Aya Gold & Silver Inc.

Good day, and thank you for standing by. Welcome to AYA Gold and Silver's second quarter 2024 results conference call. At this time, all participants are in a listen-only mode. After the CEO's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the call over to Ruth Hanna, Manager, Investor Relations and Communications at AYA. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to AYA's second quarter 2024 results conference call. My name is Ruth Hanna, and I'm dialing in with the AYA team from Montreal and Marrakesh this morning. So on the call today, we have Benoit Lassalle, President and CEO, Hugo Landre-Tolzuc, CFO, Raphael Boudoin, Vice President Operations, and David Lalande, VP Exploration. We will 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 14th news release, as well as on CDOC lists and at www.iasgoldsilver.com. With that, I'd like to turn the conference over to AYA's President and CEO, Bunwale Asal. Benoit, please go ahead.

Thank you, Ruth. Good morning, everyone. Welcome to the Q2 2024 conference call. I'm pleased to present to you a robust quarter in a milestone year. We continue to advance the secondaire mine as per our plan. We are pleased to say that we are on schedule and budget for commercial production in Q4 2024. An important element which is often missed is that we now have stockpile on the run pad of 309,000 tons of ore at the end of this quarter. Our goal originally, we communicated to you that our aim was at 260,000 tons and we have reached almost 310,000 tons to be ready for the ramp up in Q4. We've delivered more typical results that we see from Zgounder. Our production this quarter was 432,000 ounces due to an increase in fresh ore, mainly some coming from the open pit. We generated revenue of 13.7 million US dollars. As a result of Q1 selling of silver concentrated, we had an inventory and also our production. There was no over of inventory from one quarter to the next as we saw in Q1. Our net income is $6.8 million for the quarter, and our total cash cost is $17.85, and I will comment on that on the next page. We have a very strong balance sheet. We closed the quarter with $103 million in cash and cash equivalent. And importantly, we were able to draw down the last $15 million on our EBRD loan for now a total of $100 million. And why I say it's important, because before we can draw down on the EBRD loan, we have to go through full GED with them, due diligence with them. They come to site. The team goes to site. We go through all their KPIs, all their ESG KPIs, and then they authorize the drawdown. I'm pleased to say that as of today, we have drawn down the full amount, the $100 million U.S. dollars. During the quarter, we still have and we continue to have ongoing positive results from our exploration program. We've confirmed high-grade mineralization again at depth. And an important piece of news this morning, we've doubled the drill program at Gounder Main Zone from the originally planned 15,000 meters up to 30,000 meters as we keep hitting, and we have now consumed all of the budget for this year at mid-year. We've extended the Boumadine main trend. You recall we did the resource calculation on 4.2 kilometer. We're now drilled up to 5 kilometer at the end of the quarter. And during the quarter as well, we've acquired seven new permits which we are now up to 18 new permits since we made the discovery. We've identified multiple potential high conductive anomalies to the west and to the south of the Boomadzin main zone. So it's a robust quarter. Again, the highlights of it, 95% completion of the construction. 432,000 ounces of production. It's a 42% increase from the previous quarter, same period last year. 100 million in the bank, U.S. dollar, and we've increased the Gunder drill program by 100% or we've doubled it. That's taking us to page four of the presentation. And we had that discussion in Q1. where, you know, this is as our plan. I mean, we were mining according to our plan. We were processing according to our plan. So it's a steady state production at Zbunder and where we have a summary of the guidance and a summary of the results in Q2 and in H1. And we are confirming to you the guidance is staying intact and it is as part of our plan. So after two quarters, we are at almost 800,000 ounces of production. And we knew that the big production or the more important production was coming in in H2, Q3, and mainly in Q4 as we're going to be, you know, kicking in with the new plants. The cash cost was higher in Q1. It was $20. We told you it would come down in Q2 at $17. And we're maintaining our guidance for the end of the year because we know that we're heading into, you know, better grade and better recoveries for the end of the year. So the average grade for Q2 was 196. You recall the average grade for Q1 was 173, and we said it at the time that Q1, Q2 would be below the expected grade for the year. We were mining in sequence. We are also mining differently. We have started also to backfill some of the galleries. Hence, we knew that we were heading towards higher grade galleries in Q3 and Q4. Mill recoveries were 81% or 82% in Q1. We're better at 84, 85% in Q2. And we knew that as we were getting into better grade and into the open pit, deeper into the open pit, we would get better recoveries. Ton process is excellent. We are at 80,000. We were at 80,000 as well in Q1. And it's just way above the design capacity of these two plants. So we're doing extremely well. The availability, which doesn't show on the slide, but the availability of the plants in Q2 was around 96%. And you all know that that's extremely good for a plant and mining to be available 96% of the time. Taking us to page five of the presentation, just a couple of bar charts. On the top left side, the silver production, with the two plants running, the historical plants, we should be between $400,000 and $500,000 a month, and that's exactly where we are. We're back up there, which is normal for secondaire. The grade, we expected it to be lower in Q1, Q2. It is. We're expecting it to kick back up in Q3, Q4. It will. So that's what you're seeing on the left-hand side at the bottom. The mill recoveries, again, we've hit up to 87%. We're now at 84.7. We know that with the new plant, we will be above 90%, so that will kick in. I'm not telling you we will be above 90 in Q4, but that will kick in when we're a steady state. And the ton process, while we're there, we are achieving records. We're 20% above design capacity, if not 25% above design capacity. which you're seeing on the right-hand side at the bottom. Page six, you have the cash flow. We had a strong quarter with $5 million of cash flow coming from Zgunder. The gross margin is at 4.9%. The cost of sale is, of course, a function of the production. So the cost of sale is up there. remove this the cost of sale is at 8.8 million and the cash cost as we discussed when we reviewed guidance is 17.85 it's higher than the historical four years but we also knew that the cost was going to be going up this year as we were preparing for the the new capacity moving to page seven The construction. So this is a major milestone. We know that in our industry, that's very difficult to be on time and on budget. We have been putting out videos to show you where we are. Today, we can tell you that we are 95% complete. We're on track to completion and on track with our capital cost estimates. Underground development is on track. We're 96% done on lateral development, 83% on vertical, but we have one vent that is completed, you've seen in some of the videos. We're progressing to plant on electrical work, instrumentation, piping, Merrow Crow, all of that. You saw we've poured already a couple of silver bars. The underground workshop is spectacular. You can see that in the videos. the warehouse, the backfill station is up and running, and the silver room building as well. So we've completed on time and on schedule all the civil work, structural work, equipment, silver room, electrical power line, and the lab. All of that's been completed. We are pleased to say that as of now, we are operating on green energy. The power line was commissioned. It's extremely important because it's green. It's very rare in the world that you operate 100% on green energy. It's a PPA that we have signed with an independent power producer. We're getting it from the grid. We build it on time and on budget. It is a fantastic job, so we are now running on green energy. Going to page 10. uh the drill program so what's you know we've created value historically by drilling uh the original budget for this year was 144 145 sorry thousand meters of drilling uh we have about 15 16 drills starting at all time so the original program has gone there with 15 000 meters and as of now it is completed so we have authorize an additional 15,000 meters. So the program's been expanded to 30,000 meters at Secunder, the main zone. And that's following very, very good results. Boumadine is on track. You know Boumadine has a 120,000 meter program. We are currently at 42,000, but we knew that we knew that H1 would be a bit slower. It was Ramadan as well. So we knew that we would have a smaller production in H1, but looking to catch up in H2. You recall that on the 120,000 meters program, 60,000 meters is on the main zone. On the zone, the 4.2 kilometer, which is now 5, which we want to increase because it's still open north south and a depth. And there's another 60,000 meters that will test new targets, new targets that have been identified. We've shared with you 1 of them to the West. There are more to come. We've completed the mobile empty regional survey, and that is giving us some geophysics targets and we're waiting for additional data. On the Zgounder Regional, it's ongoing. We have a 10,000-meter program that's being worked on. David and the team are looking for similar mineralization. At Zgounder, there's a lot of geological theory and targets that are being tested. We've also completed the geophysics on Tirzit, which is very close by to the mine. So we're expecting a very busy H2 at Zgounder and at Tirzit. And Hamizmiz is a small project that we have in which we have never focused a lot. We may start a small drill campaign there as it has a great goal potential. Taking us to page 11 to talk about Zgounder, It's a big news event. We are doubling up that program from 15,000 to 30,000 meters. I know for us, it's like when you're drilling 120,000 meters at Boumadine, it seems small, but it is important because we're drilling that zone, which is 1.4 kilometer long. has a depth of about 600 meters, and the results keep coming in. We've been giving you results. There are more to come, but, you know, we're often hitting 1,000 grams per ton over, like we have here, 13 meters, 2,000 grams per ton over 8 meters, and it is ongoing. One of the focus is where it touches the granite at the bottom of the structure, and so far we've been pretty good at hitting mineralization. Going to page 12 on Boumadine, Boumadine is a cornerstone asset of AIA. We, you know, through drilling, we've really shown a beautiful, right now, five-kilometer structure. As I indicated, we're going to be drilling 120,000 meters there. But through field work, so we've done the drilling in this quarter. We've done 27,000 meters this quarter. 42 after two quarters so by you know subtraction there's 80 000 meters to come in h2 we've seen results we're going to be seeing more results soon uh it's uh it's it's really it is ongoing i believe we have nine drills there it changes sometimes but up to nine drill at the moment turning and and a lot many results are coming but through the field work we've been mapping and doing the prospection on the 18 new permits because our goal is to control the zone. We want to control the whole district, the Boumediene district. So we're still working on new permits, but we have 18. So we've completed the mapping, the hyperspectral. We're using all of the techniques that we know work. We've completed the mobile MT program, 13,000 lines. that flew over with the helicopter. It's an extremely large and important program. It's a new program in Morocco, and it's giving us extremely, extremely interesting results that I'll show you in a minute. Fieldwork is continuing, our drilling is continuing, and our consolidation is continuing. We've increased our land package by 198 square kilometers, and our goal is to increase that considerably. A couple of results on page 13 on Boumadine. Those are silver equivalent, 1,000 gram per ton of silver equivalent on 13 meters. So we keep hitting. You recall that on page 18, you recall that the resource that was put out in March and the final report was filed 45 days later in Q2 that we were showing 352 million ounces of silver equivalent or 4.1 million ounces in gold equivalent. So that is just the beginning. It's on 4.2 kilometer. We've now extended it to five and we are drilling it to extend that to the north and to the south. 41% of the resource was in-pit, 59% was deemed underground. We're continuing the drilling where, as I indicated, 60,000 meters is going on strike and 60,000 is going on the parallel zone. Why? Well, take a look at page 15. If you take a look at page 15, you see a portion of the geophysics. We did not give it all out. We're keeping a lot of information right now to ourselves. But you see on the right-hand side the purple color, that's the main zone. That's what we've been drilling. And that's up to now five kilometer, but the signature is longer than that. And look to the west or to the left-hand side where you have that same purple color. So it's a very large potential conductive anomaly, which is five kilometers west of Boumadine. Similar orientation, stronger intensity than the Boumadine main zone, main conductor. It's a large system. It has conductors across east-west, similar to what we're seeing at Boumadine. So obviously, this is now a top priority. So we are waiting for the inversion of the data from the geophysics. We will be getting that in August. We will be reviewing this. And as soon as we have the targets, David will be moving some of the drill rigs off the main zone. And as the program will be getting close to be completed, it will start drilling some additional targets to the west. And hopefully towards the end of the year or early next year to the south. So going to page 16 on our social values and on corporate social responsibility, very good quarter, no zero lost time injuries, 3,700 hours of health and safety training. So it's a 30% increase year over year on our training. We have received certification of emergency response team. You are following us on LinkedIn. You see often some videos on the new facilities that we have. It's a very dynamic process. Everybody has bought into the concept of health and safety, and it's coming along quite well. On the Clean Tech Fund, we've met the milestones. We had milestone one, two, and three to meet. We've met the milestone, and in meeting the milestone, Our capital costs on our debt related to the TCFD is now move or CTF tranche is down now to 1% cost of capital. And that was something that came with EBRD was very important. It's a $10 million tranche that went from round number 10% down to 1%. And with the local communities, well, we're extremely involved, as you know, education, we're, you know, helping with school supplies, equipment and all that. Environmental Day, we celebrated that. Woman's Day, we celebrated that with them. And we are, you know, we have a health program where we have, you know, clinics that we have for the villages around. And we have also livelihood projects, which is gardens, vegetable and saffron. because the area is very well known for the saffron culture. So, as a summary of where we are and what we have is the drill program is ongoing at Boumadzine. The increased drill program is ongoing at Sgoundah 40,000 meters. Boumadzine is 120,000 meters. So, as a group, we're going to be at 160,000 meters of drilling. So very, very large program, completely funded. The 2,700 ton per day plant, which is the first, the two plants that we have plus the new plant is on time and on budget. We are in commissioning. And we expect commercial production in Q4 of 2024. And on the ESG front, well, again, as I said, we keep going through these EBRD due diligence where we do extremely well. And we are happy to say that we are fully funded. So as a company, we have 100 million in the bank. The project's built. There's still some payables there. We still have some payables. But if everything goes according to plan and our budgets are built with low $20 silver, our minimum cash balance, we will always be around $40, $50 million. So we are fully funded for now and for the future. The plants are operating, the two plants, extremely well. The third plant we will know in Q4, but it's coming very, very quickly and very well. And the drilling is going extremely well. So that covers my presentation. Operator, I think we are ready for questions.