Q1 2025 Coeur Mining Inc Earnings Call
Good day and welcome to the core mining first quarter 2025 financial results Conference call.
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Mitchell Krebs: I would now like to turn the conference over to Mitchell Krebs.
Mitchell Krebs: President and CEO. Please go ahead.
Mitchell Krebs: Good morning, everyone and thanks for joining our call today to discuss our first quarter results.
Mitchell Krebs: Joining me are make routledge from a grass and Tom Whelan and we'll all be available to answer questions at the end of the call.
Mitchell Krebs: Before we start please note our cautionary language regarding forward looking statements and refer to our SEC filings on our website.
Mitchell Krebs: The first quarter highlights shown on slide three summarizes our solid start to the year, which led to the fourth consecutive quarter of positive E. P. S and another quarter of positive free cash flow.
Mitchell Krebs: These were great outcomes, considering the first quarter is expected to be our lightest quarter of the year and.
Mitchell Krebs: And we had several one time and quarter specific items that we had previously telegraphed.
Mitchell Krebs: The combination of higher prices. The addition of silvercrest liquidity and a partial quarter from lost cheapest.
Mitchell Krebs: Along with Rochester's progress toward achieving steady state and consistent performance from our other operations drove these strong results.
Mitchell Krebs: Which allowed us to eliminate nearly $130 million of debt and metal prepaid facilities in the quarter and leave us well positioned to achieve our full year guidance ranges.
Mitchell Krebs: We're now set to accelerate the pace of further debt reductions based on strong anticipated silver and gold production growth from our balanced portfolio of five North American operations.
Mitchell Krebs: This growth is expected to drive full year, adjusted EBITDA to over $700 million and free cash flow to more than $300 million, which should leave us with a year end leverage ratio close to zero.
Mitchell Krebs: It was only a few quarters ago when annualized adjusted EBITDA was only about $100 million free cash flow was negative $300 million and our leverage ratio was over four times, which highlights the degree of change now underway at the company.
Mitchell Krebs: Just a couple of other points before turning the call over to Mick burst unmask cheapest the integration is proceeding smoothly.
Mitchell Krebs: The operation delivered very strong high grade production at extremely low cost during the portion of the quarter that we owned it.
Mitchell Krebs: As we anticipated the teams have gelled exceptionally well.
Mitchell Krebs: On the exploration front recent emphasis on near mine drilling resulted in a significant discovery in the gap zone between the Bobby Canola and lost Cheeseburger zones. In addition, several high grade results had been received in an adjacent to the lost cheese Biz stone.
Mitchell Krebs: Eva will share some additional details on these developments in a few minutes.
Speaker Change: Second in our interactions with current and prospective shareholders. One of the most popular topics is our thought process for deploying the accelerating cash flows we anticipate generating in the coming quarters.
Speaker Change: It's a great conversation to have given the years of heavy investment that's been made to position the company like it is right when gold and silver prices are rising.
Speaker Change: Our board is committed to pursuing ways to generate per share value for our shareholders and we're actively engaged with them about how best to accomplish that while continuing to strengthen the balance sheet and reinvest in the business given the number of attractive opportunities that exist within the company.
Speaker Change: We look forward to continuing the conversations with our shareholders and with our board as we deliver on what should be a record year for the company and we will provide more details as we have them.
Speaker Change: Finally, we published our 'twenty 'twenty four responsibility report today, which is summarized on slide 20.
Speaker Change: Being responsible stewards and acting with integrity and respect are central to our mission of pursuing a higher standard.
Speaker Change: And I encourage you to have a look and read about everything we've accomplished over the past year.
Mick Burst: Mick over to you.
Mick Burst: Thanks Mitch.
Mick Burst: The addition of lost cheese puffs, Rochester's rump oops I'm consistent contributions from the rest of the mine sites, where the main headlines during first quarter.
Mick Burst: Before getting into the details of our good start to 2025 I'm happy to report that based on M showed data co finished 2024, if the safest mining company amongst our peers in the United States, marking our third consecutive year of doing so.
Mick Burst: We take a lot of pride in our deeply entrenched safety culture, and we will continue to set the bar high in this critical area.
Mick Burst: Mitch mentioned the word balanced in describing our portfolio of mines and it bears, noting that with the additions of lost cheese puffs and the expanded Rochester Coors asset piece has never been more balanced.
Mick Burst: With no single operation contributing more than roughly a quarter of total revenue.
Mick Burst: That is quite a departure from past years, when revenue from pulmonary who alone approached 50% of the tool in some periods.
Mick Burst: The importance of having all mines, making meaningful contributions spreads operating risk and lens consistency unpredictable to our overall portfolio.
Speaker Change: Going through the sites and starting with our newest Las cheese puffs.
Speaker Change: Partial first quarter production of 714000 ounces of silver and over 7000 ounces of gold was right down the fairway versus silvercrest budget.
Speaker Change: Daily average main production exceeding 3800 tonnes per day was better than plan.
Speaker Change: Ringing in higher margin ounces with cost per ounce for gold and silver coming to $744 and $8 38, respectively for the period.
Speaker Change: Slide seven provides a great reminder of how special loves Chiefs buses in terms agreed cost and margin profile.
Speaker Change: King with Mexico.
Speaker Change: The palm Riehle team delivered another solid quarter.
Speaker Change: Gold production was up 2% and silver production of 9% compared to the fourth quarter, driven by good productivity and Guadalupe to finish the quarter strongly.
Speaker Change: The Paul Maria who in last year's plus teams are engaging with sharing of best practices and new perspectives, taking place in both directions with lots of opportunities to realize efficiencies and productivity enhancements and Coors expanded Mexico operations footprint as well as sharing and working with our teams at Kensington in silvertip.
Speaker Change: Turning to Rochester Crusher performance continued to improve with optimization of the mail alone three stage crushing circuit and this remains job number one.
Speaker Change: The team placed 7 million tons during the quarter relying less on direct deposit tunes than in the prior quarter as more material goes through the crusher.
Speaker Change: The team continues to work down the lane to identify and implement adjustments and modifications to progress improvements in availability.
Speaker Change: Recovery rates continue to truck to predicted levels and are expected to trend higher as the average crush size trims down throughout the year towards an expected average of 77 inch.
Speaker Change: Which is what our budget on reaffirmed full year guidance assumes.
Speaker Change: One other note on Rochester, the team commenced the 8 million tonne stripping campaign for the partial removal of the stage, one and two reclaimed leach pods.
Speaker Change: To allow for infill drilling later in the year as.
Speaker Change: As we look to bring forward higher grade material into Rochester mine plan.
Speaker Change: Moving to Kensington.
Speaker Change: <unk> production increased by 6% compared to the first quarter a year ago.
Speaker Change: With the operation well positioned to reap the benefits of the multiyear investment in underground mine development and exploration and a return to positive free cash flow this year.
Speaker Change: Finishing up with Wolfe.
Speaker Change: First quarter production came in slightly higher compared to the first quarter of last year as weather tends to pose challenges there during the winter months, but wolf is well positioned to deliver another strong year in 2025.
Eva: With that I will pass the call over to Eva.
Eva: Thanks, Nick.
Eva: Exploration got off to a very strong start in 2025, but as many as 21 rigs active in the quarter with encouraging results across the board.
Eva: As a recap the company's exploration investment in 2025 is expected to total $77 million to $93 million.
Eva: Of which approximately 85% is focused on expansion in scout drilling.
Eva: At last his past the key aims virtually complete the integration of the team and reorient exploration programs from the wider region to a greater focus on the main asset.
Eva: This integration has now been completed and programs aimed at maintaining a steady mine life are in place.
Speaker Change: You can see on slide nine more details I imagine notable new discovery that was made during the quarter of a new vein called Augusta, which to date has been defined over 200 meters along strike and 150 meters down dip.
Eva: It is running multi kilo silver very high grade gold and remains open in every direction.
Eva: In addition to the highly encouraging discovery in the gap zone.
Eva: Drilling on multiple veins on an adjacent to the last chase brass block have returned high grade intercepts that she'll increasing strike length on each vein.
Eva: Early days at last his task, but very encouraging results from the outset.
Eva: Our camarillo ongoing programs encompass the full spectrum of exploration from districts scanned target generation through two expansion drilling.
Eva: A pilot program as high resolution Geophysics was flown in late 2024 and is proving highly impactful.
Eva: Exploration can now more accurately identify the sub surface locations and favorable host rocks and structures.
Eva: Meaning scout drilling should assess targets more efficiently.
Eva: An exciting structural study and mineralization review has also undertaken during the quarter.
Eva: It shows consistent styles of mineralization across the district, indicating very high perspective of tea in all four major balance three of which are still under explored and are shown on slide 10.
Eva: Yeah.
Eva: They recently signed agreement gives us full access to the entire glad that power is hey, Ido area that covers independencia sewer and the historic San Miguel and Lake Union resources, along with many other targets in the glass of Piraeus trend and then arent easters the claim block.
Eva: Also of note during the quarter is the validation drilling that commenced at Independencia sewer.
Eva: Willing testing the historic Threadneedle resources and their continuity from established sedans and minds uncooked land is proving highly encouraging with high grade results in the corridor.
Eva: At Silver Kit a brand new geological model is completed which is creating an exciting tool for targeting an exploration program planning.
Eva: In addition, we more than tripled the land package et cetera, except in the first quarter. They were taking over 60 kilometers of strike length of prospective ground that has the same geologic setting is sell Richard.
Tom Whelan: With that I'll pass the call over to Tom.
Tom Whelan: Thanks, Eva I'll begin with a brief review of our <unk> financial results, our first quarter with the inclusion of last teased us, albeit for only 45 days.
Tom Whelan: Despite our lightest production quarter, we are proud to be able to report a fourth consecutive quarter of net income and a third straight quarter of free cash flow with.
Tom Whelan: With the previously telegraphed messy first quarter behind US, we look forward to a series of Boringly predictable quarters as we embark on the final steps on our journey of achieving our deleveraging goal of net debt to EBITDA of nil.
Tom Whelan: As noted on slide 11, with just under 90000 ounces of gold and 4 million ounces of silver sold during the quarter.
Tom Whelan: We got a serious sneak peek at what the consolidated core portfolio can generate in terms of financial results key financial headlines for the quarter included revenues of $360 million quarter.
Tom Whelan: Quarterly adjusted EBITDA of $149 million net income of $33 million.
Tom Whelan: And free cash flow of $18 million we.
Tom Whelan: We were pleased to see our adjusted EBITDA margin increased to 41% during Q1, essentially doubling from the prior year.
Tom Whelan: As we had flagged during the yearend conference call. There were several one timers in first quarter specific matters totaling $130 million, which impacted our Q1 free cash flow slide 13 provides a clean snapshot of these five items.
Tom Whelan: Helping to offset these outflows with the monetization of $72 million from Silvercrest finished goods and Boolean balances we inherited on the closing of the transaction the.
Tom Whelan: The monetization did not flow through the revenue line, but did positively impact the last piece of this operating segment free cash flow. Excluding the monetization last cheapest Q1 free cash flow was $20 million not too shabby for six weeks.
Tom Whelan: It is important to highlight that absent. These one timers in first quarter specific items first quarter free cash flow would have been approximately $76 million.
Tom Whelan: Based on our updated forecast pricing of 20 $932 for gold and silver respectively. We expect to generate on average $75 million to $100 million of free cash flow per quarter for the rest of 2025.
Tom Whelan: Note three of the interim financial statements in the 10-Q provides the details of our preliminary purchase price allocation of silvercrest.
Tom Whelan: Three important accounting nuances that we wanted to highlight include first the inventory acquired in the approximately 150000 tonne stockpile at last she says was recorded at fair value.
Tom Whelan: Which will lead to higher cost applicable to sales as we monetize the inventory from the stockpile we.
Tom Whelan: We have disclosed last he says adjusted CASM the earnings to give you a sense of the accounting impact secondly, with just over $1 billion allocated to the mineral property and plant property and equipment of last Chi says expect higher amortization expense and third there are nearly $300 million of deferred tax liabilities.
Tom Whelan: Which arose as a result of the purchase price accounting.
Tom Whelan: These deferred tax liabilities will unwind as we amortize the mineral property and plant property and equipment balances, which will impact future income tax expense every quarter.
Tom Whelan: It is important to note that none of the above items impact free cash flow, but they will impact net income.
Tom Whelan: Slide 15 tells the story of Coors rapidly strengthening balance sheet with the help of silvercrest pristine balance sheet not only did we use their finished goods and bully imbalances to help offset an otherwise messy first quarter, we used the clothing cash acquired of approximately $100 million to begin <unk>.
Tom Whelan: Building, our cash balances up to $78 million at the end of March and we repaid another $85 million on our revolving credit facility, which at quarter end stood at only $110 million drawn.
Tom Whelan: We expect that the remaining revolver balance should be repaid by the third quarter of this year and maybe sooner if prices can remain at these elevated levels of.
Tom Whelan: A significant benefit of this debt reduction is that we expect to cut our interest expense and half versus the 'twenty 'twenty four level of $51 million.
Mitch: I'll now pass the call back to Mitch.
Mitchell Krebs: Thanks, Tom.
Mitchell Krebs: Before moving to the Q&A I want to quickly highlight slide 17 summarizes our top priorities over the remainder of 2025.
Mitchell Krebs: With several key company catalysts now converging at the same time that prices are reaching much higher levels.
Mitchell Krebs: We offer investors peer leading leverage to both silver and gold.
Mitchell Krebs: And provide our shareholders with exposure to a rapidly strengthening profile as 'twenty twenty-five unfolds.
Mitchell Krebs: We look forward to updating you as we deliver what should be a record year for core mining.
Mitchell Krebs: With that let's go ahead and open it up for questions.
Mitchell Krebs: We will now begin the question and answer.
Mitchell Krebs: <unk>.
Mitchell Krebs: To ask a question you May press Star then one on your telephone keypad.
If you were using a speakerphone please pick up your handset before pressing the keys.
Mitchell Krebs: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Mitchell Krebs: At this time, we will pause momentarily to assemble our roster.
Mitchell Krebs: Yeah.
Mitchell Krebs: Hmm.
Mitchell Krebs: Yeah.
Speaker Change: The first question comes from Wayne Lam with TD Securities. Please go ahead.
Speaker Change: Yeah. Thanks morning, guys.
Speaker Change: We did just that.
Maybe just at Rochester, a good to see the increase in tonnage to the crushing circuit.
Speaker Change: Just wondering when you would expect to see the benefit of that roll through the silver recoveries and then just curious on the direct the pad material is this quarter representative of the percentage of DTP material that you would expect on a run rate basis or would you expect that percentage.
Speaker Change: Through the crusher to increase as well over the coming quarters.
Speaker Change: Yeah. Thanks, Thanks Wayne.
Speaker Change: I'll start and then make you can yes, you can add to my my answer look the team up there is doing a great job.
Speaker Change: Stepping up to this much higher mining and processing rate two and a half time increased silver over prior years, whether its at the mining crushing and processing and refining.
Speaker Change: Recoveries are tracking model grades are nicely ahead with produced what we expected in the first quarter.
Speaker Change: We were kind of repeatedly proven to ourselves a crusher can do what we but we needed to do both from a throughput and a and a crusher and a crush size standpoint, so and we're pleased with how things are going I think the budget and guidance are built off of seven eighths inch target.
Speaker Change: I think to the first quarter that that was at about <unk> 92, five for the material that went through all three stages of crushing so as we see that crush size continue to trend down we'll see those recoveries continue to to go up.
Speaker Change: And confident that we can.
Speaker Change: Hit our full year guidance like we like we suggested in our in our release this morning.
Speaker Change: Part D T P that will likely decline as we go forward and as crusher availability continues to improve.
Mike: But Mike do you want to go ahead and.
Speaker Change: Answer Wayne's question further yeah, and just to see going forward.
Mike: Year on year that will decline on the DTP profile, but.
Mike: As we reported previously we expected to put about six 6 million tons of C. G. P through the pipe this year and at 1.5 in Q1, while round about the run rate that we thought we would be at it.
Mike: On the crusher itself as Mitch said.
Mike: The recoveries are trucking in the model.
Mike: As we see softer ores, it's great to have the flexibility and the crushing circuit that we didn't have previously so that we can bypass that tertiary crushing.
Mike: Crushing circuit and still provide the right tons to the to the pod overall when I see the crush are working the material going through all three stages of the crusher.
Mike: Deliberate about 70% of that material at five years of an inch so the overall blend and the target for this year at 78 of an inch is is within reach are not quite there yet, but a very typical.
Mike: Challenges on start up on an equipment. This kind this type and we're dealing with all of those things and I'm really happy about where we ought to do.
Mike: Okay.
Speaker Change: Okay, great. Thanks, and then maybe just at wharf just curious on the strong growth this quarter versus the prior quarterly guide being significantly lower for Q1 I.
Speaker Change: Just wondering what was driving that stronger performance versus the expectations.
Speaker Change: And if you might expect to see any bit of an offset to that performance over the coming quarters.
Speaker Change: Make you cover wharf.
Speaker Change: Yeah, Walter it's really just it's all about timing and where we are in the pit at anytime at the moment, we expect to deliver on the guidance at Wolf for the full year, we've seen some grade profile.
Speaker Change: Tweaks and some tonnage tweaks, but overall because that's an off heap leach pad type system, we are constrained on throughput.
Speaker Change: So overall and it's all about managing grade and hitting the plan and work is very predictable and I'm really happy about how it's performing and we expect that to continue performing at that level.
Speaker Change: Okay perfect. Thanks, and then maybe just last one on the cost front you.
Speaker Change: You guys have to say, maybe a bit lower costs on consumables.
Speaker Change: Are you seeing any impact of maybe lower labor costs as well in Mexico, and then just maybe as an offset to that can you comment on some of the cost pressures you might be seeing at Rochester and Kensington.
Speaker Change: Yeah, I'll start and then Tom May feel free to chime in.
Speaker Change: <unk>.
Speaker Change: With less cheese puffs, only having been part of the company for six weeks now that labor.
Speaker Change: Labor cost differential.
Speaker Change: Or is it still to be to be seen but.
Speaker Change: Given the.
Speaker Change: Employment increase.
Speaker Change: But that will we'll see from lost cheapest going forward that overall labor labor cost.
Speaker Change: We should see an overall.
Speaker Change: Benefit there.
Speaker Change: In terms of any any real cost pressures I mean, we've really not seen much at all there's a good slide in the deck you might've seen it waned I think it's slide 16 that just shows quarter over quarter, whether it's looking back 12 months are back over 12 24 months.
Speaker Change: You know the the declines have been pretty pretty significant so we're in really this nice sweet spot here, where we're we're not seeing the cost pressures.
Speaker Change: On the cost side, and we're seeing that the margin expansion with the higher prices in fact, if you look quarter over quarter.
Speaker Change: Our average realized gold price this quarter was 41% higher than a year ago quarter Silver average realized price was I think 36% higher than first quarter of last year and our cost per ounce were essentially flat right. So we're seeing that margin expansion.
Speaker Change: Big time that Tom alluded to in his in his comments, but Tom any ashman labor again for the most part.
Speaker Change: Cross across our asset base, we do annual raises in that first quarter and so that does kind of held in that especially across the U S sites in that 2% to 3% and Oh, we haven't experienced any.
Particularly concerning trends at all around turnover, so that kind of is locked in for the year and then we're watching diesel and cyanide in power costs and for the most part they're trending the right way, so pretty happy with the cost guidance and nice to see is set in the lower end of the range through the first quarter.
Speaker Change: Okay.
Speaker Change: Okay perfect. Thanks for taking my questions and looking forward to the improvement through the year.
Mitchell Krebs: Yeah. Thanks, a lot Wayne I appreciate it.
Speaker Change: The next question comes from Joseph Reagor with Roth Capital Partners. Please go ahead.
Joseph Reagor: Hey, Matt and team thanks for taking the questions and congrats on the strong junior.
Speaker Change: Thanks, Joe.
Joseph Reagor: I guess first thing.
Hum.
Speaker Change: On the inventory accounting.
Speaker Change: How long do you think it's going to take two to work through the extra ore stockpiled ore inventory at last cheap cheap.
Speaker Change: Bring and what level do you expect that inventory number on the balance sheet to get back down to because you know traditionally it's been more in the high Seventy's.
Speaker Change: The $2 28 is now.
Speaker Change: I'm smiling that he got an accounting question, Tom do you want to take that yeah. So again the inventory.
Speaker Change: The big increase in the inventory relates to the stockpile in front of that.
Speaker Change: The process plant at that last piece that says 150000 tonnes, which you know if you think about that's roughly five months production and so that balance well.
Gradually go down as Nic continues to mine and will put new tonnes on the stockpile at a lower cost and that will.
Speaker Change: Complete the existing stockpile will process all of that material, so youll see that number come down.
Speaker Change: Albert and for accounting purposes, we've estimated that that will happen over the next year in terms of materials and supplies, though and then we've added.
Speaker Change: A prudent level of inventory that team at last he says had done a great job of making sure. They had the right amount of spare parts et cetera, et cetera, and so you will see yet a an increase there on the balance sheet as it relates to the materials and supplies that we're not worried about that whatsoever.
Speaker Change: Okay.
Speaker Change: Is there like a rough targeted number you'd like to see that.
Speaker Change: Inventory be at year end total dollar number value.
Speaker Change: No I think.
Speaker Change: Well, we'll have to wait and see yet in terms of.
Speaker Change: Yeah, exactly how the material comes off that stockpile.
Speaker Change: And.
Speaker Change: I don't think we are at a particular target what we have guided the team down in <unk>, but you've done a terrific job the integrations going super well by the way.
Speaker Change: To just deliver the budget that the Silvercrest Board had approved.
Speaker Change: Back in December for the year, So no real specific target and again that the the value that's on that stockpile again, it's it's mainly driven by the accounting requirement to fair value at some of this was going to have an impact on our earnings as we need to play it's not going to have an impact on our free cash flow.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Fair enough and then.
Speaker Change:
Speaker Change: Bigger picture question for Mitch you know now that you're in the process of digesting the Silvercrest acquisition.
Speaker Change: How do you think about M&A going forward as the next thing on the list to start reviewing potentially a sale of something say war for Kensington or is it to look for more acquisitions or is there a temporary pause here.
Speaker Change: For a period of time.
Speaker Change: Yeah, I think Tom's words was boringly predictable.
Speaker Change: Predictably boring you know either way that's what I wanted to you yeah, we're going to be the next at least for the foreseeable future.
Speaker Change: Investors have waited a long time to see the benefits of all this investment that we're now starting to to be able to to generate and then 0.2.
Speaker Change: And then delivering on that is is is our focus now of course, we will always look at things that come across or that we identify as opportunities that fit through our filters of North America and make us.
Speaker Change: Or not necessarily just bigger and you know all those all those things, which you know it really makes for a pretty short list.
Speaker Change: But in the meantime, what we have out in front of us here at the company.
Speaker Change: It is pretty spectacular and we've worked a long time to get to this point. So we look forward on just delivering on that.
Speaker Change: And showing the kind of cash flows here in the coming quarters that we.
Speaker Change: We alluded to in our in our in our comments.
Okay, that's fair enough I'll turn it over thanks.
Speaker Change: Yep.
Speaker Change: The next question comes from Mike <unk> with RBC capital markets. Please go ahead.
Mike: Yeah, Thanks, very much for taking my questions.
Speaker Change: I'd like to go back to Rochester, but maybe just to <unk>.
Mike: Segue from the last question.
Mike: Could you go into a little bit more detail on how you're thinking about silvertip I know you've said accelerate resource growth.
Mike: Potentially invest some more cash in of silvertip.
Mike: But.
Mike: Prices have moved quickly in the last three or six months does that change your thinking and maybe conceptually what sort of milestones should we be looking for.
Mike: All sorts of over the next couple of years.
Mike: Yeah, Hi, Mike Thanks for the question.
Mike: Look we are we remain confident in the scale of the district, there at Silvertip and.
Mike: We're on the edges of a of a very large system. That's that's why we tripled our land package there in the first quarter that Eva mentioned, we've been targeting and Ben I think talking.
Mike: Over the last few months about sort of a five year time frame to to have silvertip in a position to to be a go no go a construction decision.
Mike: We all want silvertip to turn into a cash contributor versus the <unk>.
Speaker Change: Our cash consumer, but we also don't want.
Mike: Don't want to cut any corners, we need to go through the.
Mike: The project stage gauge, we need to keep drilling to keep improving our understanding of the deposit keep building critical mass the resource support the study work that.
Mike: That we're going to be doing we'll be kicking off our internal or an initial assessment here in middle part of the year, probably third quarter and that should be completed later next year that'll give us some good.
Mike: Sort of concrete information to consider next steps, where we go from where we go from there.
Mike: Have kind of built up our organizational capabilities to support.
Mike: The advancement of silvertip, whether it's on <unk> exploration team, making the projects team overall leadership, there so and we can we can devote some time and energy to better understanding what sorts of funding or permitting assistance, Mike might exist to potentially enhance the economics of shorten that time.
Mike: Table at Silvertip, but we're going to take some time and make sure. We do it right go through the project stage gauge keep drilling and while we do all that we can continue to generate the free cash flow and do everything that we've got set up in front of us here from from our other operations. So.
Speaker Change: Yeah, it's an interesting time to have a.
Mike: Our large and growing critical minerals project in Canada for sure.
Mike: And so we'll start turning our focus a bit more to that than we than we have been now that we're in a better position to do so.
Mike: Does that give you what what youre looking for Mike.
Mike: Yes, that's good color, thanks, and just to be clear. The initial assessment you were talking about that that would be internal wall me right now.
Mike: Public documents.
Mike: That's right.
Mike: Okay.
Mike: Okay, and then if we can put back to Rochester, I just want to make sure that I understand that I know this has been a topic of conversation.
Mike: What should we really be watching.
Mike: There in Q2 and beyond in terms of optimizing.
Speaker Change: Optimizing recoveries on the leach cycle and getting the operation to where you want it to be is it is it total tonnage crushed on the ratio between the two or or is it really getting as much material down to five eight so I mean, I know, it's a blend of all of the above but if there is if there's a metric that someone can look at them.
Speaker Change: And say, okay. We're on the right track are or maybe we're taking a pause here what would that be.
Speaker Change: And it's a crusher a run time availability and <unk>.
Speaker Change: And as we do that we'll see the other pieces fall into place. So I think that's.
Speaker Change: For me the key the.
Speaker Change: The key metric.
Speaker Change: <unk> yeah.
Speaker Change: Overall in the long run what target is to get to about 8 million tonnes placed on the pod on a quarterly basis and as you saw workplace and about $7 million. This this time around is that that's improving and that balanced between DTP pushed material would of course want to crush as much as we can and but our TTP product is.
Speaker Change: Is valuable and will continue to deliver that through this year will be a little bit more.
Speaker Change: Through the middle part of the year and lessor at the backend.
Speaker Change: And then just seeing the performance Steve on the recovery curve as we see the size production come down, which we've seen so far.
Speaker Change: We're tracking that so you should see us continue to improve on that predictability.
Speaker Change: And delivery of of lower sides fraction tunes to the pod and then a quarter or two quarters later, you're going to see the metal come in from that performance improvement.
Okay. So if we watch the you've reported $5 1 million tonnes crush in Q4 of $5 five in Q1.
Speaker Change: Should we be really watching that number and if that number continues to move higher that's how that's how you see at a high level at least that the crushing circuit is on the right track to deliver as much of that seven to 8 million tons as possible is that a fair way to put it.
Speaker Change: Exactly yes.
Speaker Change: One number to watch Mike that would be the one.
Speaker Change: Okay very good.
Speaker Change: Thanks, very much for taking my questions I'll pass it on.
Speaker Change: Not all thanks, Mike.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press Star then one.
Speaker Change: Our next question comes from Brian Macarthur with Raymond James. Please go ahead.
Brian Macarthur: Good morning, and thank you for taking my questions and I apologize I had sort of the same ones that we've sort of asked but maybe if I can do it differently first Tom on the accounting.
Brian Macarthur: I assume it less cheapens, what you've done is you written up the gold and silver inventory to value didn't like at $3000 gold or something and whatever it was $31 silver is not the way I think about it from an accounting basis, and that's basically what youre going to run through the income statement, but obviously the cash has already been consumed is that does that kind of what's going on there one is sort of calculate.
Brian Macarthur: What the difference is between to get up to that 218 million tons, just like I think $60 million of gold and whatever it is of silver is that the right way to think about it.
Brian Macarthur: Yeah, you got it so those are the most of the times on that or all of the tons on that stockpile will flow through our income statement that we wont make net income from them that makes sense and got it yeah, we have to mark to market with a small estimate for his great. All these accounting questions.
Brian Macarthur: Uh huh.
Brian Macarthur: The cost to complete so so again, but again from a free cash flow perspective, there is no change and just you know it has an impact on the net income so I just wanted to highlight that.
Brian Macarthur: Right and I think you were clear too on the deferred taxes theres nothing in there that you have to catch up on it's all bucket counting the way things were allocated is that right and thats going to affect the consolidated tax rate, but not the cash.
Brian Macarthur: Cash tax rate.
Brian Macarthur: Exactly exactly and so ill get perverse lately, you'll have a positive impact to our net income has that deferred tax liability.
Get smaller linear when you take a credit off the balance sheet. It hits your earnings. So so again that will make the the tax rate.
Brian Macarthur: A little wonky, and so happy to work with through that with anyway separately as you try and estimate.
Brian Macarthur: The deferred tax liability reversal it in due course.
Brian Macarthur: Okay, and maybe just to put this to bed I think what we're really after is to make sure like obviously, it's been prepays and a lot of other cash things on the balance sheet Ive had to be paid is it fair to say now pretty well that's all gone and what we see is what we get going forward as far as cash flow. There is no other.
Brian Macarthur: Catch ups or cleanups or anything on from a cash basis is that a fair comment.
Brian Macarthur: That's very fair, yeah kind of cleared the decks here in the first quarter and.
Brian Macarthur: What you have now is what we have left is what you see.
Brian Macarthur: Okay, and maybe just following up on another question on Silvertip, but you said you talked about it five years, but you know the world has changed a lot.
Speaker Change: Youre also presumably going to have most of the debt by the end of this year would it be fair to guess that you'd be more likely to pay a dividend or return capital through a buyback before big investments in silvertip would that be kind of the thinking still going forward, assuming we stay at commodity prices, where we are today.
Brian Macarthur: Yeah, I think that's fair.
Brian Macarthur: So don't want to get ahead of ourselves or our board, but I think five years would be a long time.
Brian Macarthur: To wait, especially after our.
Brian Macarthur: Our investors have waited a long time already.
Brian Macarthur: I think we.
Brian Macarthur: We obviously we ended the quarter.
Brian Macarthur: <unk> was $78 million of cash and 110 $10 million on the revolver those things will will change quite rapidly as we go forward here and as long as we're continuing to reinvest in the business the way we plan to.
Brian Macarthur: At these prices the free cash flow, we anticipate generating.
Brian Macarthur: Should leave some room to consider.
Brian Macarthur: A potential return to our shareholders in the near term rather than waiting.
Brian Macarthur: Down the road to decide what we're going to do about silvertip.
Speaker Change: Great. Thanks, very much for those clarification was very helpful.
Brian Macarthur: Thanks for the questions Brian.
Brian Macarthur: Thank you.
Brian Macarthur: This concludes our question and answer session.
Mitchell Krebs: I would like to turn the conference back over to Mitchell Krebs for any closing remarks.
Mitchell Krebs: Okay. Thanks, everybody for taking the time to talk with US today, we look forward to speaking again following the release of our second quarter results in early August Thanks, and have a good day.
Mitchell Krebs: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Mitchell Krebs: [music].
Mitchell Krebs: Uh huh.
Mitchell Krebs: [music].