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spk01: I will turn the call over to Lindsay Dunlop, VP Investor Relations, to begin today.
spk12: Great. Thanks, operator, and good morning, everyone. Welcome to Westone Goldmine's fourth quarter and full year 2023 results conference call. Before we begin today, we'd like to take this opportunity to remind everyone that during this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could cause outcomes to differ materially due to a number of risks and uncertainties, including those mentioned in the detailed cautionary notes contained in yesterday's press release and in the company's MD&A dated March 12, 2024. Yesterday's release should be read in conjunction with the MD&A and financial statements, all of which can be found on CDAR Plus and on our website. Following the prepared remarks, we will open the call for questions. All figures discussed on this call are in Canadian dollars and less otherwise noted. Now over to Andy Abbas, President and CEO, to begin today.
spk17: Thanks, Lindsay, and good morning, everyone. Before I begin, I'd like to say a big thank you to Lindsay. We'll be leaving at the end of March. Lindsay has been a part of the fabric of Westo for 10 years now. We're certainly going to miss you and wish you well. Speaking on the call with me today will be Ross Gill, SVP Corporate Development and RR, Fred Langevin, our CRO, and Mike Misho, SVP Exploration Resources. Also in the room, we have Fernando Rigoni, our recently appointed CFO, who took the reins from Jonathan Singh earlier this week. We welcome Fernando to the executive leadership team and thank Jonathan for agreeing to stay on in a leadership position in the business. Before I pass him over to Fred, I'd like to begin with a brief overview and outline why we're excited about what lies ahead for Westdome. Overall, despite significant changes in 2023, Westdome delivered only three strategic imperatives. We achieved the midpoint of guidance on production and ASIC, We advanced development to the 129 level on Kena ahead of schedule, and we ended the year with positive net cash and a strengthened balance sheet. Last night, we also updated our year-end mineral reserve resources, reporting a 12% net increase in corporate reserves after depletion, while keeping overall portfolio grade essentially unchanged. These achievements are a testament to the capacity and the commitment of our operating and corporate teams, and I want to say a special thanks to all those who are listening today. With almost a third of annual production of 123,000 ounces coming in the fourth quarter, we are setting a new pace and are well positioned to deliver higher production and lower costs in 2024 and 2025. As we previously announced in January, Kina is poised to deliver a step change increase in production on the back of higher grade Kina D4 being processed in Q2 this year. The site mining crews are optimizing their approach And so far, development remains on track. At Eagle River, we are seeing more consistent performance on development rates and grade reconciliation. Our focus at Eagle River near term will be on re-optimizing the asset with a view to value and improve margin, which gives us optionality on cut-off grade and subsequently the potential to increase reserve conversion from a resource base. In terms of exploration, it remains the cornerstone of our strategy, and we see a number of ground for exploration and development opportunities that we are confident will drive resource growth and reserve conversion, and eventually utilize the spare mill capacity at both operations. More on that from Mike in a moment. Financially, we're in a far better position, exiting 2023 than we have been before. Our liquidity ending the year was 153 million, and our net cash, That is, our cash minus our borrowing has climbed about $24 million. With robust free cash flow expected this year and next, we're on track to close out the remaining $39 million on our revolver by the third quarter. And with that, I'll pass over to Fred to walk through the operational details.
spk06: Thank you, Anthea. Good morning, everyone. Consistent with our internal projections, we had a very strong finish this year on production at two sites, and all key initiatives to setting up a successful 2024 advanced Asperg-Plan drink order. Starting with Eagle River, production in Q4 came in at 24,072 ounces. The higher production was mainly driven by higher grades, as mill throughput remained consistent with previous quarters. The 300 zone was the main contributor to gold production in Q4, and this zone continues to provide excelling grades that reconcile positively. For the full year 2024, Eagle has produced a total of 87,799 ounces of gold, firmly above midpoint of guidance ratio, with very stable production quarter over quarter. Development performances in Q4 once again exceeded budgeted targets, which positions us very well for 2024 production. On the back of this strong execution at Eagle, we continue to benchmark the operation both on productivity and on cost to try and improve our cost structure to offset the cost pressures of increasing tech. We expect to start seeing benefits of this program in 2024. At TINA, production in Q4 came in at 12,144 ounces. The rate continued to track higher than upper end of guidance during the quarter due to a combination of continued strong grade performance from the A2 zone, where we were able to continue successfully cycling slope-located and tiring in shifts, and the contribution of high-grade pre-production core development into the A zone on the way to level 129. For the full year 2023, Kena has produced a total of 35,536 ounces, slightly above midpoint of guidance rate. The ramp to Kennedy remained a key focus for the team in Q4, culminating in us reaching 129 level access in October. Since then, we've been focusing on developing the level infrastructure required to initiate mining activities, such as ventilation raises, escapeways, and power distribution on levels 127 and 129, with development into the ore in the A-Zone now ongoing. With focus in Q1 remaining firmly on infrastructure development, early gold production levels are expected to be consistent with the 2023 run rate average. As we complete infrastructure and steel development, steel production is expected to ramp up to reach steady state by the end of Q2, with grades in line with 2P levels. Finally, after receiving the required authorizations to proceed with the excavation of the Pretkill portal in Q4, we've made headway installing support infrastructure at surface to begin excavation of the portal, which was initiated in early January. As of last week, blasting of the portal was completed, and the ground support phase of the portal is ongoing. As soon as this phase is completed, development of the underground workings will commence. The 1.7-kilometer exploration ramp is being tracked closely internally, as it will be key in establishing ventilation, secondary transportation, and all edge access for the existing operation, but also allowing us to leverage the 33-level infrastructure, the supplement key to deep production, starting with the brisket zone. So overall, as expected and conveyed in our last update, strong execution of the two sites in Q4 led to all four-year cash costs and all in sustaining the default well-weaving guidance range provided in January 2023. Over to Jonathan.
spk20: Thank you, Fred. I will start with an overview of the fourth quarter and full-year results. Previously reported Q4 production of 36,216 ounces was largely in line with expectations and brought full-year production to 123,336 ounces. Sales in the fourth quarter were 37,620 ounces, slightly ahead of production due to the timing of final glory sales. All unsustaining costs of $2,082, or US$1,529, were down slightly from the same period in 2022, primarily due to higher sales volumes. As Anthea mentioned, we expect a trend of higher output driving lower costs continue for 2024 with guidance set at 160 to 180 000 ounces at a u.s equivalent of one one thousand three hundred twenty five to fourteen seventy five an ounce our net income and adjusted net income for the fourth quarter for 2023 of 2.4 million or two cents per share we do note that the quarter included a one-time non-cash deferred tax impact of 8.6 million or six cents per share but was still $5.9 million higher than the corresponding period in 2022. Cash flow from operations for the fourth quarter were $37.2 million or $0.25 per share and $101.4 million or $0.69 per share for the full year. As a result of cash flow during the quarter and the year, total liquidity stands at $153 million up from $143 million at the end of third quarter and from $129 million at the end of 2022. Balance sheet strength remains a priority for us, and we expect higher grades at TENA to drive costs lower and supporting strong cash flows, especially in Q2 and at current gold prices, allowing us to pay down the remaining balance of a revolving credit facility by the third quarter, as well as fund a range of opportunities to reinvest in the organization. Mike will now take us through the exploration review.
spk05: Thanks, John. At December 31st, 2023, West Dome's combined proven and probable mineral reserves totaled 1.1 million ounces from 2.8 million tons, grading 12.7 grams per tonne gold. Combined measured and indicated resources exclusive of reserves were 327,000 ounces, and combined inferred mineral resources were 808,000 ounces. Reserves continued to be based on US $1,400 an ounce gold and resources are now based on U.S. $1,700 per ounce. Gold-contained improvement in probable reserves at Keeney increased 21%, driven by a maiden reserve at Pressfield of 66,000 ounces, grading 7.6 grams per tonne gold, along with replacement and additions in Keeney. At Eagle River, mine ounces were successfully replaced with reserves. after we applied more conservative estimation parameters and optimized interpolation techniques. There remains a large resource of measured and indicated and also inferred resources at Eagle River, having the opportunity to be converted to reserves in the future. Reserves and resource estimates at both sites reflect reduced exploration spend in 2023. Drilling was therefore focused on improving geometric understanding of ore bodies of inferred resources to measure in the indicated categories. However, in 2024, the drilling program has been increased substantially compared to 2023 to approximately $30 million or 185,000 meters for a balanced program of underground delineation and exploration as well as surface drilling. It was a very exciting quarter at Eagle River as further drilling on several high-grade intersections in October have developed into a new zone, namely the Falcon 311 zone, that occurs within volcanic rocks immediately west of the mine diorite. Additionally, gold mineralization was identified along the eastern margin of the mine diorite near the historic sixth zone, confirming our theory that volcanic rocks along this trend are a host for gold mineralization. Recent drilling returned 123 grams per tonne gold over 1.7 metre core length. Meanwhile, Underground drilling of the 300 East Zone has continued to confirm the consistency of the high-grade mineralization that now extends to the 1600 meter level and remains open down plunge. Deeper step-out drilling is planned to provide initial indication of mineralization below this zone to optimize future drilling and development, as well as to convert the large inferred resource base to indicated and subsequently into reserves. As part of the 2024 increased exploration program, testing is also planned at the neighboring zones such as Sixth Zone, 711, and the 811 zones. These zones have the potential to also extend to 1600 vertical meters below surface and beyond. On surface, drilling is planned to test a number of targets generated using artificial intelligence on our existing databases, as well as several known zones such as the fork and birch veins. However, year-to-date warm weather conditions may require this drilling to be reallocated to exploration targets immediately east of the mine diorite near Tucson. In October 23, the company announced the discovery of the Falcon 311 zone. Subsequent drilling has now delineated the zone to extend at least 200 meters along plunge and nearly 100 meters along strike, and interpreted to extend 900 meters to surface, similar to that of the neighboring Falcon 7 zone Recent drilling returned 270 grams per tonne over 2.3 metre core length, including one section that returned 1,261 grams per tonne gold over half a metre. Obviously, this area remains a growth priority for 2024. Despite the reduced drilling at Kena, was an exciting year and we were able to add over 120,000 ounces of reserves between Preskill and Kena Deep. Within Kena, drilling has been focused on better delineating the Kena Deep A zones to de-risk 2024 mine production, particularly given the high grades in the reserve model. At Kena Deep, drilling was focused on the south limb in 2023 and has confirmed the continuity and high grade of this zone. Also, underground At Preskill, drilling has confirmed not only the continuity of the gold mineralization and the validity of the geologic model, but also the potential for down-plunge extensions towards the east, which will be further tested from surface and from underground drill platforms from the exploration ramp. Of course, the Preskill zone is just one of several zones having the potential to offer a supplementary source of mill feed near surface or in the upper mine area for the spare installed capacity at the Keenan Mill. To this end, recent drilling results from the Shockey and Dubuçon zones in 2023 have returned encouraging results. Both of these zones are accessible from the existing 33-level development that extends across the property. It is an important year for exploration at Kena, and we have developed a balanced and integrated approach to optimize the exploration spending with a combination of delineation, extension, in-mine exploration, and conceptual regional targets. to the shocky zone and adjacent to the 33 level development. In this area, limited drilling has intersected high-grade gold along a mafic-ultra-mafic contact. We expect to release these drill results in the coming weeks. And further to the East-At-Duba Zone, drilling will be focused on refining the 3D geological model and converting inferred resources to indicate the category. Over to you, Andrea.
spk17: Thanks, Mark. As you can tell, we're excited about the future of the business. We are also focused on delivering on our commitments to our owners. This year, we are guided to produce 160,000 to 180,000 ounces, essentially evenly split between the two sites, and an ASIC roughly US dollar 250 an ounce below our 2023 level. This year, operational delivery at Kena is the strategic imperative. The team has been learning from development performance year to date with excitement growing as development from 127 levels is showing plenty of visible goals, similar to what is shown on the slide. To wrap up, Westom is a compelling story with a compelling future. An all-Canadian production growth platform with a long track record of finding and producing ounces efficiently. Significantly unexplored properties with high returns and out-of-orbit, low capital intensity with an underutilized asset structure, and a balance sheet that will continue to get stronger and stronger. Capital-efficient organic growth is rare in this industry. Westom has the assets, the people, and the opportunity to build this business and provide superior returns over the longer run. Thanks for listening today, and with that, I'll turn to the operator for any questions.
spk01: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ralph Profitti from 8 Capital.
spk09: Thanks, operator. Good morning, Auntie and team.
spk02: Two questions. Firstly, on Kina, maybe you can help me try to understand where are you in respect of development ahead of the mine plan? You know, just sort of a six-month phenomenon, and what's sort of the steady state development versus mining, and are we there yet?
spk16: Sure. Pri, would you like to take that one? Yeah, of course.
spk06: Thanks for the question, Ralph. Well, to give a bit more, I guess, context as to where we are at Kena, really establishing the 129 level horizon is the critical part. So what we need to do is develop the infrastructure there, which we've started. And also, as we do that concurrently, we develop towards the ore zone. So that's been ongoing. And at this point, we're at the ore in 127 and on 129. So we need to complete development of the infrastructure that will support mining, and at the same time, continue development in the ore, and then we can start stoping in Q2.
spk17: And just to add to that, the mining horizon allows us between one and a half and two years of mining potential for experts.
spk02: Okay. Okay, yes. That's better for clarity. I appreciate that. And maybe switching just to Falcon 311. I noticed that borehole IP will be – will be looked at here. I'm just trying to understand how this can help us delineate a little bit better. Is this for a better understanding of the geologic settings? Are we looking at improved mineralogy outlook? Is perhaps testing new targets in this borehole IP going to help us test the up-plunge towards surface or at depth, or a combination of all of the above?
spk05: Thanks, Ralph. Mike here. Certainly, the Falcon 311 zone has more sulfide content up to about 5% or so in some areas than say within the mine diorite. So we're looking at surface IP combined with borehole IP. Since we have both, we can actually merge them together as a good 3D picture of what's going on to help us target the extent of that zone. But also further to the west, we've been able to do a lot of mapping on surface and to find where this favorable horizon is, but picking out where the gold actually occurs along that horizon is important, and we think four-hole IP and surface IP is going to be able to detect these sulfides and sort of help with targeting the drill holes.
spk03: Yes. Very helpful answers. Thanks very much.
spk01: Thank you. One moment for our next question. Our next question comes from the line of Wayne Lamb from RBC.
spk19: Thanks. Morning, guys. Just curious on the resource update. Good to see the overall reserve additions. I was just wondering if you might be able to provide a bit more detail on the change in parameters around the estimate for the resource. And then was there any greater dilution assumptions used? And just curious if keeping the gold price assumption unchanged, what the delta might have been versus last year's estimate.
spk14: Great, thanks. I'm going to hand it to Mike. I think he can help.
spk05: Yeah, certainly the resource side. You know, what we're trying to do in the company is certainly standardize our approach, you know, to resource estimation. And as part of that, you know, Eagle River was on paper sort of a polygonal model just several years ago when we converted it to 3D. And, you know, we continue to improve there, you know, as we mine these zones, particularly in the volcanics that are somewhat new to us. So, you know, what we're really looking at is standardization. We're looking at maybe introducing slightly more conservative capping levels at the Eagle River, just to kind of be more in line with managing risk that we've already had in place at Kena. um and that was a big part of it we're also starting as you know we've implemented a fairly comprehensive reconciliation it's early days we're still working on it but you know some indications in some areas where we wanted to just manage risk a little bit better i mean these are very high grade zones and sometimes when you get you know over several kilograms of gold per ton in an assay it's how hard you cap that i mean when we go mining we see this big areas of visible gold. But I think in our estimation and our forecasting budget, we want to manage that risk a little bit, so we've decided to lower the capping values a little bit in some of the zones there. So that was the impact. As far as the lowering of the cutoff grade, we didn't change it for reserves, so that stayed the same. It did have a little bit of an impact at Eagle River so far. Typically, in some of our high-grade zones, areas of the mine that we're looking at with some lower grade values that maybe if we could you know some more favorable cutoff grade scenarios might be able to bring them to mine plan as well but I would say this is a big year for optimizing the work we're doing at Eagle River and determining you know the best way to mine all of this resource out.
spk17: I think it's important to also note that there's a significant unconverted resource and I think that's really going to be the focus and of the team over this year.
spk19: Okay, great. Thanks. And then maybe just curious if you might be able to provide a bit more detail on how the cost optimization evaluation has been progressing at Eagle River. And just curious if you anticipate any level of increase in costs as you move further down into the 300 zone versus the Falcon zone closer to service.
spk17: Yeah, I mean, the cost optimization program we launched about three months ago, four months ago on the operation, and it's going really well at the moment. I think we're getting to a point where we're getting a sense of the baseline understanding and trying to understand where the cost drivers are for the organization which we want to leverage. I would say that we're quite excited about what we're seeing in terms of opportunity, and we're going to keep pushing that program very strongly. It's implications not only on on cost are significant, but on the opportunity to convert are significant as well. We leverage this alongside our work on mine method and mine logic as well, which is quite exciting too. I think if you look at the overall plan, I don't think you should anticipate an increasing cost or going down. I think what you should probably anticipate is that you'll see Western looking at cost structure overall and driving a more logical approach to execution at a cost level.
spk19: Okay, sounds good. And then maybe just a last question for me as a follow-up on the ramp-up at Kena. Just curious in terms of tonnage, if we should kind of assume a ramp-up to where you exit the year at, say, 700 to 750 tons per day. And then maybe just on the grade profile, if we assume lower grades through Q1 and maybe part of Q2, should we assume that grades kind of reach the upper end of guidance maybe around the 14 gram level by the end of the quarter as you get into the heart of the 129 level?
spk17: That's a good assumption, right? I think quarter one, you can certainly assume that that's a wrap up. And I think as Fred said, what he's working on is preparing for mining. So it's really important that we know that there's a lot of work being done on ensuring that we're ready to do that. And there's a lot of infrastructure work that his team are looking at in quarter one. So that's a good assumption. And then it does wrap up. And I think it's a good assumption regarding of the numbers that you mentioned.
spk18: Okay, perfect. Thanks for taking my questions.
spk01: Thank you. One moment for our next question. Our next question comes from the line of Ryan Walker from Echelon Capital Markets.
spk07: Hi. Good morning, everyone, and congrats on a strong finish to the year. So just sticking with Tina, you mentioned in the press release here briefly that you're successfully addressing the challenges of mining in a shift. Now that you're in there physically, I mean, is it more challenging than you would have thought? Are you seeing perhaps you needing to use more ground support or maybe anticipating a higher degree of dilution during mining than you might have previously? Can you kind of just give us a status update in that regard?
spk15: Great question. Let me hand over to Fred. I think he's got a lot of experience in mining this. I think he can tell you himself.
spk06: Ryan, thanks for the question. I'd say mining interest right now is going really well. I mean, in terms of support, the support scheme that we have, ours assumptions that were derived, I would say, from past life mining in similar conditions. And right now, what we're seeing is our performances in terms of development have actually been slightly higher than what we're assuming in our internal modeling.
spk10: So things are looking up on that side.
spk08: Okay, great. That's very helpful. Thank you. That's it for me. Thanks.
spk07: Thanks, Ryan. Bye.
spk01: Thank you. One moment for our next question. Our next question comes from the line of John Tumazes from John Tumazes Very Independent Research, LLC.
spk08: Thank you very much. For a couple years, the company was short of funds completing the Kiana project. How much catch-up is needed for machinery replacement underground development and uh we had about 165 000 ounce fall in total resources as we infill the past resource categories to add to reserves and do you think one year is enough to catch up on those fronts
spk17: Hi John, great question. You asked, there's two questions there. Let me start first with the capital requirements to do what we need to do. I think our capital requirements are well defined and I don't think we have a concern on adding more capital or requiring more equipment and those sort of things. So I think we can safely assume that West Dome is well resourced at those levels to do what we need to do and I think we one on the way now to leverage, you know, like you said, those issues from the past to actually move forward. I think on the resource itself, it's a really great question, and I think it's a function, a little bit of the reduction in drilling that was done in 2023, as most of us know. To catch it back, my strong suspicion is if you look at the conversion of the drill, and I'm going to turn to Mike in a moment, I think I would... He's very surprised if he can't do a great job with the amount of money we put into exploration for us to get the resource back to which, you know, as you see that growth, we'd like to see internally be targeting these things. And we wouldn't be putting the money there if we didn't believe that. So let me ask Mike just to add if he's got anything, Mike, on that.
spk05: Yeah, I would just add, you know, like this year, given the limit to drilling that we did, we did add 120,000 ounces of reserves. So had to take that from the resources to get that. But I would say we're doubling, I would say, the amount of drilling this year. And it is designed, like I said, it's a balanced and really integrated approach to not only better define some of our known zones, but to add resources in areas and also look at some conceptual targets. I mean, we want to have this balanced approach going forward. So we're always looking for a home run. but we're also looking to replace what we might have. That's our goal there. So we're pretty happy with the drilling that we've had to continue to increase the reserves.
spk08: In terms of the press keel zone, how many years or how much work is needed for it to reach production?
spk17: So, we actually mentioned that before, we will be developing in that area by, when are we developing into Preskill, right? End of next year. Sorry? End of next year. End of next year we'll be producing from Preskill, but we're going to be starting development into Preskill during the beginning of next year, right? So, I think we, you know, John, I think the resource itself will, sorry not resource, the actual program of actually mining that is well understood and we have a plan. We'll be developing in the year and we'll be producing from Frisco by the end of the year.
spk11: Thank you.
spk01: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. This is a very important part of the process. This is a very important part of the process. This is a very important part of Good morning. Welcome to West Dome Goldmine's Q4 and Fiscal Year 2023 Financial Results Conference Call. I will turn the call over to Lindsay Dunlop, VP Investor Relations, to begin today.
spk12: Great. Thanks, Operator, and good morning, everyone. Welcome to West Dome Goldmine's 4th Quarter and Full Year 2023 Results Conference Call. Before we begin today, we'd like to take this opportunity to remind everyone that during this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could cause outcomes to differ materially due to a number of risks and uncertainties, including those mentioned in the detailed cautionary notes contained in yesterday's press release and in the company's MD&A dated March 12, 2024. Yesterday's release should be read in conjunction with the MD&A and financial statements, all of which can be found on CDAR Plus and on our website. Following the prepared remarks, we will open the call for questions. All figures discussed on this call are in Canadian dollars and less otherwise noted. Now over to Andy Abbas, President and CEO, to begin today.
spk17: Thanks, Lindsay, and good morning, everyone. Before I begin, I'd like to say a big thank you to Lindsay, who will be leaving at the end of March. Lindsay has been a part of the fabric of Western for 10 years now. We're certainly going to miss you and wish you well. Speaking on the call with me today will be Raj Gill, SVP Corporate Development and RR, Fred Langevin, our COO, and Mike Mescher, SVP Exploration Resources. Also in the room, we have Fernanda Rugoni, our recently appointed CFO, who took the reins from Jonathan Singh earlier this week. We welcome Fernanda to the executive leadership team and thank Jonathan for agreeing to stay on in a leadership position in the business. Before I pass things over to Fred, I'd like to begin with a brief overview and outline why we're excited about what lies ahead for Western. Overall, despite significant changes in 2023, Westrome delivered on its three strategic imperatives. We achieved the midpoint of guidance on production in ASIC. We advanced development to the 129 level on Kena ahead of schedule, and we ended the year with positive net cash and a strengthened balance sheet. Last month, we also updated our year-end mineral reserve resources, reporting a 12% net increase in corporate reserves after depletion. while keeping overall portfolio grade essentially unchanged. These achievements are a testament to the capacity and the commitment of our operating and corporate teams, and I want to say a special thanks to all those who are listening today. With almost a third of annual production of 123,000 ounces coming in the fourth quarter, we are setting a new pace and are well positioned to deliver higher production and lower costs in 2024 and 2025. As we previously announced in January, Kena is poised to deliver a step-change increase in production on the back of higher-grade Kena D4 being processed in Q2 this year. The site mining crews are optimising their approach, and so far, development remains on track. At Eagle River, we are seeing more consistent performance on development rates and grade reconciliation. Our focus at Eagle River near term will be on re-optimising the asset with a view to value and improve margins, which gives us optionality on cut-off rates and subsequently the potential to increase reserve conversion from a resource base. In terms of exploration, it remains the cornerstone of our strategy and we see a number of ground for exploration and development opportunities that we are confident will drive resource growth and reserve conversion and eventually utilize the spare mill capacity at both operations. More on that from Mike in a moment. Financially, we're in a far better position exiting 2023 than we have been before. Our liquidity ending the year was $153 million, and our net cash, that is our cash minus our borrowing, has climbed about $24 million. With robust free cash flow expected this year and next, we're on track to close out the remaining $39 million on our revolve by the third quarter. And with that, I'll pass over to Fred to walk through the operational details.
spk06: Thank you, Anthea. Good morning, everyone. Consistent with our internal projections, we had a very strong finish this year on production at two sites. all key initiatives to setting up a successful 2024 advanced as per plan during the quarter. Starting with Eagle River, production in Q4 came in at 24,072 ounces. The higher production was mainly driven by higher grades, as mill throughput remained consistent with previous quarters. The 300 zone was the main contributor to gold production in Q4, and this zone continues to provide excellent grades that reconcile positively. For the full year 2024, Eagle has produced a total of 87,799 ounces goal, firmly above midpoint of guidance range, with very stable production quarter over quarter. Development performances in Q4 once again exceeded budgeted targets, which positions us very well for 2024 production. On the back of this strong execution at Eagle, we continue to benchmark the operation both on productivity and on cost to try and improve our cost structure to offset the cost pressures of increasing debt. We expect to start seeing benefits of this program in 2024. At Kena, production in Q4 came in at 12,144 ounces. The rate continued to track higher than upper end of guidance during the quarter due to a combination of continued strong grade performance from the A2 zone, where we were able to continue successfully cycling slope-located entirely in shift, and the contribution of high-grade pre-production core development into the A zone on the way to level 129. For the full year 2023, Kena has produced a total of 35,536 ounces, slightly above midpoint of guidance range. The ramp to Kennedy remained a key focus for the team in Q4, culminating in us reaching 129 level access in October. Since then, we've been focusing on developing the level infrastructure required to initiate mining activities, such as ventilation raises, escapeways, and power distribution on levels 127 and 129, with development into the ore in the A zone now ongoing. With focus in Q1 remaining firmly on infrastructure development, early gold production levels are expected to be consistent with the 2023 run rate average. As we complete infrastructure and steel development, steel production is expected to ramp up to reach steady state by the end of Q2, with grades in line with 2P levels. Finally, after receiving the required authorizations to proceed with the excavation of the Prettkill portal in Q4, we've made headway installing support infrastructure at surface to begin excavation of the portal, which was initiated in early January. As of last week, blasting of the portal was completed, and the ground support phase of the portal is ongoing. As soon as this phase is completed, development of the underground workings will commence. The 1.7-kilometer exploration ramp is being tracked closely internally, as it will be key in establishing ventilation, secondary transportation, and all edge access for the existing operation, but also allowing us to leverage the 33-level infrastructure to supplement key to deep production, starting with the Prescott Zone. So overall, as expected and conveyed in our last update, strong execution of the two sites in Q4 led to all four-year cash costs and all in sustaining the default well-weaving guidance range provided in January 2023. Over to Jonathan.
spk20: Thank you, Fred. I will start with an overview of the fourth quarter and full-year results. Previously reported Q4 production of 36,216 ounces was largely in line with expectations and brought full-year production to 123,336 ounces. Sales in the fourth quarter were 37,620 ounces, slightly ahead of production due to the timing of final glory sales. All unsustaining costs of $2,082, or US$1,529, were down slightly from the same period in 2022, primarily due to higher sales volumes. As Anthea mentioned, we expect a trend of higher output driving lower costs to continue for 2024 with guidance set at 160 to 180,000 ounces at a US equivalent of 1,325 to 1,475 an ounce. Our net income and adjusted net income for the fourth quarter for 2023 of 2.4 million or two cents per share. We do note that the quarter included a one-time non-cash deferred tax impact of 8.6 million or six cents per share but was still $5.9 million higher than the corresponding period in 2022. Cash flow from operations for the fourth quarter were $37.2 million or $0.25 per share and $101.4 million or $0.69 per share for the full year. As a result of cash flow during the quarter and the year, total liquidity stands at $153 million up from $143 million at the end of third quarter and from $129 million at the end of 2022. Balance sheet strength remains a priority for us, and we expect higher grades at TENA to drive costs lower and supporting strong cash flows, especially in Q2 and at current gold prices, allowing us to pay down the remaining balance of a revolving credit facility by the third quarter, as well as fund a range of opportunities to reinvest in the organization. Mike will now take us through the exploration review.
spk05: Thanks, John. At December 31st, 2023, West Dome's combined proven and probable mineral reserves totaled 1.1 million ounces from 2.8 million tons, grading 12.7 grams per tonne gold. Combined measured and indicated resources exclusive of reserves were 327,000 ounces, and combined inferred mineral resources were 808,000 ounces. Reserves continued to be based on US $1,400 an ounce gold and resources are now based on US$1,700 per ounce. Gold-contained improvement in probable reserves at Keeney increased 21%, driven by a maiden reserve at Pressfield of 66,000 ounces, grading 7.6 grams per tonne gold, along with replacement and additions in Keeney. At Eagle River, buying ounces were successfully replaced with reserves. after we applied more conservative estimation parameters and optimized interpolation techniques. There remains a large resource of measured and indicated and also inferred resources at Eagle River, having the opportunity to be converted to reserves in the future. Reserves and resource estimates at both sites reflect reduced exploration spend in 2023. Drilling was therefore focused on improving geometric understanding of ore bodies conversion of inferred resources to measured and indicated categories. However, in 2024, the drilling program has been increased substantially compared to 2023 to approximately $30 million or 185,000 meters for a balanced program of underground delineation and exploration as well as surface drilling. It was a very exciting quarter at Eagle River as further drilling on several high-grade intersections in October have developed into a new zone, namely the Falcon 311 zone, that occurs within volcanic rocks immediately west of the mine diorite. Additionally, gold mineralization was identified along the eastern margin of the mine diorite, near the historic sixth zone, confirming our theory that volcanic rocks along this trend are a host for gold mineralization. Recent drilling returned 123 grams per tonne gold over 1.7 metre core length. Meanwhile, Underground drilling of the 300 East Zone has continued to confirm the consistency of the high-grade mineralization that now extends to the 1600 meter level and remains open down plunge. Deeper step-out drilling is planned to provide initial indication of mineralization below this zone to optimize future drilling and development, as well as to convert the large confirmed resource base to indicated and subsequently into reserves. As part of the 2024 increased exploration program, testing is also planned at the neighboring zones such as Sixth Zone, 711, and the 811 zones. These zones have the potential to also extend to 1600 vertical meters below surface and beyond. On surface, drilling is planned to test a number of targets generated using artificial intelligence on our existing databases, as well as several known zones such as the fork and birch veins. However, year-to-date warm weather conditions may require this drilling to be reallocated to exploration targets immediately east of the mine diorite near Tucson. In October 23, the company announced the discovery of the Falcon 311 zone. Subsequent drilling has now delineated the zone to extend at least 200 meters along plunge and nearly 100 meters along strike, and interpreted to extend 900 meters to surface, similar to that of the neighboring Falcon 7 zone Recent drilling returned 270 grams per tonne over 2.3 metres core length, including one section that returned 1,261 grams per tonne gold over half a metre. Obviously, this area remains a growth priority for 2024. Despite the reduced drilling at Kena, It was an exciting year and we were able to add over 120,000 ounces of reserves between Preskill and Kena Deep. Within Kena, drilling has been focused on better delineating the Kena Deep A zones to de-risk 2024 mine production, particularly given the high grades in the reserve model. At Kena Deep, drilling was focused on the south limb in 2023 and has confirmed the continuity and high grade of this zone. Also, underground At Preskill, drilling has confirmed not only the continuity of the gold mineralization and the validity of the geologic model, but also the potential for down-plunge extensions towards the east, which will be further tested from surface and from underground drill platforms from the exploration ramp. Of course, the Preskill zone is just one of several zones having the potential to offer a supplementary source of mill feed near surface or in the upper mine area for the spare and sold capacity at the Keenan Mill. To this end, recent drilling results from the Shockey and Dubuçon zones in 2023 have returned encouraging results. Both of these zones are accessible from the existing 33-level development that extends across the property. It is an important year for exploration at Kena, and we have developed a balanced and integrated approach to optimize exploration spending with a combination of delineation, extension, in-mine exploration, and conceptual regional transformation. to the shocky zone and adjacent to the 33-level development. In this area, limited drilling has intersected high-grade gold along a mafic-ultra-mafic contact. We expect to release these drill results in the coming weeks. And further to the east at DubuZone, drilling will be focused on refining the 3D geological model and converting inferred resources to in-category. Over to you, Andrea.
spk17: Thanks, Mark. As you can tell, we're excited about the future of the business. We're also focused on delivering on our commitments to our owners. This year, we are guided to produce 160,000 to 180,000 ounces, essentially easily split between the two sites, and an ASIC roughly US dollar 250 an ounce below our 2023 level. This year, operational delivery at Kena is the strategic imperative. The team has been learning from development performance year to date, with excitement growing as development goal from 127 levels is showing plenty of visible goals, similar to what is shown on the slide. To wrap up, Westdome is a compelling story with a compelling future. An all-Canadian production growth platform with a long track record of finding and producing ounces efficiently. Significantly unexplored properties with high returns in our drawbridge, low capital intensity with an underutilized asset structure, and a balance sheet that will continue to get stronger and stronger. Capital-efficient organic growth is rare in this industry. Westdome has the assets, the people, and the opportunity to build this business and provide superior returns over the longer run. Thanks for listening today, and with that, I'll turn to the operator for any questions.
spk01: Thank you. As a reminder, to ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ralph Profitti from 8 Capital.
spk09: Thanks, operator. Good morning, Auntie and team.
spk02: Two questions. Firstly, on Kina, maybe you can help me try to understand where are you in respect of development ahead of the mine plan? You know, just sort of a six-month phenomenon, and what's sort of the steady state development versus mining, and are we there yet?
spk16: Sure. Pri, would you like to take that one? Yeah, of course.
spk06: Thanks for the question, Ralph. Well, to give a bit more, I guess, context as to where we are at Kena, really establishing the 129 level horizon is the critical part. So what we need to do is develop the infrastructure there, which we've started. And also, as we do that concurrently, we develop towards the ore zone. So that's been ongoing. And at this point, we're at the ore in 127 and on 129. So we need to complete development of the infrastructure that will support mining, and at the same time, continue development in the ore, and then we can start stoping in Q2.
spk17: And just to add to that, the mining horizon allows us between one and a half and two years of mining potential for experts.
spk02: Okay. Okay, yes. That's better for clarity. I appreciate that. And maybe switching just to Falcon 311. I noticed that borehole IP will be – will be looked at here. I'm just trying to understand how this can help us delineate a little bit better. Is this for sort of a better understanding of the geologic settings? You know, are we looking at sort of improved mineralogy outlook? Or is perhaps, you know, testing new targets? And is borehole IP going to help us, you know, test the up-plunge towards surface or at depth or sort of a combination of all of the above?
spk05: Thanks, Ralph. Mike here. Yeah, certainly the Falcon... 311 zone has more sulfide content up to about 5% or so in some areas than, say, within the mine diorite. So we're looking at surface IP combined with borehole IP. Since we have both, we can actually merge them together as a good 3D picture of what's going on to help us target the extent of that zone. But also further to the west, we've been able to do a lot of mapping on surface and to find where this favorable horizon is, but picking out where the gold actually occurs along that horizon is important. And we think four-hole IP and surface IP is going to be able to detect these sulfides and sort of help with targeting the drill holes.
spk03: Yes. Very helpful answers. Thanks very much.
spk01: Thank you. One moment for our next question. Our next question comes from the line of Wayne Lamb from RBC.
spk19: Thanks. Morning, guys. Just curious on the resource update. Good to see the overall reserve additions. I was just wondering if you might be able to provide a bit more detail on the change in parameters around the estimate for the resource. And then was there any greater dilution assumptions used? And just curious if keeping the gold price assumption unchanged, what the delta might have been versus last year's estimate.
spk14: Great, thanks. I'm going to hand it to Mike. I think you can help.
spk05: Yeah, certainly the resource side. You know, what we're trying to do in the company is certainly standardize our approach, you know, to resource estimation. And as part of that, you know, Eagle River was on paper sort of a polygonal model just several years ago when we converted it to 3D. And, you know, we continue to improve there, you know, as we mine these zones, particularly in the volcanics that are somewhat new to us. So, you know, what we're really looking at is standardization. We're looking at maybe introducing slightly more conservative capping levels at the Eagle River, just to kind of be more in line with managing risk that we've already had in place at ENA. um and that was a big part of it we're also starting as you know we've implemented a fairly comprehensive reconciliation it's early days we're still working on it but you know some indications in some areas where we wanted to just manage risk a little bit better i mean these are very high grade zones and sometimes when you get you know over several kilograms of gold per ton in an assay it's how hard you cap that i mean when we go mining we see this big areas of visible gold. But I think in our estimation and our forecasting budget, we want to manage that risk a little bit. So we've decided to lower the capping values a little bit in some of the zones there. So that was the impact. As far as the lowering of the cutoff grade, we didn't change it for reserves, so that stayed the same. It did have a little bit of an impact at Eagle River so far. Typically, in some of our high-grade zones, areas of the mine that we're looking at with some lower grade values that maybe if we could you know some more favorable cutoff grade scenarios might be able to bring them to mine plan as well but I would say this is a big year for optimizing the work we're doing at Eagle River and determining you know the best way to mine all of this resource out.
spk17: I think it's important to also note that there's a significant unconverted resource and I think that's really going to be the focus and
spk19: of the team over this year okay great thanks and then maybe just curious if you might be able to provide a bit more detail on how the cost optimization evaluation has been progressing at Eagle River and just curious if you anticipate any level of increase in cost as you move further down into the 300 into the 300 zone versus the Falcon zone closer to service
spk17: Yeah, I mean, the cost optimization program we launched about three months ago, four months ago on the operation, and it's going really well at the moment. I think we're getting to a point where we're getting a sense of the baseline understanding and trying to understand where the cost drivers are for the organization which we want to leverage. I would say that we're quite excited about what we've seen in terms of opportunity, and we're going to keep pushing that program very strongly. It's implications not only on on cost are significant, but on the opportunity to convert are significant as well. We leverage this alongside our work on mine method and mine logic as well, which is quite exciting too. I think if you look at the overall plan, I don't think you should anticipate an increasing cost or going down. I think what you should probably anticipate is that you'll see Western looking at cost structure overall and driving a more logical approach to execution at a cost level.
spk19: Okay, sounds good. And then maybe just a last question for me as a follow-up on the ramp-up at Kena. Just curious in terms of tonnage, if we should kind of assume a ramp-up to where you exit the year at, say, 700 to 750 tons per day. And then maybe just on the grade profile, if we assume lower grades through Q1 and maybe part of Q2, should we assume that grades kind of reach the upper end of guidance maybe around the 14 gram level by the end of the quarter as you get into the heart of the 129 level?
spk17: That's a good assumption, Ryan. I think quarter one, you can certainly assume that that's a wrap up. And I think as Fred said, what he's working on is preparing for mining. So it's really important that we know that there's a lot of work being done on ensuring that we're ready to do that. And there's a lot of infrastructure work that his team are looking at in quarter one. So that's a good assumption. And then it does wrap up. And I think it's a good assumption regarding of the numbers that you mentioned.
spk18: Okay, perfect. Thanks for taking my questions.
spk01: Thank you. One moment for our next question. Our next question comes from the line of Ryan Walker from Echelon Capital Markets.
spk07: Hi. Good morning, everyone, and congrats on a strong finish to the year. So just sticking with Tina, you mentioned in the press release here briefly that you're successfully addressing the challenges of mining in a shift. Now that you're in there physically, I mean, is it more challenging than you would have thought? Are you seeing perhaps you needing to use more ground support or maybe anticipating a higher degree of dilution during mining than you might have previously? Can you kind of just give us a status update in that regard?
spk15: A great question. Let me hand over to Fred. I think he's got a lot of experience in mining this. I think he can tell you himself.
spk06: Ryan, thanks for the question. I'd say mining interest right now is going really well. I mean, in terms of support, the support scheme that we have, development assumptions that were derived i would say from past life mining in similar conditions and right now what we're seeing is our performances in terms of development have actually been slightly higher than what you're assuming in our internal modeling so things are looking up on that side okay great that's very helpful thank you that's it for me thanks thanks thank you
spk01: One moment for our next question. Our next question comes from the line of John Tumazes from John Tumazes Very Independent Research, LLC.
spk08: Thank you very much. For a couple of years, the company was short of funds completing the Kiana project. How much catch-up is needed for machinery replacement, underground development? We had about 165,000 ounce fall in total resources as we infill the past resource categories to add the reserves. Do you think one year is enough to catch up on those fronts?
spk17: Hi, John. Great question. There's two questions there. Let me start first with the capital requirements to do what we need to do. I think our capital requirements are fine, but I don't think we have a concern on adding more capital or requiring more equipment and those sort of things. So I think we can safely assume that West Dome is is well-resourced at those levels to do what we need to do. And I think we're well on the way now to leverage, like you said, those issues from the past to actually move forward. I think on the resource itself, it's a really great question, and I think it's a function, a little bit of the reduction in drilling that was done in 2023, as most of us know. To catch it back, my strong suspicion is if you look at the conversion of the drill, and I'm going to turn to Mike in a moment, I think I would be very surprised if you can't do a great job with the amount of money we put into exploration for us to get the resource back to edge, you know, and to see that growth we'd like to see internally retargeting these things. And we wouldn't be putting the money there if we didn't believe that. So let me ask Mike just to add if he's got anything, Mike, on that.
spk05: Yeah, I would just add, you know, like this year, given the limited drilling that we did, we did add $120,000. to get that but you know I would say we're doubling I would say that you know the the amount of drilling this year and it is designed like I said it's a balanced and really integrated approach to not only better define some of our known zones but you know to add resources in areas and also you know look at some conceptual targets I mean we want to have this balanced approach going forward so we're always you know looking for a home run but we're also looking to replace what we might have. That's our goal there. So we're pretty happy with the drilling that we've had to continue to increase the reserves.
spk08: In terms of the press keel zone, how many years or how much work is needed for it to reach production?
spk17: um so we actually mentioned that before we will we will um be developing in that area by my date right where are we developing into preskill guys sorry end of next year we'll be producing from preskill but we're going to be start development into preskill during the beginning of next year right so i think we you know john i think the resource itself will a certain resource the actual program of actually mining that is well understood and we have a plan we'll be developing in the year and we'll be producing from Frisco by the end of the year Thank you Thank you This concludes today's conference call Thank you for participating You may now disconnect
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