Trekor Metals Limited Common Shares

Good morning. My name is Alan, and I will be your conference operator today. At this time, I would like to welcome everyone to Teseco's third quarter earnings conference call. All lines have been placed in 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 number two. Thank you. Mr. Burgot, Vice President of Investor Relations, you may begin your conference.

Thank you, Operator. Welcome, everyone, and thank you for joining Teseco's third quarter 2023 conference call. News release and regulatory filing announcing our financial and operational results was issued yesterday after market close and is available on our website at tesecomines.com, as well as on CDAR. I am joined today by TSECO's President and CEO, Stuart MacDonald, TSECO's Chief Financial Officer, Bryce Hamming, and our Chief Operating Officer, Richard Trompe. 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. Further information on these risks and uncertainties, I encourage you to read the cautionary note that accompanies our third 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'll open the phone lines to analysts and investors for questions. I will now turn the call over to Stuart for his remarks.

Great. Thank you, Brian, and welcome, everyone, to our third quarter earnings call. It's been a very busy three months since our last call, but we've been able to make some great strides forward with our business. We had very strong operating results at Gibraltar, solid earnings as well this quarter. But I'll start with our most exciting news, and that's our permanent success at Florence. We announced earlier this week the EPA confirmed that no appeals have been received and our final UIC permit is now effective. Great result for us and a testament to the work our project team has done over the last 10 years. We've methodically worked our way through a very rigorous and detailed permitting process. We've technically de-risked the project with successful test facility operations. And at the same time, we've been able to build the strong community support that we enjoy today. in this day and age to be able to permit a project with no substantive opposition or appeals. As I said, it's a great result, a big milestone for our company. So we're moving forward. We were at Florence site yesterday with our board of directors reviewing our construction plans. Next steps will be site preparation and clearing for the well field expansion. That work will start in the next few weeks. Drilling contractors are planned to be on site and drilling early in the new year. We're also working to finalize key vendor contracts, and our construction team has gone out for firm quotes on the remaining equipment and materials that need to be procured. We're moving forward in a disciplined way and aware of the inflationary risks and uncertain markets that we're in today. We aren't racing to complete construction. We're focused on delivering the project on budget and ensuring that we have the right financing package in place. Previously said that we're targeting to raise $100 million U.S. at the project level, consisting of debt and royalty. We've made very good progress on those discussions, and we're now very close to getting firm commitments in place. We should be able to provide additional details on that in the near future. We're expecting to be able to close those financings early in the new year before the adrenaline commences and our construction spending starts to ramp up. At that point, we would have $175 million U.S. of committed funding for Florence construction, in addition to our current available liquidity of about $110 million. Florence's profile as a low-carbon, U.S.-based copper producer continues to generate a lot of interest from potential customers, investors, and other miners. A few months ago, the U.S. Department of Energy identified copper as a critical material. This opens up the possibility of tax incentives for the project. and our preliminary review indicates we could potentially benefit from a tax credit as high as 30% on the SXEW and copper processing infrastructure at Florence. We'll need to apply and be accepted, but this has the potential to be a very meaningful piece of funding available to us in 2025. As we've said in the past, we have a very unique opportunity here, a low-impact and low-cost project now fully permitted in a Tier 1 jurisdiction. We're looking forward to realizing that value over the next couple of years. Markets everywhere are challenged right now, and we've seen copper prices impacted recently as well. 2025 looks like a great time to be bringing on a new project. Turning to Gibraltar now, it was a very strong production quarter. As we indicated on last quarter's call, we had made good progress advancing mining deeper into the Gibraltar pit. We're now well established in the bottom of that pit. With that setup in place, the mine delivered excellent results this quarter, with copper production of over 35 million pounds and C1 cash costs of $2.20 per pound U.S. Copper grades improved as expected, averaging 0.26% for the period. Mining benefited from the large continuous mineralized zones, and the softer ore resulted in mill throughput over 87,000 tons per day, which is above design capacity. The ore quality also led to improved copper recoveries in the mill, 85% for the quarter, which is a good result. Total site cost was 102 million Canadian, which is generally in line with recent quarters. We benefited from a 60% increase in moly sales, which generated a byproduct of 23 cents per pound of copper. Through three quarters, Gibraltar Mine has produced 88 million pounds of copper, and we're well on track to achieve our original production guidance of 115 million pounds. plus or minus 5%. We're hopeful to be on the plus side of that number. The Gibraltar pit will continue to be the primary source of mill feed through the middle of next year. Then we'll transition to ore from the new connector pit for the second half of next year. We should continue to see good daily mill throughput from both pits, but metal production will be affected by some planned mill downtime. Two significant downtimes are planned. Mill number two will be down for two weeks in Q1.