Dine Brands Global Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 10, 2023

There are 8 speakers on the call.

Operator

Ladies and gentlemen, welcome to McEwen Mining's Q2 2023 Operating and Financial Results Conference Call. Present from the company today are Rob McEwen, Chairman and Chief Owner Perry Ng, Chief Financial Officer William Shaver, Chief Operating Officer Michael Netting, Vice President and General Manager of McEwen Copper Carmen Diaz, General Counsel and Secretary Jeff Chan, Vice President of Finance. After the speakers' presentation, there will be a question and answer session. I will now turn the call over to Mr. Rob McEwen, Chief Owner.

Operator

Please go ahead, sir.

Speaker 1

Thank you, operator. Good morning and welcome ladies and gentlemen. Today, I'll be discussing the highlights of our operating and financial results in Q2 and the first half of this year, as well as our expectations for the balance of the year. Our press release this morning discusses these matters in greater detail, And members of senior management are on the line to answer your questions. As many of you are aware, our gold and silver assets had a weak While activities at McEwen Copper's Los Azules project were running at a rapid pace.

Speaker 1

I'm pleased to say that our mines delivered better results in Q2 than Q1 and the outlook for the second half of the year is significantly better. But I'd like to share with you the highlights of the Q1 this quarter that's passed, 2nd quarter. 1, the Fox Complex generated gross profits of $6,000,000 and is expected to deliver on our guidance. The San Jose performance was much stronger in Q2 than in Q1 and it too is expected to deliver on It's production guidance, but costs will be 10% to 20% higher on a cost per ounce basis. At Gold Bar, The outlook again is looking significantly better as a result.

Speaker 1

We are increasing the mining rate. We'll be mining with a lower strip ratio and processing a higher grade of ore. McEwen Copper released in June its updated preliminary economic assessment. It displays a project with robust economics, a long life, low production costs and based on an environmentally sensitive Approach to Mining. Safety at all of our sites was the way we like it.

Speaker 1

No lost times at Fox and Gold Bar. We improved our balance sheet by reducing our debt by 39% to $40,000,000 And financially, we consolidate the financials of our 52% owned subsidiary McEwen Copper. And as I said, we've invested heavily in exploration and other work in order to complete the updated PEA. So our quarter end at quarter end, our consolidated liquid assets were $85,000,000 With an additional $29,000,000 in investments, our working capital was 92,000,000 And our consolidated net loss in the quarter was $22,000,000 and in the first half $65,000,000 again reflecting the very heavy investment in Moving the Los Azules project forward. And we've increased the value of Los Azules significantly During this period, it now has a value of about $555,000,000 implied based on the last financing we did.

Speaker 1

Our investment in exploration at Fox has given us a resource base Confidence to see a mine life being extended by 9 years and in Mexico construction of the Phoenix project is expected to start later this year And provide a 9 year mine life. In terms of our share performance, since the beginning of the year To present day, we're up just under 18% In U. S. Dollars, and that compares against the GDX, which is down 1.8%, the GDXJ Down 5.2%, gold's up 4%, the Dow's up 6%, And the NASDAQ is

Speaker 2

the only

Speaker 1

one of those that has outperformed. It's up 32%, Largely driven it appears by generative AI development. And I have to say that the mining world We'll be embracing generative AI as we go forward like many other industries. I'd now like to open the Conference Call.

Operator

Your first question comes from the line of Jake Zaleski with Alliance Global. Your line is open.

Speaker 2

Hey, Rob and Jean. Thanks for taking my questions.

Speaker 1

Hi, Jake.

Speaker 3

So just

Speaker 2

Starting off at the Fox Complex, you mentioned grades should tick a bit higher in the second half of this year. Are you able to quantify that at all? I'm just

Speaker 3

Yes, sure. Yes, Ajay, we expect that a grade in the second half of the year is Going to be closer to 4 grams per ton. The second quarter, the grade was Closer to 3 grams per tonne and that goes back to our original Budget and mine plan for this year. So it the original plan had us With a lower grade in the first half of the year and a little bit higher grade and We're now into the higher grade stope. The stope we're in right this week is the grade is more Like $5 per tonne.

Speaker 3

So we'll see the grade increase and so that'll move our costs down By a significant amount and so we'll finish the year Following our guidance, almost exactly right. The upside, I would say, is the fact that the mill has run significantly Better in the Q2, we had some more or less record months of around 12.50 tons per day for the quarter. May June was actually closer to 13 20 tons per day. So If there's upside, it's in the fact that we're we've been able to increase the tonnage through the mill. And if the grade stays where we think it will and there's no reason to think it won't Be predictable then we'll have a slightly better second half.

Speaker 2

Okay. That's helpful and good to see there. And just switching over to Los Azule, Any color on the work that's left for the feasibility study, the timing of the report and maybe The specifics that are milestones that need to be hit just to switch over from expensing investments there to capitalizing them?

Speaker 4

Michael?

Speaker 5

Sure. So we slate the delivery of the Feasibility study to the end of 2024, beginning of 2025. We have confirmed the main consultants that are working with us to the delivery. Mainly, the most important one, I would say, is Samuel Engineering and Knight Pieselt. Samuel, who has helped us in the PEA and well as Knight Pissot, who was also delivering our environmental impact assessment report.

Speaker 5

So that is well under the way. We need to drill about 45,000 meters. We have secured already 16 drills to be able to do that. We own 4 drill rigs and Another 2.5 import permits. We're looking to get another 2 to ensure that we can get through the drilling program to be able to get all the So I think we are very optimistic going forward.

Speaker 5

Now with regards to The capitalization criteria, it's basically the environmental permit issued plus The feasibility study. Perry, I'm not sure whether you would like to give additional insights.

Speaker 4

Yes. No, I think that's an accurate statement, Michael. And just for context, I mean, That's a result of us obviously being a U. S. GAAP reporter.

Speaker 4

And assuming if we IPO McEwen Copper at some point, We could have a situation where, if McEwen Copper reports on their IFRS, it would actually Capitalize those costs, the criteria on the IFRS are a lot looser, whereas McEwen Mining would still have to continue expensing those costs. So that's just a unique feature of the differences in accounting policies.

Speaker 2

Got it. Okay. That makes sense. It's all on my end. Thanks again.

Speaker 2

Thanks, Jake.

Operator

Your next question comes from the line of Heiko Ihle with H. C. Wainwright. Your line is open. Hello,

Speaker 1

Heiko. Sorry,

Speaker 6

I have you on mute. I assume

Speaker 1

you can hear me all right. Loud and clear. Excellent.

Speaker 3

Would you be able

Speaker 6

to provide me with an approximation of your labor cost increases from the past, Call it 6 or 12 months by asset. I assume there are some pretty meaningful differences in what you've seen between Timmins or I guess rather Canada, Nevada and Argentina, please.

Speaker 1

Bill, would you like to venture into that?

Speaker 3

Yes. I guess that's A question I'm not totally prepared to answer, but I guess our cost in Canada in terms of labor cost It is around 7% or 8%. And I would say our material costs are probably somewhere in the range of 10%. And I think We anticipated that we would see a higher Fuel price than we're actually seeing. So I think there's some positives there.

Speaker 3

And I think there's some other, I guess consumables that we're seeing which seem to have smoothed out to some extent and not being steel in terms of grinding And also cyanide. So I think if I had to say What the cost increase has been on a year over year basis, I'd say it's around 10% or maybe a little It'd be a bit higher than that, but I think if you use 10%, you wouldn't be wrong.

Speaker 6

Yes, that's fair. Moving on to drilling at Gold Bar a little bit, I mean as per your release, Your exploration for the second half of the year is on the nearby resources there. You're operating 2 drills there in the second half, if memory It's correct. And you were talking about the Cedar Fault. Now what exactly do you think that will do to the ore body?

Speaker 6

Are your geologists telling you that's more or less the same type of ore, so metallurgy would be the same or is this just creating ounces? What exactly is the goal, I guess, is what I'm saying?

Speaker 3

Yes. So the goal of that drilling program It is kind of 2 or 3 fold. First, we're defining The parameters for ore that we will mine in the relatively near future, meaning next The second part is to find ore that will mine into the future And it's to in both cases, we're trying to get a very good understanding What the strip ratios are going to be and also where there might be carbon associated With some of these resources, so that we're able to mine that in the proper fashion to Make sure we can segregate the carbonaceous ore from the ore that doesn't have carbon. There's also some deeper drilling that we're doing there Where I would say we're kind of exploring for Perhaps some elephants that are similar to some properties that are just North of us, say, about 20 kilometers away. So but the focus of the drilling program is To make sure we know what we're doing over the next 18 months to 24 months.

Speaker 6

I appreciate that and I'll get back in queue. Thank you all.

Speaker 2

Thanks Heiko.

Operator

Your next question comes from the line of Bill Powers. Your line is open.

Speaker 7

Good morning. Thanks for setting this up today. I just had a couple of questions. I guess starting in Canada, you During the AGM, you mentioned that you had a capacity of 1400 tons per day. And I guess my question would be, is The stockpile, has that been able to be reduced at all at the higher rate of mill running or is that just or is that Still there and I guess are you planning to move towards 1400 tons per day in Q3 and the rest of the year?

Speaker 3

Yes. So thanks for the question. The mill tonnage in May June Has increased up to about 13 20 tonnes a day. But meanwhile, the stockpile It's still very close to 100,000 tonnes. So although we're increasing The tonnes through the mill, the mine is operating very well.

Speaker 3

Is kind of in a sweet spot in terms of the mining operation. So we're keeping up with The milling process, even though we've increased it by something more than 15% over last year. So we would like to get the stockpile lower to transfer it over Into actual cash, but we also want to keep the mine running at that sweet spot So that we get the optimum mining cost. So yes, I would say we're We're doing better on the milling where the mine is fine, keeping up And we're continuing to try to improve the throughput through the mill.

Speaker 7

Okay. Thank you on that. As far as Nevada goes, I know there was some exploration around the Atlas pit That was done last year and seemed to have some promising results. Have those has that been followed up on? And I guess is that A target for later this year or is that something or if you focus elsewhere, you're drilling near term?

Speaker 3

We're actually focusing on other portions of our property. The drill holes at the Atlas pit, I guess, we found A small amount of ore in 1 pit wall that at some point we may go And take, but we're talking about something in the order of 10,000 It hasn't turned out as positive as we hope.

Speaker 7

Okay. And thank you for the update. And I guess, my last question would be, I was a little late to the call this morning, but the If you could maybe you've gone over this or this question was asked earlier. But the expansion Of the ramp, I know you're are you still planning to put out a study for that or I guess a larger study for that or is that something that is going to be moving forward in the balance of this year?

Speaker 3

So yes, and we're talking now about the ramp at the Stock Mine. Yes. Yes. And yes, that ramp will be moving ahead. We're doing the final bit of delineation Drilling with regard to that part of the project and we are Putting together, I guess, what we're calling an economic analysis, which we'll have early in Late in Q3 or early in Q4, but we don't plan to do a revised PEA or pre feasibility study on that, we're going to basically Produce an economic analysis to make the final decision to go ahead.

Speaker 3

But at this point, we're Basically working at full speed to move that project ahead.

Speaker 7

Okay. Thanks so much for all

Speaker 1

your time this morning. Thanks,

Operator

Phil. There are no further questions at this time. Mr. Rob McEwen, I will turn the call back over to you.

Speaker 1

Thank you, operator. Assuming metal prices stay where they are And we're delivering on guidance. We don't anticipate having to come to the capital markets To fund any of our development projects, we're in a good position from our liquidity And we're quite excited about the projects we're advancing. There'll be exploration news coming out Throughout this latter part of the summer and into the fall, both from Los Azules and coming from the Fox Complex. So quite excited by that.

Speaker 1

Thank you very much and have a great day.

Operator

This concludes today's conference call. You may now disconnect.

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Earnings Conference Call
Dine Brands Global Q2 2023
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