: K zone and under the C zone.
Speaker Change: Would it be realistic to think about maybe an initial study in 2026 are or how are you thinking about that pacing.
Speaker Change: So that's what we are but we won't have to pay to yes. We also have been hanging wall, where we have indicated we also I think hanging wall was something that we don't want to part with.
Speaker Change: On the <unk>.
Speaker Change: We are in the <unk> remained between 2012 and 2022.
Speaker Change: We have indicated resources and then you also we wanted to the remainder of the two four for the team moves for example, elsewhere and look is to look at the two have unrealistic approach of the resource that we have if we just have the one target and you run. After this yes, we will generate an EV, but if we put the tree and we align them one after the other one is the good order.
Speaker Change: To generate the maximum NPV and reduce.
The capital allocation to make sure that because one of the objective personal objective.
Speaker Change: Our objective that we are able to move to Cogs newfield and generate cash flow.
Speaker Change: And based on that I think if we do our job appropriately will be able to balance our capital allocation and the revenue generation and the NPV for shareholders. So I think for now.
Speaker Change: Why is the theme of our blasting the exploration if I can say that two to bring us in our objective as I said to you is to find another season there.
Speaker Change: Consequently, I think we can easily bring this morning beyond 2014.
Speaker Change: But we are targeting.
Speaker Change: Target studies for with target resource update for the end of this year. So we provided an update to the market for exploration work at the end of Q3, we won 12, new unscheduled resources for year end.
Speaker Change: And we will blast all we were already doing work. So Luke is working extremely hard with the team we already doing prep works to our studies for 2026.
Speaker Change: Okay. It makes sense and then just one follow up on M&A then.
Speaker Change: It sounds to me like.
Speaker Change: You you've got a lot of optimism about new Afton and there's the upside at rainy River again in the context of the consolidation from 50% to 100% of new Afton are you thinking much about growth opportunities outside of the portfolio or do you think for now.
Speaker Change: You've got more than enough on your plate.
Speaker Change: To look at longer term growth.
Speaker Change: The first thing is what we control is our organic growth that's something that we have.
Speaker Change: So we cannot control what is in the ground with exploration, but I think as we control our destiny through true if we develop our resources and develop our assets. So it's what we can control and that's where we're investing the majority of our efforts.
Speaker Change: And capital allocation turmoil, if organic growth for M&A.
Speaker Change: It all will depend on the opportunity as I explained to you before our intent is not to be bigger to be bigger.
Speaker Change: <unk> has to be bigger it could be better.
Speaker Change: So.
Speaker Change: We are prudent in our approach and our focus is to improve the value per share and it's mainly what this data we're actually of the year.
Speaker Change: Okay perfect. Thank you very much I'll pass it on.
Speaker Change: Thank you so much for that question.
Speaker Change: The next question comes from Lawson Winder from Bank of America Peak go ahead.
Speaker Change: Thank you operator, and good morning, Patrick and team. Thanks, so much for the update.
Speaker Change: <unk> of rainy river and the future there so with the gold price where it is.
Speaker Change: To what extent might you now consider a more significant layback on the open pit to Q2 continue to access.
Speaker Change: Additional ore there as opposed to just focusing on underground.
Speaker Change: And then and thinking about what are your options for tailings.
Speaker Change: Yes, so thanks.
Speaker Change: <unk>, we can answer to this but the new rules.
Speaker Change: We are we are looking at this because we already having.
Speaker Change: Indicated resources.
Speaker Change: We are a part we have gains that we can if we bought the open book than we are.
Speaker Change: Part of the answer is that will there'll be transferred from underground to the open pit mining method.
Speaker Change: What we are looking at Thats really is is the capex allocation.
Speaker Change: Notwithstanding for Postbank itself, but for the tailings storage facility. So we are for the 40 to 101 that we presented to the market.
Speaker Change: Beginning with Q1 of this year.
Speaker Change: The tailings storage facility.
Speaker Change: He is close to its maximum capacity.
Speaker Change: So we have.
Speaker Change: All of the infrastructure.
Speaker Change: The propulsion profile that we presented in the technical report will be stored in the <unk>.
Speaker Change: So what we are close to the next level.
Speaker Change: So we are looking at different possibilities.
To reduce the capex.
Speaker Change: We'll have to invest in building a storage facility, if we want to do the pushback.
Speaker Change: All of this balance that Luke is working on do you want to add something.
Speaker Change: No I think thats.
Speaker Change: Covered most of it I think.
Speaker Change: Debt.
Speaker Change: This exploration drilling that we're doing in northwest trend is.
Provided the opportunity for potential bolt pivot northwest trend as well.
Speaker Change: And that also positive share opportunities.
Speaker Change: As well I have been looking at lots of different service disruptions.
Speaker Change: Yes, Youre right its the capital is behind Us and the mill.
Speaker Change: We have a trained people were trailing qualify two will do open pit mining we are motivated people, we improved drastically our performance milk and safety, we improved drastically also.
Amendments.
Speaker Change: Okay.
Speaker Change: <unk> with the SEC.
Speaker Change: The maintenance in the mill.
Speaker Change: We want to maximize that as much as we can and then also for the first time this year.
Speaker Change: Invest things up was what I was looking for targets on our land package at rainy River, So with division that.
Speaker Change: Our vision is ultimately at the end of the year, when we will exhaust the mining and the mining reserve that we have.
Speaker Change: Is that we have a pit that will be.
Speaker Change: A really low or no cost savings. So those are some diesel if we can find another pit than we are.
Speaker Change: We're connected to the national grid.
Speaker Change: Really appreciate the meal that is performing extremely well in terms of recovery compared to the degree that we are feeding the millwork.
Speaker Change: It's what we're looking at we are we are initiating work for the first time on the property to find additional resources.
Speaker Change: This year.
Speaker Change: Okay.
Speaker Change: Intriguing, yes, looking forward to hearing more about that.
Speaker Change: Can I follow up on the on my question just about <unk>.
Speaker Change: Growth and your desire to get bigger.
Speaker Change: When you think about the ideal asset to add to the portfolio do you think of a project an operating mine.
Speaker Change: And then when you think of jurisdiction.
Speaker Change: Are you primarily focused on on Canada, you mentioned in the Americas in the past and maybe you could just elaborate on what Youre thinking is in terms of just curious section as well.
Speaker Change: Well you know what it is.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: So because we are we or another.
Speaker Change: Tony we have two assets actually we're pretty agile Diablo.
Speaker Change: So I think it's <unk>.
Speaker Change: <unk>.
Speaker Change: I would say extremely well.
Speaker Change: We are modest.
Speaker Change: And we have experience with the Americas.
Speaker Change: So it was accretive something that if we have to look back.
Speaker Change: It's something that we will we are to be opportunistic were looking up but.
Speaker Change: It's difficult to find the project and all that is perfect.
Speaker Change: Our expertise in open pit, we have expertise in underground.
Speaker Change: Myself.
Speaker Change: To remind them to company from scratch.
Speaker Change: But we knew it was prior.
Speaker Change: To me, it's a bit different we have the capital risk is different but generally in term of.
Speaker Change: It's difficult to get to <unk>.
Speaker Change: Sorry the list.
Speaker Change: So and we will look at the safety of people first.
Speaker Change: We are looking at <unk> <unk>.
Speaker Change: We cannot afford to invest time in their forward some capital into project them through.
Speaker Change: The government, where we are looking at we are doing business as <unk> banka permits.
Speaker Change: Not before that.
Speaker Change: And also for me personally.
Speaker Change: The security of it might people is the most important page.
Speaker Change: I don't want to compromise the security of people we are doing works so.
Speaker Change: So maybe it guide that we know where we want to play and I think as we're looking at.
Speaker Change: No.
Speaker Change: The other part of my question was kind of project versus operating mine is there a strong preference between the two.
Speaker Change: I think it was the perfect becoming small so it's.
Speaker Change: It's.
Speaker Change: Preference will be to two Avenue.
Speaker Change: That is operating with cash flow and since it can be to build something but then we'll have to see you again, we want all our company is.
Speaker Change: We added to my my predecessors did an amazing work to to reiterate with the balance sheet of this company and I don't want to get back into the same position. That's why we wanted to be presenting that.
Speaker Change: So but.
Speaker Change: If we can the priority will be to to add them to bolt on to our two asset productivity. So that's what that is in production with distributing cash and subsequently used to build some big.
Speaker Change: But thanks very much.
Speaker Change: The last time I checked on Amazonas.
Speaker Change: We are all to find us.
Patrick <unk>: Yes, not easy okay. Thanks, thanks for that color Patrick Thanks, So much appreciate it.
Speaker Change: Thank you Youre welcome.
Patrick <unk>: Okay.
Patrick <unk>: Yeah.
Speaker Change: Thank you so much for that question and for the next question we have here Eric Windmill from Scotiabank. Please go.
Patrick <unk>: Go ahead.
Eric Windmill: Hi, Joe Hi, parchment team I appreciate you taking my question.
Speaker Change: New Afton I Wonder if you could elaborate a little bit so youre doing this the flow cleaner circuit upgrade here to bump the recoveries.
Eric Windmill: I know youre, saying its commissioning in Q.
Eric Windmill: Q3, just wondering what some of the key milestones you're looking for there you could please remind us on the Capex and then I guess second part are you seeing any challenges in the supply chain here.
Eric Windmill: As it relates to geopolitics and tariffs and what we're seeing.
Eric Windmill: Yes, so we.
Eric Windmill: Well a few a few question Erika tried to if I'm missing some points you. Let me know so on Capex, we're buying on.
Eric Windmill: Thank you.
Eric Windmill: What we present in the technical report, what we presented to you in the guidance.
Eric Windmill: So we're.
Eric Windmill: What we are doing.
Eric Windmill: Our forecast for year end, we are buying on we're progressing.
Eric Windmill: Revenue well in the <unk> because this year we.
Eric Windmill: Capital allocation is for the stabilization of the tailings, we argue and events.
Eric Windmill: When we did the debt from three of the tailing storage facility, we are 20% less water and as expected. So we are really well positioned to stabilize that more than a year in advance. So we are really satisfied.
Eric Windmill: We have an investment in the mill that will increase the recovery of our concentrate that is just replace what is themselves. It's going extremely well we are bang on time and slightly under budget and for underground we are exactly where we want to be in terms of the progression of the conclusion of the case. So we.
Eric Windmill: We are.
Eric Windmill: We are 53% progression in the cave, we expect to be at 94% at year end. So we will still adding crude Rob Wills to build in Q1 2026 as planned.
Eric Windmill: Actually we are bang on in terms of Capex. So the next milestone is what what is exceptional for our new <unk>.
Eric Windmill: Our firm is in Q1, we over perform vitry in term of recovery and in term of grades.
Eric Windmill: No.
Eric Windmill: It was excellent.
Eric Windmill: So the program is the broker side of it.
Eric Windmill: Because we are we slow down the progression of season to go forward with this one because we have more tons to extract and also the progression of <unk> as Brian and we'll reach slightly more.
Eric Windmill: Thanks.
Eric Windmill: So as.
Eric Windmill: And in term of term that will come right. So we're still expecting to be at 60 tons per day.
Eric Windmill: By the end of this year.
Eric Windmill: And we will do the exploration update that is a major milestone at new Afton in Q3, we will have over.
Eric Windmill: Reserve.
Speaker Change: At the beginning of Q4.
Speaker Change: And so and so I think it's the major milestone that we got out there this year.
Speaker Change: So the mine is we're really pleased that it's performing as expected if not better than expected <unk>. So and we will complete the extraction of battery in Q2 in this quarter in Q2 2025.
Keith: And Eric it's Keith on supply chain.
Keith: We're not really seeing a material impact right now and is a relatively small portion of our cost profile excellence from the U S and is subject to tariffs we have seen some crashes I'd say overall on supply chain, but our team has done a really good job to mitigate.
Keith: <unk> seen any impact on critical supplier side.
Keith: So a little bit, but not much impact at the moment.
Keith: Okay Fantastic Yeah, I really appreciate all the added color.
Keith: Maybe just on the flow cleaner circuit upgrade.
Keith: Specific milestones, we should be looking for there as it comes into service in Q3.
Leukemia: Yeah, Hi, Eric it's leukemia.
Keith: Finished a major shutdown in the plants at new Afton this months, which was planned.
Leukemia: As part of that would be completed the bypass.
Leukemia: The.
Speaker Change: The third stage of cleaners said, it's predicting positioned to complete the project in Q3 with IV.
Leukemia: Delayed.
Leukemia: <unk> operation.
Leukemia: Maybe I'll start which was just completed.
Leukemia: And then the fabrication of gas from James Hello.
Leukemia: Yes.
Leukemia: Everything's on track there.
Speaker Change: Alright, great to hear really appreciate it so congrats on a good start to the year ill hop back in the queue cheers.
Leukemia: Thank you.
Speaker Change: Thank you for the question and for our next question that will differ Jeremy or higher from Canaccord Genuity.
Speaker Change: Please go ahead.
Speaker Change: Thank you operator, hi.
Speaker Change: Keith Thanks for taking my questions and welcome to Travis.
Speaker Change: Just two questions from me.
Speaker Change: You guys completed a milestone at rainy River and the underground development is a breakthrough in the Tech corridor.
Speaker Change: Two other key items that you had talked about was the fresh air range and event loop.
Speaker Change: Could you comment on progress there and if those are still expected to be complete in Q2 and my second question is on grades in the three I know thats going to be culminating.
Speaker Change: This quarter, but just wondering so far if we're seeing seeing elevated grades is that case tails off.
Speaker Change: Okay.
Speaker Change: And just for maybe the first boring for river.
Fresh berries.
Speaker Change: The activity. There is boring is completed was completed last year.
Speaker Change: <unk> costs were normal.
Speaker Change: But we think we're going to receive all the components and our objective is through conversion that mid June and to be fully operational in June. So I think it's going to be in Q2.
Speaker Change: An important milestone for us.
Speaker Change: Well look I think we're still having one with 70 meters of development to complete that were ramping up in Europe.
Speaker Change: We're working for both sides of deep learning and we're ramping up and we felt we plan to complete.
Speaker Change: I think look for again.
Speaker Change: In Q2 this month this quarter, so basically the two major milestone with our luck a lot of possibilities speed up so.
Speaker Change: On the portal.
Speaker Change: Using the Baltimore actually we all in the material for the weeks of Olympic Lachlan.
Speaker Change: So the pit on the Ram Buildout from Libya.
Speaker Change: Sterling.
Speaker Change: Okay great.
Speaker Change: And then Jeremy with them with the great Yeah.
Speaker Change: As I said, we continue to see the B three.
Speaker Change: K progressed, well as I said, we expect that to be completed and exhausted in Q2, and then we'll be in that transition period between C zone in between grade. So we do expect that production profile to be aligned with what we guided previously.
Speaker Change: He is on the grid in the block cave as we assimilate that we're using.
Speaker Change: It's a good solid sort of skip itself, where we call. The PCB system to do the mobile at the greed and at the end of the block cave, we usually you have more dilution.
Speaker Change: Your you have less material in the scope of the division is coming from the wall. So we plan border worse than we wish for the best and this is the reason we got the best because we are the resolutions would agree that we are unexpected if we knew what was happening.
Speaker Change: Yeah, well it was a nice little surprise for the quarter.
Speaker Change: Okay great.
Speaker Change: Sometimes it's good to have some positive.
Speaker Change: Yeah, absolutely I'm in agreement there and if you can't find any assets on Amazon may be you can look at Gmail I hear cheese prices.
Speaker Change: Thank you.
Speaker Change: [laughter].
Mohammad KDB: Thank you for that question and for our next question that would be if I am Mohammad KDB.
Speaker Change: Please go ahead.
Speaker Change: Thank you Patrick and thanks for taking my question. So just to follow up on Jeremy's question I guess that you have done under grades.
Speaker Change: I just wanted to focus maybe on the split so you mentioned that we can still.
Speaker Change: Malo that 45% into first half of 2025, and you have to them does that imply basically a weaker Q2 with.
Speaker Change: With grades coming down there.
Speaker Change: Yes, as I said, the Q2 Petri coming off in <unk>, and Zelle and ramping up there is that kind of transition point with the with the caves and with the startup of the C Zone K, we did expect and when we do expect that to be lower grade. So yes, we still.
Speaker Change: In line with that production profile that we outlined at the start of the year.
Speaker Change: And this is the bottom parts of zone.
Speaker Change: Some lower grades as expected because it's part of the reserves itself, it's not a new drivers so with the lower part and also we have some draw builds of ore and waste and Europe is over and above so it's plan. So in 2025.
Speaker Change: We will process more tons than we did in 2024 to produce the same metal more or less is really because of the beginning overseas. One degree is the word and it's what is in the plan that's what we forecast.
Speaker Change: Great. Thanks, a lot for that color that's pretty helpful and just the second question on the capital allocation priority I think.
Speaker Change: Oh, sorry did you touch on the M&A front, but I was just wondering if that's part of it.
Speaker Change: As you look over the next three years in the amount of free cash flow, you'll be generating if there was any thinking around maybe potential capital returns to shareholders are desperately.
Speaker Change: Not top of mind currently thank you.
Speaker Change: Yeah.
Speaker Change: Oh.
Speaker Change: It's something that.
Speaker Change: So we are working on that.
Speaker Change: So for now of course for this year.
Speaker Change: Beyond the two so drove the buyback of the 19 board, 9%, we didn't want to dilute our shareholders. It was our strategy. So.
Speaker Change: So yes, we have the prepay in the revolver that we want to refill before yearend.
Speaker Change: As much as possible and we want also to maintain a minimum of cash in <unk>.
Speaker Change: Based on what happened with Covid COVID-19 can be outbound over.
Speaker Change: My name is so we want to make sure that we have sufficient.
Speaker Change: Capital I'm, not talking to have a $1 billion, but.
Speaker Change: 100 $150 million in cash in the bank account to react appropriately to what we have to face and to be opportunistic and after that the projects are not.
Speaker Change: If we.
So we have our <unk>.
Speaker Change: Greg that we want to support as they are brought in value for shareholder is not for sure. If we will have to return the money to the shareholders and something that with the board. We are really vigilant and we know that the cash flow that we'll generate and we know that that's shareholder money.
Speaker Change: And so that's why we're working for and so we will probably look at this in mid Gemzar brochure.
Speaker Change: Thanks, a lot Patrick and congrats on a good quarter.
Speaker Change: Thank you.
Speaker Change: Thank you for that question Mohammad and since there are no. Further question at this time I will be transferring to the conference again to Mr. <unk> Shah. Please continue.
Speaker Change: Thank you and thank you to everybody who joined US as always should you have any additional questions. Please do not hesitate to reach out to us by phone or email have a great rest of your day.
Speaker Change: This concludes today's call. Thank you for participating you may now disconnect.