Q1 2025 Heliostar Metals Ltd Earnings Call
Charles Funk: Good morning, everyone. Thank you for joining us for our webinar and our update on our preliminary quarter as a company. I'll just hold for another minute. I see attendees are still joining. Then I'll introduce the team, and we'll present the presentation. Perfect. Well, as I just touched on, thank you everyone for attending. We're pleased to provide an update, principally based on Q1 of this year, also more broadly with an update for the company for our outlook for the remainder of the year. It's a slightly unusual way to present a quarterly for us as a company. For those who follow the company in detail, our formal financial year end is 31 March of each year. That means that we won't have the final quarterly numbers and the full year out until probably sometime in July.
Perfect Well as I just touched on so thank you everyone for attending
We're pleased to provide an update, principally based on the first quarter of this year, but also more broadly with an update for the company for our outlook for the remainder of the year.
It's a slightly unusual way to present a quarterly for us as a company. For those who followed the company in detail, our formal financial year end is March 31st of each year.
So that means that we won't have the final quarterly numbers and the full year out until probably sometime in July . That's something that's going to change going forward. By the end of this year, we'll move to a formal full year.
Charles Funk: That's something that's going to change going forward. By the end of this year, we'll move to a formal full year. We wanted to present this update, so that we could present some preliminary view of what those numbers are on our production and some cost guidance ranges and allow us to present what that means for us as a company and more importantly, to present what that does for us going forward as we plan to build the company. A note that on today's presentation, that we'll be making forward-looking statements, myself and the team. You'll be able to find this presentation on the website. We'll also host the webinar on our website for anyone who wants to come back and read through in detail. As most of our shareholders know, what we've been trying to achieve at Heliostar is to build a mid-tier gold producer.
So we wanted to present this update so that we could present some preliminary view of what those numbers are on our production and some cost guidance ranges and allow us to present what that means for us as a company and more importantly to present what that does for us going forward as we plan to build the company.
I note that on today's presentation that we'll be making forward-looking statements myself and the team. You'll be able to find this presentation on the website. We'll also host the webinar on our website for anyone who wants to come back and read through in detail.
As most of our shareholders know, what we've been trying to achieve at Hellostar is to build a mid-tier gold producer.
Charles Funk: Obviously, the last 12 months has been very transformational in that, and it is our great pleasure to be able to present a quarterly with our first full quarter of production as a company. We plan to grow significantly from where we are now, and hopefully, by the end of this webinar, you have got an update on how we are going to achieve those steps of materially growing our production profile. Our aim is to be a 500,000 ounce a year producer by the end of the decade. I will start before we get into the quarterly and introduce the team at the highest level. Where we stand at the close of yesterday is between CAD 250 and 300 million market cap, CAD 1.14 share price, 249 million shares outstanding, just over 300 million fully diluted.
Obviously the last 12 months has been very transformational in that and it's a great pleasure to be able to present it quarterly with our first full quarter of production as a company.
We plan to grow significantly from where we are now, and hopefully by the end of this webinar you've got an update on how we're going to achieve those steps of materially growing our production portfolio. Our aim is to be a 500,000 ounce year producer by the end of the decade.
So I'll start before we get into the quarterly and introduce the team at the highest level. Where we stand at the close of yesterday is between 250 and 300 million Canadian market cap.
$1.44 share price, 249 million shares outstanding, just over 300 million fully diluted.
Charles Funk: One of the things that I'm particularly proud that we've achieved over the last few months is a much stronger balance sheet, as a function of the production that we'll talk about, cash flow from the operations and the financing that we undertook in the quarter. We ended the quarter with CAD 27 million in cash, and we're starting to see some of the warrants trickle in. We also have a significant amount of in-the-money warrants that we expect to come in if we remain at these levels over the next 12 to 14 months. We're fortunate that we've got some very strong shareholders, led by our largest shareholder, Eric Sprott, Franklin Templeton, also over 10%, and then a number of institutions led by Adrian Day, who have been supportive as we've built this company. I think the company is on a lot stronger footing than we ever have been.
One of the things that I'm particularly proud that we've achieved over the last few months is a much stronger balance sheet as a function of the production that we'll talk about cash flow from the operations and the financing that we undertook in the quarter.
We ended the quarter with 27 million dollars in cash and we're starting to see some of the warrants trickle in. We also have a significant amount of in the money warrants that we expect to come in if we remain at these levels over the next 12 to 14 months.
We're fortunate that we've got some very strong shareholders led by our largest shareholder Eric Sprott, Franklin Templeton, also over 10% and then a number of institutions led by Adrian Day who have been supportive as we've built this company.
I think the company is on a lot stronger footing than we ever have been and we can use that to ultimately bring out a polar online as we'll talk to it.
Charles Funk: We can use that to ultimately bring Ana Paula online, as we'll talk to. Over the quarter, and it's a good chance for me to introduce Stephen Soock and Mike Gingles, who are joining me on the call. We've continued to grow our management team, to the point that I think we have all the key roles in place and the experience in place that'll allow us to deliver on the promises that we've been making and that we'll make today. In the quarter, Vitalina Lyssoun joined us as our CFO. Vitalina's got extensive experience in Mexico, having joined from Gatos Silver. We also added Stephen Soock and Connie Lillico after Easter. Stephen joins us as an analyst from Stifel, who's going to help us with our investor relations and with some development work that we're focused on as a company.
[inaudible]
Speaker Change: Over the quarter, and it's a good chance for me to introduce Steven and Mike, who are joining me on the call. We've continued to grow and management team.
Speaker Change: To the point that I think we have all the key roles in place and the experience in place that allow us to deliver on the promises that we've been making and that will make today.
Speaker Change: And so in the quarter, Vitalina Lysine joined us as our CFO . Vitalina has got extensive experience in Mexico having joined from Gattos Silver.
Speaker Change: We also added Steven Suke and Connollulica after Easter. Steven joins us as an analyst from Stifle who's going to help us.
Speaker Change: With our investor relations and with some development work that we've focused on as a company and Connie joins us with an extensive career from First Majestic. She's already been involved in one nascent company. Hopefully she's bringing our expertise as we build hillies to be another of those.
Charles Funk: Connie joins us with an extensive career from First Majestic. She's already been involved in one nascent company. Hopefully, she's bringing her expertise as we build Heliostar to be another of those. I think the combination of management and board that we've put together, and culminating with Stephen and Connie's hires, puts us in a really strong position to deliver over the next couple of years and continue to build Heliostar. With that, I'll probably first introduce Stephen. Stephen, if you're happy to say a few words and introduce yourself, please.
Speaker Change: So I think the combination of management and board that we've put together and culminating with Stephen and Connie's highs puts us in a really strong position to deliver over the next couple of years and continue to build Hellostar.
Speaker Change: So with that, I'll probably first introduce Stephen, Stephen, if you're happy to say a few words and introduce yourself place.
Stephen Soock: Yeah, absolutely. Thanks, Charles. Joined very recently, as Charles said, previously as an analyst with Stifel, covering the junior precious metal space, gold and silver. Lots of exposure in Mexico, and lots of experience in valuating growth companies and their ability to add value for shareholders as they execute on strong growth plans with good management teams and good portfolio and assets. Now, if that sounds a lot like Heliostar, that's not by accident. That's a big part of the reason I joined is that the company does check all the boxes in my mind for something that I want to be attached to the long term and continue to help build. Happy to be here.
Speaker Change: Growth, companies, and their ability to add value for shareholders as they execute on strong growth plans with good management teams and good portfolio assets.
Speaker Change: Now, that sounds a lot like Helio Star, that's not my accident. That's a big part of the reason I joined is that the company does check all the boxes in my mind for something that I want to be attached to the long term and continue to help build.
Stephen Soock: I guess I'm just closing out my first month and with a mandate to try and expand the shareholder registry more to the institutional world, as well as continue to tell the story to a broader audience, and work on various development opportunities as they come up to try and take some of the stuff off Charles Funk's plate.
Speaker Change: Happy to be here. I guess I'm just closing it my first month and with the mandate to try and expand a shareholder registry more to the institutional world as well as continue to tell the story to a broader audience and work on various development opportunities as they come up to try and take some of the stuff off Charles's plate.
Charles Funk: Thank you. Our VP of Corp Dev, Mike Gingles is here. He'll present part of the presentation and answer any questions you've got. When we move to our formal quarterlies, Vitalina and Gregg will join as well. We wanted this to be more of an update of our plans, so hence the focus on development and growth of the assets. If I return to the presentation. For those who aren't familiar with the company, our key assets are spread across Mexico. Our operating assets that we'll report on today are La Colorada in Sonora, San Agustin in Durango, and then corporately, our priority development project is the Ana Paula project in Guerrero. That's going to be the key focus over the coming years, and we intend to use the cash flow that we're generating from these assets to build that.
Speaker Change: Thank you and our VP of Corp Dev, Mike. Jingle is here. He'll present part of the presentation and answer any questions you've got. When we move to our formal quarterlies, Vitalina and Greg will join as well. We want this to be more of an update of our plans, so hence the focus on development and growth of the assets. So if I return to the presentation.
Thank you.
Speaker Change: For those who aren't familiar with the company, our key assets are spread across Mexico, our operating assets that we'll report on today, the Colorado and Sonora, San Augustine in Durango, and then, corporately, our priority development project is the Anipola Project in Gerero. That's going to be the key focus over the coming years, and we intend to use the cash flow that we're generating from these assets.
Charles Funk: We have a very significant resource base as a company to grow on. We're a very asset-rich company. We have 3.2 million ounces in the M&I category that we treat as current, and another 1 million inferred. We also separately have 2.9 million ounces in the historic category at Cerro del Gallo, and we're working this year to update that as a technical report. The company's backed by a significant resource base and a significant development pipeline. The key is to use the cash flow from our existing operations to unlock that and expand our production profile. What that breaks down to, really simply, is maximizing cash flow from La Colorada and San Agustin and using that to build Ana Paula with little to no equity dilution. That's what we're targeting as a management team. We can add some additional clarity on that throughout the presentation.
Speaker Change: to build that. We have a very significant resource base as a company to grow on. We're a very
That we treat as current and another 1 million inferred.
Speaker Change: We also separately have 2.9 million ounces in the historic category at Saratago, and we're working this year to update that as a technical report.
Speaker Change: The company is backed by a significant resource base and a significant development pipeline and the key is to use the cash flow from existing operations to unlock that and expand our production profile.
Speaker Change: What that breaks down to, really simply, is maximizing cash flow from the Colorado and San Augustine and using that to build an appaller with little to no equity dilution. That's what we're targeting as a management team and we can add some additional clarity on that throughout the presentation.
Charles Funk: What we've been able to do at La Colorada is restart production at the beginning of this year, return it to steady state mine life, and in 6 months it's gone from care and maintenance to restarted with a 6.5-year mine life ahead of it. It's been a pretty significant transformation from the asset, and we're working on further improving those economics with an updated technical report mid this year. At San Agustin, we're very profitably recovering gold from the leach pads, and we intend to restart operations in Q4 this year, and we'll present the progress we've made on that. A lot of work going on to the feasibility study and a detailed drill program at Ana Paula, that's going to lead to a construction decision that we plan for mid next year as a company.
Speaker Change: What we've been able to do at the Colorado is restart production at the beginning of this year. Return to steady state mine life and in six months it's gone from carom maintenance.
Speaker Change: to restart with a six and a half year in my life ahead of it. It's been a pretty significant transformation from the asset and we're working on further improving those economics with an up that a technical report meet this year.
Speaker Change: At San Augustine we're very profitably recovering gold from the leach pads and we intend to restart operations in Q4 this year and we'll present the progress we've made on that and a lot of work going on to
Speaker Change: In the feasibility study in a detailed drill program in Annapurla, it's going to lead to a construction decision that we plan for mid-next year as a company.
Charles Funk: With that in mind, our guidance for this year is 30,000 to 40,000 ounces. We reiterate that guidance on the back of the quarter of gold production. We anticipate doing that at CAD 1,950 to 2,100 gold price. We've tracked quite well in Q1, as Stephen will touch on, relative to that. The higher costs are principally due to the restarts of operations. We think life of mine, these assets will support around 1,800 ounce production, but as you restart, you have additional costs, and they're captured in this financial year. If we delve into how that looked on Q1, Stephen, if I can hand over to you to present Q1 of the year.
Speaker Change: With that in mind, our guidance for this year is 30 to 40,000 answers. We reiterate that guidance on the back of the quarter of goal production.
We anticipate doing that at 1950 to 2100 gold price.
Speaker Change: We've cracked quite well in Q1 as Steve and we'll touch on. Relief to that.
Speaker Change: The higher costs are principally due to the restarts of operations.
Speaker Change: We think life of mine these assets will support around 1800 ounce production.
Speaker Change: But as you restart you have additional costs and they're captured in this financial year.
Speaker Change: So if we delve into how that looked on the first quarter, even if I can hand over to you to present the first quarter of the end.
Stephen Soock: Thanks, Charles. As Charles mentioned, these are our Q1 preliminary results with full financials and our full year coming out later in the summer. We had a very strong Q1. I don't think there's any doubt about that. 9,000, almost 9,100 gold equivalent ounces produced. A little bit of lag in the sales, but that's really just around timing of when things get shipped out the door. That'll be plus or minus about that 1,000-ounce margin going forward, but it all comes out in the wash. That culminated in strong cash generation for us, made about CAD 15 million that we added to the balance sheet from operations, which is great for a first full quarter of operations from these assets.
Stephen Souk: Thanks Charles. So as Charles mentioned these are Q1 preliminary results full of financials and a full year coming out later in the summer.
Stephen Souk: We had a very strong Q1, I don't think there's any doubt about that 9,000, and almost 9,100 gold equivalent ounces produced.
Stephen Souk: A little bit of lag in the sales, but that's really just around timing of when things get shipped out the door. So that'll be plus or minus about that thousand hours margin going forward, but it all comes out in the wash.
Stephen Souk: Tominated in a strong cash generation for us means about $15 million that we added to the balance sheet from operations, which is great for a personal quarter of operations from these assets.
Stephen Soock: Also worth noting that we used a portion of that cash, actually as net of extinguishing CAD 5 million worth of debt that we used to purchase this portfolio in Mexico. We are currently debt-free at the corporate and asset level. On the cost side, cost came in very strong as well. Part of that is due to the stronger production. Obviously, as you produce more ounces, you've got a larger denominator by which to divide a bunch of the overhead costs. A very strong cash cost to start the year, which expect to come in, and let's call it the CAD 1,200 range in AISC around that CAD 1,375 to 1,475 range. This was a, let's call it a strong start to the year, something that we do expect to weaken a little bit. I think we should be prepared for that through to Q2 and Q3.
Stephen Souk: Also worth noting that we use a portion of that cache actually has net of extinguishing $5 million with the debt that we used to purchase this portfolio in Mexico, so we are currently debt-free at the corporate and asset level.
Stephen Souk: On the cost side cost came in very strong as well. Part of that is due to the stronger production. Obviously as you produce more ounces, you know, you've got a larger denominator by which to to divide a bunch of the overhead cost. So very strong cash costs a sort of year. We expect to come in and let's call it the $1,200 range.
in the ESIC around that $1375 to $1475.
Stephen Souk: Range. You know, this was a call it a strong start to the year.
Stephen Souk: Something that we do expect you to weaken a little bit. I think we should prepare for that through Q2 and Q3. Not to say there aren't so opportunities for us to perform. Continue to find things from the edges that continue to draw as strong results. But just in nature of the mind plan we put together through the year, it will tail off a little bit and then likely pick up and Q4 which I'll touch on a little bit more detail.
Stephen Soock: Not to say there aren't still opportunities for us to outperform, continue to find things around the edges that continue to drive strong results. Just the nature of the mine plan we put together through the year, it will tail off a little bit and then likely pick up in Q4, which I'll touch on in a little bit more detail. All that to say, strong production in what ended up being a very strong gold price environment, produced a very healthy AISC margin, 50% AISC margin. I challenge you to stack that up against a gross margin in any business, not just mining, and we'll be viewed favorably by that metric. Next slide, please. A little bit more color as we go through the assets here.
Stephen Souk: All that to say pretty strong production in what ended up being a very strong gold price environment produced a very very healthy asic margin, 50% asic margin. You know, I challenge you to stack that up against a gross margin in any business, not just mining and you know will.
BB you favorably by that, Patrick. My next slide, please.
Stephen Souk: It's a little bit more color as we go through the assets here, this is a nice shot of our like Colorado mine.
Stephen Soock: This is a nice shot of our La Colorada mine, which as Charles said, went from going into care and maintenance to a six-year mine life shortly after we got our hands on it. Gold production of just over 4,100 ounces. Silver production, not insignificant at just over 18,000 ounces for 4,300 ounces GEO production. Throughput at around that 11,000 ton per day rate. That's on average. Some days are stronger, some days are weaker, but we managed to do that over the 90 days in Q1 on average. The bar here is representative of how we're tracking against guidance for the asset and the point of guidance. La Colorada is a little slower to start. We did start stacking from the junkyard stockpile in January.
Speaker Change: which as Charles said, went from from going into care and maintenance to a six year my life shortly after we got our hands on it.
Speaker Change: Gold production of just over 4,100 ounces silver production not insignificant at just over 18,000 ounces for 4,300 ounces geoproduction.
Speaker Change: Throughfoot at around the 11,010 per day rate. That's on average. Some days are stronger. Some days are weaker. But we may have to do that over the 90 days in the first quarter on average.
Bye.
Speaker Change: So, you know, the bar here is representative of how we're tracking against guidance for the asset and the point of guidance. Lockhallerada was, you know, is a little slower to start. We did start.
Speaker Change: Stacking from the junkyard stockpile in January , those ounces. There's a bit of a lag before you see the full effect of that coming through the the wheat pad stacking on top and then it's got to triple through the the whole whole pad for the recorder at the back end. So we do expect that to pick up somewhat in the next couple of months here. [inaudible]
Stephen Soock: Those ounces, there is a bit of a lag before you see the full effect of that coming through the leach pad, stacking on top, and then it's got to triple through the whole pad before the recovery at the back end. We do expect that to pick up somewhat in the next couple of months here. It's very profitable material. 0.2 grams a ton doesn't sound like a lot, but it is already mined, blasted, and sitting right on surface. What's involved is a little bit of rehandling, crushing, stacking, and leaching. This is definitely a strong cash generation center for the company. In addition to that, let's call it pseudo primary mining activities, we also have a strong residual leaching, turning over portions of the pad and putting them under re-leach.
Speaker Change: But it's very profitable materials and you know .2 grams a ton doesn't sound like a lot, but it is already mind blasted and sitting right on surface. So let's involve a little bit of rehandling, crushing, stacking and leaching. So this is definitely a strong cash generation center for the company.
Speaker Change: In addition to that, let's call it pseudo-primary mining activities. We also have a strong residual leeching, turning the reports into the pad and putting them under re-leech.
Stephen Soock: What's nice about La Colorada is the gold mineralization, to get a little technical, is in fairly coarse particles. If you can think about leaching it, you take the skin off each of those particles every time it goes under leach. If you get bigger particles, there's more skin to peel off it like an onion. As we go through this re-leaching, we are getting strong results from those bigger gold particles continuing to produce out from the back end of the leach pad and into doré bars for us. Something else I think is important to highlight is no lost time incidents. Safety is paramount for us, something we start off by, every daily report starts with the safety line, and every site conversation every day starts with a talk on safety. It is a good leading indicator for how well assets are managed.
Speaker Change: What's nice about La Colorado is we the gold mineralization to get a little technical is is in fairly coarse particle. [inaudible]
Speaker Change: So if you can think about leaching it, you take the skin off you to those particles every time it goes under leached.
Speaker Change: If you get bigger particles, there's more skin to peel off at like an onion. So as we go through this re-leaching we are getting strong results from those those bigger, bigger whole particles continuing to produce out from the back and middle each pad and into into Dora bars for us.
Speaker Change: Something else I think is important to highlight is no lost time incident.
Speaker Change: Safety is paramount for us. Something we start off by, you know, every day of the report starts with the safety line and every site conversation every day starts with with a talk talk on safety.
Speaker Change: And it is a good leading indicator for for how well assets are managed just safety uh, sorts to slip. You can be sure that production metrics are going to slip as well. A strong safety record speaks to how much attention and care is put by the team uh, day-to-day, day-to-day out.
Stephen Soock: If safety starts to slip, you can be sure that production metrics are going to slip as well. A strong safety record speaks to how much attention and care is put by the team day to day in, day out. Last but not least, the drill result continues to impress. We have an ongoing drill program at La Colorada with a few different focuses. Some of these results in the quarter show very strongly, drilling some of the upper portions of the crust on pushback, converting areas that were modeled as waste into ore just through a lack of data points. Charles will touch on in more detail as we go through our path forward here, as well as adding high-grade ounces in some of these resource areas. Importantly, also a high grade below the pit.
Speaker Change: Last but not least, the drill result continues to impress, and we have an ongoing drill program at La Colorada with a few different focuses. Some of these results in the quarter are shown very strongly drilling some of the upper portions of the crust on pushback, converting areas that were modeled as waste into the orchids through a lack of data points. Charles will touch on in more details to go through our path forward here.
Speaker Change: as well as adding high grade ounces in some of these resource areas.
Speaker Change: And importantly, also high grade below the pit, you know, 8, 8, almost 9 meters to 25 grams per ton is a nice fit, but it's certainly not an anomaly here. We are seeing multiple. It's of high grade, overmindable with indicating that there's potential for an underground mindless extension of the Colorado.
Stephen Soock: 8, almost 9 meters of 25 grams per ton is a nice hit, but it's certainly not an anomaly here. We are seeing multiple hits of high grade over minable width, indicating that there's potential for an underground mine life extension at La Colorada. Expect more results to come out as that drill program continues throughout the year. Next slide, please. San Agustin Mine. This is a mine that is residual leaching, but the team's found many opportunities to continue to really push this to outperform through the Q1. Gold production of just over 4,400 ounces. Again, not insignificant silver. We are a gold company, but silver's a nice kicker to have right now. Just about 8,600 ounces for gold equivalent of 4,500 ounces in the quarter. See, there's 3 parts to our guidance here.
Speaker Change: So expect more results to come out as actual program continues through the year.
Next slide please.
Speaker Change: Stan Augustine mine. This is a mine that is residual leaching but the team sound many opportunities to continue to really push the table performs through the first quarter.
Speaker Change: Gold production of just over 4,400 ounces. Again, not insignificant silver. We are a little company, but silver's a nice kicker to have right now. Just about 8,600 ounces for gold equivalent of 4500 ounces in the quarter.
Speaker Change: You know, there's three parts to our guidance here. There's, you know, what we're producing Q1, the guidance, just some residual leach, and then the restart of the corner area, what we expect to be able to produce in Q4, from that pushback. Again, Charles is going more detail on that as we talk about our longer term plans for the assets.
Stephen Soock: There is what we produce in Q1, the guidance just from the residual leach, and then the restart of the corner area, what we expect to be able to produce in Q4 from that pushback. Again, Charles will go into more detail on that as we talk about our longer-term plans for the assets. Again, at this site, no lost time incidents through Q1 of the year, which is excellent. With the re-leaching, turning over and irrigating portions of the leach pad. There are also things that the team is getting creative with, looking at ramps, access ramps that are built with ore and haven't been robustly re-leached that is producing good results for us. Despite being on care and maintenance, that does not mean that we are just sitting back and doing nothing. There are opportunities here to continue to squeeze the pad, as it were.
Speaker Change: Again, at this site, no lost time incidents through the first quarter of the year, which is X1.
Speaker Change: with the re-bleaching, turning over and irrigating portions of the leach pad. There are also things that are the teams getting creative with looking at ranks.
Speaker Change: access ramps that are built with a war and haven't been robustly re-leached that's producing good results for us. So, you know, these are just by being on care and maintenance that doesn't mean that they're just sitting back and doing nothing. There are opportunities here to continue to squeeze the pad as it were.
Stephen Soock: The other thing that significantly progressed through Q1 was permitting progress. We got the change of soil use permit advanced through the permitting process. Continue to keep an eye on that for a continued growth area. We do need that to be able to mine the Porter permit. It's certainly progressing apace, again, as Charles will go into more detail. Those are the results for the quarter. I'll pass it back to, I think, Charles to present more of our path forward.
Speaker Change: The other thing that significantly progressed through its review one was permitting progress. We got the change of soil use permit in advance through the permitting process. So continue to
Speaker Change: Keep an eye on that for a continued growth area. We do need that to be able to mind the corner permit but there's certainly progressing a pace. Again, it's also going to more detail. So, uh...
Speaker Change: Those are the results for the quarter and then I'll pass it back to I think Charles to present more of our path forward.
Charles Funk: Thank you. Yeah, I think, on every metric from safety to improvements to our balance sheet and to our production profile, Q1 was very strong for us as a company. I thank the team in Mexico for the work that they've done. We're probably tracking quite well at the lower end of our cost range looking forward. I think there's a number of things that we can be quite proud of. We ended the quarter with $5.5 million in cash and grew that by over $21 million, as well as retiring the debt. It set us up very strongly. We're maintaining our guidance for the remainder of the year, but we're very happy with the start that we've made to deliver on that.
Charles: Thank you. Yeah, I think you know on on every metric from safety to improvements to our balance sheet into our production profile Q1 was very strong for us as a company. I think you know, I think the team in Mexico for the work that they've done.
Charles: We're probably tracking quite well at the lower end of our cost range looking forward. So I think there's a number of things that we can be quite proud of. We ended the quarter with five and a half million US in cash and grew that by over $21 million.
Charles: So as well as retiring the debt. So it set us up very strongly. We're maintaining our guidance for the remainder of the year but we're very happy with the start that we've made to deliver on that.
Charles Funk: What we would like to present now is move to what we're doing in some of the next steps, and how we maximize cash flow out of these assets, and then how we plan to distribute that, particularly on Ana Paula. If I could, Mike, I'd like to hand over to you, to present the work that we're doing initially at La Colorada and then at San Agustin.
Thank you.
Charles: What we would like to present now is move to what we are doing in the next steps and how we maximise cash flow out of these assets and then how we plan to distribute that particularly on Anipola. So if I could, Mike, I'd like to hand over to you to present the work that we are doing initially at LeColorada and then at San Augustine.
Mike Gingles: Thanks, Charles. As Stephen Soock said, we had a very successful quarter at La Colorada, principally re-leaching, as we started up the Junkyard deposit around January. That was a new deposit that was identified, in Q3, Q4 of last year. It was proved up, now we're actually exploiting that material and beginning to see the success from that. Basically, no surprises to date. Things look steady. We produced a technical report on both the Junkyard, El Creston, and the third deposit, La Veta Madre, at the start of the year. I think as Charles referenced there, we have a new technical report update planned in the next 3 months. That will incorporate the results from the 12,500 drill program that was conducted between last October and into this year. We have drill programs planned for 2 more stockpiles similar to the Junkyard.
Thanks, Charles.
Mike Jingles: As Steven said, you know, we had a very successful call for it La Colourada.
Mike Jingles: We started up the junkyard deposit around January . That was a new deposit that was identified in the third quarter, fourth quarter of last year. It was proved up and now we're actually exploiting that material and beginning to see the success from that.
Basically no surprise is to date.
Things look look steady.
We produced a technical report on
Mike Jingles: Both the junk on the junk yard now crest on on the third deposit, Leventa Mardry at the start of the year. I think it's child's reference there we have a new technical port update planned in the next three months.
Mike Jingles: That will incorporate the results from the 12,500 drill program that was conducted between the last October and into the year.
Thank you.
Mike Jingles: We have a job programs planned for two more stoppiles similar to the junkyard. We've named them El Dorado and the truck stop.
Mike Gingles: We've named them El Dorado and the Truck Stop. Those require drilling and proving up. We know in generally the tonnage size of those, but we have to do the work. Those will not appear in the updated technical report, but we have some expectation that we can, if we're successful there, we'll be able to bring them into the production profile as well. Charles will touch on the underground a little bit later, but we have extensive programs planned regionally as well to introduce there. Perhaps, Charles, we could go to the next slide or the next slide. This will explain a little bit where we have the areas of interest and where we are working now on the sequencing of those. Junkyard, as I said, was brought on in January there, with reserves of 22,000 ounces of gold. That's expected to run through the year.
Mike Jingles: Those were quite drilling and proving up. We know in generally the tonnage side of those, but we have to do the work. Those will not appear in the updated technical report, but we have some expectation that we can, if we're successful, they will be able to bring them into the production profile as well.
Mike Jingles: We'll touch on the underground, Charles will touch on the underground a little bit later but we have extensive programs planned regionally as well to introduce there. Perhaps Charles, we can go to the next slide or next slide.
Charles: But this will explain a little bit where we have the areas of interest and where we are working now on the sequencing of those. I'm sorry, the junkyard, as I said, was brought on in January there.
Speaker Change: with reserves of 22,000 ounces of gold. That's expected to run through through the year. We'll have some some further leaching from the material that was put on to the pads early into next year. We then have the two assets that I referenced there, the two additional stockpiles which are elderado.
Mike Gingles: We'll have some further leaching from the material that was put onto the pads early into next year. We have the two assets that I referenced there, the two additional stockpiles, which are El Dorado. We have Veta Madre, which is currently under a permit application for the CUS. We're hoping to get that through this year. That has another 43,000 ounces of reserves. Between the Junkyard, the potential to mine El Dorado, and the potential to mine Veta Madre that we have subject to receiving the permit, we have pretty much set ourselves up for maybe 2, 3 years of production out of La Colorada. As we referenced earlier, Creston is a major deposit, a major cutback with 312,000 ounces of gold. We have the drilling, which we're incorporating those results into the new technical report.
Thank you.
And we have Veta Mardre which is currently under
Speaker Change: A permanent application for the CUS. We're hoping to get that through this year. That has another 43,000 ounces of reserves. So, between the the junkyard, the potential to to my Nel Dorado and the. We're hoping to get that through this year.
Speaker Change: potential to find metamardry that we have subject to receiving the permit. We have pretty much set ourselves up for maybe two three years of production out of the Colorado.
Speaker Change: As we referenced earlier, Creston is a major deposit, a major cutback with 312,000 ounces of gold.
Speaker Change: We have the drilling which we're incorporating those results into the new technical report.
Mike Gingles: Originally, we thought we would be moving straight from the Junkyard into Creston. I think El Dorado and Veta Madre give us some different options in there, and that's really some of the work that will be done in the next 3 to 6 months. We'll be working on the sequencing of those and seeing how we can play with those and best incorporate them. Charles referenced there that a big driver here is to make sure we maximize the cash flow for the company. We have great hopes for Ana Paula. We really hope we can move forward with that successfully in the next few months and into next year towards we move towards an investment decision. These assets are potential cash flow drivers so that we're able to internally build the cash mountain that we need to move that project forward as well.
Speaker Change: Originally we thought we would be moving straight from the junkyard into Preston. I think El Dorado and Beto-Mondra give us some different options in there and...
Speaker Change: That's really some of the work that will be done in the next three to six months will be working on the sequencing of those and seeing how we can we can play with those and best incorporate them.
Speaker Change: Charles reference there that you know a big driver here is to make sure we maximize the cash flow for the company. We have a great hopes for Anna Paola. We really hope we can move forward that successfully in the next few months and into next year towards we make to move towards an investment decision. These assets are potential cash flow drivers so that we are able to internally build the cash.
Speaker Change: the cash mountain that we need to move that project board as well. So it's looking good at the Colorado. We, as I said, we
Mike Gingles: It's looking good at La Colorada. As I said, we took this at a mining care and maintenance just 7, 8 months ago. The diligent work from the team there. I think Charles has referenced previously that, yes, we bought some assets that we could see a compelling future for, but at the same time, we inherited two strong mining teams there, and I think we've seen them excel the last few months as well. They've been able to identify new opportunities, really move forward. They've got the mines under control operationally. As Stephen said, no lost time accidents. We're pretty pleased with where that's going, and I think we've got a very motivated team there that's going to bring all of these deposits forward and hopefully build a good platform for the rest of the growth that we hope to get to.
We took this at
and a mining care maintenance just
Speaker Change: 7-8 months ago, you know the diligent work from the team that I think Charles's reference previously that you know we yes we bought some assets that we could see a compelling future for but at the same time we inherited two strong mining teams there and I think we we've seen them excel the last few months as well they've been able to to identify new opportunities really move forward they've got the mines under control operationally.
Speaker Change: The Stephen said, you know, no lost time accidents and so we're pretty pleased with where that's going and I think we've got a very motivated team there that's going to bring all of these deposits forward and hopefully build a good platform for the rest of the growth that we hope to get to.
Charles Funk: Yeah.
Mike Gingles: Charles, say a few words about the underground.
Speaker Change: Yeah, I love this slide because of what it what it demonstrates so as you touched on clearly the there's two things that have materially changed since we bought these assets one is we're in a completely different gold price environment so we were when we initially agreed mid last year.
Charles Funk: Yeah. I love this slide because of what it demonstrates. As you touched on, clearly there's two things that have materially changed since we bought these assets. One is we're in a completely different gold price environment than we were when we initially agreed mid last year. Secondarily, the change in the ability to get permits in Mexico is certainly a breath of fresh air from my personal perspective. That's allowed us to then focus on what generates the maximum cash flow for the least amount of capital, separately from what you're able to do under the permits that you have in place. The technical report will pivot to Veta Madre first and Creston second, which lowers the upfront capital in our expectation.
Speaker Change: Secondly, the change in the ability to get permits in Mexico is certainly a breath of fresh air from my personal perspective. So that's allowed us to then focus on what generates the maximum cash flow for the least amount of capital, separately from what you're able to do.
Speaker Change: under the permits that you have in place. So the technical report will pivot to Veta Madre first and crest on second which lowers the upfront capital in our expectation.
Charles Funk: Secondly, we'll talk to it later, in terms of maximizing cash flow, to be able to go from the Junkyard to El Dorado, once we drill that off to Veta Madre, we think those three can maximize the cash flow over the next couple of years and provide a significant amount of free cash flow out of the asset for us as a business that we can deploy to further grow and build from there. To me, it's been a very positive surprise. We didn't know that we could do it this way. The ability to be able to advance La Colorada with very little to no CapEx ultimately hinges on the drilling at El Dorado.
Speaker Change: Secondly and we'll talk to it later in terms of maximizing cash flow.
Speaker Change: to be able to go from the junkyard to Eldorado once we drill that off.
Speaker Change: to Veta Madro. We think those three can maximize the cash flow over the next couple of years.
Speaker Change: and provide a significant amount of free cash flow out of the asset for us as a business that we can deploy to further grow and build from that. So to me, it's a very, very positive surprise. And we didn't know that we could do it this way, but the ability to be able to advance the Colorado with very little to no CapEx.
Speaker Change: Ultimately hinges on the drilling at El Dorado, but assuming similar grades to junkyard which is not...
Charles Funk: Assuming similar grades to Junkyard, which is a feasible step to take prior to drilling, we're well set up to sort of tic-tac-toe and continue to expand La Colorada with much more reduced capital needs than we thought when we first bought the asset. We look a bit closer at Creston, which is the bigger prize at La Colorada to date. The drill program, we've been putting results out throughout the quarter. We've got more results to come. We'd committed to a 12,500-meter program. We've expanded that to materially over 15,000 meters. I think it'll finish up just over 16,000 meters. That's going to drive the resource in the updated technical report in the middle of the year. We've had some success along strike, in the shallow areas that were considered to be waste, that we think now can be ore.
Speaker Change: And we, which is a feasible step to take, prior to drilling, we're well set up to sort of tic-tac-toe and continue to expand the Colorado with much more reduced capital needs than we thought when we first bought the asset.
Speaker Change: If we look a bit closer at Creston which is the bigger prize at LeColorada today the drill program we've been putting results out throughout the quarter and we've got more results to come we committed to a 12 and a half thousand meter program we've expanded that to materially over 15,000 meters I think it'll finish up just over 16,000 meters
Speaker Change: And that's going to drive the resource in the updated technical report in the middle of the year. We've had some success along the strike in the shallow areas, areas that were considered to be waste that we think now can be all.
Charles Funk: Drill results in the range of sort of 5 to 50 meters of 0.3 to 1 gram plus oxide gold. As Stephen touched on, getting some really attractive vein hits that we think speak to the underground potential, particularly at Creston and Gran Central. Excuse me, my son has come in. It's particularly at Gran Central and Creston, where we think that there's an underground mine future above and beyond the mine life of the open pits. We'll focus on delivering the technical report over the next couple of months. We think that's got the potential to demonstrate more attractive economics than we put out in the study in January. In the H2 of the year, look to focus on the underground and exploration opportunities, which we see some clear targets at La Colorada for.
Speaker Change: Drill results in the range of sort of five to fifty meters of point three to one grand plus oxide gold and then it's even touched on getting some really attractive vein hits that we think speak to the underground potential particularly at Christon and Grand Central
Speaker Change: Where we're going to, excuse me, my son has come in.
[inaudible]
Speaker Change: It's particularly at Grand Central and Creston where we think that there's an underground mine future above and beyond the mine life of the open pits.
Speaker Change: So, we'll focus on delivering the technical report over the next couple of months.
Speaker Change: We think that's got the potential to demonstrate more attractive economics than we put out in the study in January .
Speaker Change: And then in the back half of the year, look to focus on the underground and exploration opportunities which we see some clear targets at LeColoradofore. It's going to be quite exciting to be able to pivot and look at some of the other sides. Really the first time in a number of years at LeColorado.
Charles Funk: It's going to be quite exciting to be able to pivot and look at some of the upsides, really the first time in a number of years at La Colorada. Mike, to you at San Agustin.
Mike, and to you at San Augustine.
Mike Gingles: Successes in the early part of the year. At this stage, San Agustin is releaching. The mine's been successful to bring some new techniques to the leach piles. Looked at some areas that were perhaps under leached in the past, and they've had some successes there to build up the production this year. A great performance there. Looking forward, we're pending information on the approval of the permit, the land use permit for the Cornwall, as Stephen talked about. Preparation work is made in anticipation of that at the moment. We hope we have some success with that application sooner than later. With that, around the existing pit area, there's potential. The teams are looking at that. There's some drilling planned to look at the potential there, and so we can add ounces to the existing production profile. Excuse me.
Speaker Change: Again, success is in the early part of the year. At this stage, San Augustine is re-leaching. The mine's been successful to bring some new techniques to the leach piles, looked at some areas that were perhaps under leach from the past and they've had some successes there to build up the production issues. So a great performance there.
Looking forward, we're repenting.
Speaker Change: information on the approval of the permit, the land use permit for the corner as Stephen talked about preparation work is made an anticipation of that at the moment so we hope we have some success with that application sooner than later.
with that around the
Existing pit area was this potential
Speaker Change: The teams are looking at that as some some drilling plan to to look at the potential there and so we can add.
add ounces to the existing.
Production Profile
Mike Gingles: Again, pending approval, of course, we hope to take San Agustin through to the end of next year. There'll be a few months of planning, very few months of planning. Hopefully within about 3, 4 months of the approval, we'll be able to bring the production on, hopefully later this year. Through next year, we'll have production from there. As that goes on, we'll look at the future for San Agustin. There's several drilling targets, some drilling ideas, some other corporate ideas that are out, and we'll see what we can do with there. It'll give us production for 2 more years, and it'll give us the potential to build a stronger platform for that property beyond that.
So again, I'm.
Thank you.
Speaker Change: Again, pending approval of the course, we hope to take San Oblastine through to the end of next year.
Speaker Change: There will be a few months of planning, very few months of planning and hopefully within about three, four months of the approval will be able to bring the production on hopefully later this year.
Speaker Change: and through through nature we'll have production from there as that goes on we'll look at the the future for son of a scene with several drilling targets and drilling ideas.
Speaker Change: Some other corporate ideas that are out and we'll see what we can do with air but it'll give us a production for for two more years and it'll give us the potential to build us a stronger platform for that property beyond that.
Charles Funk: Yeah, I think that's right. I was in Durango at the end of last week. We're very comfortable. We're at the final steps of the permitting process. We expect to have that by the middle of the year. That's progressing quite nicely. Site visits were completed on track. We're at the very back end of that process. Once we get that's what we'll do, as Mike Gingles touched on, which what we've done at La Colorada. We'll start to deploy some capital, and we'll look to expand the oxide resources to increase that mine life. In particular, we think the core area could potentially grow to the southwest, so that'll be an immediate focus. We did some metallurgical work. There's quite significant sulfide potential underneath the resource.
Speaker Change: Yeah, I think that's right. So I was in Dorenga at the end of last week. We're very comfortable. We're at the final steps of the permitting process. We expect to have that by the middle of the year. That's progressing quite nicely. So our visits were completed on track. We're at the very back end of that process.
Speaker Change: And once we get that, that's what we'll do as Mike touched on which what we've done at the Colorado. Then we'll start to deploy some capital and we'll look to expand the oxide resources to increase that mine life.
Speaker Change: In particular, we think the corner area could potentially grow to the southwest, so that'll be an immediate focus.
Speaker Change: We did some metallurgical work that's quite significant sulfide potential underneath the resource. The first pass metallurgical work is left more questions than answers. For the first pass, that it is something that we will focus on in the second half of the year once we've maximized the oxide.
Charles Funk: The first-pass metallurgical work has left more questions than answers for the first pass, it is something that we will focus on in H2 of the year once we've maximized the oxide resource footprint. Our aim is to maximize our cash flow from San Agustin, to extend the mine life as much as we can, and to use that cash flow to contribute to Ana Paula. We believe San Agustin is going to be a very, very strong contributor to our cash flow next year as a company. That's, I think, well summarized on this slide in terms of the cash flow that we believe that we can generate over the next two and a half years and how we want to deploy that.
Speaker Change: resource footprint. Our aim is to maximize our cash flow from San Augustine to extend the mind life as much as we can and to use that cash flow to contribute to anapolar. Anapolar we believe San Augustine is going to be a very very strong contributor to our cash flow next year as a company.
Bye.
Speaker Change: And that's I think well summarized on this slide in terms of the cash flow that we believe that we can generate over the next two and a half years and how we want to deploy that.
Charles Funk: I think we can generate between CAD 80 to 200 million in free cash flow over the next 2.5 years from San Agustin and Ana Paula. That's a pretty significant amount of money, and that's the capital that we plan to use for the non-project financing portion of Ana Paula. We've attempted to show that. We're a bit restricted in terms of needing technical reports. For example, if you compare the Junkyard in the first column, the recovered just under 15,000 ounces of gold forecast from the technical report. It doesn't include some inferred material that's being mined. It has materially higher costs than we've been able to achieve in our budget. If you track our budget, we expect the Junkyard to produce between CAD 10 to 15 million of cash flow at CAD 2,600 gold. It's proving to be much more attractive than the technical report.
Speaker Change: I think we can generate between 80 and $200 million in free cash flow over the next two and a half years from San Augustine and Annapurla. That's a pretty significant amount of money and that's the capital that we plan to use for the non-project financing portion of Annapurla.
Speaker Change: And so we've attempted to show that. We're a bit restricted in terms of needing technical reports, for example, if you compare the junkyard in the first column.
Speaker Change: The recovered just under 15,000 ounces of gold forecast from the technical report. It doesn't include some inferred material that's being mined, it has materially higher cost and we've been able to achieve in our budget.
Speaker Change: If you track our budget, we expect the junkyard to produce between ten and fifteen million dollars of cash flow at twenty six hundred dollar gold. So it's proving to be much more attractive than the technical report. We're just a bit limited in how we can document that.
Charles Funk: We're just a bit limited in how we can document that. We haven't yet drilled El Dorado. We expect to have very little to no CapEx, maybe a small expansion of the leach pad for CAD few million. It's not beyond the realms to estimate the same or potentially even slightly higher grade, given that it was deposited a slightly lower gold environment than the Junkyard. We think when we drill off El Dorado, which we're going to start doing in the next couple of weeks, we'll be able to provide certainty by the middle of the year. We think the cash flow from those two, we can use to fund the cutback of Veta Madre. Veta Madre is going to grow in our estimation when we update the technical report this year. We're in a higher gold price environment, meaning we can capture more recoverable ounces.
Speaker Change: We haven't yet drilled Eldorado. We expect to have very little to know CapEx maybe a small expansion of the leach pad for a few million dollars.
Speaker Change: It's not beyond the realms to estimate the same or potentially even slightly higher grade given that it was deposited a slightly lower gold environment than the junkyard.
Speaker Change: So we think when we drill off El Dorado, which we're going to start doing in the next couple of weeks.
Speaker Change: We'll be able to provide certainty by the middle of the year. We think the cash flow from those two, we can use to fund the cutback of Veta Madro.
Speaker Change: Vata Madre is going to grow in our estimation when we update the technical report this year we're in a higher gold price environment meaning we can capture more recoverable ounces. And so we think the three of those at LeColorada can generate a very, very strong cash flow
Charles Funk: We think the three of those at La Colorada can generate a very, very strong cash flow for us. At San Agustin, it shows attractive economics at $2,600 or $3,000 gold, whichever one you want to show. If we take what we think is possible out of the stockpiles, we add that to each of these projects and the residual leaching from the pads. I'll reiterate that we believe that we can generate between $80 million and $200 million in cash flow, depending on more or less conservative ounces out of Dorado and more or less conservative on $2,600 or $3,000 gold. Our plan as a company is to use that capital to not need any significant or potentially any equity to build Ana Paula. If we can build Ana Paula, that's a step change for us in terms of production profile.
And then at San Augustine.
Speaker Change: It shows attractive economics at $2,600 or $3,000 gold, whichever one you want to show him.
Speaker Change: So, if we take what we think is possible out of the stockpiles we add that to each of these projects and the residual leaching from the pads.
Speaker Change: I'll reiterate that we believe that we can generate between 80 and 200 million dollars in cash flow depending on more or less conservative answers out of Dorado and more or less conservative on 26 or $3,000 or $2,600 or $3,000 gold.
Speaker Change: And our plan as a company is to use that capital to not need any significant or potentially any equity to build an Apollo.
Speaker Change: If we can build Annapoola, that's a step change for us in terms of production profile.
Charles Funk: It's a step change for us in terms of our cost basis in a reduction of our AISC. It means we're a much more valuable company. If we deliver that with no to very little share dilution, that obviously sets us up for a very strong share performance over the coming two years. This then moves to our production profile of what we expect to produce over the coming years. There'll be slight adjustments and tweaks to this as we update the technical report at La Colorada. We're going to bring Veta Madre ahead of Creston. Essentially, we're on track to increase next year. We should be in that 50,000 to 100,000 ounce a year range if you look at the dark blue from La Colorada and the light green from San Agustin. We think, however, that there's room to expand upon this.
Speaker Change: It's a step change for us in terms of our cost basis, in a reduction of our ASIC. It means we're a much more valuable company. And if we deliver that with no to very little share dilution, obviously sets us up for a very strong chef's performance over the coming two years.
Speaker Change: And so this then moves to our production profile of what we expect to produce over the coming years. There will be slight adjustments and tweaks to this as we update the technical report at LeColorada. We're going to bring Vader Madre ahead of crest on.
Speaker Change: But essentially we're on track to increase next year and we should be in that 50 to 100,000 ounce year range if you look at the dark blue from the Colorado and the light green from San Augustine.
Speaker Change: We think, however, that there's room to expand upon this. If we're successful, we'd add drilling at the El Dorado stockpot, which we're highly confident about. We think we can materially improve our production in 2026.
Charles Funk: If we're successful with our drilling at the El Dorado stockpile, which we're highly confident about, we think we can materially improve our production in 2026 by bringing Veta Madre forward, by expanding the mine life at San Agustin. If we're successful at that, we think we can grow 2027. Our true step change as a company comes at the beginning of 2028 when Ana Paula comes online. We think it's possible that we could be in the 150,000 to 200,000 ounce production range, noting that that is a forward-looking statement until we put the studies out at Ana Paula, and we think we can materially lower our costs. I don't think it's beyond the realm that Ana Paula produces with a sub-$1,000 AISC.
Speaker Change: by bringing Vader Madre forward by expanding the mind life at San Augustine. If we're successful at that, we think we can grow 2027.
Speaker Change: And then our true step changes the company comes at the beginning of 2028 when Annapolla comes online. We think it's possible that we could be in the 150 to 200,000 ounce production range noting that that is a forward looking statement until we put the studies out at Annapolla and we think we can materially lower our costs.
Speaker Change: I don't think it's beyond the realm that anapola produces with a sub-a-thousand dollar ishic.
Charles Funk: We think that our true transformation comes in 2028, and I think we're on that nice path where we anticipate our production profile increasing, our cost profile decreasing. If you look at our peer group, if you're producing 150,000 to 200,000 ounces at sub 1,500 AISC, there's some pretty valuable companies out there that would suggest a material rewrite for us if we're successful at delivering it. Our unique proposition or unique business proposition, in my opinion, is the ability to do it with very little to no further equity dilution. That brings a lot of attention to Ana Paula. Ana Paula, we've always considered to be our flagship.
So
Speaker Change: We think that our true transformation comes in 2028 and I think we're on that nice path where we anticipate our production profile increasing.
Cost Profile Decreasing
If you look at a pay group...
Speaker Change: If you're producing 150 to 200,000 ounces of sub-1500 ASIC, there's some pretty valuable companies out there that would suggest a material rewrite for us.
Speaker Change: If we're successful at delivering it and our unique proposition or unique business proposition in my opinion is the ability to do it with very little to know it for the equity delusion.
Speaker Change: And so then that brings a lot of attention to Anna Paula. Anna Paula we've always considered to be our flagship. We think it's the highest quality project that we have and we're doing considerable amount of work to bring that forward.
Charles Funk: We think it's the highest quality project that we have, and we're doing considerable amount of work to bring that forward. For a quick background for those who aren't super familiar with the asset, we bought it for what ended up being CAD 10 million in 2023 after we canceled the back-end payments last year. It was sold for over CAD 100 million. It's had over CAD 100 million invested in it. We own all the surface rights. We have camp facilities, power. The decline that you can see here, there's probably CAD 50 to 100 million worth of CapEx already spent on the project that we won't have to pay. What the deposit was is essentially this big sea of low grade with this fairly spectacular high-grade core and the high-grade panel in the center. We changed the approach from previous owners to focus on the high-grade panel.
Speaker Change: For a quick background for those who are super familiar with the asset, we bought it for what ended up being $10 million in 2023 after we cancelled the back end payments last year. It was sold for over $100 million that's had over $100 million invested in it.
Speaker Change: We own all the surface rights, we have camp facilities, power, the decline that you can see here. There's probably 50 to 100 million dollars worth of capex, or we spent on the project that we won't have to pay.
[inaudible]
Speaker Change: What the deposit was is essentially this big sea of low grade with this fairly spectacular high grade core and the high grade panel in the center.
Speaker Change: And so we changed the approach from previous owners to focus on the high-grade panel, a zone that's 280 meters long, 100 meters tall and 60 meters wide.
Charles Funk: A zone that's 280 meters long, 100 meters tall and 60 meters wide. The measured indicated category, just over 700,000 ounces at 6.6 grams. The inferred 450,000 ounces at just over 4 grams. There's not too many 60-meter wide, 5-gram ore bodies out there in the world. It's shallow, it has good ground conditions. It's got a high-grade zone that'll come early in the mine life. It's got a number of attractive features that we think can lead to pretty significant margin for deposit. Today, if you look at that high-grade zone, that rock's probably worth between $800 and $900 a ton, and mining costs in this part of the world are probably going to be around $100, $115 a ton mining and processing costs.
Speaker Change: The measured indicated category just over 700,000 oz at 6.6g, the inferred 450,000 oz and just over 4g.
Speaker Change: There's not too many 16-meter wide 5-gram all bodies out there in the world.
Speaker Change: It's shallow, it has good ground conditions, it's got a high grade zone that will come early in the mind life.
Speaker Change: It's got a number of attractive features that we think can lead to pretty significant margin for a deposit today. If you look at that high grade zone, that rock's probably worth between $800 and $900 a ton.
Speaker Change: And mining costs in this part of the world are probably going to be around $115 a ton of mining and processing costs.
Charles Funk: You're looking at a deposit that has the potential to contribute a significant amount of free cash flow, particularly early in its mine life, and we look forward to completing the FS to formally present that. What we're doing at the moment is completing the trade-off study. We know that at least 60% of the high-grade panel has good conventional recoveries, about 80% conventional recoveries. We're also looking into BIOX to handle some of the refractory material. We think that combined will give us the best financial outcome, particularly at these gold prices.
Speaker Change: So you're looking at a deposit that has the potential to contribute a significant amount of free cash flow, particularly early in its mind life, and we look forward to completing the FS to formally present that.
Speaker Change: What we're doing at the moment is completing the trade-off study. We know that at least 60% of the high-grade panel has good conventional recoveries, about 80% conventional recoveries.
Speaker Change: We're also looking into Biox to handle some of the refractory material.
Speaker Change: We think that combined will give us the best financial outcome particularly at these gold prices.
Charles Funk: The lower that we can drop the cut-off grade, there's a lot of ounces that we can bring into this mine plan. We think it's going to give us the most flexibility to produce with a conventional pathway and an ability to handle the refractory material, I think, really unlocking the financial outcome for Ana Paula. It's not something we originally planned when we bought it. We've made considerable technical progress. This gold price opens up a lot of opportunities for us as a company to maximize that cash flow. What that'll do is then set the cut-off grade. That sets the mine plan for us in June. That allows us to then design the modified tailings facility. We plan to move from the permitted conventional tailings facility to a dry stack tailings facility.
Speaker Change: The lower that we can drop the cut off grade, there's a lot of answers that we can bring into this mine plan.
Speaker Change: and we think it's going to give us the most flexibility to produce
Speaker Change: It's a conventional pathway and an ability to handle the refractory material. I think really I'm locking the financial outcomes and a polar.
Speaker Change: It's not something we originally planned when we bought it. We've made considerable technical progress and this gold price opens up a lot of opportunities for us as a company to maximize that cash flow.
[inaudible]
Speaker Change: What that'll do is then set the cut off grade, that sets the mine plan for us in June .
Speaker Change: That allows us to then design the modified tailings facility. We plan to move from their permitted conventional tailings facility to a dry stack tailings facility.
Charles Funk: We'll submit the modified permit plan, to amend it to go from open pit to underground later in Q3. We will begin the discussions with potential financing partners in earnest in Q4, so that we can target completing the feasibility study with the permit modification, with the financing in hand to make that construction decision mid-next year. That will allow us to achieve commercial production at the beginning of 2028 on the timelines that we're working to. The reason that we can move so quickly is the advanced nature of the project, given the capital that's been spent there before. We would also like, and we're reviewing scenarios where we can accelerate that decline. For me personally, if we can get the restart at San Agustin, I think that'd be a wonderful catalyst for us to restart the decline and complete the decline into the ore body at Ana Paula.
Speaker Change: We'll submit the Modifer-Pified Permit Plan to amend it to go from open pit to underground later in Q3. We will begin the discussions with potential financing partners in earnest in Q4.
Speaker Change: So that we can target completing the feasibility study with the permit modification with the financing in hand to make that construction decision mid-next year.
Speaker Change: That will allow us to achieve commercial production at the beginning of 2028 on the timelines that we're working to. The reason that we can move so quickly is the advance nature of the project given the capital it's been spent there before.
Speaker Change: We would also like and we're reviewing scenarios where we can accelerate that decline for me personally if we can get.
Speaker Change: The restart San Augustine. I think that'd be a wonderful catalyst for us to restart the decline and complete the decline into the old body at Annabella.
Charles Funk: One of the potential knocks that might come for us on the feasibility study is it'll initially show a shorter mine life because we haven't converted enough of those inferred resources. As capital was tighter for us and we were building the business, we prioritized on the maximum impact of the drill programs that we had, we weren't able to do big enough programs to convert those 450,000 inferred ounces to M&I. We're confident that we're going to get a very high conversion rate. It's just a matter of doing that infill drilling. That stronger balance sheet, on the back of the cash generation from the assets and the CAD 9.5 million financing, has allowed us to finally be more aggressive and do what we've always wanted to do at Ana Paula. We're going to drill a 15,000-meter drill program.
Speaker Change: One of the potential nox that might come for us on the feasibility study is it will initially show a shorter mind life because we haven't converted enough of those in forward resources. As capital was tied to force and we were building the business we prioritized on
Speaker Change: On the maximum impact of the drill programs that we had, but we weren't able to do big enough programs to convert those 450,000 in third ounces to M&I. We're confident that we're going to get a very high conversion rate. It's just a matter of doing that infield drilling.
Speaker Change: And so that stronger balance sheet on the back of the cash generation from the assets and the nine and a half minion canadian financing has allowed us to finally be more aggressive and do what we've always wanted to do with anapola so we're gonna drill a 15,000 meter drill program.
Charles Funk: That's going to principally convert the majority of those inferred resources across. We think it has the potential to expand the footprint of the high-grade panel, the parallel panel, and some of these interesting hits, in the recent real results early this year. Some satellite hits of 16 meters at 16 grams in hole 314. 24 meters at 5 grams in 319. We think that there's some expansion of the mineralization that we can put in there. Lastly, it allows us to start doing the first real exploration at Ana Paula, which we've always wanted to do. We're going to test some of the ideas that there's more of these parallel east-west zones to the north. Some of the over 15,000 meters of drilling will go to that. We're going to do on the eastern part of the property, systematic soils prospecting, mapping.
Speaker Change: That's going to principally convert the majority of those inferred resources across.
Speaker Change: We think it has the potential to expand the footprint of the high-grade panel, the parallel panel and some of the interesting hits.
Speaker Change: In that recent real results early this year, some satellite hits of 16 meters at 16 grams in hole 314, 24 meters at 5 grams in 319, we think there's some expansion to the mineralisation that we can put in there.
Speaker Change: And then lastly it allows us to start doing the first real exploration in Anapolitan, which we've always wanted to do.
Speaker Change: We're going to test some of the ideas that there's more of these parallel eastward zones to the north.
Speaker Change: So some of the over 15,000 meters of drilling will go to that.
Speaker Change: We're going to do on the eastern part of the property systematic soils prospecting mapping we're doing geophysics over the deposit.
Charles Funk: We're doing geophysics over the deposit. We think that we can work up a whole series of growth targets for the first time since probably since the discovery of Ana Paula. We've got a very large land package. That land package is in a very prospective part of the world. As you can see, when you stand on Ana Paula and look to the south, we've really never had the bandwidth to be able to look at our over 60,000-hectare land package. Now, given our stronger financial stability, we can start to look at Ana Paula as a larger district. Look for within the resource footprint at depth when we get the decline down and at resource, and see can Ana Paula be as big as its neighbors.
Speaker Change: We think that we can work up a whole series of growth targets for the first time since probably since the discovery of anapolar.
So we've got a very large land package.
Speaker Change: That land package is in a very prospective part of the world as you can see when you stand on a polar and look to the south.
Speaker Change: We really never had the bandwidth to be able to look at our over 60,000 hectare land package and now given a stronger financial stability, we can start to look at Anapola as a larger district.
Charles Funk: It's certainly got a lot of upside, and I'm excited that we finally have the capital to start to unlock it as a project. There's a lot of work going on at Ana Paula. We'll start to have systematic drill results coming from late June, early July onwards. We look to convert a lot of that inferred, which will allow us to extend that mine life beyond what it will show in the feasibility study, and see what is the true size and what is the true grade of Ana Paula. It's open at depth. It's open in that big sea of low grade with lots of high-grade targets. Who knows how big it could be. We look forward to finally having the balance sheet that allows us to work that out over the next few months.
Speaker Change: So there's a lot of work going on with an anapola. We'll start to have systematic results.
Coming from late June , early July onwards.
Speaker Change: We look to convert a lot of that in third which will allow us to extend that mind life beyond what will show in the feasibility study.
Speaker Change: and see what is the true size and what is the true grade of anapolar.
Speaker Change: It's open at depth. It's open in that big sea of low grade with lots of high-grade targets. Who knows how big it could be. We look forward to finally having the balance sheet that allows us to to work that out over the next few months.
Charles Funk: In the background, we've got two large development projects, Cerro del Gallo and San Antonio. We've really been focused on Q1, embedding down the assets, maximizing performance, working out what's the optimal way to generate cash from the production assets. In H2, now that becomes more steady state, you can see a focus on growth, the growth at La Colorada, the growth of the oxides at San Agustin, growth at Ana Paula. We're also going to start doing the work to bring Cerro del Gallo forward as an option for us after Ana Paula. We plan to complete a technical report on it in Q3. We're looking at the options to submit the permit, noting that we have a number of years to get that.
Speaker Change: In the background, we've got two large development projects, Cerro de Gaio and San Antonio. We've really been focused on Q1 in betting down the assets, maximizing performance, working out what's the optimal way to generate cash from the production assets.
Speaker Change: In the second half of the year, we can now that becomes more steady state. You can see a focus on growth. The growth of the Colorado, the growth.
of the Oxides at San Augustine, growth at Annapurla.
Speaker Change: We're also going to start doing the work to being Sarah DeGaio forward as an option for us after Anna Pola.
Speaker Change: We plan to complete a technical report on it in Q3. We're looking at the options to submit the permit noting that we have a number of years to get that.
Charles Funk: In our view, do the work on Cerro del Gallo with a view of that being the next growth option after Ana Paula once we've built and paid back the capital of Ana Paula later in this decade. It's quite incredible when you look at the organic pipeline that we have. I don't think it's that hard for us to get to 300,000 ounces of annual production within our organic portfolio, which takes us a long way to our target of that half a million ounces by the end of the decade. I've left our catalyst slide. I think it's one of the things that I'm very proud of the team, and I thank them for delivering, is that we've delivered the promises that we've made to the market over the last 2 years.
Speaker Change: So, in our view, do the work on Sarah De Gaier with a view of that being the next growth option after Annapollah, once we've built and paid back the capital of Annapollah later in the later in this decade.
Speaker Change: And so it's quite incredible when you look at the organic pipeline that we have. You know, I don't think it's that hard for us to get to 300,000 ounces of annual production within our organic portfolio, which takes us a long way to our target of that half a million ounces by the end of the decade.
Dog Left
Speaker Change: Our catalyst slide I think it's you know one of the things that I'm very proud of the team and I thank them for delivering is that we've delivered the promises that we've made to the market over the last couple of years. We've steadily ticked off the milestones that we've laid out and I think we've seen that as a positive reflection in our share price.
Charles Funk: We've steadily ticked off the milestones that we've laid out, and I think we've seen that as a positive reflection in our share price. We want to be a company that you can trust the promises that we make. We pride ourselves on delivering on the promises that we make. I think looking forward, there's 3 levels of catalyst for us as a company. At the base, there's that ongoing production. At this price environment, we're demonstrating very attractive economics and very significant margins on the assets. We'll continue to put out those quarterly updates, and look, as Stephen touched on, to outperform our budget over the remainder of the year. In the big picture, we have the big chunky steps as we show significant increases to our net asset value.
Speaker Change: We want to be a company that you can trust the promises that we make and we pride ourselves on delivery on the promises that we make.
Speaker Change: And I think looking forward there's kind of three levels of catalyst for us as a company at the base. There's that ongoing production at this price environment. But, um...
Speaker Change: We're demonstrating very attractive economics and very significant margins on the assets. We'll continue to put out those quarterly updates and look as Stephen touched on to outperform our budget over the remainder of the year.
Speaker Change: Then, in the big picture, we have the big chunky steps as we show significant increases to our net asset value. The first of those will come in late June , early July , with the technical report from the Colorado, then at the end of Q3.
Charles Funk: The first of those will come in late June, early July, with the technical report from La Colorada. At the end of Q3, we'll have a technical report on Serra da Gáia, and the feasibility study coming mid-next year at Ana Paula. Each one of those, I think, are big steps for us along the way. We have more of that growth narrative feeding on top of that. It's the permits to expand San Agustin. It's the drill results coming from La Colorada. It's finally being able to do a significant drill program at Ana Paula for the first time, and starting to do growth drilling at all of those assets. I think we're in a pretty strong position as a company where we're generating free cash flow. We're deploying that on attractive growth assets. We see significant upside on all of those assets.
Speaker Change: We'll have a technical report on South and the Saratagoa and the feasibility study coming mid next year at Annapurla. Each one of those I think are big steps for us along the way.
Speaker Change: Then we have more of that growth narrative feeding on top of that. It's the permits to expand San Augustine, it's the drill results coming from the Colorado. It's finally being able to do a significant drill program at Annapurla for the first time and then starting to do growth drilling at all of those assets.
Speaker Change: So, I think we're in a pretty strong position as a company where we're generating free cash flow we're deploying that on attractive growth assets.
Speaker Change: We see significant upside on all of those assets. We think that's going to lead to production increases year on year. We think that's going to increase the decrease costs.
Charles Funk: We think that's going to lead to production increases year-on-year. We think that's going to increase the decreased costs, and we can continue year in, year out to demonstrate an ability to grow our NAV. If we do that prudently, we believe that'll lead to a significant growth to our share price. We think they're a pretty sweet spot to be a producer with the growth profile we have. We think we've delivered strongly in Q1. With that in mind, happy to turn over and take any questions. Please feel free to write in the Q&A box any questions, and the three of us are happy to field and answer those questions now. Stephen, I'll hand over to you for the first of those while I read some.
Speaker Change: and we can continue year in year out to demonstrate an ability to grow a net asset value and if we do that currently we believe that will lead to a significant growth to a share process.
So...
Speaker Change: We think they're a pretty sweet spot to be a producer with the growth profile we have. We think we've delivered strongly in Q1 and with that in mind, happy to turn over and take any questions. Please feel free to write in the Q&A box any questions and the three of us are happy to field and answer those questions now.
Stephen Souk: Even all, hand over to you for the first of those while I read something.
Stephen Soock: Sure. Thanks, Charles. Maybe to address something you touched on right at the end there. Someone asked, the stock's more than doubled year to date versus the GDXJ, up 40%. I like the story. I was concerned that I've missed the boat. Can you address valuation? Certainly. As Charles said, I think we're a NAV growth story. There's still certainly a bunch of those longer-term development projects that have real potential that we just frankly haven't gotten around to in terms of team bandwidth yet. Expect those to start to add to our underlying valuation. We can also expect a bit of a multiple re-rate as we continue to grow in production size.
Sure, thanks Charles.
Stephen Souk: So maybe address something you don't you touched on kind of right at the end there is someone asked the stocks more than doubled year to date for the versus the GDXJ up 40% I like the story of what I've concerned I've missed the boat can you address valuation
Stephen Souk: Um, certainly as Charles said, you know, I think we're uh, inevitable story. There's still certainly a bunch of those.
Stephen Souk: longer term development projects that have real potential that we just frankly haven't gotten around to in terms of team bandwidth yet. So expect those to start to add to our underlying valuation.
and can also
Stephen Souk: Expect a bit of a multiple re-rate as we continue to grow in production size.
Stephen Soock: This is a dynamic you see across the industry that as you produce more ounces, you get ascribed a higher multiple in the market, partially through just meaningful scale and partially through diversification. I think that's another avenue we expect to drive value. Then, de-risking Ana Paula. We'll have a feasibility study out mid-next year, which will really highlight what we think will be very strong economics that I don't think is truly, fully appreciated yet in the market. Look for our work to de-risk or lower the discount rate applied to that very valuable asset within our now profile. Hope that answers the bulk of that question.
Stephen Souk: A dynamic you see across the industry that as you produce more ounces you get described the higher multiple in the market partially through just meaningful scale and partially through diversification. I think that's another avenue we expect to expect to drive value
Stephen Souk: And then, you know, de-risking, Anna Paula, you know, we'll have a feasibility study at mid-next year, which will really highlight DD. Well, we think will be very strong economics that I don't think is truly fully appreciated yet in the market. So, you know, look, look for our work to de-risk lower the discount rate applied to to that very, very valuable asset within our, our now profile. [inaudible]
I hope that answers the book of that question.
Charles Funk: Yeah. Mike, I think a question that you can answer. There is a couple of questions along the theme of what were the drivers for the higher gold equivalent ounces, and why were the costs so low in Q1 relative to our guidance?
Stephen Souk: Yeah, Mike, I think a question that you can answer. There's a couple of questions along the theme of what were the drivers for the higher gold equivalent ounces and why were the costs so low in Q1 relative to our guidance?
Mike Gingles: I think a couple of features in there. I think we all reference the improved performance on the re-leaching. Efforts were made on both mines to revisit the leach piles to extract as much value as possible out there. That meant changing conditions for the actions of the cyanide. Lime was added in certain conditions. Other areas were looked at that had been leached but were perhaps not fully leached. A combination of those all added to the production through the period. On the other side of it, the costs are under control, and efforts were made to do that. You get a combined impact there on the results, which obviously drive the unit cost down as well.
Stephen Souk: I think a couple of features and I think we all reference the improved performance on the re-leaching efforts were made on the on
Stephen Souk: On both minds to revisit the leach piles, to extract as much value as possible out there that meant changing conditions for the actions of the cyanide line was added in certain conditions.
Stephen Souk: other areas were looked at that had been leached but perhaps not fully leached and so a combination was all added to the production through the period. On the other side of it the costs are under control and efforts were made to do that and so you get a combined
Stephen Souk: impact there on the on the results which will drive the unit cost down as well.
Charles Funk: Yeah, I think we've had a pretty good handle on the production numbers. Possibly, if we progress at this rate, in hindsight, you might argue that we're being a bit too conservative on our guidance range. I hope that becomes the case at the end of the year. When you take over production, I think it's prudent to be conservative. Now as we get to understand the rhythm of the assets a bit better, we've deployed that restart capital. I'd hope that we are a bit conservative on that guidance range. That remains to be seen over the year. We're certainly tracking strongly now. We chose not to take any risks, particularly around our cash guidance range for 2025. I think that feeds into another question here around some of the higher costs for guidance. When you restart operations, you capture a lot of costs.
Speaker Change: Yeah, I think I think we've had a pretty good handle on the production numbers possibly if we progress at this rate you know, I'm sorry you might argue that we were being a bit too conservative on a guidance range.
Speaker Change: I hope that becomes the case at the end of the year. When you take over production, I think it's prudent to be conservative, and as we get to understand the rhythm of the assets a bit better, we've deployed that restart capital. I hope that we are a bit conservative on that guidance range. That remains to be seen over the year, but we're certainly tracking strongly now. We chose not to take any risks, particularly around that cash guidance range for 2025.
Speaker Change: And I think that feeds into another question here around some of the higher costs for guidance.
Speaker Change: When you restart operations, you capture a lot of costs. Either in the example of a Colorado where you're spending the money in crushing and stacking the material but you're not seeing the gold come out or at St. Augustine we'll have a number of months of mine production. There's some CapEx.
Charles Funk: Either in the example of La Colorada, where you're spending the money in crushing and stacking the material, but you're not seeing the gold come out. At San Agustin, we'll have a number of months of mine production. There's some CapEx up front for that. You capture those. Steady state, as I said, I think we've got assets that'll produce around a CAD 1,800 AISC. We're reflecting some of those higher costs next year. That'll balance out with representatively lower costs the following year. You capture them in any period. The higher cost in Q4, particularly for San Agustin, to answer the question, is specifically the restart CapEx. It's not representative of the life of mine. It just captures all the costs with very little amount of gold production coming from those costs in Q4.
Up front for that. So you capture those. So
Speaker Change: Steady State, as I said, I think we've got assets that will produce around an 1800 ASIC.
Speaker Change: We're reflecting some of those higher costs next year that will balance out which representatively lower costs the following year but you capture them in any period so the higher costing Q4 particularly for San Augustine to answer the question is specifically the restart capex it's not representative of the life of mine it just captures all the costs with very little amount of gold production coming from those costs in Q4
Charles Funk: We'll get the flip side of that with a strong benefit the following year on the cost basis for San Agustin.
Speaker Change: We'll get the flip side of that with a strong benefit following year on the cost basis for San Augustine.
Stephen Soock: I think also just to clarify on that question. Those are two separate pieces for San Agustin. The restart is not a subset of the San Agustin guidance, as it were. There's the San Agustin re-leaching program, and then a separate portion for Q4 for the Cornwall permit pushback, with our consolidated guidance being a weighted average of all three of those portions, La Colorada, San Agustin re-leaching, and then the San Agustin restart. It's not a subset. Just to kind of clarify the math there.
Speaker Change: I think also just to clarify on that question, you know, there are two separate pieces for San Augustine. The restart is not a subset of the San Augustine guidance as it were. There's the San Augustine rebeaching program and then a separate portion for Q4.
Speaker Change: for the corner permit pushback with our consolidated guidance being a weighted average of all three of those portions, like Colorado, San Augustine, Releaching and then the San Augustine restart. So it's not a subset. So just to kind of clarify the math there.
Charles Funk: Great. A question on CapEx required for restarting Veta Madre. We've presented that there's around CAD 26 million in the previous technical report. I'd expect that number to go up, because I think we're going to capture more gold in an increase in the gold price. I wouldn't be surprised if it goes up to the CAD 40 million, CAD 45 million range. In guidance, in the tech report, we support that. We support that with the CAD 26 million on the previous tech report. Noting that I would suggest that that number will be slightly higher when we update in June this year.
Bye.
Speaker Change: A question on CAPEX required for restarting Vatamadro, so we've presented that there's around 26 million in the previous technical report, but expect that number to go up, because I think we're going to capture more gold in an increase in the gold price, so I wouldn't surprise if it goes up to the $40, $45 million range.
And guidance in the tech report, we support that.
Speaker Change: We support that with the 26 million on the previous tech report noting that I would suggest that that number will be slightly higher when we update in June this year.
Mike Gingles: I think it's good, Charles, to add on to that. That is pre-stripping costs. This is mining costs as opposed to CapEx for equipment or materials. It's a pre-strip and it leads us into the next part of the deposit.
Speaker Change: And I think it's good chose to add on to that. That is that is pre-stripping costs so that this is this is mining costs as opposed to, you know, capex for equipment or materials. It's a pre-strip and it leads us into the next part of the deposit.
Charles Funk: Yeah, I think to reiterate the point, even we didn't expect when we bought La Colorada, that you could potentially go from the junkyard to Dorado to Veta Madre to Creston. The combination of permit constraints that we didn't know whether we'd be able to get, and not knowing the resources were there in the stockpiles and the gold price. La Colorada, as I said, has come a long way very quickly, and it's very positive the way we can jump from one leap then to the other. I'm butchering a metaphor there. I think we can really surprise ourselves. We initially thought we might need a much more CapEx to restart La Colorada, and we've generated a very, very low capital intensity pathway for the asset. Some through the smart work of the team.
Speaker Change: Yeah, I think it's a genuine, to reiterate the point, even we didn't expect when we bought the Colorado. You could potentially go from the junkyard to Dorado to Vatamadre to Creston, the combination of permit constraints that we didn't know whether we'd be able to get and not knowing the resources were there in the stockpiles and the gold price.
Speaker Change: The Colorado, as I said, just come a long way very quickly and very positive the way we can jump from one leap then.
Speaker Change: I'm only fed to the other, I'm bluttering a metaphor there, but I think we can really, really surprise ourselves. We initially thought we might need a much more capex to restart the Colorado, and we've generated a very, very low capital-intensive pathway for the asset. Some through the smart work of the team, also acknowledging the gold process certainly helped that cause that.
Charles Funk: Also acknowledging the gold price has certainly helped our cause there. There is a number of questions here around M&A. As I touched on, I think we can get around that 300,000 ounce a year production number with very little to no equity dilution with the assets that we have. Our goal is to be bigger than by the end of the decade. We certainly get a lot of inbounds on M&A. We have looked at the odd thing. It has not been a strong priority for us as a company. We are in a unique position that a development asset would have to be better than Ana Paula or very cheap for us to look at that. Production-wise, I think it is a market where you are starting to see M&A, and I think in the right scenarios, it is something that we would consider.
Speaker Change: There's a number of questions here around M&A, as I touched on. I think we can get around that 300,000-ounce-year production number with very little to note equity dilution with the assets that we have.
Speaker Change: Our goal is to be bigger than by the end of the decade. We certainly get a lot of involved on M&A. We've looked at the odd thing, it hasn't been a strong priority for us as a company.
Speaker Change: And we're in a unique position that a development asset would have to be better than anapola or very cheap for us to look at that production wise, you know, I think it is a market where you're starting to see M&A and I think in the right scenarios it is something that we would consider. [inaudible]
Charles Funk: From our perspective, though, it's only if we want to do it. We're not forced to do it, so we've got a strong hand for it. I think most importantly, it's going to be project-driven. We're not a company that is likely to have a banker knock on the door and I say, "This sounds like a great idea," and it'll add to your NAV multiple. I think we've seen the way we've built the company is we've gone to parts of the world or assets that the market hasn't attributed valuable to. We've recognized value and unlocked that. Whatever assets we would look at if we go and do M&A, I think we're likely to try and find an asset that the market has misascribed value to, sticking to our technical principles.
Speaker Change: From our perspective though it's only if we want to do it we're not forced to do it so we've got a strong hand for it.
And I think most importantly...
Speaker Change: It's going to be project driven, you know, we're not a company that is likely to have a bank knock on the door and I say this sounds like a great idea and a ledity and have multiple
Speaker Change: I think we've seen the way we've built the company is we've gone to parts of the world or assets that the market hasn't contributed valuable to.
Speaker Change: and we recognize value and unlock that. So whatever assets we would look at if we go and do M&A, I think we're likely to try and find an asset that the market has has miss a subscribe value to it.
I was sticking to our technical principles.
Charles Funk: We were certainly a very unpopular company while we were putting this project portfolio together, and I think it's seemed to be a prudent decision. Certainly, the tailwinds of a change in permitting environment in Mexico and gold prices had a huge part in that. We sort of chose to accept some of those risks, knowing that these assets had upside if we deployed the capital. Look for us, if we go and do M&A, it'll certainly, later in the decade, be something that we would look to do. We might opportunistically do it beforehand in a very special set of circumstances.
Speaker Change: We're certainly a very unpopular company while we're putting this project portfolio together.
Speaker Change: And I think it's seen to be a prudent decision, certainly the tailwinds.
Speaker Change: of a changing permanent environment in Mexico and gold prices had a huge part of that.
Speaker Change: But we sort of chose to accept some of those risks.
Speaker Change: Knowing that these assets had upside if we deployed the capital. So look for us if we go and do M&A, it will certainly later in the decade be something that we would look to do. We might opportunistically do it beforehand in a very special set of circumstances.
Stephen Soock: Actually, that leads into answering another question here, Charles. What's the remaining associated life at La Colorada and other mines like San Agustin, and what's the potential upside? Part of that is we do see upside, especially at La Colorada, as Charles went through, both a long strike and then potential for underground, maybe later on down the pipeline. San Agustin, there is potential there to expand the oxide resource somewhat. We're probably talking in the quarters rather than years of additional oxide production realistically. There is also that large sulfide deposit, excuse me, sitting underneath. That does require a little bit more work before we can fully evaluate that. Part of that growth profile is definitely organic as well.
Speaker Change: And actually, that leads into answering another question here, Charles. What was the remaining? It's just the life at La Colourada and other Minds like Sandhog scene with the potential upside. Part of that is we do see upside, especially at La Colourada as Charles went through.
Speaker Change: both a long strike and then potential for for underground maybe later on down the pipeline.
Speaker Change: Uh, stand on scene, uh, there is potential to expand the oxide resource somewhat.
Speaker Change: We're probably talking that in the, you know, quarters rather than years of additional oxide production realistically, but there is also that large sulfide or body or sorry large sulfide deposit, excuse me, sitting underneath that does require a little bit more work before
Speaker Change: Can fully evaluate that, but part of that growth profile is definitely organic as well.
Charles Funk: There's a question here on what permits are required to achieve our guidance this year, and can we get to 70,000 ounces next year. I think the first part, the permit that we need is the expansion at San Agustin. We are projecting that we will have that in the middle of the year to allow that production to come on in Q4. That's what we need for production this year. To get to 70,000 ounces next year, that permit being in place, and then having the El Dorado stockpile come back favorably would be the simplest way. We've got a number of choices at La Colorada. To maximize cash flow, we would like to continue from pivot from Junkyard to the El Dorado stockpile. That's what could possibly take us to that range. We'll obviously put that guidance out late this year, early next year.
Speaker Change: There's a question here on what permits are required to achieve our guidance this year, and can we get to 70,000 answers next year? So I think the first part, the permit that we need is the expansion at St Augustine. We are projecting that we will have that in the middle of the year to allow that production to come on in Q4.
Speaker Change: That's what we need for production this year. To get the 70,000 ounces next year, that permit being in place.
Speaker Change: And then having the Eldorado stockpile come back favorably would be the simplest way. We've got a number of choices at the Colorado, but to maximize cash flow, we would like to continue from pivot from junkyard to the Eldorado stockpile.
Speaker Change: That's what possibly take us to that range. We'll obviously put that guidance out like this year early next year. I think that's...
Charles Funk: I think that's a good target for us. I think we could get there. We're doing the work right now. We should know by the middle of the year what El Dorado looks like and be able to present that. We'll have a technical report showing the open pit expansions, and then we'll be able to show the cash flow that we can generate from the stockpiles ahead of that. As I said, it's amazing how well it's come together for La Colorada.
Speaker Change: A good target for us. I think we can get there. We're doing the work right now. We should know by the middle of the year what El Dorado looks like and be able to present that. So we'll have a technical report showing the open pit expansions.
Speaker Change: And then we'll be able to show the cash flow that we can generate from the stockpiles ahead of that. As I said, it's amazing how well it's come together for the Colorado.
Stephen Soock: There are some questions here on Ana Paula. Maybe you're best to address these. When's it likely to get the Ana Paula permit? You can kind of clarify the status of the permitting, and then question around current resources, mine life permitting, and then the drill program. You can kind of address those two in one.
Speaker Change: There's some questions here on Anapala. Maybe you're best to address these. When does it likely get the Anapala permit? So you can kind of clarify the status of the permitting and then question around current resources, my life permitting, and then the drill program. So you can kind of address those two and one.
Charles Funk: Yeah. As we touched on, locking down the flow sheet sets the material that goes into the tailings facility. That'll finalize the tailings facility design. Once we have that, we have all the material we need to submit the modification of the permit at Ana Paula. Our plan is in late Q3 to submit that. I would expect around a 9-month timeline for us to receive that permit back. Having said that, we would possibly advance the decline ahead of that, which we have permitted to do. Our intention is to have the permit modification, the FS study, and the financing all lined up for the middle of next year. In terms of drilling, we've got the 15,000-meter drill program. We expect to have the first results, I think we'll see them in around late June, maybe early July, and pretty consistent drill result news flow.
Speaker Change: Yeah, so as we as we touched on locking down the flow sheet sets the material that goes into the tailings facility that will finalize the tailings facility design. Once we have that we have all the material we need to submit the modification the permit at anapollop.
Speaker Change: So our plan is in late Q3 to submit that I would expect around a nine month timeline for us to receive that permit back.
Speaker Change: Having said that we would possibly advance the decline ahead of that, which we have permitted to do, so our intention is to have the permit modification there.
Speaker Change: FF study and the financing all lined up for the middle of next year in terms of drilling we've got the 15,000 meter drill program we expect to have the first results I think we'll see them in around late June maybe early July .
Speaker Change: I'm pretty consistent through result news flow. So it's fun to put out results from given how special the whole body is. It's where the
Charles Funk: It's always fun to put out results from Ana Paula, given how special the ore body is. It'll be nice to finally be able to just consistently put out those results over the remainder of the year.
Speaker Change: It would be nice to finally be able to just consistently put out those results over a remainder of the year.
Stephen Soock: Okay. This will lead into another question here. You touched on a more favorable permitting environment in Mexico. Can you elaborate on what makes you say that a little bit, please?
Speaker Change: Does it lead into another question here? You're testing a more favorable permitting environment in Mexico. Can you elaborate on what makes you say that a little bit please?
Charles Funk: Yeah. I can talk to that firsthand. We've been down regularly. I've been in meetings. Our team's been in meetings. Since the change in government, you're seeing when you sit down for a meeting with SEMARNAT, the acronym for the permitting authority in Mexico, a lot more knowledge, a lot more detail in terms of their understanding than under the AMLO regime, where things were effectively frozen. You see progress. There's a set timeline of which different steps are taken. You submit a document that's reviewed. There's a request for information. You submit the updated information. That's reviewed. You lead to site visits, then different permit requires go down different pathways. We're seeing all those things happen. We had the site visit, which is one of our very last steps at San Agustin recently. We were sitting, as I said, in Durango last week, having some meetings.
Speaker Change: Yeah, so I can talk to that first hand, you know, we've been down regularly. I've been in meetings. Our team's been in meetings.
since the changing government government.
Speaker Change: You're seeing when you sit down for a meeting with Seminat, the acronym for the Permanent Authority in Mexico.
Speaker Change: A lot more knowledge, a lot more detail in terms of their understanding than under the am low regime where things were effectively frozen.
awww
Speaker Change: You see progress, there's a set timeline of which different steps to take and you submit a document that's reviewed, there's a request for information, you submit the updated information, that's reviewed, you'll need to cite visits and then different, so it requires going to different pathways.
Speaker Change: We're seeing all those things happen. We had the site visit which is one of our very last steps at St. Augustine recently. We were sitting as I said in Durango last week having some meetings. The system is working.
Charles Funk: The system is working. We'd all love to see more permits more quickly. It's a return to still a government process, but I think from my perspective here is that shareholders should take comfort that the process is working, and we expect to see the first fruits of that in the middle of this year.
Speaker Change: And we'd all love to see more permits more quickly, you know, it's a return to still a government process. I think from my perspective, Hellostar should take comfort that the process is working and we expect to see the fruits, the first fruits of that in the middle of this year.
Stephen Soock: Just the last few minutes we have here, quickly kind of coming full circle, any plans for Unga?
Speaker Change: It was the last few minutes we have here, quickly coming full circle, any plans for
Charles Funk: We're in discussions right now. We'll probably plan to do a small program at Unga this year. I'm heading up to Unga for the first time this year in early June. It's a project that we see considerable potential. Look forward to a small update on that probably in early June. It will see a small amount of exploration this year, we can make some decisions on the back of that program. Look forward to providing an update there in Q2, let's say. I think we've covered the bulk of the questions, although I think we've covered most of the key themes. If anyone would like a replay of this, please come to our website. We'll host it as soon as we have it up on the website later today. If you've got any questions, please reach out to us as a company via the website.
Speaker Change: So we're in discussions right now. We'll probably plan to do a small program in a few days.
Speaker Change: I'm heading up to Angle for the first time this year in early June .
It's.
Speaker Change: is a project that we see considerable potential. Look forward to a small update on that, probably in early June .
I think maybe, I think we've covered the bulk.
Speaker Change: of the questions, although I think we've covered most of the key themes. If anyone would like a replay of this, please come to our website. We'll host it as soon as we have it up on the website later today. If you've got any questions, please reach out to us as a company via the website. Very happy to answer any follow-up questions.
Charles Funk: Very happy to answer any follow-up questions. Quite proud of what the team's delivered at the beginning of this year. Look forward to turning that into a company that's worth a lot more over the remainder of the year. Thank you very much for your time, your attention, and your support and interest in Heliostar.
Speaker Change: I'm quite proud of what the teams delivered at the beginning of this year. Look forward to turning that into a company that's worked a lot more over the remainder of the year. Thank you very much for your time, your attention and your support and interest in Hellostar.
Operator: Goodbye