Lundin Gold Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 9, 2023

There are 8 speakers on the call.

Operator

Good morning. My name is Lara, and I will be your conference operator today. At this time, I would like to welcome everyone to London Gold's Third Quarter 2022 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Are followed by the number 2. Thank you. Mr. Ron Hoxton, President and CEO, you may begin your conference.

Speaker 1

Thank you, Lara. Good morning, everyone. Thank you all for joining us on this conference call today We're Terry Smith, Chief Operating Officer Chris Goliam, Chief Financial Officer and I are going to take you through our results for the Q3 of 2023. Please note, London Gold's disclaimers on this slide. This discussion includes forward looking information.

Speaker 1

Actual future results may differ from expected results for a variety of reasons described in the caution regarding forward looking information and statements section of our press release. London Gold is a U. S. Dollar reporting entity and all amounts in this presentation refer to U. S.

Speaker 1

Dollars unless otherwise indicated. London Gold reported gold production of just over 112,200 ounces and gold sales of 112,711 ounces this quarter at a cash operating cost of $704 per ounce sold and all in sustaining cost of $907 per ounce sold. We maintained a high average throughput rate of just over 4,500 tonnes per day, which was offset by lower grades than previous quarters, which was expected based on our mine sequencing and lower recoveries. Terry will talk about our initiatives to improve recoveries in a bit more detail. Our cash operating costs and ASIC were higher than previous quarters, but they are in line with our expectations.

Speaker 1

Our operating results put us firmly on track to meet our revised AISC guidance of $8.20 to $8.70 per ounce sold and near the upper end of our revised production guidance of 450,000 to 485,000 ounces. LundinGold's track record of generating strong cash flow continued during the 3rd quarter with free cash flow of approximately $81,000,000 or $0.34 per share achieved resulting in a cash balance of $302,000,000 at September 30. Given this robust cash balance and Portacci cash requirements, we have elected to fully repay out senior debt The remaining balance plus accrued interest totaling approximately $72,000,000 will be repaid next week on November 14, well in advance of its original maturity date of June 2026. Upon completion of this repayment, Lending Gold will have extinguished 2 of its 3 project finance facilities, the gold prepay and senior debt, which had an original combined principal amount of $500,000,000 after only 3 years of operation. The Stream credit facility now makes up the last component of the outstanding debt on our balance sheet.

Speaker 1

The first half Of which we have the option to buy back in June of next year of $150,000,000 We have and will continue to progress our debt and strategy for the benefit of Lending Gold shareholders. With that, I'd like to turn the call over to Terry now for a more detailed look at the operating results.

Speaker 2

Thanks, Ron, and hello all. Another quarter in the books for Lundin Gold. Operating results in Q3 were highlighted by quarterly gold production Totaling approximately 112,000 ounces comprised of 72,000 ounces of concentrate and 40,000 ounces of dore. Gold sales totaled around 113,000 ounces. In the same period last year, gold production and sales totaled roughly 122,000 and 135,000 ounces respectively.

Speaker 2

I'm also pleased to report that we completed another quarter without any lost time or medical treatment incidents, further extending our exceptional safety performance. Mine production was close to 398,000 tonnes of ore at an average grade of 9.3 grams per tonne. Mine tons were less compared to previous periods as part of the stockpile reduction strategy to help reduce oxidation of ore on surface, which can impact recovery that I'll talk more about shortly. The mill processed about 416,000 tons of ore at an average throughput rate of 4,523 tons per day, which is consistent with the throughput rate achieved during the Q2. The mill has averaged 4,494 tonnes per day during the 1st 9 months of 2023.

Speaker 2

Compared to previous periods, strong mill throughput was offset by a decrease in head grade and recoveries. Finally, disseminated sulfide minerals in the ore continued to impact the flotation circuit during the quarter, resulting in average recoveries of 86.5%. Recovery improvement initiatives remain a key focus for us. We continue to carry out Various tests with different ore types, including grind size, flotation reagents, flotation operating conditions with consideration for the impact of oxidation from stockpiling mentioned previously. We expect to implement changes to operating strategies to improve recoveries in the coming quarters.

Speaker 2

In addition, we have completed pilot testing of the Jamison Cell technology, which yielded positive results. Basic engineering has been completed and detailed engineering is underway to incorporate this technology into our flow sheet. This recovery improvement project will be done in conjunction with the contemplated plant expansion to further increase mill throughput from the current 4,500 tonnes per day to 5,000 tonnes per day. Based on current schedules, the James themselves are to be in place at the same time as the ramp up to 5,000 tonnes per day anticipated in Q4 next year. Sustaining capital expenditures accounted for $140 per ounce sold in the Q3, another increase compared to recent periods.

Speaker 2

A large portion of this is attributable to the construction of the 4th tailings dam raise, where significant progress was made in Q3 with completion expected in mid-twenty 20. During the Q3, the conversion drill program also continued to advance and has now been completed. We plan to update our resource and reserve estimate in Q1 2024 with these results in hand. Ron will Go through this program in a little more detail later. In addition to the drilling, development advanced On our 2 exploration headings, 1170 and 1080 that will facilitate the 2024 conversion drilling program at the southern extension of the current FTN resource.

Speaker 2

Development for these two headings is estimated at 765 meters. I'm also happy to announce that commissioning of the underground mine maintenance facility is now complete and we're moving into the facility. This new underground shop is expected to provide several efficiencies and cost savings by bringing our maintenance teams closer to the work underground. Other sustaining capital projects such as implementation of a mine dispatch system, upgrades to the sewage treatment plants, purchase of mobile equipment and other efficiency improvement projects are expected to ramp up during the remainder of the year with some projects carrying over to 2024. Cash operating costs and all in sustaining costs in the 3rd quarter were $704 $907 per ounce of gold sold respectively, which are both higher than previous periods.

Speaker 2

Cash operating cost per ounce sold was impacted by lower gold production due to expected lower grade and recoveries, partially offset by increased mill throughput, while the higher all in sustaining costs also reflects the increase in sustaining capital activities during the quarter. Over the 1st 9 months of 2023, London Gold achieved An all in sustaining cost of $807 per ounce. 4th quarter production is anticipated to be lower than Q3 due to lower grades. In August, we increased production guidance and decreased cash costs and all in sustaining guidance. Given our strong performance During the Q3, we anticipate being at the upper end of our revised production guidance of 450,000 to 485,000 ounces sold and remain firmly on track to meet our revised all in sustaining guidance of $8.20 to $8.70 per ounce sold.

Speaker 1

I'll turn the call back to Ron now to discuss our exploration programs. Thanks, Terry. During the Q3, Conversion drill program continued to advance in distinct sectors of the FDM deposit, focusing on the northern central and southern portions of the resource envelope with approximately 6,200 meters drilled across 46 holes. A total of approximately 11,000 meters of underground drilling from 79 drill holes was completed as part of the now completed 2023 conversion program. Conversion drilling in the southern sector of FDM has returned several high grade intercepts associated mainly with vein and our veinlet zones associated posted in volcanic, porphyritic, intrusive rocks.

Speaker 1

In the North Central sector results show gold mineralization in brecches and stock work zones, very similar to the mineralization found in the mineral reserves of this Sure. Results are currently being incorporated into the geological model and will form the basis of an updated mineral reserves for resources estimate to The largest exploration program of our 3 programs, the NEAR Mine program Continues to explore distinct sectors located in the long trend of the FDM deposit and within extensions of its major controlling structures. The near mine program includes drilling from both surface and underground. The surface drilling program Continues along the south extension of the east fault where the FDN South also known as FDNS and Bonzo Sur targets were identified. During the Q3, 10 surface drill holes were completed, mostly at Bon Secours, where the drilling program Continued to confirm the continuity of the mineralization.

Speaker 1

Exploratory holes were also completed along the north and south extensions of the FDM deposit. Five surface rigs are currently drilling, 2 of them are at Bon Sasseur, 2 along the south and north extensions of FDM And one to the east of FDM. The underground drilling program continues to explore the continuity of the FDM deposit at depth and beyond the major faults. 4 drill holes were completed in the Q3 and all of them intercepted structures, Zones of hydrothermal alteration and gold mineralization beyond the current limits of the FDM resource boundary. In the north part of FDM, 1 underground drill hole confirmed hydrothermal alteration zones related to the breaches and veins at depth below the current resource mineral envelope of FDM.

Speaker 1

In the central part, another underground drill hole interceptors hydrothermal alteration Zones along the downtick extension, again, below the current resource envelope. Furthermore, 2 underground drill holes completed at the FDN East target intercepted a new mineralized zone represented by branches, veins and veinlets with sulfides posted on porphyritic intrusive rocks or in volcanic rocks. I'd like to spend a little time on Montessori though. Reisperation continues to advance into finding this new epithermal system. 7 drill holes have been completed here and confirm the extension of the new mineralized zone.

Speaker 1

Recent results Indicated the gold mineralization is hosted by the same volcanic sequence found at the FTN deposit with occurrences of disseminated to semi massive levels of sulfide. Since the discovery of Bonzo Sur, numerous drilling intercepts suggest the occurrence of 3 subparallel vein or vein length zones, which we have called Colorado Central, West and East. This epithermal system is believed to extend to surface and stretches for 850 meters along the North South strike and for at least 500 meters at depth in the central area. Gold mineralization remains open in all directions. Over the coming months, the drilling program at Bonzosur will focus on better understanding the mineralized zones through reducing drill spacing and focusing on further exploration at depth and along its strike.

Speaker 1

New rates are currently turning up on Zosuur and I'm excited to see the progress we continue making at this high priority target. Regional drilling program continues to advance in distinct sectors along the southeastern and southwestern borders of the Suarez Basin A total of 2,544 meters across 4 drill holes were completed in the 3rd quarter. Regional drilling focused on the Crispelt target, where 3 drill holes were completed testing an unexplored geochemical and soil anomaly along the Southwest contact between the Suarez border and the volcanic sequence. All drill holes intercepted hydrothermal alteration Zone with important quantities of sulfides posted on abrutiated volcanic rocks. 1 drill hole returned low grade values of gold.

Speaker 1

Lending Gold's exploration programs are continuing to demonstrate the significant untapped exploration potential near the current FDM deposit. Nine rates are currently turning on our exploration programs and we now expect to drill 53,000 meters in 2023, 11,000 meters already drilled on the conversion program, 9,000 meters anticipated on the regional program And now 33,000 meters on the near mine program. That is more than the 50,000 meters we had communicated previously while we maintain our cost guidance. Very exciting times for us at London Gold. I'll now turn the call over to C.

Speaker 1

K. To provide a more detailed look at the financial results.

Speaker 3

Thanks, Ron, and good morning, everyone. In the Q3 of 2023, London Gold recognized revenues of $211,000,000 from sales of approximately 113,000 ounces of gold at an average realized gold price of $1931 per ounce. Income from mining operations increased to $100,000,000 compared to $84,000,000 a year earlier, primarily a result of the higher gold price. From this, LundinGold generated adjusted earnings, which exclude the derivative gain and related deferred income tax expense, included net income of $45,000,000 or $0.19 per share this quarter compared to $20,000,000 or $0.09 per share a year earlier. For the 1st 9 months of the year, London Gold recognized revenues of $712,000,000 and income from mining operations of $357,000,000 The company generated adjusted earnings of $171,000,000 or $0.72 per share.

Speaker 3

Adjusted EBITDA was $121,000,000 in the 3rd quarter. For the 1st 9 months of this year, LundinGold achieved EBITDA of $430,000,000 Performance during the Q3 of 2023 continues London Gold's track record of generating Strong free cash flow. The company generated net cash from operating activities of $120,000,000 and free cash flow totaled $81,000,000 or of $0.34 per share compared to $65,000,000 or $0.28 per share a year earlier. For the 1st 9 months of 2023, The company has generated free cash flow of over $200,000,000 which impressively also includes interest and finance charges of 129,000,000 from the full repayment of the gold prepay facility in January. We expect to continue generating significant free cash flow in the future based on our production and ASIC guidance, especially given increased exposure to strong gold prices with the benefit of the full repayment of the gold prepay.

Speaker 3

Lending Gold ended the 3rd quarter with a very strong cash balance. As at September 30, the company had cash of $302,000,000 and a working capital balance of $314,000,000 compared to cash of $363,000,000 and a working capital balance of $195,000,000 as at December 31, 2022. The change in cash during the 1st 9 months of the year was primarily due to the full repayment of the gold prepay facility of $208,000,000 principal repayments, interest and finance charges including associated taxes under the Stream credit facility totaling $61,000,000 interest and principal repayments under the senior debt of 121,000,000 Dividends of $71,000,000 and cash outflows of $40,000,000 relating to sustaining capital expenditures. This is offset by substantial cash generated from operating activities of $427,000,000 and proceeds from the exercise Stock options and anti dilution rates of $13,000,000 As Ron mentioned, given our robust cash balance and forecast cash requirements, we are going to fully repay the remaining principal and accrued interest under the senior debt facility of approximately $72,000,000 which will take place next week. With this, we will have extinguished all bank debt with only the Stream credit facility remaining.

Speaker 3

I would like to express our appreciation to our lenders for their participation and trust in Lundin Gold, the country of Ecuador and Fruta del Norte over the past 5 years. Their financial support allowed Lundin Gold to introduce responsible mining in Ecuador and create opportunities for the people of Zamora and Chipa that may have not otherwise existed. In addition to the senior bank debt, we have the option to buy back half of the stream in June next year for $150,000,000 and the second half in June twenty twenty six for $225,000,000 The company continues to evaluate these options and in the absence of other more attractive capital allocation opportunities, we expect exercising the first option will make sense for our shareholders. Free cash flow is fundamental to London Gold's growth story and we have generated a lot of it in 2023 so far. We've made some serious headway in our debt reduction strategy.

Speaker 3

London Gold shareholders already benefit from the additional cash flow generated from the 11,500 ounces quarterly that no longer service the gold prepay, which was repaid in early Q1. Now going forward, shareholders will also benefit from the additional cash flow that would otherwise have serviced our senior debt. I can't talk about cash flow without mentioning London Gold's dividend policy of $0.10 per share declared on a quarterly basis. The 3rd dividend of 2023 was paid at the end of Q3, bringing year to date dividends paid to a total of $71,000,000 The 4th dividend is payable on December 22nd for shares trading on the TSX and OTCQX and December 29 for shares trading on NASDAQ Stockholm based on a record date of December 7, 2023. Even after the payment of dividends, we still retain a healthy treasury and continue to generate significant operating cash flow for other value generating initiatives such as our near mine and regional exploration programs, future throughput expansions and other strategic opportunities.

Speaker 3

With continued progress on strengthening our balance sheet, we expect to reevaluate our dividend policy in the latter half of next year. A great first 9 months for Lundin Gold. The company is in a robust financial position to benefit from prevailing gold prices and remains in a strong position to meet our improved guidance for the full year. For a more detailed discussion of our financial results, I encourage you to turn to our MD and A. Now I'd like to turn the call back over to Ron for his concluding remarks.

Speaker 1

Thanks, C. K. Before I conclude, I want to quickly provide a few important corporate updates. Near the end of the quarter, Nathan Monash, Vice President of Sustainability departed London Gold. I want to thank Mason for the incredible important work he has done since joining the company in 2015.

Speaker 1

Nathan has been instrumental in building the industry leading ESG practices that Lending Gold today incorporates in our activities and helping to develop a responsible mining industry in Ecuador. We wish him well at Lundin Mining, where I'm certain he will do a fantastic job. In his place, Sheila Coleman has taken on the role and is now Vice President, Legal and Sustainability and Corporate Secretary. A number of changes have also occurred on London Gold's Board of Directors. On the acquisition of Newcrest by Newmont on November 6.

Speaker 1

Craig Jones and Jill Terry, former Newcrest nominees, Resigns from the Board. In their place, London Gold has appointed 2 new directors, Melissa Harman and Scott Langley as Newmont nominees. Leisa has a mining engineering degree and an MBA. She has been employed with Newmont for over 20 years in increasingly senior roles in operations and is currently group head non managed operating joint ventures. Scott is currently Vice President of Corporate Development at Newmont and worked in investment banking for more than 15 years prior to joining Newmont.

Speaker 1

We are pleased to welcome both Melissa and Scott to the London Gold Board of Directors. In closing, another strong quarter of free cash flow And as a result, we are advancing our debt reduction strategy with repayment in full of the remaining balance of our senior debt facility. Operationally, while results were strong, we continue to focus on improving recoveries and have made progress in identifying and implementing solutions. Thank you all once again for your continued support. And with that, I will now open the call to questions.

Speaker 1

Over to you, Lara.

Operator

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. You will hear a 3 tone prompt acknowledging your request. We have our first question coming from the line of Wayne Lam from RBC. Please go ahead.

Operator

Again, Mr. Wayne Lam from RBC. Your line is now live. Please go ahead.

Speaker 4

Hey, morning guys. Just wondering what needs to be done to kind of expand the mill beyond the permanent capacity. What's the cap on the throughput there? Is there a cap around $47,000,000 and I guess what's Required in terms of permitting and would you have to throttle back output to remain within the capacity limits?

Speaker 1

Good morning, Wayne. What's needed to go to that is we're not talking about a lot of capital. We're presenting that to the Board here in a few weeks with our 2022 budget, but it's a neighborhood, Terry, 30 30 to 40. 30 to 40 month, probably They've closed $30,000,000 to $35,000,000 And from a permitting standpoint, we've done the work. We're still within our environmental envelope that was the original EMP or environmental management plan for the operation.

Speaker 1

No further disturbed areas, we're still with all our discharges are within the environmental envelope. So it's essentially a notification to The Ministry of Environment that we're increasing throughput and that we're within. So there's really not much on the permitting side. The way that Terry and the team are laying out the project that's we've got the way and the way the mill was built and everything, it's actually Pretty neat and that we're going to be able to carry on this project through the year with minimal downtime. And really what we're doing right now is scheduling our Downtime to bring that project in when we're doing mill lock relines and that sort of thing to really minimize the impacts for 2024 production and be able to Almost do this seamlessly and be able to ramp up in Q4.

Speaker 4

Okay, perfect. Thanks. And then Just wondering on the additional tailings raise, how much capacity does that give you at the current run rate? And Is there sufficient capacity in doing additional lifts going forward to support the expansion capacity? Or at some point, Are you going to have to contemplate a new TSF?

Speaker 1

If Andre keeps having the success he's having on the exploration programs, So we've put 14 holes into Bonzo Sur and 13 have hit ore grain mineralization. So with that continued success rate, I hope you're right that we will have to be looking at another TSF because we're going to be way beyond our current mine life. But going back to what we have right now and the Throughput Wayne, we're fine with our existing at the current the increased throughput rate, our next raise will be Tail end of later 2025 when we have to do the next raise. And then it's kind of every other year after that. And We have sufficient capacity with our existing tailings facility to handle our current reserves And a good chunk of our resources actually.

Speaker 1

We're in good shape with the current facility.

Speaker 4

Sounds good. Sounds like Andrey is putting a bit of pressure on Terry over there. Maybe just last one for me. What's, I guess, required in terms of the equipment for the additional improvement in recoveries? And Do you have a kind of quantum of CapEx spend related to that as well?

Speaker 2

Hey, Wayne, it's Terry here. Yes, in The 30 to 35 that we were talking about that included the Jameson sales that we mentioned in the earnings script. So there's 3 cells that we're looking at purchasing and we're obviously encouraged from the pilot testing and excited to get them in. So we've already started procurements to get them fabricated and into the operation next year.

Speaker 4

Okay, perfect. Thanks for the detail. That's all for me. Thank you.

Speaker 1

Thanks, Gwen.

Operator

Our next question comes from the line of Arun Lamba from TD Securities. Please go ahead.

Speaker 5

Hi, Ron. Just high level on the new President, Daniel Nova. Just kind of your thoughts on that. I've kind of my view is generally been pro mining and you never really had any kind of Political issues at your mine in Southeastern Ecuador, but maybe just high level on the new President, any interaction that you may have had or going to have would be helpful.

Speaker 1

Yes. Thanks Arun. That's a good question. No, we're so the new National Assembly is taking their seats On November 15, and the new President, President of Naboa, will be taking his seat on December 1. I personally having spent as much time as I have in Equinor, I'm really I'm personally excited about what I see from this new government.

Speaker 1

And also I think the new National Assembly, not just the President, but the new National Assembly. I think a lot of people have learned the mistakes or the errors of their ways over the past few years and lack of things have happened with the government. And so it's exciting times. The challenge we're going to have, Arun, as you well know, Naboa coming in and the National Assembly, they only have an 18 month term. So they're only finishing out which was the lasso's original term.

Speaker 1

So they're essentially almost the day they start, they're going to be campaigning again to get reelected. And so it's encouraging. There's probably going to be some really good things happen within the country, but they're going to be focused on things that are going to get them votes, which is the security, health care, jobs. He's really focusing on jobs for young people. Those are the things he's going to show.

Speaker 1

In terms of what the impacts on the mining industry, I don't see much happening within the next during this term, but I'm encouraged overall. I think It's going to be great for the country and I think the national assemblies, they're going to find ways to work together.

Speaker 5

That's helpful. Thanks. And then just one more. With the Newmont and Newcrest acquisition closing, I know you guys had a great relationship with Newcrest and they kind of gave you sign off to if you found something that made sense for you guys, you kind of I mean, they're generally supportive of anything you guys did. Have you been in discussions with Newmont During this past 6 months in the deal process or now that it's closed, dialogue will kind of pick up?

Speaker 5

And then what you're thinking just kind of terms in M and A, I think You mentioned looking at potential developers, if it makes sense. Yes, any color on that would be great.

Speaker 1

Yes. Arun, we've been having discussions with Newmont for quite a for several months. It's developed more As they became clear and clear, the transaction was going to occur. I'm really looking forward to or we are looking forward to the relationship. We've got It was a lot of discussion right at the very senior levels and through the organization.

Speaker 1

CK has good contacts there. Really, we've had Melissa and Scott took part in their first board meetings yesterday and really excited to have them On the Board, I think right now what we can say, Arun, is Newmont, everything we're hearing from Tom And the senior people and the board nominees is they're aligned with Lending Gold to create shareholder value. And they are supportive of of the Lundin family. And I think there's some long ulcer relations longer relationships with Newmont and the Lundin family didn't recognize with Newcrest. So I think we overall are excited about The new the horizon here with our new shareholders, new Monk.

Speaker 6

That's helpful. Thanks so much. That's it for me.

Operator

Our next question comes from the line of Don DeMarco from National Bank Financial. Please go ahead.

Speaker 6

Thank you, operator. Good morning, Ron and team. My first question, just Ron, taking a look back at the technical report, I mean, of course, we're seeing grades over 10 grams per tonne next couple of years production topping 500,000 ounces a year. Is this trend still intact after you've worked your way through 2023? And I guess we're just trying to get a little bit of flavor ahead of the guidance release next year.

Speaker 1

We're just we've seen preliminary life of mine plans. We're putting that forward to the Board in a couple of weeks With our 2024 budget. But

Speaker 2

yes, we're based on

Speaker 1

the current life of mine plan, Don, Yes, we anticipate a good couple of years in front of us at the getting up to 5,000 tonne per day by the end of Q4 and the grades that we see over the next couple of years.

Speaker 6

Okay. And also another question on the mine plan. We see after next couple of years grades Moderate a little bit, still fairly robust, but come down. Is there with your exploration, near mine exploration success and so on, is there potential opportunity to Little is great even ever so slightly beyond, say, 2025?

Speaker 1

That one, Terry.

Speaker 2

Sure. Hey, Don, it's Terry here. What Ron was describing in the call from some of the exploration work going on around the peripheries of Fruta. Certainly, we're seeing very similar Tenure of grades and widths as the main ore body. So obviously, as we incorporate that into our Resource model and redo our reserves and update our life of mine plans.

Speaker 2

That's of course going to extend the really good High grade heart of our life of mine plan, so we're hopeful to see that. But that process is underway at the moment. So We'll report back on that resource reserve update next year.

Speaker 6

Excellent. Okay. And as a final question, just shifting to recovery in Q3, of course, we saw recovery ease slightly. And I know you have a work in place to bring them back up to your recent run rate. Was it really just largely a function of grade then?

Speaker 6

Lower grade, we would might expect lower recoveries? Or are there things you can do and do you You have the expectation to kind of bring those recoveries back up even if it was comparable to us? Thank you.

Speaker 1

Yes. It was a little bit It was a little bit great, but now it was more just a type of ore. Remember, Don, you've been covering for a while with the SBR and And now we're getting into different parts of the ore body. And so yes, it was I would say It was more excuse me, it was more mineralogy issue than a grade issue because the following Month, we saw similar grades and recoveries 3% to 4% higher than what we had in the Until end of the quarter. So it was really it's really a mineralogy issue.

Speaker 6

Okay. And are you able to adopt Plant, like now you have some familiarity with the different types of neurology. Are there adjustments to make when you enter zones that you mined in Q3?

Speaker 1

Yes, there's definitely adjustments we're making with the blending strategy. We're looking at, as Terry mentioned, some different reagents to help. But where were our losses, what we've determined where our losses are is in the finely disseminated sulfides. And that's really That's in the wheelhouse of the Jameson sales. That's what they really focus on is the fine grain flotation.

Speaker 1

And so As Terry mentioned, we had a pilot, the cell on-site. We got really interesting results. They've done a bunch of simulations for us, which has led to The installation of 3 cells at different stages within the flotation circuit. And I guess What I want to say, Don, is that we're not just sitting on our laurels and waiting until those Jameson cells are installed. We continue to do work and we are learning to improve.

Speaker 1

But we're pretty excited about what we anticipate to see with the Jameis themselves.

Speaker 6

Okay. Thank you. That's all for me, Ron. Appreciate it and good luck with the rest of the year.

Speaker 1

Great. Thanks, Don.

Operator

Our next question comes from the line of Kerry Smith from Haywood Securities. Please go ahead.

Speaker 7

Thanks, operator, and thanks for taking my question, Ron. Just on the test work that you've done with the Jameson cells, What sort of indicated recovery are you or recovery improvement are you seeing? And I know you probably won't get that in the commercial plant, but what is the kind of the order of

Speaker 2

Hey, Carey, it's Terry here. Yes, the Pilot work that we did really simulated the 3 positions that we're looking at putting these Jameson cells. One is at the head end of the flotation circuit, one sort of in the middle of the flotation circuit and then one is at the end. And we Tried to introduce as much variability into the feed as we could to really understand the performance. And So the modeling work that we've done and of course Glencore Technologies have taken the results and we're estimating that we'll see about a 3% Recovery bump once these Jameson cells are installed.

Speaker 7

Okay, great. And that's 3% expected in the commercial plant, not 3% from the pilot work and expected to be slightly lower than that.

Speaker 2

That's correct. 3% sort of over our historical averages.

Speaker 7

Okay. Okay. Okay. That's great. Awesome.

Speaker 7

And you'll have those cells installed and running by the end of the year as sorry, by the end of next year as Part of the expansion to 5,000 tonnes and that's the intention, correct?

Speaker 2

You got it.

Speaker 7

Okay. And when just maybe you can answer this question too, Terry. When will we see the new life of mine plan That's been generated and is going to be presented to the Board. Is that something that we'd see with your guidance? Or will that be a new technical report?

Speaker 7

Or how would we see that?

Speaker 1

We're not planning on updating our technical report, Terry and or to Carey. So we'll just be issuing new 3 year guidance Following the approval of the budget.

Speaker 7

Okay. So in the 3 year guidance, we would only see the 3 year guidance. We wouldn't We see necessarily the total life of mine plan then.

Speaker 1

No, we'll wait till we get the short material change and update our technical report. We don't anticipate doing that next year.

Speaker 7

I got you. Okay. Okay. And then Just the last question I had and maybe Terry can comment just on the current run rate for unit costs at the operation, like Cost per ton mine, cost per tonne milled and site G and A, could you give me some flavor for what you're kind of seeing these days in your costs?

Speaker 2

Yes. I think our 3rd quarter costs per ton, we're in that $170 to $180 a ton range. So nothing really significantly different than what we've talked about in the past, Gary.

Speaker 7

Okay. Okay. And the and just remind me the milling cost again?

Speaker 1

30s low 30s per tonne melt.

Speaker 7

Okay, got you. Okay. Okay, that's great. Thank you very much.

Operator

We have our next question coming from the line of Jonathan Agilo from Desjardins. Please go ahead.

Speaker 5

Thanks guys. Most of my questions have already been answered. I guess the one remaining one is how well Understood and modeled. Are these finely disseminated sulfide zones? And I guess did their appearance in Q3 Or surprise you or were you expecting to have to deal with them this quarter?

Speaker 1

It was a little bit of a surprise, but we are getting We're getting ahead of with all our infill drilling now, Jonathan, we're collecting samples and again doing metallurgical tests on them. Our geometallurgical model we've been working on now for about a year as we get into different parts of the ore body and it's really coming together. So I think we're going to be a lot We have a lot better and we'll be able to blend better as we go forward. So it's been work in progress, but we're making some serious headway.

Speaker 5

Okay. And I guess, is it too early to know then if there's expectations of some signs in the upcoming quarters then? Or is that Something you're doing right now and it will come out with guidance.

Speaker 1

We'll take that into it. We're taking in our all our efforts to improve recovery that Being incorporated into our 2024 budget as the some things we're implementing, some new reagents, Terry, we're Coming in this quarter, aren't we, in Q4. So we'll take that into account in our write off the start of the year.

Operator

There are no further questions at this time. I'd now like to turn the call back over to Mr. Hochstein for final closing comments.

Speaker 1

Thanks, Laura. Thank you, everybody, for taking the time this morning to hear a little bit more color on the Q3 results. And As I mentioned in the call, it is really exciting times. Our exploration programs are really showing a lot of opportunities for us. We're starting to work on even now as a result of those 5 year, 10 year plans for milling throughput rates, tailings, capacity mining of alternatives.

Speaker 1

And so, yes, look forward to talking a little bit more about the upcoming Announcement of our new 3 year guidance and thank you again for taking the time this morning.

Operator

Thank you, sir. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask to please disconnect your lines.

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Earnings Conference Call
Lundin Gold Q3 2023
00:00 / 00:00