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spk03: Thank you for standing by. This is the conference operator. Welcome to the El Dorado Gold Corporation Q2 2021 Financial and Operational Results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations. Please go ahead, Ms. Wilkinson.
spk02: Thank you, operator, and good morning, everyone. I'd like to welcome you to our second quarter 2021 conference call. On the call today, we have George Burns, President and Chief Executive Officer, Phil Yee, Executive Vice President and Chief Financial Officer, Joe Dick, Executive Vice President and Chief Operating Officer, and Jason Cho, Executive Vice President and Chief Strategy Officer. Our release yesterday details our 2021 second quarter financial and operating results. This should be read in conjunction with our second quarter financial statements and management's discussion and analysis, both of which are available on our website. They have also been filed on CDAR and EDGAR. All dollar figures discussed today are US dollars, unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. Before we begin, I would like to remind you that we will be making forward-looking statements during the call. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. I will now turn the call over to George.
spk07: Thanks, Lisa, and good day, everyone. Here is the outline for today's call. I'll provide a brief overview of Q2 results and highlights before passing it to Phil to go through the financials. Joe will follow by reviewing operational performance, and then we'll open it up for questions. In the second quarter, we had strong project and operating results at Kisada, FN Chukuru, and Lamak. However, Olympias was affected by work slowdowns as we progressed our transformation efforts at the Cassandra mines. We continue to be on track for 2021 production and cost guidance. Our transformation focus on increasing productivity across the Cassandra assets which is essential to create value. We are actively engaging with our stakeholders on this initiative, and we are confident with their cooperation we will make meaningful progress. Joe will discuss our transformation plans at Cassandra Mines in more detail later on the call, but first I want to touch on a few highlights. During the quarter, we reduced our debt and maintained our strong liquidity position while investing to grow our business. We end the quarter with a cash balance of $410 million, and our balance sheet continues to emerge as a major strength. It will enable us to fund growth and maximize the opportunities ahead of us. In the second quarter of 2021, we successfully completed the acquisition of QMX, which significantly increased Eldorado's position in the Abitibi Greenstone Belt and is consistent with our strategy to invest in world-class mining jurisdictions. addition of qmx to our portfolio opens a range of opportunities to expand our activities in the region and to leverage our existing infrastructure and el dorado strong operational exploration and stakeholder expertise shifting gears and looking ahead to the second half of 2021 and into 2022 we have several upcoming catalysts that i will discuss on this slide starting with turkey Commissioning of the high-pressure grinding roll circuit at Kisada is now scheduled to initiate at the start of Q4. We expect the HPGR to increase gold recovery by approximately 4% and enhance the already positive results achieved with the CIC trains and the new carbon regeneration kiln that were completed in the first half of the year. In Canada, at Lamarck, The decline connecting the Sigma mill with the Triangle Underground mine is progressing on schedule. It is expected to be complete in the fourth quarter. Work continues to progress on the Lamarck PEA with expected completion in the first quarter of 2022. We have taken some extra time with this study as our operational performance has improved, exceeding nameplate at the mill. As a result, the PE will reflect the optimization of the asset. moving to Greece. The updated feasibility study for scurries continues to advance, and we expect to complete it in the fourth quarter. The revised schedule is largely driven by our focus on capital discipline with respect to the additional scope for infrastructure related to legislative changes, climate change impacts on water management, and inflationary cost pressures. The study will support our process of finalizing financing and a decision by management and our board to restart construction for this world-class project. With a timely completion of construction in two and a half years, low-cost production from scurries represents significant upside in our current five-year production profile. In parallel, we're also working towards submitting an updated EIA for the Cassandra Mines in Q4. To be clear, the updated EIA will accommodate future Olympias expansion and Spittoni Port modernization. Finally, at Paramahill, an updated technical study remains on schedule for completion in early 2022. In parallel with the study work, we will be working with regulators to efficiently permit the project, leveraging our recent successes with the recent amendment to the Cassandra EIA for the use of dry stack tailings. We continue to monitor cost and capex inflation across our operations. In Turkey, inflationary pressures have been mostly offset by the weakening lira. In Canada, mining project activity has picked up in the Val d'Or area, which is putting pressure on our contractor and labor rates. COVID-19 has impacted supply chain, causing minor shipment delays. In June, we released our 2020 sustainability report, which showcases details of the sustainability framework and our ESG performance. We achieved our sustainability targets, which included developing a sustainability integrated management system, having zero fatalities and zero environmental and regulatory noncompliance incidents. We originally targeted a 10% reduction in our lost time frequency rate, And in fact, we reduced it by 43%. We also aimed at a 10% reduction in our total reportable injury frequency rate and surpassed our goal there too by reducing it by 27%. We continue to focus on safety improvements with a strong emphasis at the Cassandra Mines as part of our transformation efforts. Our sustainability framework is our foundation for how we approach responsible mining. It articulates our four key pillars that are commitments across environment, social, and governance indicators as follows. Number one, first and foremost, safe, inclusive, and innovative operations. Second, engaged and prosperous communities. Third, responsibly produced products. And finally, healthy environment, now and for the future. This slide highlights from our 2020 sustainability report grouped under each of these four pillars of our sustainability framework. I'm very proud for achieving these successes. In delivery on our commitments, we believe we will continue to be a preferred partner for host communities and countries and have the access to capital to grow our business to benefit all stakeholders. With that, I will turn things over to Phil for review of the second quarter financial results.
spk06: Thank you, George. Good day, everyone. Starting on slide seven, we had another solid quarter of operational results with production and costs both in line with our 2021 annual guidance. Revenues were consistent with plan and expectations, supported by strong sales and an average realized goal price of $1,835 per ounce. Free cash flow was lower than a quarter due to the increased growth capital spending, increased tax cash payments, and the timing of royalty and interest payments. We expect free cash flow generation to improve in the second half of the year. Eldorado reported a net loss attributable to shareholders in Q2 2021 of $55 million or $0.31 loss per share compared to net earnings of $49 million, or $0.29 per share, in the second quarter of 2020. After adjusting for one-time non-recurring items, including a $99 million non-cash impairment of the token casino project, among other things, adjusted net earnings for Q2 2021 increased to $29 million, or $0.16 per share, an increase from $24 million or 14 cents per share in Q1 of 2021. Cash operating costs in Q2 2021 averaged $645 per ounce sold, an increase from $550 per ounce in Q2 2020. The increase was primarily due to lower grade ore mined and processed at Kissadag, Lamarck, and Olympias, resulting in fewer ounces produced and sold. These increases were partially offset by modest reduction in cash operating costs per ounce sold at FM Chukaru as a result of the weakening Turkish lira and a change in the structure of concentrate contracts, whereby lower payable ounces are offset by the elimination of treatment charges and other deductions. All in sustaining costs per ounce sold averaged $1,074 an ounce in Q2 2021. an increase from $859 an ounce in Q2 2020, primarily due to the increase in average cash operating costs per ounce sold, higher royalty expense at Kissadag and FM Chookaroo as a result of the 25% increase to gold royalty rates effective from September 2020, higher royalty rates at Olympias effective from March 2021, following the ratification of the amended investment agreement, and higher sustaining capital expenditures. Capital expenditures in Q2 2021 were $72 million compared to $37 million in Q2 2020 and $64 million last quarter. This reflects a planned increase in growth capital spending at Kisileg and Lamak. Capital expenditures at the Cassandra mines in Greece are lower than expected in the first half of 2021, a result of our ongoing transformation work. We are focusing on rigorous capital discipline across our portfolio of assets, and we will specifically be looking at capital allocation more closely at the Cassandra Mines as we progress through our transformation efforts over the remainder of 2021 and into 2022. As a result, we expect capital expenditures at the Cassandra Mines to be at the low end of our guidance range for the year. Tax expense decreased to $0.1 million in Q2 2021 from $25 million in Q2 2020, mainly driven by the investment tax credit received in Turkey in Q2 2021 related to Kisedag heap leach improvements. The investment tax credit reduced the corporate tax rate, resulting in current tax savings of $22 million in the second quarter. As we typically pay quarterly tax installments on a one-quarter lag, we expect a lower tax expense in Q2 2021 to result in lower cash tax payments in Q3 2021. This difference also led to high cash tax payments in Q2 2021 of $27 million as a result of the higher increase current tax expense that was reported in Q1. Depreciation expense totaled $51 million in Q2 2021 compared to $53 million in Q2 2020, which has been recast as a result of the correction of an immaterial error related to the prior year's depreciation. The decrease in depreciation this quarter reflects lower sales volumes. We are forecasting full year 2021 depreciation expense to be in a range of $200 to $215 million. Moving on to slide eight on financial position, we continue to focus on maintaining a solid financial position which provides flexibility to unlock value for our portfolio of assets. At quarter end, we had unrestricted cash and cash equivalents and term deposits of $410 million. We made a $50 million repayment on a revolving credit facility during the quarter in response to the improved circumstances pertaining to the COVID-19 pandemic. As a result, we now have approximately $150 million undrawn and available under our revolving credit facility. We also completed a scheduled payment of $22 million on our term loan, which now has an outstanding balance of $100 million at the end of Q2. Our net leverage ratio is at 0.08 times as at June 30th, 2021, compared to 0.46 times at the end of the second quarter of 2020. This reflects a much improved credit profile for the company. And reiterating George's comments earlier, our balance sheet continues to emerge as a major strength. With that, I will now turn it over to Joe to go through the operational highlights.
spk05: Thanks, Phil, and good day, everyone. Our second quarter operating performance continued to be strong, and we are tracking in line with our 2021 annual guidance range. of between 430 and 460,000 ounces of gold. And I want to thank the team for their hard work over the past quarter in achieving these results. As always, the foundation of our production performance is our health and safety culture. We continue to be a fatality-free organization since Q3 of 2017, and several sites and functions have completed more than a year and some multiple years without a lost time injury. We produced 116,066 ounces of gold in the quarter at cash operating costs of $645 per ounce sold and all-in sustaining costs of $1,074 per ounce sold. As Phil mentioned earlier, capital expenditures were higher in Q2 2021 compared to the last quarter and last year, reflecting our planned increase in growth capital spending at Kisladad and Lamarck. We're focused on disciplined capital allocation across our operations, and specifically, we will be looking at capital allocation more closely at our Cassandra mines in Greece as our transformation efforts continue to progress. Starting in Turkey with Kisladad, our second quarter gold production totaled 44,016 ounces at cash operating costs of $529 per ounce. The commissioning of the high pressure grind roll circuit is scheduled to initiate at the start of the fourth quarter. As George mentioned, we expect the HPGR to increase by approximately 4% and enhance the already positive results achieved from the CIC trains and the new carbon G regeneration kiln completed in the first half of the year. We're also progressing well on our multi-year pre-stripping campaign. and studies are actively underway to assess the potential for accelerating this work to bring value forward at Kisladad. Work continues on the north heap leach pad construction. We can continue to be on schedule, and completion of phase one is expected mid-2022. Over to FM2 crew. Second quarter gold production totaled 23,473 ounces at cash operating costs of $5. Our recently installed flotation columns continue to operate well as we continue to evaluate optimum ranges. This has resulted and will continue to result in significant improvements in the quality of our gold concentrate. FM2Crew continues to deliver quarter after quarter with a strong track record as a safe and reliable operation. Turning to our Canadian operations, second quarter tons and grade of the mock continue to deliver to plan. Second quarter gold production totaled 35,643 ounces at cash operating costs of $658 per ounce. The underground decline between Triangle and the Sigma mill is progressing on schedule and we expect completion in the fourth quarter. We expect to reduce the operating costs upon completion of the decline as surface haulage costs are eliminated and the current up ramp underground route is replaced with straight line haulage to the Sigma mill. At ORMAC, early infill drilling results for this 800,000 ounce Maiden Gold resource have been as expected. Preliminary mine planning studies are underway to assess the initial scope of this resource within the Lamac operation. Once completed, the underground decline will enable the team to drift over the deposit and gain additional information to integrate this promising new discovery into future mine plans. Work continues to progress on the Lamacq PEA and we expect completion during the first quarter of 2022. We have taken some extra time with this study as our operational performance has improved, exceeding main plate at the mill and the PEA will better reflect the opportunities and optionality to asset, giving us the opportunity to view capital with a longer-term outlook as we evaluate in the context of a much larger land package. Over to Greece. At Olympia, second quarter gold production totaled 1,200, 934 ounces at cash operating costs of $1,237 per ounce. Earlier this year, we initiated transformation efforts at The Cassandra Mines focused on increasing productivity, which is essential in realizing the full potential of these assets. Transformation is key to underpinning investment and longevity of the Cassandra Mines. I'm really happy to see our union partners now taking part in this effort and understanding the importance of our transformation plans. I will talk about transformation a bit more in detail on the next slide. But first I want to touch on Karama Hill, where an updated technical study remains on schedule for completion in early 2022. We also continue to see great exploration potential in the Thrace region, supporting opportunities for growth in and around Parama Hill. In parallel with the study work, we'll be working with regulators to efficiently permit the project, leveraging our recent success amending the Cassandra EIA for the use of dry stack tailings. Now let's move on to a transformation initiative at Cassandra Mines, which we briefly discussed a few months ago in our Q1 conference call. I want to take this opportunity to provide a few additional details. Essentially, the transformation work in Greece is sustained to optimize the Cassandra Mines. It touches on every part of the business in Greece, including employee education and training, physical plant upgrades, business system upgrades, and leadership. The overall goal is to increase productivity and operating safely, economically, and at globally competitive levels. Implementing this scale of change in an existing operation like Olympias is challenging and entails risk, which we have planned for as part of the transformation work. We expect this effort will lead to sustainable continuous improvement and value delivery as we move into 2022. The long-term benefits in safety, culture, and productivity will result in a stronger operation with greatly enhanced economics. We remain committed to responsibly developing the Cassandra Mines to create value for all stakeholders. This includes job creation, investment into local communities, and opportunities for local suppliers while maintaining our high environmental standards. With that, I'll turn it back to George for closing comments.
spk07: Thanks, team. With strong operational results in the first half of 2021 and numerous upcoming catalysts expected in the second half of the year, Eldorado remains well positioned to deliver on our growth plans and create value at our assets. Thank you for your time, everyone. We will now turn it over to the operator for questions.
spk03: Thank you. We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from Cosmos Chu with CIBC. Please go ahead.
spk04: Hi, thanks, George, Phil, Joe, and team. Maybe my first question is in Greece. You know, as you talked about, you're working on the transformational work optimization of the Cassandra mines. You don't say Olympia, you say Cassandra, because I would imagine you're looking at it from the entire Greek operational level. I'm just wondering, you know, as you kind of work through how you can optimize Olympias, are there any benefits that you foresee for Scurius as well? Is that in part why, you know, you've undergone this plan in terms of transformation optimization? And then the second part of my question is, is there a target that you're trying to get to before you make further commitments to SCURIUS? And how are some of this optimization work going to be factored into your feasibility study that's upcoming for SCURIUS?
spk07: Thanks, Cosmos. I'll let Joe jump in with some details. We refer to Cassandra because that's our subsidiary that holds the assets of Olympia's SCURIUS project. and our Mavis-Petrus-Retoni operation, which is a kind of immaterial base metal operation. So, I mean, the primary focus is definitely on Olympias. That's where we're currently producing, and we have an enormous opportunity to reduce cost and increase productivities and create value. But you're right. We're also in the early stages of preparing for construction at Scurries. And we're looking to make improvements across all of those assets underneath Cassandra. And with that, I'll turn it over to Joe to give you some more details on transformation.
spk05: George, first in kind of relation to the Scourius Olympus relationship. Cosmos, I think, you know, certainly work in safety culture and those things are very similar between both sides. Well, Scourius is a different operation. you know, open pit, more technology, you know, maybe the, you know, the kind of the productivity numbers aren't directly transferable, but a lot of the cultural items are, and that, you know, that pertains to our entire workforce, including, you know, staff and our miners. You know, we're, you know, pleased that we have experienced miners at Olympias, and, you know, they know their work. I think our biggest challenge is really you know, the introduction of management operating system and, you know, a culture of continuous improvement. And as we look to, you know, really optimize, you know, our short-range plans, how we convert those plans to executable shift plans, how we manage the shifts on a short interval control basis, how we feedback at the end of the day on performance, You know, those kind of things, you know, haven't been done on an ongoing basis, and we've introduced all of that. In addition, we've looked at the mining cycle from drill and blast and, you know, the types of rounds we're pulling, you know, the length of rounds. And, you know, we have all of that along with haul cycle times, you know, and our whole, you know, productive time cycle, in the mine in a set of KPIs, which our labor partners are reviewing with us now on a biweekly basis. You know, so we're pleased about that. You know, we've kind of put it in a two-tiered target. You know, first as we, you know, work to get ourselves to a first step in Olympia's growth to around 530,000 tons and then to 650,000 tons. So we've kind of phased that out through some benchmarking and other things as to looking at, you know, similar mines, how they perform. And we're looking to be, you know, kind of in that average performance range from where we are today. So, you know, which is a bit of a step. And I think it boils down to mostly, you But there are many other factors around technology and performance in safety, our business plans, other things. And I would mention that we are in the process of introducing dispatch and helping us with shift control and historical data. So there's a lot going on. But we're pleased with the work so far and you know, it's a lot of change, but necessary change.
spk04: Yeah, for sure. Thanks, Joe. That's really helpful here. And then, you know, I guess more specifically on Scurious here, as you mentioned, you know, Q4, you're expecting the feasibility study to come out. I think in the past, George, you had, you know, talked about potentially finalizing some kind of joint venture partnership by 2021 as well. Is that still sort of potentially the timeline. And then the second part of my question is, I see that for SCARIUS, you've done about $2.8 million in terms of CapEx. I believe your full year guidance was $25 to $30 million. Are you still expecting to hit those numbers for full year? Is some sort of CapEx delay due to COVID-19? Could you maybe comment on that as well?
spk07: Sure. So for scurries, the schedule slipped a little bit. We, at the beginning of the year, expected to get the feasibility study completed in the third quarter to support progress on financing in the fourth quarter. And now we're looking at early Q4 to finalize the feasibility study, and that's probably going to push the financing evaluation into Q1 next year. So a little bit of slippage. And, you know, in terms of why that occurred, We're focused to ensure this feasibility study is updated and gives us a really good estimate of schedule and cost. And there has been some changes in both EU and Greek legislations that are being baked into this feasibility study. We've also taken a fresh look at climate change and the impact on precipitation to ensure all of our stormwater management facilities are adequate. So there's some changes happening in that regard. but things that we need to have our hands completely on. And then in terms of our strategy on how we'll fund the construction of scurries, we're still believing that a joint venture partner at the Cassandra level is the optimum strategy. And a couple of factors for that. One, we're looking for some strategic partners that can bring influence and expertise to the development of the Cassandra assets. So that's one. And two, an equity injection that would position us, we think, in an optimum way for our overall portfolio as well as our balance sheet and delivering on the outstanding upside we have with these high-quality assets. That still remains a primary strategy, but we're obviously looking at every alternative for financing, project financing, potentially streams. So we're taking a broad look, and in terms of schedule, it's probably going to slip into Q1 of next year, but still remain confident these high-quality assets will be able to deliver significant upside to our current five-year guidance.
spk05: For sure. Yep. George, just a couple of comments on Cosmos' question about capital outlay at Scorias this year. We'll likely be a bit under Cosmos. Certainly, mobilization and getting the owner's team together follows the other adjustments in schedule. And we had some pre-construction activities that were planned. and some modest construction work that we were to get going with this year, but that all kind of times with the owner's team and, you know, preparing to be able to execute. So, you know, we can still see some of that done as we move further into Q3 and into Q4, but we'll, you know, we'll provide more information, you know, another month, six weeks down the road.
spk04: Great. And then maybe just one last question here as we wrap up the discussion in Greece. Joe, as you talked about, as you engage all these different stakeholders in Greece, any concerns about potential strike risk or labor risk? And then the second part of my question is, for Sirius, what are you assuming right now in terms of labor productivity? Are you currently assuming current level of Olympia's productivity? or have you factored in some upside to it?
spk05: So on the first question, there's always a risk, but we're confident at least at this point that we'll find workable solutions with our labor partners regarding ongoing work slowdowns and potential work stoppage. That is a focus as we move through this quarter. You know, as far as the kind of the mine productivities and that kind of information or that kind of transfer that comes over, it's kind of apples and oranges. You know, even the underground work at Scorius is quite different than that at Olympias. So they're not directly transferable, but we are in that kind of, you know, globally competitive area. type productivities for planting Ascurias and both in pit and underground. But we're not at all, you know, kind of on the far optimistic side. We're kind of middle of the road.
spk04: Of course. Thank you. That's all the questions I have.
spk07: I might just add some supplementary comments. So, I mean, Overall, as Joe mentioned, we're aiming at kind of globally average productivity rates for mines similar to Olympia's. And as always, including all of us on the call, when you need to change, sometimes it's not easy and it doesn't feel comfortable. So we're working through those issues with labor. I can tell you, though, that we're all aligned. Our communities, our workforce, everybody wants these assets to be successful, to be profitable. and have success over the next couple of decades with the assets based on the current reserves. And so we've got great alignment there. And in the end, we all understand that we need to deliver on the transformation. We need to attract the financing for series. And with all of that, all of our stakeholders are going to benefit greatly. So I focus on those positives. We recognize there'll be some bumps along the road with changes. There always is. But we remain confident we're going to deliver on this.
spk04: Great. Thanks, George. And I totally agree with you. And thanks again for answering all my questions and have a good weekend.
spk07: Thank you.
spk03: The next question comes from Josh Wolfson with RBC Capital Markets. Please go ahead.
spk01: Thank you. I noted the commentary earlier on the call about the plan to submit an updated EIA in the fourth quarter. This, and forgive me, excuse me if I'm sort of mistaken on this, that seems to be a new development because I was under the impression I think you had sort of already received the amended EIA. So what is this sort of incremental step in the process?
spk07: Thanks, Josh, for the question. So no, this isn't a new expectation or requirement. So we did earlier this year get a modification to the prior EIA to enable us to deploy dry stack tailings at scurries. And as we've discussed frequently, that's a massive improvement in project scope and risk reduction and in environmental performance. What we've always said is that at the current permitted production rate at Olympias, it's a two-step process, as Joe mentioned. And so the first step, we're focused on driving productivity and efficiencies up. But to get to the expanded potential throughput, we need a revision to the EIA. And so we've been working on this modification with regulators and engineering firms for around a year now. And we'll be submitting that revision. And essentially what it is, we're going to be moving more tons out of the underground than the existing EIA anticipated and processing it through the plant and then delivering the tailings to the Coconolicus extremely high quality tailings disposal facility as dry stack tailings. So we're just increasing volumes. And all that has to be engineered and modeled and walked through the normal permitting process. So this was always in the plan as part of our five-year guidance and our five-year plan, and we're on schedule to deliver it this year and expect approvals next year.
spk01: Okay. So just so I understand this, so the EIA is for Cassandra overall, but the real only changes are related to Olympias.
spk07: Yeah, well, beyond Olympias, the other thing we've mentioned, we use the Stratoni facility, which is a port to export the Olympias concentrates, at least a portion of them currently. And so, you know, some of the concentrates coming out of the Olympias mill end up being bagged and trucked to Thessaloniki, where it's then shipped to customers. A portion of the Olympias concentrate goes to that Stratoni port right at our operation. obviously at a much lower cost. And then our kind of immaterial base metal mine, from a financial perspective, Mavis Petrus, we also ship the concentrate from that mine out of the Strattoni port. So with this EIA, our plan is to upgrade that port, modernize it, improve its environmental controls, but at the same time set it up that we can ship all concentrate from Olympias directly out of that port, reducing our freight costs. So this EIA is mainly about the Olympia's expansion in mine production and plant throughput, but it also supports this modernization of Scrotoni. So that is, and maybe I wasn't clear, the Cassandra Mines has a single EIA, and it's been that way from the beginning. And under that EIA, we have operations and projects. So it's a stage approach, and we're on schedule as planned to deliver on that
spk01: For Olympias, the plan to submit a study for processing the refractory by 2023, should we think about this as the equivalent or maybe the same as the old study for the flash smelter or is this going to be a new type of study?
spk07: No, it's a new study. So, you know, our business plan, we're committed to completing the construction on scurries, expanding Olympias, and modernizing the Stratoni port. So I call that our base business plan. Now, if you look at our guidance, what you see in our guidance is simply the expansion of Olympias. And for now, we don't have scurries in our five-year production and cost guidance simply because We need to finish the engineering and walk it through our capital allocation process and ultimately seek financing and management and board approval to proceed. So, I mean, that's where we stand with our production guidance and our permitting. I've lost my train of thought. Now, if you could repeat your question.
spk01: Oh, yeah. This was sort of related to the processing plans for the refractory or... Yeah, so that's really not built into our base plan.
spk07: What we're saying here is that we're looking at other alternatives other than flash melting that might be economic and a good investment to improve the value of Olympias. And so, I mean, one option would be... And one that's commonly used for these types of ores would be pressure oxidation and leaching. And with that, we could produce a dore of gold in country. We'd still be shipping out the lead and zinc concentrate in that scenario. So that's just one alternative. We're taking a fresh look at technology, but it's not smelting. It's other alternatives.
spk01: Okay, so I guess the wording on that, you know, making it, you sort of committed to providing a proposal on this processing plant for Olympias. You know, should we understand this as part of, you know, requirement in developing these assets?
spk07: Yeah, I mean, like for every country, you know, there's a desire to maximize value out of the natural resources that are being produced. to benefit the country as much as possible. So Greece is like every other country. They'd like to see as much of the work done in country. And so in our new investment agreement that was signed and ratified by Parliament and now is law, we've committed to just do the study work. We won't proceed on another technology for further processing of the Olympia's gold pyrite concentrate unless we find an economic solution. And assuming both government and us are comfortable with that investment opportunity and the permitting that would go with it, there would obviously be public consultation. So there's no requirement to execute the plan. There's a commitment and a requirement for us to evaluate and assess alternatives and then to work with government on whether or not we might proceed with those. So hopefully that's clear.
spk01: Okay, and I'll try to limit this to maybe just one more question. The commentary on some of the additional work that was done for the LMAAC tailings, what sort of thinking should we have in terms of the takeaway recommendations that are upcoming?
spk07: Joe, do you want to take that one?
spk05: You know, so what we have done is essentially review the plan thoroughly and de-risk it. I don't think we see too much different than prior. We're continuing with the Sigma tailings lift on schedule this summer. And we're looking at the tailings facility reacquired with QMX to make certain that it is maintaining at reasonable standard. as well as the Lamarck tailings. And we don't expect anything material at this point. And we're potentially looking at either of those facilities for optimization as we continue work on potential for in-pit going forward. So all we've really done is had a good, solid look at current plan and work to de-risk that plan.
spk07: I might just supplement that answer as well. I mean, Obviously, there's been a major focus on the way our industry manages tailings. And I think Eldorado is positioned significantly better than most companies with our deployment of dry stack tailings disposal, both in our operations and in our future projects, as well as underground cemented paste backfill. And so I think we're way better than average in terms of the way we manage tailings. But we're also looking at our historical sites that we've inherited and how we improve and manage those historic facilities. As Joe mentioned, we've got, you know, a long runway of exploration opportunities that are expanding the mock property post the QMX acquisition in Q2. And so we're just trying to be, you know, strategic about the alternatives for long-term tailing disposal with an appetite of extended mine lives and hopefully higher production rates. So, you know, With success there, we're going to have to have more tailings capacity and we're assessing those alternatives and trying to deploy the best available technologies. Right now, our Sigma tailings facility is the only conventional tailings disposal we have in our operating company. We want to move that to improved tailings management standards. We've been working on this for a couple of years, continue to work on it, and with the focus that we're expecting to grow our business there, so we're going to need more tailings capacity. Okay.
spk01: Thank you very much.
spk07: Thanks, Josh.
spk03: Once again, if you have a question, please press star, then one. The next question comes from Tanya Yakuskanik from Scotiabank. Please go ahead.
spk00: Hello, everyone, and thank you for taking my call. I just wanted to come back to just inflation, and I'm going to start first on the inflationary pressures you're seeing in your cost structure before I get to capital. So can I just start with the inflationary inputs into your cost structure in terms of labor, consumables, given energies is an easier one to understand. But of your labor and consumables, can you go through the jurisdictions you operate in and what you're seeing?
spk07: Sure. I mean, starting with Turkey, Turkey's economy is dealing with some pretty significant inflationary pressure. And we're seeing that in our costs from a Turkish literate perspective. But as we've seen in prior inflationary periods in Turkey, the U.S. dollar exchange rate with Lira ends up washing away that effect. So if anything, we're probably seeing a slight benefit in Turkey overall when you look at it from a U.S. dollar perspective. In Canada, the opposite is true to some degree. We've seen, like everybody's seen, the price of copper is up. So if you're buying anything with copper in it, it's going to be a little bit more expensive. You've got the normal labor rates pushing prices up on everything. But I'd say, again, no significant impact that we can measure in our current cost, other than diesel's up a bit and some of these inputs are up slightly. I think the bigger issue with our Canadian operation is just the negative headwind on FX exchange rate to the U.S. dollar. So that's put some pressure on the MOC. In Greece, the exchange rates have been a bit of an issue there. Our inflation rate in Greece has not been that high, although those same input costs are obviously having some impact. So I would tell you overall, if you look at our results through mid-year, we're not seeing a material impact from inflation. But I can say we are concerned about it. other projects that have announced recent capital increases. We don't have any indication yet on our scurries update. We're in the middle of that. And as Joe mentioned, internally we'll be seeing some numbers in Q3. And as we work through those and finalize it, we'll update the market in Q4. But, you know, the things I can speak to, diesel is definitely up from where it was for us. We only have one open pit mine, and that's usually where there's the most impact, and that's Kisada. It's not a high strip ratio mine, so a modest impact. And the rest of our operations are underground. So, yeah, diesel prices are up, but not that material. And then in terms of the overall project at Kisada, most of the major equipment is in place. We've got to buy the filters and all the equipment that will go with running that. We've got to purchase the building. We've got to construct the primary crusher. There's still all the wiring and instrumentation in the flotation plant needs to be completed. So copper prices are up. There's going to be an impact there. There's lots of underground development to be done. So impacts on steel will have some impact on ground support and other normal infrastructure and underground mine. We have the rock dam that will sit at the bottom of the dry stack tailings facility as erosion control barrier. So there's haulage from the open pit waste down into that valley. So some minor impacts. We'll have a lot better idea of the inflationary impact on scurries once we get this feasibility study done, and we'll update the market there. You know, yeah, is there pressure? For sure there's some. Can I quantify it with our existing results? Not very well, Tanya. I think, you know, again, we're on track to deliver on our guidance for the year, so I'd say nothing abnormal, but for sure global inflationary pressure is out there, and every jurisdiction is a bit different, and we're continuing to monitor it.
spk00: That's why I'm asking more specifically in your jurisdiction, because every jurisdiction is different. I just wanted to confirm that you've mentioned obviously copper, you've mentioned diesel, of course, you've mentioned steel. Can I just ask specifically for your operations, are you seeing any pressure on explosives and or cyanide? You've mentioned labor. I'm just kind of wondering, you know, forget the effects impact that's, you know, offsetting it, but generally what are you seeing labor inflation at? So just the cyanide...
spk07: In terms of inflation, general inflation is over 20%. But again, we've seen these high inflationary periods, and the FX rate is adjusted for that reality in-country, and we're seeing that again. So overall, it washes away in terms of our U.S. dollar cost. I'm going to let Joe jump in here. He probably has better detail than I can speak to, but The only place I know we've had some issues with COVID in Quebec, there was some issues earlier in the year of moving materials out of Ontario. So the border was restricted at some point. We had to go to some alternative suppliers. There's some minor delays, but none of that really impacted our production profile. And as far as I know, an immaterial impact on our cost structure so far. So Those are my thoughts, Joe. If you've got anything you can add, jump in here.
spk05: Sure, George. Tonya, to a couple of the specific questions you asked around cyanide, explosives, no material or significant change to this point. As George mentioned, energy prices are up slightly. As far as labor goes, we're Net or better in Turkey, you know, modest pressure in Greece and modest pressure in Lamarck and maybe a little more significant in Lamarck based on just a lot of activity in the area. So it's twofold effects plus, you know, the amount of activity in the area. We're not, at this point, at least projecting significant labor cost change going forward. We'll continue to review it, but at present, we're holding to standard historic inflation rates.
spk00: Okay. And maybe if I could leave off this and move back to Olympias. In your commentary, you talked about this transformational effort that you're doing and trying to minimize some of the risks within this. Can you just talk to us what you see are the risks in this transformational change that you're undergoing?
spk05: Well, certainly, I think it always, when you go through a change like this, it's the duration it takes to make the changes. As George stated in his comments, you know, we're confident we'll get through it and see ourselves as a you know, a more productive operator on the other side. And it's really a matter of, you know, how long does that take? And we're a bit encouraged. You know, we're seeing progress in, you know, blasting practices and results already. We're seeing, you know, a bit of progress in, you know, shift duration around, you know, first and last trucks as they get in and out of the mine. You know, we're coupled with that with Olympia's that we have, you know, been at a bit of a development deficit or at least, you know, certainly haven't progressed it greatly. So according to plan, so we're kind of facing two issues. One is, you know, lack of faces and work areas at the same time that we're working to increase development. productivity. And so those things kind of go hand in hand and it's just a matter of how long does it take? And, you know, we think we'll see a, you know, kind of a turning point or bottoming as we move through Q3. And, you know, we're planning and our plans are for, you know, seeing increased or improved numbers as we head into 2022 and value creation on the back of that. As far as the risk mitigation and that side of it, we certainly have open and transparent communications ongoing with our labor partners. As I mentioned during the discussion, we are meeting biweekly basis with the union presidents on how things are going relative to key performance indicators and metrics. And we also have several improvement teams that go from minor on up through kind of superintendent level working together on solutions. So we're really positive about all that. But it does take time.
spk07: Maybe a couple of supplementary comments on this topic. So, you know, we went through a pretty difficult period a couple of years ago with the last government and delayed permits and putting scurries in care and maintenance, and all that was a headwind. And I can tell you our labor workforce union leadership were in full support of us getting through those difficult times and been in full support of the revised business plan and setting us up to be able to grow our business there. So we've got strong community and labor support on that. Change is never easy on any of us. And we're working our way through the changes that are going to make these mines profitable and material assets for the company. And again, as I said, I'm confident about that. And beyond how we're mitigating the risk of working through change, I mean, one of them is training. So we're working on a new training facility that will support some of this transformation or existing operations and support the training and development of a new workforce that we're going to need to bring scurries into operation. So here again, we're going to have alignment. We've put a board together for this training center. The union's got a representative to help us design this and build the systems to support it to bring success. So I just want to put an optimistic tone on this, even though the reality is working through change is never easy, and remain confident we'll get through all that. You're going to see some pretty good numbers next year.
spk00: And maybe just my final question on this, because you mentioned getting the appropriate leadership in place to get all of this going. Do you have the leadership? Do you have the right people in place to do this for you?
spk05: Yes. Tanya, this is Joe. We're confident that we do have the right leadership in place around the transformation. We're looking forward to you know, some more, call it, you know, resource sharing across Eldorado and, you know, kind of short-term assignments and subject matter expert help. But we're confident around the transformation resources that we have. You know, we think it's important that we work through this, you know, as a team and as Eldorado. When I was talking earlier about leadership, I was talking more about the owner's team for Scurrius that we are now in selection process on.
spk00: Okay. Okay, great. Thank you.
spk07: Thanks, Tanya.
spk03: That is all the time we have for today, and this concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
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