Centerra Gold Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 2, 2024

There are 11 speakers on the call.

Operator

Good morning, everyone. Thank you for standing by. This is the conference operator. Welcome to the Centerra Gold Second Quarter 2024 Conference Call. As a reminder, all participants are in a listen only mode.

Operator

The conference is being recorded. After the presentation, there will be an opportunity to ask questions. At this time, I'd like to turn the conference call over to Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications with Centerra Gold. Please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. Welcome to Centerra Gold's Q2 2024 results conference call. Joining me on the call today are Paul Tomory, President and Chief Executive Officer Paul Charam, Chief Operating Officer and Ryan Snyder, Chief Financial Officer. Our release yesterday details our Q2 2024 results. It should be read in conjunction with our MD and A and financial statements, both of which can be found on SEDAR EDGAR and our website.

Speaker 1

All figures are in U. S. Dollars unless otherwise noted. Presentation slides accompanying this webcast are available on Centerra's website. Following the prepared remarks, we will open the call for questions.

Speaker 1

Before we begin, I would like to caution everyone that certain statements made today may be forward looking and are subject to risks, which may cause our actual results to differ from those expressed or implied. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. Certain measures we will discuss are non GAAP measures. Please refer to the description of non GAAP measures in our news release and MD and A issued yesterday. I will now turn the call over to Paul Tomory.

Speaker 2

Thanks, Lisa, and good morning, everyone. We delivered another quarter of solid operating performance and maintained consistent quarter over quarter cash flow from operations before working capital and income tax is paid. Our year to date production costs are in line with our guidance ranges and full year 2024 consolidated guidance for production costs and CapEx is unchanged. In the first half of the year, we've made good progress executing on our strategic plan, focused on maximizing the value of each asset in our portfolio. Earlier this year, we announced an additional agreement with Royal Gold, which allows us to assess Mount Milligan's potential to be a multi decade operation.

Speaker 2

This was a first key step in our strategy to realize the full potential of this cornerstone asset located in a top tier mining jurisdiction. We continue to progress work on the preliminary economic assessment to update the larger resource to include all the drilling completed to date, to identify value added initiatives to the plant and to optimize the mine plan. We expect to complete the study in the first half of twenty twenty five. Also at Mount Milligan, we have continued our progress on the site wide optimization program that was initially launched last year, and Paul Charron will speak to this later in the call. We remain focused on maximizing the value of our molybdenum business unit assets, which are comprised of the Thompson Creek mine, the Endako mine and the Langaloc metallurgical facility.

Speaker 2

In the Q2, we advanced our pruning work at Thompson Creek. With strong collaboration and proactive support from our regulatory partners, we successfully obtained authorizations for additional lands at Thompson Creek Mine, which will enable a proposed pit high wall layback. This is an important deliverable in the overall permitting process and provides for a long runway of mining activities under the current plan. We remain on track to release the Thompson Creek FS study later this year, at which time we also expect to outline our commercial optimization plan for Langeland. We're encouraged by the value opportunity in Langelof and the expected synergies with the Thompson Creek Mine.

Speaker 2

With respect to our pipeline of growth projects, we continue to progress work at the Goldfield property in Nevada. Our focus this year has been on exploration on the large land package looking for more oxide material, as well as metallurgical test work to support a lower capital flow sheet to maximize returns on the project. We expect to release an initial resource at Goldfield by the end of the year. Finally, I'd like to provide an update on our ESG initiatives. In line with our commitment to sustainable and responsible mining practices, we recently published our 2023 Annual ESG Report.

Speaker 2

We've made meaningful progress in our sustainability journey over the past year, marked by significant achievements across the organization, including the following. Throughout 2023 and this year, efforts have been made to identify potential efficiencies in greenhouse gas reduction opportunities at the site level with a goal of establishing attainable targets. 2nd, the number of reportable incidents decreased by 17%. Thirdly, we contributed over $3,200,000 to community investments and donations across our operations. And finally, we achieved the 2026 gender diversity goal 2 years ahead of schedule, with 38% female representation on the Board of Directors and 33% among officers of the company.

Speaker 2

As we look ahead, we're dedicated to continuing our efforts to drive sustainable value and positive impact. And with that, I'll pass the call over to Paul, who'll walk through our operational performance for the quarter.

Speaker 3

Thanks, Paul. I'd like to start with Mount Milligan's safety performance. The operating team continues to embrace the site wide optimization program, which starts with continuous improvement to our safety performance. Year to date, we have seen evidence of this through a significant reduction in high potential incidents. I would also like to congratulate our Mount Milligan Mine Rescue team for placing 1st overall in the Northern BC competition.

Speaker 3

On Slide 5, we show operating highlights at Mount Milligan for the quarter. Mount Milligan produced over 38,000 ounces of gold and over £13,000,000 of copper in the 2nd quarter. Gold and copper sales were down quarter over quarter, which was anticipated due to the timing of shipments. Both gold and copper sales are expected to increase in the second half of the year, contributing approximately 60% of the annual sales. In the Q2, all in sustaining costs on a byproduct basis were $12.34 per ounce, higher quarter over quarter due to lower sales and higher sustaining CapEx.

Speaker 3

The 2024 guidance metrics at Mount Milligan remain unchanged. During the Q2, we continued our progress on the site wide optimization program at Mount Milligan that was initially launched last year. This program has been focused on an holistic assessment of occupational health and safety, as well as improvements in mine and plant operations. While the optimization program is still ongoing, year to date we have begun to see productivity improvements in the load haul cycle at the mine, as well as the plant processing costs. In the 1st 6 months of 2024, milling costs at Mount Milligan were $5.60 per ton processed, 12% lower than the same period last year.

Speaker 3

Due to the longer term nature of the mining optimization initiatives, we expect to see improvements in the unit mining costs in 2025. Now moving on to Oksut. Starting with safety performance, year to date, Oksut is tracking on target on both total reportable injury frequency rate and severity rate. By embracing various safety systems and programs, including our WorkSafe, HomeSafe initiative, we are demonstrating our commitment to continuous improvement in our journey towards 0 harm. On Slide 6, we show operating highlights at Oksut for the quarter.

Speaker 3

2nd quarter production was over 51,000 ounces. This is less than last quarter due to the winding down of inventory built up during the operations shutdown in 20222023. Our 2024 production guidance at Oksut is unchanged with approximately 40% to 45% of the annual production weighted to the second half of the year. In the Q2, all in sustaining costs on a byproduct basis were $9.43 per ounce, which is higher compared to last quarter due to lower sales and higher royalty costs resulting from higher average realized gold prices. Opsuit's cost guidance ranges for the full year of 2024 are unchanged.

Speaker 3

However, we could be at the high end or potentially exceed the guidance range if gold prices remain at current elevated levels, mainly driven by higher royalty rates. I'll now pass it on to Ryan to walk through our financial highlights for the quarter.

Speaker 4

Thanks, Paul. Slide 7 details our 2nd quarter financial results. Adjusted net earnings in the 2nd quarter were $47,000,000 or $0.23 per share. In the Q2, sales were 83,258 ounces of gold and £11,700,000 of copper. The average realized price was $2,097 per ounce of gold $3.79 per pound of copper, which incorporates the existing streaming arrangements at Mount Milligan.

Speaker 4

At the molybdenum business unit, approximately £2,700,000 of molybdenum was sold in the Q2 at the Langloft facility at an average realized price of $22.10 per pound. This annualized throughput rate represents utilization of approximately 30% of the facility's capacity. More details on future plans for Langloft are expected to be provided later this summer with the release of the Thompson Creek Mine feasibility study. Consolidated all in sustaining costs on a byproduct basis in the 2nd quarter were 11 $79 per ounce and our full year consolidated guidance for unit cost metrics is unchanged. Slide 8 shows our financial highlights for the quarter.

Speaker 4

In the second quarter, we generated consistent cash flow from operations before working capital and income taxes paid of $94,000,000 After routine statutory tax and royalty payments to the Turkish government in the 2nd quarter, cash flow from operations on a consolidated basis for the quarter was $3,000,000 and we had a free cash flow deficit of $27,000,000 In the Q2, Mount Milligan generated $29,000,000 in cash from operations and $14,000,000 in free cash flow. Due to the timing of shipments, gold and copper sales volumes are expected to be higher in the second half of the year. Oksut used $2,000,000 of cash from operations and had a free cash flow deficit of $11,000,000 in the second quarter. This was impacted by routine statutory tax and royalty payments of $105,000,000 made to the Turkish government. We expect to generate strong cash flow from operations at Oksut in the second half of twenty twenty four.

Speaker 4

The molybdenum business unit as a whole used $8,000,000 of cash from operations and had a free cash flow deficit of $13,000,000 this quarter. This related primarily to activities at the Thompson Creek mine as Lanloff operating cash flows were breakeven for the 2nd quarter. Interest income was $8,000,000 in the 2nd quarter, which primarily includes interest on bank term deposits. We continue to generate significant interest income on our cash balance. A key focus for Centerra is returning capital to shareholders.

Speaker 4

In the Q2, we were active on share buybacks, repurchasing 1,400,000 shares for total consideration of 10,000,000 dollars Also, the Board declared a quarterly dividend of $0.07 per share. Returning capital to shareholders remains a key pillar in our capital allocation strategy and we expect to remain active on the share buybacks dependent on market conditions. At the end of the Q2, our cash balance was $592,000,000 This provides us with total liquidity of $992,000,000 and positions us well to execute on our strategic plan and deliver shareholder value. I'll pass it back to Paul for some closing remarks.

Speaker 2

Thanks, Ryan. We remain committed to delivering consistent operating results each quarter and driving value for our shareholders. Looking ahead, we expect to continue to deliver on our strategic plan with the release of the Thompson Creek feasibility study and the Langelof commercial optimization plan later this summer. And with that operator, we'll open the call to questions please.

Operator

Ladies and gentlemen, at this time, we'll begin the question and answer And our first question today comes from Anita Soni from CIBC World Markets. Please go ahead with your question.

Speaker 5

Good morning. Paul, thanks for taking my questions. First one is with regards to OkCeut and the HIT sequencing. I think I was expecting a little bit more stripping to be done this quarter. And I'm just wondering if some of that was pushed out into the back half of the year or are you done with the stripping campaign that you had that I think was happening in the first half of the year?

Speaker 3

Thanks, Anita. It's Paul here. We're continuing with our waste stripping through the year. That's relatively and it's approximately 16,000,000 tons. So we're on track for that.

Speaker 3

We did have a little bit of change in our ore sequencing though and that was really just to blend our Gunutepe pit which is higher grade has a little bit higher clay and so we needed to adjust our mine ore sequencing. And then we did have, as we noted in the MD and A, we did have a little bit of dilution due to the rainy season.

Speaker 5

Okay. So what you're saying that this quarter you were in a higher grade set? Because it's actually lower quarter over quarter. I'm not feeling a little confused about that.

Speaker 3

No, no. We needed to change the ore sequencing timing in the larger pit, the Caltepe pit, because we needed to blend some of the higher grade on Glen Yutepi. Overall, the grade was lower. And then, of course, we were winding down the inventory that was built up during the shutdown.

Speaker 1

Okay. All right.

Speaker 5

Thanks. That helps. And then just a bigger, broader question for Paul Tomory. As you think about you do have some significant free cash flow coming into the back half of the year. As you think about where gold prices sit and where does that change your thinking at all in terms of what gets prioritized in terms of use of cash?

Speaker 2

In terms of use of cash, the first thing coming down our pipe here is the Thompson Creek feasibility study. So that's coming here at the end of the summer. We're happy with where things are at on molybdenum price, but more importantly, we've done a lot of work internally over the last 6, 8 months on understanding the value potential of the integration between Thompson Creek and Langloft and that will be shown when we put out those study results. So we really like what we're seeing on the Thompson Creek Langalov combination and you'll see that when we put out our results and our intended path forward. So that remains an area where we will prioritize capital allocation.

Speaker 2

The other we're always looking at opportunities externally to add specifically on the gold side. But as you know, things are pretty fully valued out there and a lot of the assets that come up for sale are not always they'll have various issues technically or locationally or on other matters. So we're very disciplined in the way we look at M and A. So another example is this past quarter we made an investment in a junior and we think there's good value to be had very early in the chain partnering with juniors explorers and that forms another key part of our capital allocation. So yes, molybdenum will remain something that we're going to talk about in the near term here.

Speaker 2

We continue to look for opportunities in gold and that remains a major strategic focus. And by the drill bit as well, we're going to continue drilling and we're also going to provide updates on our resource models for Goldfield and Mount Milligan by the end of the year and we're pretty encouraged by what we're seeing particularly at Mount Milligan.

Speaker 5

Okay. I'll leave it there and get back in the queue. Thanks. Thanks.

Operator

Our next question comes from Raj Ray from BMO. Please go ahead with your question.

Speaker 6

Thank you, operator. Good morning, Paul and team. My first question is on Mount Milligan. Q2 grades were lower. You did mention it was mine sequencing, but was it more than what you had expected or it was as per what your mine plan suggested?

Speaker 6

And then looking at the second half of the year, how should we look at grades for Q3 and Q4? And then also on recovery for gold, slightly lower. Should we expect second half recoveries to pick up again like Q1? Or do you expect recoveries to hover around these levels? So that's first on Milligan.

Speaker 6

And then secondly, with respect to the Moly study that's coming up, I understand that once the feasibility study is out, they will decide on what capital to spend. But should we anticipate any spend in Q4 or is this more a 2025 if and when you decide to spend any capital there?

Speaker 2

Paul will do to Mount Milligan and then

Speaker 3

I'll take over on. Sure. Okay. So Mount Milligan, there was a number of questions there. So in Q2, yes, we had standard mine sequencing and that's why you saw the grades somewhat lower.

Speaker 3

That being said, in terms of recovery, our gold recovery, we can expect that to go up a little bit and that's just some of the initiatives that we're doing on our optimization program, we're calling that M plus So we can expect to see somewhat higher gold recovery for a number of different reasons. And then in terms of the grade going forward to the remainder of the year, I think the best thing to do is just take a look at our guidance. We're on track for that and then that will pan out. We are good, but we will expect a little bit higher grades for the remainder of the year, not exceptionally higher. And I think that was the bulk of your questions on Mount Milligan.

Speaker 2

All right. So on molybdenum, Ryan would have mentioned in his prepared remarks that there was some spending in the quarter at Thompson Creek related to early works activities. We continue to do that. So in anticipation of the project study coming out in a few weeks here, we continue to prepare the site for a potential go decision on the project. And so there has been some spending and there will continue to be spending here through August and into September as we prepare for a decision there.

Speaker 2

If you want more details, Ryan could speak to that, but perhaps that answers your question.

Speaker 6

No, that's good.

Speaker 4

And I think we will guide the spending for the remainder of the year as part of that release. And so if we do go forward, there will be spending, there is spending now, there is early works as Paul says, it will provide an updated number for the remainder of 2024 with that.

Speaker 7

Okay, that's great. Thank you. That's it for me.

Operator

Our next question comes from John Sklodnick from Desjardins. Please go ahead with your question.

Speaker 8

Yes, thanks. Thanks for taking my questions here. I guess looking at Goldfields, it looks like I guess most of the planned drilling is done. Just wondering if you can give any indication on kind of what you're seeing there, maybe cut off date for the resource estimate, if you're thinking about using the same resource gold price of $1800 or if you might take that up, and how those column leach tests have been going?

Speaker 2

Yes. So I'll remind because we did that pivot on Goldfield, what we're looking for here is a principally run of mine oxide resource. So we had to prove to ourselves 2 or 3 key things. One is that we have sufficient oxide material, having temporarily put the sulfides on the shelf. We continue to drill and we are adding to our internal view on quantity there.

Speaker 2

And the column leach tests are going extremely well. We're getting recoveries in line with what I would have expected for run of mine Nevada oxide. So those are going very well. In terms of drilling, we will do more drilling this year and we will incorporate the remainder of that drilling into our resource estimate. With that resource estimate, we'll also put out what the recoveries look like, a high level view on a flow sheet and then a path forward on engineering and potential path to execution.

Speaker 2

Your second question there is, what do we use a higher gold price for the resource at Goldfield? Potentially. I mean, it's a relatively low risk in Nevada, fairly easily digestible project. We haven't made that decision yet, but certainly, I think what you're asking is a good question. We're going through the same logic as well.

Speaker 8

Okay. Yes, and I appreciate that color and looking forward to the update there. I guess one other one for me. This is just kind of annoying modeling one, but the depreciation has been trending a bit below guidance and I'm just wondering if that's going to pick up in the second half or if you're kind of going to be targeting the low end of that depreciation guidance range?

Speaker 4

Yes. I mean, I think it's probably heading towards the lower end of it. Mount Milligan with the increase in reserves at the end of last year brings down that depreciation a little bit. It will pick up a bit in the second half of the year as we sell more material at Mount Milligan. But I think we're heading towards the lower end of the range on that.

Speaker 8

Okay. Appreciate that. And yes, Roger, I have my Mel Milligan question. So good for me. Thanks, guys.

Operator

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

Speaker 7

Hi guys. A couple of questions for me. Could you first start off, there's quite a few forest fires in BC. Are you seeing any impact at site or at risk of being able to move material in or out?

Speaker 3

Out? Thanks for the question. We pay very close attention to that, of course. At this moment in time, we're actually category 2, which is fairly low risk. It's not the lowest category 1 would be.

Speaker 3

There was a period of time earlier in the quarter we were at category 3. There were a number of fires. We had the fire in Jasper and some of the other locations. But no, that's not an issue in our locale at Mount Milligan. And back in April, we had a fire relatively close to Endako, and we were on alert for evacuation there, but that didn't need to happen.

Operator

And can you just

Speaker 7

remind us in terms of like the force fire seasonality? Is that something that generally kind of continues through Q3? And then as you get into like probably, I'm guessing kind of late Q3 it dies down and Q4 it's like a non issue with like snowfall?

Speaker 3

Well, definitely Q4 it's a non issue. Best way to answer that is we're in a bit of a different climate change. It's always been out right early right early in April, right on through to August September in the past. So we're on alert right through.

Speaker 4

Okay.

Speaker 9

Last year was

Speaker 3

a lot worse for us. Yes. B. C. Was worse, but it's also where you are in C.

Speaker 3

At this moment in time, it's not as high risk as it has been in the past throughout in the past of this summer.

Speaker 7

Okay. Just circling back, like you're making some pretty impressive cost improvement success at Mount Milligan, some you guys certainly were highlighting is some low hanging fruit on the site tour last year. With respect to the mining cost improvement, can you give us a bit more color on what are the initiatives like focused at? Is it like I know Tire Light was I think something in standing water on roads improvement that seemed like some kind of low hanging fruit from sites or can you just give us some high level of like where you're focused in the near term and where you expect to kind of realize those savings?

Speaker 3

Yes. So there is always some opportunity on consumables like tires and diesel, perhaps a little bit on powder factor, although we've got to be very careful on fragmentation since that's the main goal. But the bulk of the gain is going to come from improving the load haul cycle production and productivity. And that's actually already been happening at site. Why we're not seeing in the unit operating costs for the quarter is because we did have some residual costs on equipment, some major component change outs.

Speaker 3

So it doesn't reflect in the operating costs. And so going forward, it's really going to come from the load haul cycle itself and improving on all the various components there. That's where the biggest ticket is. And then, of course, some of the other items like the consumables as you pointed out.

Speaker 7

And I think the vision of making the pit bigger, does that I remember from site, I think it would the way I would kind of summarize it was if you guys were expecting the equipment, you wouldn't have necessarily picked the equipment that's there now. It would seem kind of the wrong size for the operation. Does that shape like with this expansion you're talking about in pit size, does that make use of that underutilized scale of the fleet? Or are you all still looking to like as assets mature in terms of rolling stock, do you look to optimize scale going forward?

Speaker 3

Yes, that's a great question. So if you were to start fresh, you might look at a different fleet, of course. Probably the biggest one that I would change right away would be the loaders, the use of the loaders, the 994s in the pit. But that's what we're working with. So going forward, we'll optimize those.

Speaker 3

In terms of the change out of the fleet proper, we need to do the decision, the capital allocation decision based on what we have. And for the long term expansion, of course, there's a number of different options. We can take a look at extending the current fleet. We can take a look at a larger truck size. But then of course the larger your truck size, you then have to take a look at what the overall productivity is and where you're coming from the different base advance.

Speaker 3

And you have a little bit less optionality on that. So we're looking at all these options. But I think the overarching component of our current stock and then going forward what would make the most sense, you need to take a look at what we have today and use it in your capital allocation. That's far and away the most important variable.

Speaker 7

Okay, thanks. That's it from me.

Operator

Our next question comes from Brian McCarthy from Raymond James. Please go ahead with your question.

Speaker 9

Good morning and thank you for taking my question. It relates back to the moly operations and again the study. You've talked a lot about potential at Lang lot and it's only working at 30% of capacity. When you come out with the details, I assume we're going to get a Thompson Creek study, which is sort of apples to apples to what we did before. But the second part of it at Langloft, in that analysis, are you just going to assume the integration of Thompson Creek?

Speaker 9

Or given I think there's even more excess capacity, does the fact that you can actually put the Thompson Creek stuff in allow you to go out and get more 3rd party materials. So we'll not only get the benefit of the Thompson Creek material over fixed costs over larger volumes and things like that, but there'll be another uptick. Is that what we're getting on the Langloss study or to the extent you can comment on that, it'd be helpful?

Speaker 2

Yes, I think you've described the strategy well. I'd say that the most important component of our thinking on the Melenden business unit, meaning the integrated Tumps Creek, Langeloth operation is that Langoloth is the principal value driver, it's not the only value driver, but it's the principal value driver. And by utilizing that fixed cost leverage and increasing utilization of the capacity there, we not only create a strong EBITDA business, but we also to a large degree insulate ourselves from fluctuations in molybdenum price because of the way we would purchase concentrate up from a third party and then sell it onward to steel makers. So the strategy here is use Thompson Creek as a significant component of filling the capacity at Langloft. So as you pointed out, we're roughly running at 1 third capacity.

Speaker 2

In broad brush terms, Thompson Creek would fill the 2nd third, which would then allow us to fill the final third with 3rd party material and particularly dirtier or higher copper content cons where we can charge a bigger spread, a bigger TCRC because we have the very clean con coming from Thompson Creek. When you look at the world of molybdenum, interestingly, the 2 cleanest cons out there are actually Thompson Creek and Endako. So the Thompson Creek feed, the con from there will allow us significant flexibility in blending in order to fill that final third. So yes, the answer to your question, which you kind of previewed there is that study will be a standalone mine feasibility study with its accompanying NI-forty three-1 hundred and one, but we will have an entire other section showing the economics of the integrated whole Thompson Creek and Langalop. And you will see that the value is generated in significant part by an optimal use of the roasting facility.

Speaker 9

Right. But just so I'm clear, would that study assume 66% utilization of Langloft or you're actually good?

Speaker 2

No, not higher. Right?

Speaker 7

Not higher.

Speaker 4

Yes. Okay. So you'll be able to

Speaker 9

do 100, so you'll make assumptions about what you can do on the other side and we'll get to see all that?

Speaker 2

Precisely, yes. But the important part is that Thompson Creek enables that ramp from 66 to 100 because you now have the clean con that you can blend with higher copper percentage cons. So yes, we will show a full ramp up.

Speaker 9

Perfect. And again, just to be clear, as you said, the value add is in treating the dirty cons. It's not like you bring in Daco into that something because it's another clean con. So it's still a total standalone unit that you have to look at going forward if you decide to go down that route. Is that fair?

Speaker 2

Yes. So I think that if you were to look at this very, very high level strategically, Endako has no place in the plan until Thompson Creek is exhausted. So if you look at a perfect situation here, you run Thompson Creek and then whatever 15, 20 years later, you then bring in Daco into the mix as the next source of Clean Con, which you can then use. It would not be good for us to open both together.

Speaker 4

Great. That's what I thought, but

Speaker 9

I just wanted to confirm.

Speaker 4

Thanks very much. That's very, very

Speaker 7

helpful. Thanks,

Operator

And our next question comes from Jeremy Hoi from Canaccord Genuity. Please go ahead with your question.

Speaker 7

Hi, Paul

Speaker 10

and team. Thanks for taking my question. You guys have made some good progress with your optimization study at Mount Milligan. We saw that in your per ton processing costs this quarter. Do you expect to see continuing improvements in the processing throughout the year?

Speaker 10

Or have they largely been realized? And am I correct in assuming that those were not factored in when providing guidance at the beginning of the year for costs for the operation

Speaker 7

and that's it.

Speaker 3

Okay. Thanks, Jeremy. So first, no, we did not include these gains in our guidance at the beginning of the year. And so and then to answer your question, are we going to continue to see gains? So this is a very long term view.

Speaker 3

And so we had some low hanging fruit, recycling some of the steel, which was a big gain. We're looking at optimization of our concentrate qualities. So that actually improves our overall gold. And so that's why you're seeing some of the gains in the plant. And yes, we're looking at a number of different optimization programs to improve the plant overall, both on recoveries, throughput, and also the mine to mill because if we can have a steady state and have less disruption in the plant, then that actually helps the overall costs.

Speaker 3

And then lastly, through the winter that was a problematic area and we've done quite a lot of gains there. So yes, we can expect to see continuous improvement in the plant. But just overarching, this is a comprehensive program to put Mount Milligan into a world class operation, and this was key for the long range plan. And so we'll be adopting those operating metrics into the PEA and into the plan itself going forward with these demonstrable improvements.

Speaker 2

And I'll use this as an opportunity to plug the PEA. What we're looking at here at Mount Milligan is a very significant potential mine life extension beyond the 2,035 reserve incorporating the drilling that I mentioned earlier. We're doing a lot of drilling. We're getting very good results on that. So we're looking at a resource model update.

Speaker 2

We're looking at I'll remind that we're currently capped on reserves with tailings capacity. We're looking at incremental opportunities to store tailings and we're making good progress on that. And lastly, as Paul said, we're incorporating these new operating metrics into the way we look at mine and plant operations for consideration in that study. So things are going well on that study. We're hard at work on it and we still need several months to do that, but we're very encouraged by what we're seeing.

Speaker 10

Okay, great. Thanks for the color and we'll look forward to see further results from that.

Speaker 5

Thanks, Aaron.

Operator

And ladies and gentlemen, in showing no additional questions, we'll conclude today's question and answer session and today's conference call. You may now disconnect your lines. We thank you for participating and have a pleasant day.

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