Trekor Metals Limited Common Shares

Good morning. My name is Joelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tesico's second quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then the two. Thank you. Mr. Bergo, you may begin your conference.

Thank you, Joelle. Welcome, everyone, and thank you for joining TSECO's second quarter 2023 conference call. The news release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tsecomines.com and on CDAR. I am joined today in Vancouver by TSECO's President and CEO, Stuart MacDonald, TSECO's Chief Financial Officer, Bryce Hamming, and our Senior VP Operations, Richard Tremblay. As usual, before we get into opening remarks by management, I would like to remind our listeners that our comments and answers to your questions will contain forward-looking information. This information by its nature is subject to risks and uncertainties that may cause the stated outcome to differ materially from the actual outcome. For further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our second quarter MD&A and the related news release, as well as the risk factors particular to our company. I would also like to point out that we will use various non-GAAP measures during the call. You can find explanations and reconciliations regarding these measures in the related news release. And finally, all dollar amounts we will discuss today are in Canadian dollars unless otherwise specified. Following opening remarks, we will open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.

Okay, thank you, Brian. Good morning, everyone. Thank you for taking the time to join our call this morning. Operationally, it was a decent quarter at Gibraltar. We had copper production of 28 million pounds, which is up 12% from Q1, and unit costs also declined. As we've spoken about previously, the lower benches of the Gibraltar pit are producing higher-grade, more continuous ore zones, and the pit is set up very well for ore release over the balance of this year. Head grade in the quarter averaged 0.24%, and we should see similar levels for the rest of the year. Mill availability was the main operational challenge that we faced in the quarter. We had several maintenance downs in April and May. As a result, mill throughput for the quarter was just below 80,000 tons per day, which is below target. However, since early June, the situation has much improved. We've been operating at closer to 90,000 tons a day. and the softer ore in the Gibraltar pit is being processed very well. Improved mill performance allowed us to produce 11 million pounds in June and again in July. We're expecting second half copper production to be roughly 15% higher than the first half of this year, and we remain confident in our original production guidance of 115 million pounds of copper. Turning to our financial results now, Sales volumes in Q2 were lower than production as we had a small inventory build. And the average realized price also dipped to $3.78 per pound from $4.02 in the prior quarter. It also averaged about $4 last year. These changes have a meaningful impact on Gibraltar earnings and cash flow, and we have a lot of leverage to the copper price. The price trend in recent weeks has been positive, and it's currently hanging in the $3.90 per pound range. That's up about 20 cents per pound since quarter end. It's also notable this quarter that copper and moly price changes led to an $8 million write-down of our stockpile inventory. That's 3 cents per share impact on GAAP earnings, adjusted earnings, and EBITDA. With that, we still reported $22 million of adjusted EBITDA and earnings from mine operations of $28 million. Our unit operating costs declined quarter over quarter, down to $2.66 per pound. That's a 10% reduction over Q1. Partly due to lower diesel prices and cost reductions in a few other areas, but the higher production level was the biggest factor. An offset was the lower MOLLE byproduct credit, as average molybdenum prices dropped from $33 per pound in Q1 to $21 per pound in the second quarter. Overall, we expect our C1 unit cost to continue to decline in the second half of this year as copper production increases. Capital spending remained at elevated levels again in the second quarter, both at Gibraltar and Florence. Work continued on construction of the new site for the in-pit crusher at Gibraltar. And as we noted in the past, the actual crusher move has been deferred until Q2 next year. But this has been a significant capital project for us, about $50 million Canadian in total on a 100% basis. But most of that spending has already been done with about $10 million left to go next year for the physical move. After that move, we'll be able to continue advancing into newer zones in the connector pit. And of course, spending has continued at Florence as well as we continue to receive long-lead items on site in preparation for construction. Bryce can add some more details on CAPEX in a minute, but certainly the capital projects this year have impacted our cash flow, especially in light of a lower copper price in the second quarter. With Gibraltar CAPEX mostly behind us, we expect solid free cash flow generation from the mine over the remainder of this year. As far as permitting process at Florence, the message remains the same. We're in regular contact with the EPA, and we continue to see them taking the final steps towards issuance of the final UIC permit. We don't see any significant issues or concerns emerging. In fact, in June, the EPA circulated the final programmatic agreement for signature, which we see as another positive sign that they're readying to issue the UIC permit. It's been a lengthy and tedious process, and we need to keep patient and allow the agency to finish the final steps of their work. But we do remain confident it will be a positive result very soon. We're using the additional time to deliver the right financing package for the project. The remaining capex that we disclosed a few months ago was about $230 million US. And with our existing liquidity and the funding commitments received from Mitsui and Bank of America, we already have a large portion of that financing in place. We continue to advance discussions on project-level financings, which could include a copper royalty or a small project loan. Progress is being made on both fronts and tracking with the expected permitting timeline. Two last topics to touch on, and both have been in the news recently in BC. Firstly, the port strike. That occurred in the first half of July, and it delayed copper concentrate shipments to begin our third quarter. It was a two-week strike, or a two-week labor disruption at least, and created quite a backlog of cargo for Teseco and all the other shippers that operate on the West Coast ports. We're now supplementing our regular rail service with trucking to try to reduce the site inventory levels in the coming months. Secondly, the wildfire situation. It's been a very active fire season here in BC and in other parts of Canada as well. To date, there's been no impact to Gibraltar operations. although in July we did have a fire break out just a few miles from the mine site. But it was contained and no longer presents any risks to the site. We're grateful for the work of the BC Wildfire Service and the many others that are working hard to keep communities around our province safe. And with that, I'll turn the call over to Bryce for some more details on the second quarter financials and an update. Over to you, Bryce.