Aya Gold & Silver Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2024

There are 10 speakers on the call.

Operator

and thank you for standing by. Welcome to IAA Gold and Silver's Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen only mode. After the CEO's presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to turn the call over to Ruth Hanna, Manager, Investor Relations and Communications at AYA.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and welcome to AYA's Q2 2024 results conference call. My name is Ruth Hanna, and I'm dialing in with the AYA team from Montreal and Marrakesh this morning. So on the call today, we have Benoit Lafau, President and CEO Hugo Landry Tolstuc, CFO Rafael Baudoin, Vice President, Operations and David Lalonde, VP, Exploration. We will finish today's event with a Q and A session with the team.

Speaker 1

Please contact our IR team directly with any follow-up questions that are not addressed during the call. Before we begin, I'd like to remind listeners that today's event will contain forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Details of the forward looking statements are contained in our August 14th news release as well as on SEDAR Plus and at www.aiagoldsilver.com. With that, I'd like to turn the conference over to IAS President and CEO, Benoit Lafau. Benoit, please go ahead.

Speaker 2

Thank you, Ruud. Good morning, everyone. Welcome to the Q2 2024 conference call. I'm pleased to present to you a robust quarter in a milestone year. We continue to advance the Zunder mine as per our plan.

Speaker 2

We are pleased to say that we are on schedule and budget for commercial production in Q4 2024. An important element which is often missed is that we now have stockpile on the rumpad of 309,000 ton of ore at the end of this quarter. Our goal originally, we communicated to you that we are aiming with 260,000 ton and we are we have reached almost 310,000 ton to be ready for the ramp up in Q4. We've delivered more typical results that we see from Grundare. Our production this quarter was 432,000 ounces due to an increase in fresh ore, mainly some coming from the open pit.

Speaker 2

We generated revenue of US13.7 million dollars as a result of Q1 selling of silver concentrate that we had in inventory and also our production. There was no over of inventory from 1 quarter to the next as we saw in Q1. Our net income is 6,800,000 dollars for the quarter and our total cash cost is $17.85 and I will comment on that on the next page. We have a very strong balance sheet. We closed the quarter with $103,000,000 in cash and cash equivalent.

Speaker 2

And importantly, we were able to draw down the last $15,000,000 on our EBRD loan for now a total of $100,000,000 And why I say it's important because before we can draw down on the EBRD loan, we have to go through full GD with them, due diligence with them. They come to site, the team goes to site, we go through all their KPIs, all their ESG KPIs and then they authorize the drawdown. I'm pleased to say that as of today, we have drawn down the full amount, the US100 $1,000,000 During the quarter, we still have and we continue to have ongoing positive results from our exploration program. We've confirmed high grade mineralization again at depth. And an important piece of news this morning, we've doubled the drill program at Gundair Main Zone from the originally planned 15,000 meters up to 30,000 meters as we keep hitting and we have now consumed all of the budget for this year at midyear.

Speaker 2

We've extended the Boumadin main trend. You recall, we did the resource calculation on 4.2 kilometer. We're now drilled up to 5 kilometer at the end of the quarter. And during the quarter as well, we've acquired 7 new permits, which we are now up to 18 new permits since we made the discovery. We've identified multiple potential high conductive anomalies to the west and to the south of the Bouhmadin main zone.

Speaker 2

So it's a robust quarter. Again, the highlights of it, 95% completion of the construction, 432,000 ounces of production. It's a 42% increase from the previous quarter same period last year, dollars 100,000,000 in the bank, U. S. Dollar and we've increased the Zugundeir drill program by 100% or we've doubled it.

Speaker 2

That's taking us to Page 4 of the presentation. And we had that discussion in Q1, where this is as our plan. I mean, we were mining according to our plan. We were processing according to our plan. So it's a steady state production at Grundere and where we have a summary of the guidance and a summary of the results in Q2 and in H1.

Speaker 2

And we are confirming to you the guidance is staying intact and it is as part of our plan. So after two quarters, we are at almost 800,000 ounces of production and we knew that the big production or the more important production was coming in, in H2, Q3 and mainly in Q4 as we're going to be kicking in with the new plant. The cash cost was higher in Q1. It was $20 We told you it would come down in Q2 at $17 and we're maintaining our guidance for the end of the year because we know that we're heading into better grade and better recoveries for the end of the year. So the average grade for Q2 was 196.

Speaker 2

You recall the average grade for Q1 was 173 and we said it at the time that Q1, Q2 would be below the expected grade for the year. We were mining in sequence. We are also mining differently. We have started also to backfill some of the galleries. Hence, we knew that we were heading towards higher grade galleries in Q3 and Q4.

Speaker 2

Mill recoveries were 81% or 82% in Q1. We're better at 84%, 85% in Q2. And we knew that as we were getting into better grade and into the open pit deeper into the open pit, we would get better recoveries. Ton process is excellent. We are at 80,000.

Speaker 2

We were at 80,000 as well in Q1 and it's just way above the design capacity of these two plants. So we're doing extremely well. The availability, which doesn't show on the slide, but the availability of the plants in Q2 was around 96%. And you all know that that's extremely good for a plant and mining to be available 96% of the time. Taking us to Page 5 of the presentation, just a couple of bar charts on the top left side, the silver production With the 2 plants running at the historical plants, we should be between 400,000 and 500,000 a month and that's exactly where we are.

Speaker 2

We're back up there, which is normal for expected it to be lower in Q1, Q2, it is. We're expecting it to kick back up in Q3, Q4, it will. So that's what you're seeing on the left hand side at the bottom. The mill recoveries, again, we've hit up to 87%. We're now at 84.7%.

Speaker 2

We know that with the new plant, we will be above 90%. So that will kick in. I'm not telling you we will be above 90% in Q4, but that will kick in when we're at steady state. And the ton process, while we're there, we are achieving records where we're 20% above design capacity, if not 25% above design capacity, which you're seeing on the right hand side at the bottom. Page 6, you have the cash flow.

Speaker 2

We had a strong quarter with $5,000,000 of cash flow coming from Zscunderes. The gross margin is at 4.9%. The cost of sale is, of course, a function of the production. So the cost of sale is up there. Let me just remove this.

Speaker 2

The cost of sale is at 8,800,000 dollars And the cash cost, as we discussed when we reviewed guidance, is 17.85 dollars It's higher than the historical 4 years, but we also knew that the cost was going to be going up this year as we were preparing for the new capacity. Moving to Page 7, the construction. So this is a major milestone. We know that in our industry, that's very difficult to be on time and on budget. We have been putting out videos to show you where we are.

Speaker 2

Today, we can tell you that we are 95% complete. We're on track to completion with and on track with our capital cost estimate. Underground development is on track. We're 96% done on lateral development, 83% on vertical, but we have one vent that is completed. You've seen in some of the videos.

Speaker 2

We're progressing to plant on electrical work, instrumentation, piping, Merrell Crowe, all of that you saw we've poured already a couple of silver bars. The underground workshop is spectacular. You can see that in the videos. The warehouse, the backfill station is up and running and the silver room building as well. So we've completed on time and on schedule all the civil work, structural work, equipment, Silver Room electrical power line and the lab, all of that's been completed.

Speaker 2

We are pleased to say that as of now, we are operating on green energy. The power line was commissioned. It's extremely important because it's green. It's very rare in the world that you operate 100% on green energy. It's a PPA that we have signed with an independent power producer.

Speaker 2

We're getting it from the grid. We build it on time and on budget. It is a fantastic job. So we have we are now running on green energy. Going to Page 10, the drill program.

Speaker 2

So what's we've created value historically by drilling. The original budget for this year was 145,000 meters of drilling. We have about 15, 16 drills starting at all time. So the original program at Gundair was 15,000 meters. And as of now, it is completed.

Speaker 2

So we have authorized an additional 15,000 meters. So the program has been expanded to 30,000 meters at Skunder, the main zone, and that's following very, very good results. Boumagazine is on track. Boumagazine has a 120,000 meter program. We are currently at 42,000, but we knew that.

Speaker 2

We knew that H1 would be a bit slower. It was Ramadan as well. So we knew that we would have a smaller production in H1, but looking to catch up in H2. You recall that on the 120,000 meters program, 60,000 meter is on the main zone. On the Boumazin zone, the 4.2 kilometer, which is now 5, which we want to increase because it's still open north, south and at depth.

Speaker 2

And there's another 60,000 meters that will test new targets, new targets that have been identified. We've shared with you one of them to the west. There are more to come. We've completed the mobile MT regional survey and that is giving us some geophysics target and we're waiting for additional data. On the Zunde Regional, it's ongoing.

Speaker 2

We have a 10,000 meter program that's being worked on. David and the team are looking for similar mineralization as Gundair. There's a lot of geological theory and targets that are being tested. We've also completed the geophysics on Tirzret, which is very close by to the mine. So we're expecting a very busy H2 at Gundyr and at Tirzitz.

Speaker 2

And Amiswiz is a small project that we have in which we have never focused a lot. We may start a small drill campaign there as it has a great gold potential. Taking us to Page 11 to talk about Gundair, it's a big news event. We are doubling up that program from 15,000 to 30,000 meters. I know for us, it's like when you're drilling 120,000 meter at Boumaudin, it seems small, but it is important because we're drilling that zone, which is 1.4 kilometer long, has a depth of about 600 meter and the results keep coming in.

Speaker 2

We've been giving you results. There are more to come, but we're often hitting 1,000 gram per tonne over like we have here, 13 meters, 2,000 gram per tonne over 8 meters, and it is ongoing. One of the focus is where it touches the granite at the bottom of the structure And so far, we've been pretty good at hitting mineralization. Going to Page 12 on Boumagin. Boumazin is a cornerstone asset of Aya.

Speaker 2

We through drilling, we've really shown a beautiful, right now, 5 kilometer structure. As I But through field work, we've so we've done the drilling. It's But through field work, so we've done the drilling in this quarter. We've done 27,000 meters this quarter, 42,000 after 2 quarters. So by subtraction, there's 80,000 meters to come in H2.

Speaker 2

We've seen results. We're going to be seeing more results soon. It's really it is ongoing. I believe we have 9 drills there. It changes sometimes, but up to 9 drill at the moment turning and a lot many results are coming.

Speaker 2

But through the field work, we've been mapping and doing the prospection on the 18 new permits because our goal is to control the zone. We want to control the whole district, the Boumazen district. So we're still working on new permits, but we have 18. So we've completed the mapping, the hyperspectral. We're using all of the techniques that we know work.

Speaker 2

We've completed the mobile MT program, 13,000 lines that were flew over by with the helicopter. It's an extremely large and important program. It's a new program in Morocco, and it's giving us extremely, extremely interesting results that we'll show you in a minute. So it's our field work is continuing, our drilling is continuing and our consolidation is continuing. We've increased our land package by 198 square kilometers and our goal is to increase that considerably.

Speaker 2

A couple of results on Page 13 on Boumedin. Those are silver equivalent, 1,000 gram per tonne of silver equivalent on 13 meters. So you we keep hitting you recall that on Page 18, you recall that the resource that was put out in March and the final report was filed 45 days later in Q2 that we were showing 3 52,000,000 ounces of silver equivalent or 4,100,000 ounces in gold equivalent. So that is just the beginning. It's on 4.2 kilometer.

Speaker 2

We've now extended it to 5, and we are drilling it to extend that to the north and to the south. 41% of the resource was in pit, 59% was deemed underground. We're continuing the drilling. We're as I indicated, 60,000 meter is going on strike and 60,000 is going on the parallel zone. Why?

Speaker 2

Well, take a look at Page 15. If you take a look at Page 15, you see a portion of the geophysics. We did not give it all out. We're keeping a lot of information right now to ourselves. But you have you see on the right hand side, the purple color, that's the main zone.

Speaker 2

That's what we've been drilling. And that's up to now 5 kilometer boat with the signature is longer than that. And look to the west or to the left hand side where you have that same purple color, So it's a very large potential conductive anomaly, which is 5 kilometer west of Boumadin, similar orientation, stronger intensity than the Boumazin main zone, main conductor. It's a large system. It has conductors across east west, similar to what we're seeing at Boumedin.

Speaker 2

So obviously, this is now a top priority. So we are waiting for the inversion of the data from the geophysics. We will be getting that in August. We will be reviewing this. And as soon as we have the targets, David will be moving some of the drill rigs off the main zone and as the program will be getting close to be completed and we'll start drilling some additional targets to the west and hopefully towards the end of the year or early next year to the South.

Speaker 2

So going to Page 16 on our social values and on corporate social responsibility, very good quarter, no zero lost time injuries, 3,700 hours of health and safety training. So it's a 30% increase year over year on our training. We have received certification of emergency respond team. You are following us on LinkedIn. You see often some videos on the new facilities that we have.

Speaker 2

It's a very dynamic process. Everybody has bought into the concept of health and safety and it's coming along quite well. On the cleantech fund, we've met the milestones. We had milestone 1, 23 to meet. We've met the milestone.

Speaker 2

And in meeting the milestone, our capital costs on our debt related to the TCFD is now move or CPF tranche is down now to 1% cost of capital. And that was something that came with EBRD was very important. It's a $10,000,000 tranche that went from round number 10% down to 1%. And with the local communities, well, we're extremely involved as you know, education, we're helping with school supplies, equipment and all that. Environmental Day, we celebrated that.

Speaker 2

Women's Day, we celebrated that with them. And we have a health program where we have clinics that we have for the villages around. And we have also livelihood projects, which is gardens, vegetable and saffron because the area is very well known for the saffron culture. So as a summary of where we are and what we have is the drill program is ongoing at Boumedzin. The increased drill program is ongoing at Zgundej, 40,000 meters.

Speaker 2

Gumaadze is 120,000 meters. So as a group, we're going to be at 160,000 meters of drilling. So very, very large program, completely funded. The 2,700 tonne per day plant, which is the first the 2 plants that we have plus the new plant is on time and on budget. We are in commissioning, and we expect commercial production in Q4 of 2024.

Speaker 2

And on the ESG front, well, again, as I said, we keep going through these EBRD due diligence that where we do extremely well. And we are happy to say that we are fully funded. So as a company, we have EUR 100,000,000 in the bank. The projects built, There's still some payables there. We still have some payables.

Speaker 2

But if everything goes according to plan and our budgets are built with low $20 silver, our minimum cash balance, we will always be around $40,000,000 $50,000,000 So we are fully funded for now and for the future. The plants are operating the 2 plants extremely well. The 3rd plant, we will know in Q4, but it's coming very, very quickly and very well. And the drilling is going extremely well. So that covers my presentation.

Speaker 2

Operator, I think we are ready for questions.

Operator

Thank you. Our first question comes from the line of Puneet Singh from 8 Capital.

Speaker 3

Hi, Benoit and team. I wanted to ask a couple of questions on Boumediene. First on the geophysics, really positive to see that conductive anomaly to the west. I understand you'll be looking for those massive sulfide bodies and cross cutting features. But how will you vector in further before drilling?

Speaker 3

Could you run us through that, expand on some of those tools you were talking about and why they're useful and what exactly they tell you? And if you can also just repeat, I think you mentioned it, but when do you expect to drill that area to the west? Thanks.

Speaker 2

Okay. Well, Puneet, we have David on the call. So David, do you want to comment on the geophysics and on the spectral? And when do you expect to bring the drills over to the West?

Speaker 4

Hi, Puneet. I'll try to answer that question. Yes, the geophysic is very spectacular. I fully agree with you. What we are waiting when we start getting the final results from the company that did the survey is all the inversions.

Speaker 4

So right now, we do have the magnetics. We do have the surface response, different layers from the electromagnetic, the magneto tellurics. But what we want to see before doing a drill program is the full inversion to really narrow the potential conductive corridors. So to better allocate the metering and to have a more accurate drilling plan. We expect to receive those deliverables by the end of August.

Speaker 4

So then it's a matter of building the drill program and bringing drills, rigs there. So most likely end of September, beginning of October, around that time, we should be able to start a drilling campaign there. Other tools that we have and use is the hyperspectrals. So the survey we've completed this year, we already have all the layers. So it allows us to really map the alteration created by hydrothermalism and or other features like dikes around the property.

Speaker 4

So that's a great tool to help us locate targets. And on top of that, we have some detailed mapping on the ground, lots of graphs, lots of geochemistry data. So it is a matter of putting all those data together and come up with the best drill program for Q3 end of Q3 beginning of Q4 this year.

Speaker 3

Okay. Sounds good. Sounds like it could be well timed with higher production in Q4 first results. So that would be good to see. Had one last question on the main trend at Boumedin.

Speaker 3

And the survey was showing more anomalies at depth there. But will the bulk of the program be focused on targets closer to surface like it was before? Or how are you thinking about that split?

Speaker 4

Well, we have the 60,000 meters that is already planned and well advanced. Like at the end of the quarter, we were at 42,000 meter, if I recall. Right now, today, we're at 55,000 meter completed. So the main trend will remove the will lead the program as it was. So it was mostly to extend the strike line.

Speaker 4

But we did reserve few holes to go target at depth also at the Boumaden and see the big geophysical anomaly. So as soon as we have the inversion for that too, we will give it a try, so later in Q4. And the rest of the more regional program, if you want, of 60,000, the idea was to go and test different targets. So Tzu was 1, We have a big program completely at the south on some north east west structures. We will just allocate some of those targets, especially the North-seventy and North-thirty structures, we'll allocate the meterage for the Western geophysical anomaly.

Speaker 4

It's always a matter of prioritizing the target and with this geophysical response, we believe that it might be more significant than the small cross cutting structures. But again, lots of those structures will test this year and there's lot more coming for 2025 as well as there's plenty of geophysical target and lots of nice things we're seeing on the ground.

Speaker 3

Okay. Thanks, David, and good luck. It sounds like you got a lot to do, but that's good to stay busy. Thanks.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Justin Chan from SCP Resource Finance.

Speaker 5

Hi, guys. Congratulations on getting Feudy to where it is and another good quarter. A couple of questions just on perhaps the path forward and where you are now. On the vertical development, could you give us a sense of what's left to do? Is it on the vent rate side or material handling or what's left on that?

Speaker 5

And how does that impact your ramp up rates maybe is the first question?

Speaker 6

Sure. Happy to comment on that. This completion rate was on July 30, so the end of July. And we were still working on one last ventilation raise for the sub levels, and that raise is now complete. So you can expect 100% on next quarter on the vertical development.

Speaker 6

So all vent trays are completed, and we have 1 ore chute and 1 waste chute that are also completed. And we are finalizing to install civil work with them online. But as we speak, all vertical development is now complete.

Speaker 5

Okay, perfect. Thanks. That's a great update. And on the ore mine this quarter, what was the split between open pit and underground? And could you give us the grades between the 2 if you have that data available?

Speaker 6

We comment on overall grade mine and obviously as per sequence, sometimes one goes up, the other one goes down, which is not quite relevant on a quarter over quarter. That's why we publish overall grade. We target towards the end of the year to have about 1,000 tonne per day from the open pit and for full ramp up for the open pit at 1,000 tonne per day. We're now about 500 tonne per day simply because we don't need more, but we can increase it to 1,000 ton per day when the new plant is up and running.

Speaker 5

Got you. And roughly where do you I mean, I think the guidance implies a fairly big step up in grade in the second half as well as tons. I guess, what are your thoughts grades you're targeting for Q3 and Q4, if you can give us any granularity there?

Speaker 2

Justin, it's difficult because as you know, with the deposit, the way it is, it's when we hit these very high grade pockets, it goes very, very quickly into the 100 and 100 of gram per ton. But we're comfortable when we look at the model that globally we are going to meet our guidance. So if our guidance is around, let's say, we take the bottom part of the guidance at $215,000,000 and we're currently now on average at $1.96 for Q2, dollars 184 that means we will be above the $2.15 for Q3 and Q4.

Speaker 5

Okay, perfect. Thanks. I appreciate that. And I guess given where your level of development is, you've got good flexibility.

Speaker 3

Well, anyway, I'll free up

Speaker 5

the line. Thanks very much for taking my questions.

Speaker 2

Thanks, Justin. Thank you.

Operator

Thank Our next question comes from the line of Don DeMarco from National Bank Financial.

Speaker 7

Thank you, operator, and good morning, Benoit. Bumadin, yes, Bumadin is on my mind. So with the new conductive anomaly, Benoit, shall we assume that you embark on a multi quarter or even multi year drills program before you start thinking about a PEA? I mean, if those new anomalies prove out, it just seems very early to start thinking about what the throughput should be and things like that.

Speaker 2

Totally you're absolutely right, Don. The drilling to the west could be a game changer. And we are doing some work right now. We have a project manager that we've hired, who is a top of the line metallurgist and mining and a production man. So we are doing the test, we're doing all of that.

Speaker 2

But to finalize the flow sheet, the throughput, the quantity, it's a function of the size of the project. So we are working on understanding all of that and getting ready. Now there are a lot of chapters that you don't need the size on water management, electricity, tailings. So we started all of that. All these chapters have been started.

Speaker 2

But the actual PEA based on size is going to be a very dynamic system because if we find what we believe is there on the West side and on the South, we have not yet put that out. But on the south, of course, it's a different size project. So absolutely based on drilling and based on results, the project will be dynamic.

Speaker 7

Okay. And can you comment on the existing infrastructure at BluMaarten, like for example, power, water and is it driving access between the current and the new conductive anomalies?

Speaker 2

So look, at Boumedin, it's you've we've been together with Gounder. So Gounder is 2,000 meter above sea level. It's quite hilly. It's higher. Boumedzin is a lot it's a 1,000 meter.

Speaker 2

It's got an airport 1 hour away. You can drive from the airport, which you've got fly flights from Agadir all the time because it's the entrance to the tourist area when you go on camel rides and on safaris. So it's quite good infrastructure. Power is not far away. So power will come from the grid.

Speaker 2

It's not at site yet, but it's going to be at site. It's not far away. There are villages around. There are good hotels in the and I'll ask Rafael maybe to comment after. So of course, it's something that's pretty straightforward.

Speaker 2

The issue is always in Morocco and in North Africa is water. So we have a team on water right now. Is it going to be reservoirs? Is it going to be from some of the villages that are around? So we're working on that.

Speaker 2

That's always, always the pacing item. But at this point today, it's all about David and David putting in the drill and increasing the size of the resource. And Rafael, do you want to add something on the infrastructure? No. No.

Speaker 2

So that's what it is, Don.

Speaker 7

Okay. Okay. Well, thanks for that color.

Speaker 2

And we'll organize a visit to Boumedin in the fall with Alex, and a lot of people want to come and see it. And it's look, you'll see the infrastructure is actually, I would say, almost simpler than it's going there just because of the where it is and access to an airport very close by.

Speaker 7

Okay. Okay, good to hear. And then one question on Segunda. When do you expect to reach mining rates at 2,700 tons per day? Is that going to be late this year or later with some reliance on the stockpiles?

Speaker 2

I'll ask Rafael, who's sitting right across me and So we

Speaker 6

take our time. We want to do it right and we started early to be able to have this flexibility. Right now, we have extra mining capacity and we're not mining as fast as we could, if we wanted because we have over 300,000 tons of ore stockpiled. But to answer your question is somewhere in mid-twenty 25, early 2025, mid-twenty 25 depending on mill throughput, on mill ramp up. So we have this flexibility right now.

Speaker 7

Okay. Thank you for that. Well, good luck with Q3, and that's all for me.

Speaker 2

Thank you, Don.

Operator

Thank you. Our next question comes from the line of Mike Kozak from Cantor Fitzgerald.

Speaker 8

Yes. Good morning, Benoit and team. Congrats on the solid quarter. Most of my questions have been asked, but I just had one more. With the Zagun der expansion almost done, how are you as a company thinking about debt reduction next year?

Speaker 8

Do you have kind of a target debt repayment amount per quarter in mind or something like that? Just any guidance there would be appreciated. Thank you.

Speaker 2

Well, that's a very good question. And I'm going to not turn it over. It depends on David's demand on drilling. It's for

Speaker 8

us Fair enough.

Speaker 2

For us, drilling is the most important value creation. And so far, with 94,000 meters at Boumazin, we found 352,000 ounces of silver is showing us things, he says I want to drill this, for us that's the top priority. EBRD is extremely flexible. We have a payback program over 4 years starting in 2026, and they're extremely flexible. They come to site.

Speaker 2

We are their star project in their new mining strategy. If we wanted to pay faster, we could. If we wanted to delay, we could. Not that we would delay, but they are very happy with those projects. And seriously, if David keeps coming up with discoveries, both at Gundair Regional, Boumazin and Tirzitz, The value of the drill the cost of drilling is our cost of discovery last year was like $0.10 an ounce of silver.

Speaker 2

So there's but yes, if we do have excess cash, it will be to pay down the debt, obviously. But it's a soft loan with EBRD. It's extremely soft. They're very good and hence we're comfortable. But yes, with a $35, dollars 40 silver and the production that we're going to get, we'll probably have all the money in the world for David and to be able to pay down the debt.

Speaker 8

All right. Good stuff. That's it for me. I'll revert back. Thank you.

Speaker 2

Thanks, Mike.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Steven Sook from Stifel.

Speaker 9

Hi, guys. Most of my questions have been answered too. I just had one on cost structure. Now that you kind of ramped up or largely ramped up underground, have a good handle on the open pit mining. How are kind of unit costs tracking versus your expectations and maybe versus the study?

Speaker 9

I know inflation in Morocco has been very low. So I think it looks like it's essential to beat there, but just wondering what you're seeing day to day and how you're thinking about that going forward? Thanks. Yes. So on open pit specifically, it's a contract miner that we use.

Speaker 9

And so far, it's been exactly as expected in both in terms of drilling blast and in terms of haulage from the pit to down the valley and back up to the other mountain. So it's exactly honestly, we're quite happy and I think we've mentioned that in the MD and A. We're very happy with our contract for the performance and the cost there's no surprises. Perfect. No, that's great to hear.

Speaker 9

I know the expanded capacity will really have a notable positive impact on the cost structure and margin overall. So looking forward to that inflection point in the second

Operator

half of the year. That's it

Speaker 6

for me.

Speaker 2

Thanks. Thank you. Yes. Thank you, Stephen. And as you said, there has the inflation in Morocco has been contained and the value of the dirham is devaluated just a little bit, not much.

Speaker 2

So you see it in our construction costs, when you look at us coming through with 2022 CapEx numbers that we are able to build it on time and on budget, it says a lot about the capacity of the construction capacity in Morocco.

Operator

Thank you. At this time, I would now like to turn the conference back over to Benoit LaSalle for closing remarks.

Speaker 2

Well, thank you so much. Thank you all for attending. It was a good quarter heading into a very interesting second half of the year with the commissioning ongoing. Keep watching our little videos. It will show you what we're doing and how we're doing it.

Speaker 2

And heading into the commercial production in Q4 of 2024. What's also very interesting is the fact that we have 300,000 ton on the ramp pad. That's like extremely important for a smooth ramp up, and it's all there. So it's been mined. So when we look at the mining rate and the fact that we've been mining 1200 ton a day and including feeding the 2 plants, we've been able to stockpile 300,000 ton.

Speaker 2

It just tells you that we do have, as Ralph said, the capacity to grow and we have also the capacity to slow it down if we have to, which is what we've done. So you have a very well oiled machine, which is giving us 96% availability. And the 3rd plant is coming live now and will be in commercial production in Q4. So on the operating side, it's going extremely well. On the exploration side, it's what can I say, 160,000 meters of drilling in Morocco with a very good team of geos that have made some big discoveries for Aya?

Speaker 2

So that will be a very, very good year. On the geopolitical front, Morocco, now that we have all the issues all over the world, Morocco is fantastic. They are now being recognized as one of the top mining jurisdiction investment jurisdiction in the world. Their EV strategy is working out. They have many companies investing 1,000,000,000 of dollars to the north in their EV strategy.

Speaker 2

And Aya is the key player with Managem in the on the mining front. They are organizing a conference, a Morocco Mining Conference in December from the 3rd to 5th in Marrakesh. I'm inviting all of you to come and see us at the booth. It will be very interesting. So Morocco is coming through as a very good mining jurisdiction.

Speaker 2

We are there. We have many things going on for us. And H2 will be very, very interesting. So thank you for being shareholders. Thank you for being our analysts and being interested in Morocco, in Aya and the work that we do.

Speaker 2

We will talk to you in November at the Q3 call, and that will be from the mine site as we will be having our board meeting at the mine site in November of 2024. Thank you all of you. Have a great summer and we'll see you in the conferences starting at Beavercreek.

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Earnings Conference Call
Aya Gold & Silver Q2 2024
00:00 / 00:00
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