This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: Good day, my name is Michelle and I will be your conference operator today. At this time, I would like to welcome everyone to the AYA Gold and Silver second quarter 2023 results conference call. All lines are being 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 2. Thank you. Ms. Ruth Hanna, you may begin your conference.
spk10: Thank you, operator. Good morning, everyone, and welcome to AYA's second quarter 2023 results conference call. My name is Ruth Hanna, and I'm the Investor Relations and Communications Manager, dialing in with some of the AYA team from Montreal and Morocco this morning. On the call today, we have Benoit Lassalle, President and Chief Executive Officer, Hugo Landry-Tolsouk, Chief Financial Officer, Raphael Boudouin, Vice President, Operations, and David Lalande, Head of Exploration. We'll finish today's event with a Q&A session with the team. Please contact our IR team directly with any follow-up questions that are not addressed during the call. Before we begin, I'd like to remind listeners that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward-looking statements are contained in our August 11th news release, as well as on CEDAR Plus and on our website. With that, I'd like to turn the conference over to IAEA's President and CEO, Benoit La Salle.
spk04: Benoit, please go ahead. Thank you. Thank you, Ruth. Good morning, everyone. Welcome to the AYA Q2 conference call. We had an excellent quarter. Q2 was an excellent quarter. We have given you a presentation that summarizes the results which you have for this call. I would ask you to go to slide number three. On slide number three, we have highlights of operation. In Q2 2023, we produced 526,703 ounces of silver, which is clearly for us above budget. It was a very good quarter. It's the second highest quarterly production after Q4 of 2022. Our cash cost was at 1098 per ounce sold. We generated $9.6 million in revenue and $3.7 million in cash flow. And we also closed the quarter with $52 million in cash and cash equivalent. So very good quarter, very good cash position, strong financial position. The growth pipeline, we have progressed this Gounder expansion to 45% completion. As you see regularly with our videos, the construction is going very well, and we will keep updating you regularly. The extended Boumadine open-end strike to 3.8 km, that was also disclosed this quarter in a press release. And we've also discovered a new at-surface northwest mineralized zone, which we will review later. Also, for some of you who have questions, David Lalonde is on the call with us from Marrakech. So you will be able to ask questions to him directly. We also had some...
spk05: in their regional plate.
spk04: In the quarter, we've acquired seven permits, the Tirzit Copper, the historical Tirzit Copper Mine, and 67.7 square kilometers property. Just for a bit of history, in 2020, when we started reviewing the assets of uh of aya and we had those who their assets we had identified those and these permits when we've identified them belong to a family we were able to acquire them in the q2 of 2023 which came after three years of us looking at those permits as being complementary to and positioned in a very strong geological potential area. The few things at the AGM in the quarter, we've increased the board diversity. We have now more than a third female representation on the board, which is aligned with Glass-Lewis. We've also disclosed a lot of our ESG program, and we've had our ESG report that was published. Going to slide number four on our presentation, that's quite telling. You have a summary of Q2 and year to date, and it's quite interesting to see that with 526,000 ounces of silver production, we are now at a year to date of over a million ounces compared to our guidance of 1.7 to 1.9. So we maintain the guidance for the time being at 1.7 to 1.9, knowing that as of now, we're at 1 million ounces. The cash cost was excellent in Q2. It was good as well in Q1. So the average cash cost so far for the year It's 1287. Our guidance was 1440. So we're a bit ahead of our guidance, which is something that we understand quite well. It's all a function of definition drilling and being more efficient at site. The average grade is aligned with the reserve model. Q2 was at 265. For up to now, we're around 250. The guidance was at 264. You recall that, you know, the deposit has these very high grade pockets that we hit in Q4 of last year. So right now, it's more the grade is steady. But the important thing is we've also been adding to the stockpile, which we did not have historically. Now we're mining more than we're processing, and that's quite important. The two plants, you know, have good recoveries. So the average meal recovery is at 87%. The guidance was at 86%. So we're doing quite well. The availability, which you don't have on page four, but the availability is in the MDNA for the two plants, it was at 95%. So that was really, really excellent. So the quarterly production is expected to remain steady throughout the year. And based on our mine plan, we should even have better grade going forward. Cash costs are expected to remain stable. And the exploration budget, of course, is something that will be coming back to you shortly as we are getting very, very good results at Zgounder and at Boumadine. Just as slide number five, it's interesting to see the bar charts. The top left one shows the production. And as you can see, except for Q4, which was, you recall, an excellent quarter due to very, very high grade, this is our second best quarter at 526,000 ounces. So it's very good. The grade you see below on the left-hand side below the production, is steady and it is where it should be around 250, 260. So it's really where it should be. The recovery is on the right-hand side at the top, again, except for Q4, which was a normal quarter. If you look at the recoveries at 87%, that's really aligned with where we want it to be. And the oil process at 72,000 tons, it's the second highest. And actually, we are right now around 800% a ton a day with a design capacity of 700 ton a day. So, you know, in the industry, we always say you have about a 15% potential to go higher than the design capacity while we are 15% above the design capacity right now of the two existing plants. And that's why we're building a third plant right now. Slide number six. On a cash flow basis, top left You see at 3.7 is again aligned with where we need to be. Of course, it's affected by sale. And, you know, currently, as you know, we have approximately half of our production is concentrate and half is ingot. The concentrate, it's a bit more difficult on the timing of the sale because the timing of the sale is when it reached destination, so based on transport. So we don't always, you know, we don't, not always, we don't control the timing of the sale on the concentrate. We do on the ingots, but not on the concentrate. So that has a direct effect, obviously, on our revenue, which has then a direct effect on the financial statements. The gross margin at 2.8 million during the quarter is good. It's aligned with where, you know, based on our cash costs where it should be. Cost of sales at 6.9 million. Cost of sales at 6.9 million is a little high. We have been acquiring a lot of equipment for the plant expansion. We've been hiring more people. And as we indicated in the previous quarter, This is not a business as usual. This is business going into a very large expansion. So you have amortization is more than what it should be because we have more trucks than we should have. We have more employees. So yes, it's a very, very good quarter. It's a very good cash cost. But also remember that we're getting ready to quadruple the production this time next year. So, you know, we don't hire all the people a week before we get going. So we know we're a little bit overstaffed, over-equipped, and all of that, but we understand this. The cash cost was excellent at $10.98. One of the reasons why it's a little bit lower is there was less definition drilling. We had done quite a bit of definition drilling at the beginning, and we were ahead of the curve on that. So we have a good cash cost at $10.98. Moving to slide number seven and on the sustainability. Again, look, to me, that is pretty straightforward. We have a $100 million ESG loan with EBRD. We follow some very strict guidelines with them, which we're very happy to have. We had them on site in July. They came, which is part of the process of the loan agreement that we have. And we went through with, you know, we have obtained a pass, which is what we need to obtain. So everything is aligned correctly. So you have a major effort that's been put in health and safety, major effort, which we now are pleased to say that we're becoming international standard We've also put in a mine rescue plan, which did not exist when we arrived. Now we have a mine rescue plan, which is very important, and that's coming along very well. The other important aspect is scope two emission. You recall that we have a power line that's being built at the moment, which will bring green energy to site for the new plant expansion and for all of the equipment that we have. So that is going extremely well. Any question on that, you have Hugo and Raphael with us today. But that power line is coming along very, very well. The task force on climate-related financial disclosure is about 70% completed. This is something that we're doing with EBRD as well. And the environmental and social action plan is 31% completed. But that's also something that we follow closely, which is part of our ESG financing. So we are in a very good position and locally things are going very well. We have local cooperation. This is a very important project in the country and in the region where we are. And we also have, as you saw, mobile clinic on different health topics. And we have a great success with all of this. Slide number eight is, of course, it's just a picture. I know you've all seen the videos that we circulate about once a month, and it's going very well. The construction that you're seeing here is where we are as of the end of the quarter, but the construction is going quite well. On slide number nine, you see that we have the percentage of completion For the process plant, we're at 40%. The underground and open pit mining at 47%. You saw pictures in the video of the open pit mining, all the drilling that occurred there. Tailings, you also see that at 55%. Water management at 74%. Electrical infrastructure, that's the new power line that's being built right now at 27%. And on-site infrastructure at 55%. Look, globally, as Raphael will tell you, on time and on budget, we are 90% committed on our costs and we are on budget. And, you know, and then now we're getting into the erection part of the program, which is, you know, where it's something that we're going to follow closely. A couple of pictures on page 10 of the leach tanks, the ore silos, and then a view of the water management system. As we all know, water is key to mining. Water is key to Morocco. We're lucky that we have mountains around us that are up to 4,000 meters high that bring in water from snow melting and from the rainfall. So we will be capturing, we need to capture less than 1% of the water that runs by our territory, less than 1% to have water for the full year. On page 11 is our portfolio of assets. The Atlas Fault in Morocco. Morocco is becoming an extremely busy part of the world right now in mining, in industrial construction, in automobile, in batteries. I'm sure you see a lot of news flow coming out of Morocco these days. So we have a very good portfolio after ManageM. This is the second portfolio in the country. Of course, not taking into account the phosphate. We have, you know, Zgunder and we keep acquiring ground around Zgunder. We have Tirzit that we've just acquired. We have Boumadine, and we are also there looking to acquire additional ground at Boumadine. And we have exploration going on at all of our projects, secondaire Boumadine. Of course, not at Azégor and Amisbiz right now, but we will, you know, these are assets that we maintain in the portfolio. So on slide 12, you just have something you've seen many, many times. is the mine, the Gounder mine. We need to drill all the way down to the granite and we need to extend it to the east. We are accelerating this drilling as we speak and the reason is because we needed to complete the development of the level 1950 and 1925. And in order to start drilling, not from the top of the mountain, but from a gallery that has been developed, which is now in place, and we are drilling now extensively, trying to go all the way down to the granite. And so this hasn't changed. It's continuing, and we keep drilling. So there will be lots of drill results from now until the end of the year, coming from Zgounder, the main zones. On slide 13, it's the regional Zgounder, what we call Zgounder Regional. There's ongoing drilling there. We've done 8,000 meters so far. There's more coming. And we have many targets. David has seen some structures. He's seen some silver, gold, copper grades and vein mineralization. So this is an ongoing process. We are also working on Zgounder West. There's also potential on Zgounder East and South. And so it's an ongoing process. It's something that we will, you know, spend a lot of time because for us, the best discovery possible is another Zgounder. And we know that that's something that we're looking for on top of increasing the Zgounder main zone. So that's page 13. On page 14, that takes us to Boumadine. Now, as of the end of the quarter, we were at 20,000 meters approximately of drilling done. If I'm not mistaken, I say 20, but now we're all done. So now, as of now, we're 36,000 meters done. We're waiting for results. We should be getting most of them in the next few weeks. There will be a press release summarizing the drill program and the drill campaign before we all go to Beaver Creek. And that's something that, you know, we will be putting together. We've had very good results in Q2 that we've put out 192 gram per ton over 129 meters and many that I, you know, I won't repeat them. You have them on slide 14 and you've seen them. So all in all, Boumadine is now 3.8 kilometer long. So very impressive. You see it on page 15 as well on the longitudinal section is it has roots. So we've tested it down to 600 meters, but it's clearly, you know, a strong system. So on 3.8 kilometer. And what's really important, as you see on page 16, and you see the structures that are in echelon, is to the north in pink, purple, you see that there is a new structure. That's what we call the cross-section north 70, which is where we've seen a silver mineralization crossing the main structure. So obviously, the permits to the north of this becomes important, and we are in discussion with the state on that. the permit to the south, and all of what you're seeing here requires additional drilling. But we've drilled the whole program, 36,000 meters. It's been, as you saw, very, very good. We'll have more results in a couple of weeks. And that permit and that project is a key asset of AYA and will continue to be. On page 17, On page 17, you have the location of the new permit of Tirzit. So you have our Zgunder permit at the top. You see then, we see the Zgunder mine. You see the boxes around or the permits around. And look, every time you see that, you know, pink color is the granite. And always close to the granite, touching the granite, is where we have the mine located. and it's where we see the anomalies. And to the north, that's where we also get results. And if you look to the west on those permits, they are showing very good anomalies there to the west as well. And that's why in 2020, we had identified the Tirzip permit as being extremely interesting because they were also touching the granite But south of the Granite, we're like north and east and west as well because we cover so much ground. And we like those permits quite a lot. So we've just obtained them. Elias and the team are completing the transfer of ownership. David is gathering the data. They did the geophysics. They did some work. They did the drilling. There's about 50 drill holes. They had intercept up to 3.5% copper, and they also had, you know, silver anomalies. So it's a very interesting group of permits. We just, again, we're starting. We don't even have all the data yet, but it's a very interesting group of permits. So that was acquired in Q2, and it's part of our – you know, of our results for the period. So on page 18, you just have a summary of what we've done, you know, good silver production and, you know, and meeting cost guidance and meeting production guidance. You have the plant expansion, the 2,700 ton per day plant expansion. That's going very, very well. Actually, you know, the start of the construction of the TSF is starting Q1. You see the progress in the videos. It's going very well. We've completed the detail engineering. We're receiving the ball mitt in Q2. If some of you saw... our Twitter account or our LinkedIn account, you saw a picture of the ball mills coming in on the deck of a ship being shipped over to Morocco. So we're awaiting them at the port and we'll bring them up to site. So it's coming extremely well. As I said, the drilling at Zgounder and Zgounder Regional is ongoing. The drilling at Boumadine as of now is completed. We didn't talk much about Tijerit and Mauritania, but we are completing feasibility. It will be done by the end of August, and then we will see how to maximize value on this project. And in the second half, then, of the year, we will launch fieldwork on Tijerit, of course, and we'll continue the exploration on all of our other assets. So that completes the official, I would say, portion of the presentation. Again, you have Hugo, you have Elias who's with us, you have David Lalonde and Raphael. Any questions specific to the operation, we will answer with great pleasure. Operator, back to you.
spk02: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request. Should you wish to remove yourself from the queue, please press star too. If you're using a speakerphone, please lift the hands up before pressing any keys. One moment, please, for your first question. The first question comes from Justin Chen of SCP Resources Finance. Please go ahead.
spk09: Salut, Benoit and team. Congrats on another great quarter. I guess my first question is just regarding the second half of the year and your overall CapEx plans. Is it right in doing the math from today that you have roughly $105 million left in your budget to spend? And I'm just curious how much you think is this year versus how much is next year?
spk07: Hi, Justin. You're talking more about our capex for construction, I'm assuming?
spk09: Yes.
spk07: Yeah. So, of course, at the beginning of the project, it's a lot of deposits and civil work and earthworks. So, I think today, right now, in our budget, we'll have about half of that that will be done this year and about half that will be done next year.
spk09: Okay, got you. Okay, that makes sense. Thanks for that. And then just on, I guess your expectations on grade for the rest of the year, you expect something pretty similar to this quarter, which I think would imply that you're going to beat guidance as you normally do, but I'm just maybe asking the question to confirm what you think.
spk03: Hi, this is Raphael speaking. So for the grade, we need to understand that we are mining right now about 50% higher mining rate than we are milling rate. So we are stockpiling and we are processing. For commissioning next year, we need ore, and we certainly won't pass the best ore we need to for commissioning the plant. So to answer your question, we're mining at around 230 gram per ton right now, but we are milling around 250, and we're stockpiling a bit lower grade. So we do expect to continue processing this slightly higher grade of the mill than we stockpile for the rest of the year. Guidance remains the same. We need to do a bit of maintenance at the end of the year. We want to make sure that we do guidance, that we do our stockpile, that we are ready for next year. So we don't expect much change. We don't expect any change in our strategy, so head grades should remain similar.
spk09: Gotcha. Thanks. Just on Tijeret in Mauritania, I guess, what are your current thoughts on that? I suppose we'll know more when the DFS comes out. But strategically, do you see it as a project within AYA or perhaps maybe a standalone opportunity? Just curious how you view that right now.
spk04: Well, we're finishing, Justin, we're finishing the feasibility. That will be done for the end of August. You will see some drill results in the next few days, because we did 25,000 meters, so obviously we had a lot of results. The feasibility will be done at the end of August, and then we'll make a decision. Look, it's a robust project. It's good grade. We know that it's a grade... around 3.54 gram per ton it's open pit it's easy it's it's it's close by to tasia so it's it's an easy project so it's a project that's easy to do uh is it part of our main strategy no it's not because you know we want to focus in morocco but we have it we we you know it's something that we've known for many years we uh we will decide in in in in september how we approach this. That project is going to get built. Is it by us, by somebody else? I mean, we don't have an answer yet, but we'll maximize the value for our shareholders. It's a very nice asset, but it'd probably be best fit with a pure play, gold play. But again, this market is this market. We don't know where we're going to be with it. So we'll make a decision, but it is a nice asset. I mean, it's got a, you know, a good, and a lot of a potential in geology. So again, it's part of, you know, it's a small asset for us. It's a little bit like, you know, and the other assets that we have, which we're not spending a lot of time on, but this one is, it's baked. It's ready to go to construction in three months, two months.
spk09: Gotcha. Well, it sounds very good. We look forward to those results. Thanks, guys. I'll free up the line, but congratulations again on being where you normally are mid-year, which is above your guidance rate and below your cost looking down at it. Cheers.
spk05: Thank you, Justin. Thank you. Thank you.
spk02: Thank you. The next question comes from Eleanor Medzinski from SCP Resource Finance. Please go ahead.
spk11: Hi Benoit and team, great work this past quarter. I have a bit more detailed questions kind of on the mining side of things. The first question I was just wondering is how many jumbos you currently have operating?
spk03: Okay, so we currently have four jumbos on site. That being said, we operate full-time two of them. The two other are either on support, support work. One thing we need to understand here is that we are on ramp-up, so there is a bit of a... There's a bit of a sequencing between the equipment we receive and how the mining rate follows. So we want to make sure we have enough equipment on site to sustain that mining rate. So right now we have two jumbles in operation and two in standby that will be put to work towards the end of the year and early next year.
spk11: Okay, great. And then do you also have some jack leg headings as well for your developments?
spk03: No, we use jackleg for definition drilling punctually, but we do not have any stoves that are operated with jackleg.
spk11: Okay, great. And then the second question is about raising, so just for vertical development. Just curious what was, I guess, what was developed in Q1 versus Q2, and if it's primarily to do with, you know, oar passes and waist passes, or ventilation or kind of a combination of both?
spk03: Sure. In this project, we have four rays. We have four rays on our plan. The first one we did, and we finished it in Q1, commissioned it in Q2, is the ventilation rays. So we are installing our primary ventilation, so that was the first ray. We have two other rays that we are working on, one for waste and one for ore. Or vice versa, we can interchange them. And finally, the fourth raise will be a ventilation raise also for the sub-levels, lower than level 2000. So we're about halfway through our vertical development, but the pace continues to improve, and now we are cruising. So to answer your question, we have four raises in this project, two for ventilation, two for ore and waste.
spk11: Okay, great. And is it a combination of Alamak and drop raising?
spk03: Only Alamak.
spk11: Only Alamak. Okay. Okay, great. Yeah, your rates are pretty great, especially considering it's Alamak. So it's good to see. That's all the questions I had. Thank you very much.
spk05: Thank you.
spk02: Thank you. The next question comes from John Skolnik of Desjardins. Please go ahead.
spk08: Yeah, thanks, guys. Yeah, I'm going to go back on the detail a little bit here, but a very good quarter and an impressive cash cost, obviously tracking well below guidance. With you leaving guidance in place, do you think that kind of back half of the year cash costs are going to be above the guidance level or just above kind of year-to-date numbers so far?
spk07: Hi John, this is Hugo. Listen, we try to do our best on cash costs every quarter. There is a little bit of stuff associated to mining that's gotten pushed to mining costs and some development and some ground support that's gotten pushed a little bit into the second half. And so for now, we're not changing guidance on costs, but obviously it's the target we try to beat.
spk08: Fair enough, and a very diplomatic answer. On the exploration budget, I know you kind of touched on it and alluded to it maybe going up back half of the year. Schooner construction still on budget, and on my numbers, it looks like you'll have a bit of a cash buffer. Just kind of wondering if you can provide a bit of colour on kind of what buffer you'd like to have there as you're ramping up Schooner and kind of how you see that exploration budget tracking in that light.
spk07: Yeah, so far, I think Benoit mentioned, right, at Boumadine, we've basically done the meters that we want to do or that we had budgeted for the year. And so we're kind of waiting on some results and some feedback for David here. And then we'll see what we want to do with the budget associated to that. On Zgoundaie, we've done the majority of our surface drilling. Now we're really focused on a lot of the drilling that had to be done from underground drilling. We have two drills operating now and a few others coming in here towards the end of the month. So we're on track in terms of budget and in terms of meters we want to do and the cost associated to that. And same thing with regional. We're pretty much on track of where we want to be. We're a little bit ahead of what we had budgeted with RC drilling to define the open pit. We finished that basically six months early of what we had budgeted. So that's pretty much completed. And so for exploration, I say right now we're on budget on what we want to do. We'll see what we do going forward here. That was always our plan, right? Kind of do the first half year, go all out with what we could, kind of look at our results and make a decision from there. And so we're there now. And on construction, We're on budget. I think Justin had a question about that. We have about half the amount to spend of about 100 million that's left or a little bit less than 100 million, about half this year, about half next year. And so anyway, all that money is in and we'll start to see it here. We're going to do our first drawdown of the debt probably towards the end of this month. And so we'll start seeing a more restricted cash on our on our on our balance sheet as per our loan agreement. And so that's kind of put to the side where it's self-contained in restricted cash. And so that's following track. And so in terms of in general what kind of cash buffer we want, Obviously, we monitor when we plan to finish and the ramp-up of the Gundag expansion, but I think we don't want to fall below probably something around $15 million of cash in the bank. But if our geology team comes up with great results and we feel like that's something we should continue to invest in heavily, then we'll have to make decisions moving forward.
spk08: Okay. No, that makes sense. We appreciate that. And last one for me, and not sure if you can provide any details, but just on that MPI, as I recall, you weren't paying it as it didn't seem legit. Just curious kind of what the resolution was, if you can provide any details, and I guess specifically if there was a cash or share component there.
spk04: Yeah, John, absolutely. So the MPI, you remember when we came in, we immediately said that we didn't like it. We didn't think it made any sense at the time. We felt it was... not the right thing to have. And so we went and we started discussion with the former CEO. We were accounting for it, but we never paid it. But we were accounting for it. And in Q2, after months of discussion, we finally came to an agreement with the former CEO whereby we would pay him a portion of what was owed to him, which was even prior to our time. but then also for 2020 and 2021. And so there was a payment made of $1.6 million, which was accounted for. It wasn't the payable. It was there. And we made that payment to the former CEO. And for that, we just, with him, agreed to kill the agreement, the NPL agreement. So it was done with him, and it was, I won't say friendly, because it's a big discussion, but at the end it was, and he agreed that that thing was done at times that was different. And so we paid $1.6 million, which was accounted for in the payables. So the payables are down $1.6 million U.S., and the NPI has been canceled.
spk08: Nice. Okay. Yeah, no, that seems like a win-win. I'm sure he prefers that money than nothing. So, yeah, no, it seems like a good solution. That's it for me for questions. So, yeah, again, congrats on a great quarter, and thanks for taking my questions.
spk05: Thank you.
spk02: Thank you. The next question comes from Stephen Sook of Stifle. Please go ahead.
spk06: Hi, guys. Echo John's sentiment. Great quarter. Great to see everything on track here. Most of my questions have been answered, but I was just wondering if you could provide a little more clarity on the costs here. You know, quite low for Q2, and that's great to see. You mentioned some of the development and ground support work has been pushed in the second half of the year, so I guess we should expect a bit of an uptick. But is there any other, you know, are you starting to recognize efficiencies from the scale-up of the underground mining activities, or any additional color on kind of why those costs were so low quarter over quarter? Thanks.
spk03: So, this is Raphael again here. Like Gil said, we obviously try to do our best every quarter. Indeed, there is a bit of timing thing here. We did not have any mill maintenance shut down this quarter. Very high availability. 95%. That's one thing. Also, we have quite a bit of brand new equipment. We did a lot of maintenance last year. We are in ramp up. We have brand new equipment. Things are going well. Because we mine at the higher rate, we do have the flexibility of putting good ore through the mill. So we benefit from that. Not much more to say than this. This was a particularly good quarter. We do have maintenance to do towards the end of the year and guidance the number we want to beat.
spk06: Perfect. Makes sense. No, I appreciate that. That's it for me. Thanks.
spk05: Thank you.
spk02: Thank you. The next question comes from Don DeMarco of National Financial. Please go ahead.
spk00: Thank you, operator, and good morning, Benoit and team. Just a couple questions here. First off, just focusing on the Gunder construction, I think a previous caller mentioned maybe the remaining capex on the order of about $105 million. Would that be correct in your estimate?
spk05: Yeah, we're a little bit, yeah, about there.
spk00: About there, Don. About there. And if we split that between H2 and H1 next year, you know, I guess it works out to maybe all things equal $26 million a quarter. But just wanted to confirm a few timelines then. Are you expecting first pour, maybe late Q1? And then can I assume commercial production sometime in Q2 next year?
spk07: Are you talking about budget or construction timeline, Don?
spk00: I'm talking about... Zegunder expansion milestones. So, with respect to first tour, would that be tracking late Q1 next year and then commercial production in Q2 sometime? Just trying to think about how to assign the remaining development capex before, say, commercial production.
spk07: Yeah, so kind of our payment milestones and, if you will, the completion milestones, or maybe like they're not exactly perfectly timed. And so probably costs will come a little bit, like as things move forward, especially with the plant, a lot of it is paid, and then there's kind of a retention until commercial production. If you look at the MD&A, we have a simplified Gantt chart that's there. We have some. Right. We have somewhere like first pour kind of late Q1, early Q2 kind of thing, and then commercial production sometime between Q3 and Q4, and then ramp up and commissioning between that. And so we're pretty much sticking to that. That's what we've kind of had from the beginning. That's what we're kind of sticking to right now. There's nothing that really indicates that it'll be different. But payments will be earlier than that because most of the work is going to be done.
spk00: Got it. Okay. Thank you for that. Okay. Just shifting to the operations. I see in Q2 that open pit mining of ore commenced in July. Is that a contributor to the increase in mining rates that we saw in Q2? And looking ahead to Q3, Q4, are you going to expect to see those mining rates really increase as open pit accelerates?
spk03: So, yeah, happy to comment on that. Obviously, we go from 700 tons per day to 2,700 tons per day. This is quite a bit of a step up, and the open pit will be instrumental to succeed that. In 2023, our plan, our objective, is to bring underground mining rate from 700 to 1,200 tons per day, which we achieved. So we're already there, so good news. For the rest of the year, we will focus on bringing up the open pit production to reach half the mining rate, so around 500 tons per day. So indeed, towards Q4, we will see a ramp up in the open pit. Right now, we take our time, we finish definition drilling in Q1 and Q2, and we just started to open up the open pit. So we're taking our time. This is the first open pit at Goundaille. We are making sure to get the dilution right, to get the workbench right. So Q3 will be the start of the open pit. We have maybe 2,000 or 3,000 tonnes. in July and we'll accelerate that most in Q4 to reach 500 tons per day towards the end of the year. And then continue to ramp up next year between underground and open pit to reach our target cruising rate of 2,700. Okay, excellent.
spk00: Thanks so much for that great caller. That's all for me. Good luck on Q3, guys. Thank you. Thank you. Thank you.
spk02: Thank you. Once again, ladies and gentlemen, if you do have a question, please press star 1 at this time. Our next question comes from Puneet Singh, 8 Capital. Please go ahead.
spk01: Great, thanks. Just one on strategy. Quite an extensive land position you got there with Zagunda Regional, and now you make that new acquisition. I just wanted to ask, do you see yourself locking up more land in that area over time, or would you first like to see what you have and then make a decision going forward? Thanks.
spk04: Yeah, Tony, this is Benoit. Look, we always look for ground, always, always, always, because sometimes things have to be renewed and then we can get additional ground around it. It's a function of the results that we're getting. You know, we have permits also to the south east that are also very interesting there. David has been working there and we may look if we, you know, we see better things, we will get additional ground. We're always, always on the lookout because people have slowly started to come in. When we were at Boca Raton two weeks ago at the Rick Rule conference, some people came to me, companies, and said, oh, we're looking into Morocco now. Your numbers are so good that we've got to see if we can get some ground. I mean, they may try, but... I think Morocco is going to get busier. So we're maximizing the real estate. It's got to make sense, obviously, but we're maximizing the real estate. Same at Boumadine. David's got his eyes on a few things and it's normal. And same as Gounder and Tirzit, well, it came, it was an opportunity. But we do look at things in Morocco regularly. People do come to us and, you know, we take a look, we decide yes or no, and David goes and he will visit it. And it's a function of what we see. But we're absolutely open to take more ground. Absolutely.
spk01: Okay, sounds good. Yeah, I think you definitely have an advantage being a first mover there. So, great. Thanks very much.
spk05: Thank you.
spk02: Thank you. There are no further questions. I will turn the call back to Benoit LaSalle for closing remarks.
spk04: Thank you, operator. Thank you for the questions. Thank you very much to all of you present. Again, we had a very good H1, good Q1, good Q2. The The team is, we're fully staffed. We have a fantastic team on site here in Canada. We're, as you know, developing two, three big projects, Gunder, Main Zones, Gunder Regional, Boumadine, and now Tirzit. So we have, you know, a lot of work for the rest of the year. We also have guidance to meet, which we're, you know, we're looking forward to, and we believe that we will maintain that. the guidance that we have and we will be able to meet that. So currently, what we're seeing. So again, thank you very much. It'll be a busy H2 because we have drilling going on extensively at Zgounda and Zgounda Regional. We have Boumadine that has just completed the 36,000 meters. That will be coming out. And obviously, as Hugo indicated, and the team, we will sit down as soon as we have all the information and then make some decisions on additional exploration going forward. Also, we will see many of you at Beaver Creek. We will see some of you in Denver as well, immediately after Beaver Creek. If any of you go to the Denver Broncos game, just make sure to let us know. And we will be there. And so, look, thank you for being there. It's been a great beginning of 2023. And we're looking forward to discussing with you and working with you for the rest of the year. Thank you very much.
spk02: Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
Disclaimer