Fairfax Financial Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2024

There are 8 speakers on the call.

Operator

you for standing by. This is the conference operator. Welcome to the IAMGOLD First Quarter 2024 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.

Operator

At this time, I would like to turn the conference over to Graeme Jennings, VP, Investor Relations for IAMGOLD. Please go ahead, Mr. Jennings.

Speaker 1

Thank you, operator, and welcome, everyone, to our Q1 2024 operating and financial results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer Martin Zanuzen, Chief Financial Officer Bruno Lemelin, Chief Operating Officer and Tim Bradburn, Senior Vice President, General Counsel and Corporate Secretary. We are joining today from IAMGOLD's Toronto office, which is located on 3 d 13 territory on the traditional lands of many nations, including the Mississaugas of the Credit, the Anishinaabe, Chippewa, Hootenishoni and the Wendat peoples. At IAMGOLD, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, transparency and mutual respect. Please note that our remarks on this call will include forward looking statements and refer to non IFRS measures.

Speaker 1

We encourage you to refer to the cautionary statements and disclosures in the non IFRS measures, including the presentation and the reconciliations of these measures in our most recent MD and A, each under the heading Non GAAP Financial Measures. With respect to the technical information to be discussed, please refer to the information in the presentation under the heading Qualified Person and Technical Information. The slides referenced on this call can be viewed on our website. I'll now turn the call over to our President and CEO, Renaud Adams.

Speaker 2

Thank you, Graham, and good morning, everyone, and thank you for joining us. It is an exciting time at IAMGOLD. As a company, we're gaining momentum towards our goal of becoming a leading mid tier and modern gold producer. The highlights of the quarter was, of course, the first four at Goteko. With this achievement, we've brought online a key cornerstone producing asset and our 3rd producing mine alongside of operations at Issaquane and Westwind.

Speaker 2

At steady run rate, Koti Gold will be among the largest gold mines in Canada and is critical for the repositioning of Feingold. As Koti provides a higher production base, lower cost profile and a longer life of cash flow generations and growth opportunity in Canada. We believe that Coty will be a model of modern mining done right here in Canada and for many decades to go. To the whole CodeEgold team and partner, I really want to express my congratulations and appreciations for a job well done. With a special thought to our resilient project and commissioning teams.

Speaker 2

This extends as well to our operating teams in Quebec and Burkina Faso as Ryanville started this year with strong performance at both Susacana and Westwood positioning the company well on the path towards our guidance targets for the year. Looking ahead, our primary target is on the safe and steady ramp up of Cote. As we will discuss in a moment, the ramp up has been progressing well with all key equipment proving itself to be able to operate near NIM plate and this compared to our targets of exiting the year at 90% plus of nimplate. We remain very confident to achieve commercial production in the Q3 of this year. On the finance side, we will continue to prioritize the options to return to our 70% interest in Cote, as we believe that the value of this project is well above the current market sentiment and repurchase price.

Speaker 2

Longer term, we have a clear roadmap for Niant Gulf with strong free cash flow generation and will which will be essential to ultimately improve our balance sheet and deliver value to our shareholders. With that, we will now dive into the operating and financial results and highlights for the quarter. Starting with health and safety, IAMGOLD is committed to our guiding principle of 0 harm in every aspect of our business, putting the health and safety of the company's employee contractor and consultant first. IAMGOLD started the year with a good performance on safety with a days away restricted transfer duty rate of 0.53 and a total recordable injury rate of 0.61, tracking below where we were last year. I want to take a moment to congratulate Essakane, which once again achieved a remarkable performance in health and safety with the total recoverable injury days away, restricted transport duty rate of 0.06.

Speaker 2

This is among the best health and safety performance in our industry and is a testament to the professionalism and commitment to our culture of safety of our people in Burkina Faso. On production, IAMGOLD started the year with strong attributable productions of 151,000 ounces, including a solid production of 150,000 ounces from the Sakane and Westwood, which position us well for our annual guidance of 430,000 to 490,000 ounces on an attributable basis and excluding Coty production. As we will get into a moment, the Q1 production results were driven by esakane being able to operate without disruptions and benefiting from positive grade reconciliations, coupled with the continued ramp up at Westwood as the mine benefits from the rehabilitation of the underground and opening of new mining areas. The strong reductions in sales volume translated to a decline in our cash costs and all in sustaining costs in the Q1, excluding Cote, to $10.53 an ounce and $14.93 an ounce respectively, providing a major benefit to operating cash flow. With that, I will pass the call over to our CFO to walk us through our financial results and positions.

Speaker 2

Martin?

Speaker 3

Thank you, Renaud, and good morning. In terms of our financial position, IAMGOLD ended the quarter with cash and cash equivalents of 291,200,000 dollars and our credit facility remains undrawn, equating to total liquidity of approximately 603,800,000 We note that within cash and cash equivalents, dollars 76,400,000 was held by Kotak Gold and the $99,700,000 was held by Essakane. Dakota Gold unincorporated joint venture agreement requires its joint venture partners to fund in advance 2 months of future expenditures and cash calls are made at the beginning of each month, resulting in the month end cash balance approximating the following month's expenditure. Essakane normally pays a dividend in the second half of the year and the size of this dividend is dependent on the cash held by Essakane in Burkina Faso and its working capital requirements, which is impacted by the ability of the company to receive value added tax or VAT, reimbursements from the government of Burkina Faso or to sell the VAT receivable to local banks. We are seeing an emerging risk where the ability to recoup these receivables is declining, and the company has not received VAT reimbursements in Q2023, Q4 2023 or Q1 2024.

Speaker 3

Further, the company still expects the remaining bamboo transactions related to the sales of assets in Ginnie Mining to close this year, with gross proceeds of approximately $84,400,000 dollars Subsequent to quarter end, we announced another amendment to our gold prepay commitments that included a new forward sale arrangement and a partial amendment to one of our existing gold prepay arrangements. The arrangements would effectively increase cash flow by more than $73,600,000 during the Q2 of 2024 at current gold prices. The forward sale arrangement is for 31 1,250 ounces and includes a gold collar where the company will also participate in the gold price from $2,100 up to $2,9.25 per ounce at the time of delivery. Therefore, ensuring gold price participation in the Q2 of 2025 should the gold price remain above $2,100 per ounce. These arrangements are similar to the amendments we made previously to transfer the cash impact of the gold delivery obligations out of the Q1 this year into the Q1 of next year.

Speaker 3

These gold forward arrangements allowed for improved financial flexibility for the company at a reasonable cost, while also benefiting from favorable forward gold prices, particularly in the first half of the year, while we are commissioning and ramping up Cote. Looking at our Q1 financials, revenue from continuing operations totaled $338,900,000 from sales of 163,000 ounces on a 100% basis at a record average realized price of $2,077 per ounce. The realized price includes the impact of the gold prepay arrangement that was delivered into during Q1 2024. The strong operating results coupled with the high gold price translated to an adjusted EBITDA of $152,500,000 compared to $110,600,000 in the Q4 of 2023 $83,000,000 in the Q1 of 2023. Adjusted earnings per share was $0.11 for the quarter compared to $0.06 in the Q4 of 2023 and $0.05 in the Q1 of 2023.

Speaker 3

Looking at mine site free cash flow, which is calculated as cash flow from mine site operating activities, less capital expenditures from the operating mine sites, Westgrid returned its 1st quarter of positive mine site free cash flow since the restart of operations of $10,500,000 At Essakane, we note mine site free cash flow in the Q1 of 30 $5,700,000 compared to $18,400,000 during the Q1 of 2023. The Q1 2024 minuteesize free cash is net of working capital payments of $58,900,000 including the impact of the increase in the VAT receivables referred to earlier of 11 pass back the call to Renaud. Thank you, Renaud.

Speaker 2

Thank you, Martin. We will now walk through our operating performance at Essakane and Westwood before we dive into Cote. At Essakane, the mine reported attributable gold production 118,000 ounces in the first quarter, which was the highest quarter of productions on record, a high watermark in the nearly 14 years of operation. This was made possible by our mining operation being able to perform to plan in the quarter without disruptions in fuel supplies to the site compounded by higher than expected grades. Mining activities totaled 11,300,000 tons in the quarter with 3,500,000 tons of ore, the rates which are generally in line with our updated mine plan.

Speaker 2

Head grades increased from the prior quarter to 1.52 grams a ton due to the continued positive reconciliation upgrade from the reserve model as we mine deeper into Phase 5. This positive grade reconciliation in the deeper portions of Esakane was seen previously in Phase 4 of the pit and the influence has continued in the early weeks of this quarter. However, we are seeing head grades decline in line with the life of mine as volumes from Phase 6 and 7 increase and from increased proportion of stockpile. On a cost basis, Esukana reported first quarter cost of $1,002 per ounce and an all in sustaining cost of $13.12 per ounce, an improvement from the prior quarter on the higher productions and sales volume. While on a unit basis, cost came down, our total cost spending in the quarter was in line with plans and reflects the increase in the second and cost profile over the last 12 months to 18 months due to the updated royalty rates implemented at the end of the last year coupled with sustained higher realized prices for inputs such as landed fuel prices, transportations and CAM costs as a result of the security situation in country.

Speaker 2

With the strong start of the year, Essakane is positioned well to achieve our guidance target of 330,000 to 370,000 ounces of attributable production at a cash cost of between $1300 $1400 an ounce and an all in sustaining cost of $16.75 to $1800 an ounce. We are continuing to examine opportunities to extend the mine life of Esakane which is currently defined out to the end of 2028, with drill campaigns ongoing within the fence to ensure the safety of our teams. Turning to Westwood, the Q1 was a major milestone for the operation as the mine not only returned the highest quarter of gold production since the mine restarted in 2021, but also produced as Martin noted positive mine free cash flow of $10,500,000 On operations, Westwood produced 32,000 ounces as the ramp up of underground operations provided increased volumes of higher grade underground material for the mill supplemented with materials from the satellite open pits of Granjuk and Fayol. Our mine from underground totaled 83,000 tons in the Q1 contributing to an average head grade from underground or of 8.8 grams a ton, which is the highest grade from underground in over 5 years as rehabilitation efforts have allowed access to previously closed higher grade underground steps.

Speaker 2

The mill throughput in the Q1 was 249,000 tons at an average blended head grade of 4.27 grams a ton and a 94% recovery. The mill availability averaged 85% in the quarter, which is roughly about 5% below where we would like to be as the plant team managed unplanned maintenance requirement on the SAG mill liners. Though the plans are in place to further improve availability through our ongoing maintenance program. The cost profile for Westwood continues to see improvement with the increase in production. Cash costs averaged $12.36 an ounce and the all in sustaining cost averaged $18.36 an ounce in the Q1, which was also a record since the restart of operations and down nearly 30% from the high watermark from last year.

Speaker 2

Looking ahead, there is no change to our guidance to the year for the year with Westwood expected to produce between 100,000 and 120,000 ounces at a cash cost of $4.50 to $13.75 an ounce and an AISC between $18,021,000 an ounce. Work has begun on the planned updated technical report and the mine plan for Westwood, which will be announced later this year and will provide details of the results of the last 2.5 years of mine optimization efforts and strategic assessment of the Westwood complex. So congratulations to the Westwood team for a very special and successful turnaround story, an example of resilience in team efforts and I'm sure more to come. Turning to CoDegol and with a big smile on everyone's face, this is the slide and images we have all been long waiting for. We poured a first goal at the end of the Q1, but the image refers to a subsequent 4.

Speaker 2

Mining activity totaled 7,600,000 tons in the first quarter, including 1,900,000 tons of ore. Combined with the 4,900,000 tons of previously stockpiled to start the year, 6,700,000 tons of material was available at the end of the quarter for the ramp up of the processing plant. As we mine through the early benches in the pit, we are seeing that the great control model supports our current reserve model. Additionally, as mines rates ramp up, we are getting visibility on our actual mining costs, which were $3.32 a ton in the Q1 with further cost improvement expected through the year, an exceptional performance at this very early stage of mining operation. The mining team continues to improve efficiencies of the mining operation with new daily records achieved in April in excess of 160,000 tons hauled per day.

Speaker 2

The mining rates improvements include the commissioning of 2 additional autonomous haul truck, the deployment of the second hydraulic electric shovel and the commencement of double side loading in the pit. On processing, the Q1 was primarily focused on commissioning and build up of the in circuit inventory, which allowed the company to complete its first floor. Subsequent to this, the ramp up of the plant has been progressing well. Throughout March April, the crushing and milling circuits utilization rates progressively increased and the mill throughput capacity is in line with our expectation at this stage of the ramp up. The primary and secondary crushers have been operated up to 1900 tons per hour and our HPGR and ball mill operated up to 1600 tons per hour during April.

Speaker 2

In other words, together representing over 95% of nameplate's capacity, meaning the primary components of the processing plant have demonstrated their ability to operate near nameplate capacity. This means it is all about increasing mill availability and stability in order to ramp up the processing circuit utilization rates towards a goal of achieving commercial production in the Q3 of this year. Recoveries in the plant has been steadily improving and I will note this is prior to start up of the gravity circuit which will be commissioned later this quarter. I will now hand the call back to Martin for quick discussions on project expenditures.

Speaker 3

Thank you, Ronon. Before we get into the capital numbers, I want to remind everyone that under the latest IFRS guidelines, revenue and cost of sales are to be recognized from the first sale. We shipped and sold our 1st gold bars in April and so we will be recognizing revenue and cost in the 2nd quarter. Further, it is worth reinforcing that OnGolf will continue to fund operating and capital expenditures through cash flows at its 60 0.3% interest and will receive 60.3% of the gold production. Now with that said, as we discuss project expenditures, please note that all the costs being quoted are on a 100% basis.

Speaker 3

Project and capital expenditures in the Q1 totaled $196,300,000 and includes the incurred project expenditures up to First Gold of $151,700,000 which also includes the cost of consumables and supplies inventory purchased during the Q1 2024. This brings the total project expenditures incurred for Cote Gold since the commencement of construction to First Gold to $2,935,000,000 of the planned $2,965,000,000 In addition to the project expenditures, approximately $27,000,000 of operating expenditures were capitalized related to mining, surface costs, administration and indirect cost that will be incurred during commissioning, ramp up and up to commercial production. Further, there were capital expenditures related to ongoing operations of $17,600,000 including $8,100,000 of capitalized stripping, $8,000,000 for tailings and earthworks and other projects of $1,500,000 The total and timing of these expenditures are in line with our forecast and guidance for the year. If we look at the bottom of the total 2024 outlook slide, we can see the construction to capital of First Gold is finalized at $151,700,000 Accordingly, we have revised our project constructed related capital outlook post First Gold upwards to $67,000,000 and the total construction capital for the year, therefore, remains guided at $219,000,000 The construction post first goal is for the additional ancillary infrastructure and earthworks projects that were outlined in the project scope, but not required for First Gold.

Speaker 3

The other guidance estimates for project capital expenditures related to operations and capitalized waste stripping are also unchanged. I would also like to note that the Gote gold capital expenditures related to operations this year are expected to be higher than the life of mine average as the mine extends to the full tailings dam footprint to support the life of mine. The classification of capital expenditures as either sustaining or expansion prior to commercial production will be dependent on the timing of achieving production and the nature of expenditure. Back to you, Renaud.

Speaker 2

Thank you, Martin. So our goal this year is very clear. We need to ramp up the planned availability and utilization to reach commercial productions in the Q3 of this year, which will position us very well to achieve our goals of exceeding the year at a throughput rate of approximately 90% of nameplate. Based on this timeline, our production guidance for this year at Cote D'Gol on a 100% basis is unchanged at between 220,000 and 290,000 an ounce for the year. We continue to estimate that as Cody achieved 90% throughput exiting the year, cash costs at that time are expected to be in the range of approximately $700 to $800 per ounce sold and all in sustaining costs of $1100 to $1200 per ounce sold.

Speaker 2

This brings us to the slide we always like to finish on and this is what the future is for Cote. As a reminder, the Cote deposit has estimated mineral reserve on a 100% basis of 7,600,000 ounces. These reserves are constrained by permitted tailings capacity and form the basis of the current economics of the project. But on a measured and indicated resource basis, the coated pit is currently estimated at a total of 12,100,000 ounces. The adjacent Gosselin pit has an additional 4,400,000 ounces of measured and indicated resources and nearly 3,000,000 ounces of inferred.

Speaker 2

So bringing the project to a total of 16,500,000 ounces of measured indicated and an additional 4,000,000 ounces of inferred. The size of Cote and Gosselin together puts the project in a very exclusive category among the large scales producing Canadian assets. We are continuing to advance our understanding of the impact of Gosselin and potential of the project. At year end 2023, we updated the Gosselin mineral reserve and resources estimate with an additional 35,000 meters of drilling, which was drilled over the 2 years prior. This year itself, we are conducting a 35,000 meters of drill program, targeting the central zone between the pit shells where we see indication of continuations of mineralizations and hydrothermal breaches, as well as some deeper holes understand the continuity of mineralizations below the current pit shells.

Speaker 2

We expect to have the result of this program later in the year, which will greatly inform our understanding of how to incorporate Gosselin into a potential future mine. As I said before, Corregol today is a project, but we believe strongly that this is the start of the mining camp and will provide a strong foundation for Ayangol for many years to come. So thank you all and I look forward to an exciting year ahead. With that, I would like to pass the call back to the operator for the Q and A. Operator?

Operator

Thank First question comes from Anita Soni with CIBC World Markets. Please go ahead.

Speaker 4

Hi, good morning, everyone. Firstly, on Ethikin, you mentioned that the grades are declining to life of mine. How does that decline look over the course of the year?

Speaker 2

Yes. If you look at thanks Anita for your questions. And if you look at the 40 three-1 100 and which reflects well the 1st year 2024 of the plan, so we originally estimated the grade at about 1.1. Course, in the Q1, we massively aided on the Phase 5. The reason why we're saying that we see a potentially decreasing, remember as well back in 2023 as we entered the Phase 5.

Speaker 2

So we also have like some negative reconciliation at the start eventually will act far enough. So same behavior as Phase 4. So we will be entering Phase 6 and 7 as we advance in the year. So there is no reason at this time to believe that we will not be return to the more. But we will obviously benefit the Q1 ahead.

Speaker 2

And as we said, so far in Q2, we've seen the same behavior from the Phase 5. But eventually, we'll have to transition to 6 and 7.

Speaker 4

Okay. And then also a good turnaround at Westwood after some challenges over the last decade. Moving to Cote, can I I was wondering what is your mill utilization rates? Like what are they right now? And obviously, you're trying to get to 60% of throughput for the commercial production in Q3.

Speaker 4

But I just wanted to get an idea of like how many days on, days off or is the plant like operating like daily consistently and then it's just a matter of small starts and stops or are there big shutdowns still at this stage?

Speaker 2

Yes. Thanks for your questions. And we're not discussing on a week by week basis, but we definitely remain. But as we said, it's not about the throughput. I think we're already extremely well positioned.

Speaker 2

We just came out of 5 days shutdown where we had the opportunity to improve some aspect that we've seen. We know that the R is abrasive, so we needed some adjustment around shoots and all those and lining and stuff. So this is done. So we feel now that from, let's call where we are now to the Q3, We'll move this up over the 60% average throughput. So it's tough to say where we are now because we've been systematic and disciplined to correct as we go.

Speaker 2

So when we see some bottlenecks, so we remove and we go. So we don't really judge, but we're very comfortable that from now to as we exit Q2 after Q3 that will be achieving our objective.

Speaker 4

Okay. And both like 100% of the flotation tanks are working now, right? I remember like I think it was about 6, 9 months ago there was Yes, correct. Okay. All right.

Speaker 4

And then

Speaker 2

This is the first goal was achieved with the first half of the circuit and post fall of first goal, we started the second half.

Speaker 4

Okay. All right. And then these questions are for Martin. The CapEx number, I'm a little confused on. I think the if you look in the financial statements, it says around $153,000,000 and you just mentioned that Cote alone was about $151,000,000 So is this still the Sumitomo financing coming through or is like what's the differential there?

Speaker 4

Yes.

Speaker 3

Anita, this we of course really like our partnership dealers Sumitomo, but it does make the accounting a little bit complicated. So for IFRS, we have to recognize everything on our balance sheet at 70%. So that means the additions that you see in the financial statement is stated at 70 percent as well. So what we've tried to do to help with that is, if you look at our segmented notes, we then provide a breakdown of the capital in there that excludes the right of use assets as well as the borrowing cost. And then so we show up the total for the company of 188,000,000 dollars And then in our non GAAP reconciliation at the back of the MD and A, we take that $188,000,000 converted to 60% for Cote and show the Cote number there.

Speaker 3

So hopefully, that's helpful, but we are of course more than happy to jump on a call with you to go through the details.

Speaker 4

I will take you up on that. You might need to clear an hour. And then secondly, that's the also on the all the callers and the hedges or the prepay and how that's working. So like I was going to take more than this call to answer the question, but I guess I was looking at it, like is all of it coming through in like where did some of it come through in the interest and non financial like the interest and derivative instruments and some of it comes through in the revenue line. Is that how it works?

Speaker 3

So for revenue on the gold prepays, we still have to deliver 75,000 ounces this year into the collar structure. Those ounces, the revenue will basically be recognized at $2,100 if the gold price remains above $2,100 because we hit the top of that collar. And then for the ounces this year that we have to deliver on the fixed rate, which would be about 12,500 ounces, that could be recognized at a price of 17.53 dollars Then for next year, in Q1, we deliver another 75,000 ounces over Q1 and Q2. There's 31,000 ounces that we will get revenue of 2,135,000 that's for the fixed portion in Q1. And then in Q2, the same 31,000 ounces, we will participate between 2,100 and 2,925.

Speaker 3

If the gold price is in between those ranges, we will effectively recognize revenue at spot. So maybe this is also another one for us to go through in details, but it comes down to for the ones on the collars, revenues recognized at spot And for the fixed term or the forward ones, we would be recognizing revenue at the forward rates.

Speaker 4

Okay. Thanks. And I definitely would want to talk to you offline on that. Thanks. That's it for my questions.

Speaker 5

Thank you.

Operator

The next question comes from Mike Parkin with National Bank. Please go ahead.

Speaker 5

Hi, guys. Congrats on the strong quarter. Nice to hear everything at Cote is going well. Just following up on your earlier comments around getting money out of Burkina Faso, can you give us a sense of the cash reported? How much of that is in country versus in your accounts in, I assume, Canada?

Speaker 2

Thanks. And first of all, Mike, nice to have you back. So Martin, can you answer this?

Speaker 3

So in our disclosures, if we break out our cash balance between Essakane, Cote and Corporate, the cash balance for Essakane, which was $99,000,000 or around $100,000,000 for Q1, that is all in Burkina Faso.

Speaker 1

Okay.

Speaker 5

And thanks for now. It's good to be back. That's it for me. Thanks.

Operator

The next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.

Speaker 6

Good morning, everyone, and thank you so A couple of questions I have. I'm going to start with just understanding, I mean that realized gold price Martin was amazing given the fact that it includes the prepaid in there. Looks like you realized $2,091 without the prepaid. It was just I mean I have to believe it was just like $20 an ounce higher than the quarterly average. Just the way you sold your gold through the quarter or was there anything else I should be aware of?

Speaker 3

There's nothing else that you need to be aware of. We try to sell our gold equally over the month, every month. It doesn't get delivered and shipped equally, but we've got some sales strategies just to try to hit the peaks. But no instruments or anything, just trying to sell meet the market and sometimes we're lucky and we hit the peaks, but that's all that it was.

Speaker 6

Yes. It's just the first company I saw that I cover that had such a delta to the gold price given your prepaid. 2nd question I have is just following up on Anita's questions on the profile for this year. So just wanted to confirm that looks like Westwood is evenly distributed during the year and Essakane would be Q1, Q2 stronger and then lower with the grades in Q3, Q4. Would that be a safe assumption to model?

Speaker 2

Definitely for the Westwood and because we Phase 5 has been behaving the way it is and it's kind of continuing into I would also agree with your assessment. Originally, of course, it was more some sort of a flat type of same H1, H2 at Sakan, but we're very pleased with the positive reconciliation. So you could assume a higher stronger H1 over H2 as you said.

Speaker 6

Okay. So that's very helpful. Thank you. And then if I can move over to Cote and just to finish off some of Anita's questions on that, just some can you give us an idea how April May have gone like in some of the stats like you so much more in processing side. You mentioned that the recovery is 81%.

Speaker 6

We have the gravity circuit coming in Q2. So that should move your recoveries up. So can you just walk me through how April, May is and sort of where you see this recovery moving at once we get the gravity circuit in?

Speaker 2

I guess, what I can say and that I really like the approach of the team is to kind of understanding the next milestones ahead of time. So when we enter the pre commissioning, we obviously are positioning ourselves to be able to do this like in a relatively short, so all the prep behind. So about the same thing in April May. So yes, it was about stabilization, but it was also to understand at the very early stage, if the capacity was installed was there. And so I think April, May was really about understanding a few bottlenecks, which we've done a lot of corrections in the last shutdown, but it was really at the very early stage to understand that the next milestones of the 90% nameplate was achievable.

Speaker 2

So we that was largely the focus of April May. So now we know that it's about now to ramp up the availability and stability until we reach the commercial. But that's what I could say has been the focus in April May. At the same time of ramping up and improving the mining operation, which is now basically very close to the plans of sustaining a full capacity mill.

Speaker 6

Okay. And so the mining is now ramping up with the mill for sustainability there. What about this recovery once we get this circuit in the gravity? 81% is I think what you have right now.

Speaker 7

Yes. Hello, Tanya. So, so far we're seeing like very good results in terms of recovery despite that the cavity circuit is not fully commissioned yet. That's right away at target, if not above. But again, be careful because we're still ramping up.

Speaker 7

So the incident times in our tank is greater than when we're going to be processing at full capacity. But so far, we're pretty pleased with what we're seeing.

Speaker 6

Okay. So what should I be thinking about when you go commercial this recovery?

Speaker 7

Still at 91.

Speaker 6

Sorry, about 81?

Speaker 3

91.

Speaker 6

Oh, 91, sorry. Okay.

Speaker 1

Thank

Speaker 6

you. And then maybe over to Martin again, my final question is just a reminder. When I look at the prices for oil today and I look at your ability, let's assume everything goes positively. And in terms of buying back your option back from Sumitomo, would it be fair to assume that looking at current spot prices, assuming everything goes well that that would be achievable in the first half of twenty twenty five? Is that what you have in your model?

Speaker 3

So, Tanya, there's a lot of different factors that, of course, come into that to say that we can generate enough free cash flow to buy back in the first half of twenty twenty five, going through all the inputs and outputs and risk, it's hard to say with 100% confidence. But for us, we continue to see that the value of what we're paying and for the underlying asset to make sense for us to buy it back and we continue to look at all the options that's available to us to realize that value.

Speaker 6

Okay. Well, all right. I mean, I assume you have a model that would show some if you assume everything goes well, there's a timeline and I understand things come and go and this Burkina Faso money in country. But assuming you can access it, would it be fair to have it in first half or should I be thinking later in the year?

Speaker 2

You're talking about later in the year?

Speaker 6

20 25.

Speaker 2

2025. Yes, I mean, there's 2 ways to look at it. Of course, I mean, it depends on gold price you're using and so forth. We will see this summer how

Speaker 5

we go. I would

Speaker 2

just say that we're not

Speaker 1

going to be able to get it.

Speaker 2

Yes. I guess if you assume that, yes, at some point in time the cash flow of the company will be sufficient of course to prepay it. It's just a matter of timeline timing.

Speaker 6

Okay. Thank you. Thanks.

Operator

This concludes the question and answer session. I would like to turn the conference back over to Graeme Jennings for any closing remarks. Please go ahead.

Speaker 1

Thank you very much, operator, and thank you everyone for joining us this morning. As always, if you have any further questions, please reach out to Renaud or myself. Thank you all. Be safe and have a great day.

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