Aya Gold & Silver Inc.

Good morning. I will now turn the call over to Salisha Ilyas, IA Gold and Silver's Investor Relations Officer. Please go ahead.

Thank you, Operator, and welcome to everyone who has joined IA's first quarter 2025 earnings conference call. Here with me today, I have Benoit LaSalle, President and CEO, Hugo Landry Toleschuk, Chief Financial Officer, Ilyas Ilyas, Chief Legal and Sustainability Officer, Rafael Boudouin, Vice President of Operations, and David LeLonde, Vice President of Exploration. We will be referring to a presentation on this conference call, which is available via the webcast and is also posted on our website. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release, and MD&A, as well as the risk factors included in our annual information form. Technical information in this presentation has been reviewed and approved by Rafael Boudouin, IA's Vice President of Operations, and David LeLonde, IA's Vice President of Exploration, both of whom are qualified persons as defined under National Instrument 43.101, Standards of Disclosure for Mental Projects. I would also like to remind everyone that our presentation will be followed by a Q&A session. With that, I would now like to turn the call over to Benoit LaSalle. Benoit?

Thank you, Selesha. Welcome, everyone, to this Q1 2025 earnings call. I would refer you to the PowerPoint that we have, the presentation. On the first page that you see now, you see the plant that was built last year, that was commissioned on December 30, 2024, and for which the ramp-up started in January. So Q1 2025 is the first quarter of the beginning of the ramp-up. The plant was built on budget. It was commissioned on time. It was delivered to us a little bit later than expected, but it was commissioned on time. Q1 is the first quarter of this brand new plant operation. You have on page two and three the forward-looking statement, and on page four we have the highlights of Q1 2025. So this Gunder Main expansion ramp-up continues to give us improvement in production, in cost reduction, and cost. It is a very smooth ramp-up. It's only three months, so we know that in our industry ramp-ups can go above one year. Here we're in the first quarter of the ramp-up. We've had for Q1 significant improvement in our goal production. Our goal production is at ,069,000 ounces, which is obviously a lot more than the previous quarter. Also very important in Q1 is the open pit ore mine equal approximately 68% of the ore mine during the quarter, reaching our target open pit slash underground split. When we do talk to you regularly, we talk about 70%, 30%, 70 open pit, 30% underground. That's the shift that we did in Q4 and now are implementing in Q1. We are there now at 68% for the average of Q1. As well, the stockpile which we put together over the last two years was at the beginning of the year 300,000 tons of ore. Well, at this quarter end, the stockpile is at 281,290 tons. This is a buffer for the plant as we are bringing the open pit and the underground to the 3,300 tons per day needed to feed the plant. Throughput and mill availability are good, are actually extremely good. Throughput exceeds already main plate capacity and mill availability are in the high 90s. We're in a very good position. Recoveries are still where we need to work and we are working. We have identified the reason why the recoveries in Q1 were at 82%, knowing that in the feasibility study it should be at 89%. The oxygen plant, which was designed and built by our EPC contractor, has not yet been working at its capacity. It's been having some issues, but we have been working on it. It's been fixed as we speak. This will bring the recoveries to the level that we expect. You recall that our guidance for the year is mid-80s to 88%. We know that we're moving up from the 82% where we are right now. We understand why the recoveries were lower in Q1 and we also have been working on correcting the oxygen plant. That is, as I said, being done as we speak. Globally, when we look at the company, we had a very good quarter as a ramp up quarter with the million ounces of production. We will show you that we have a profit, we have positive cash flow, but one element that's been coming back to us is our cash position. As of today, I am pleased to tell you that with the cash and the restricted cash at $37 million, you have looked at our financial statement. You saw that we had at quarter end $11 million of accounts receivable. This was a sale that was done on the last day of the quarter, which was collected a few days into the next quarter because as we sell in Geneva, we're paid within a few days. When you look at that, the $37 million of cash and restricted cash plus the $11 million of accounts receivable puts us in a very comfortable position on a cash basis. Furthermore to this, after the quarter end, we have agreed with EBRD, our main and only banker, on a $25 million, $25 million US dollar credit facility, which has been accepted at the EBRD board, at IS board, and is being put in place. When you look at the $37 million, when you look at the receivable that were cashed in within the few days and the additional $25 million facility, our liquidity position is extremely, extremely good. On the exploration front, as you know, Aya is always an exploration story. Yes, we are in production at Zgounder, but the potential of Zgounder Regional and the potential of Boumadine is so unique that people are looking at us with understanding the upside. So we have drilled at Zgounder close to 3000 meters on the main structure and 1000 meters on Zgounder Regional. I was there last week on site. We've reviewed the Zgounder Regional target and regional will be a very interesting program. You will have a very interesting program this year as we are seeing many, many new targets. At Boumadine, which is our big project, which is continuing to give, we have completed a very impressive 46,000 meters of drilling in Q1 on a program of 140,000 meters of drilling. As you know, we always set the program in a very conservative way based on results. We looked at how much more drilling we need, but in Q1 we did 46,000 meters of drilling at Boumadine. We've also at Boumadine published a mineral resource update, which was extremely positive, adding 100 million ounces of silver equivalent. On the ESG front, it's always a priority for us. Health and safety is a major concern to our operation. It's part of our values. We've had another stellar quarter. 100% of all the incidents are analyzed. We always make sure we get better. In the quarter, we also gave 2,364 hours of training. That is something that we take very seriously, especially now that increasing the number of employees at Gondar. We're also increasing the number of employees at Boumadine as the drilling program gets to be bigger and bigger. Of course, the ESG priority for us is on health and safety. We do give a lot of training to all the employees. On the corporate social responsibility, we've also expanded the tutorial program to the communities. We do this all the time. We began a new community engagement project where the local communities present their programs. We have a committee made of local representatives and company representatives. We select projects that we all want to see. It's a very dynamic process. We've started that this year. Q1 2025 is a strong quarter. Good production for a ramp-up period. Very good cash flow and good profitability. On page 5, you have some of the pictures. I know many of you have been to site in the past month. You see the quality of the construction, the quality of the operation. Again, a project like that built in North America would be north of 400 million, maybe 500 million. This project in Morocco is more like $140 million of construction costs. It's strong, it's robust and operating extremely well. On page 6, you have some highlights, operational highlights. On the top left corner, you have the ore mines. You see beautiful progress. We're mining thoroughly and steadily. We're increasing this. Obviously, we need to bring the ore production to 3,000 ton minimum per day to the plant. We do have a program to bring the open pit to 2,000 ton a day, the underground to 1,000 ton a day, plus or minus 10% on both. Then we're following that. On the ore process, again, another extremely important KPI for us. You see that we've done extremely well comparing Q1 2024 to Q1 2025. Now, in our ramp-up, the plant is working extremely well. The plant was at main plate capacity within a couple of weeks. It's now steady above main plate capacity. You see this on the ore process. On the right-hand side, at the top, you have the average grade for Q1 2024 and Q1 2025. The grade is something that we're working on. The grade issue came mainly from the underground. We are addressing this. You will see great improvement over the coming quarters. Of all the KPIs, this is the one that we're working on. Now, obviously, in the ramp-up, we do take ore from the stockpile. You saw we took some ore from the stockpile. The stockpile runs at about 150 gram per ton. That's something normal. While the recoveries are not where we want them to be in the high 80s, it's normal to have a little bit lower grade, which we have at this time. To compensate for that, the plant capacity is exceeding main plate, which is compensating currently for the lower grade that we're putting through the plant. On the bottom left-hand side, you have your silver production. Obviously, a major change here from Q1 2024 to Q1 2025. We understand this is a new plant in its ramp-up phase, but we're still showing way above a million ounces of production. The average net realized price went from 22 to 31.87. Now, a major difference in 2025 is with the new plant, we do not produce a concentrate anymore. Whereas in Q1 2024, we were producing a concentrate, which once sold was not giving us 100% of the metal value, but more like 85% of the metal value. Now, we do not produce a concentrate anymore. The one million ounces that were sold in Q1 was mainly ingots. In Q2, it will be 100% ingots. That's for the company and as a net-realizable silver price, it's much better. The cost per ounce is something that we've guided that will be below much below 18. In Q1 last year and in Q1 this year, there's a small improvement. Again, in the ramp-up period, it's normal. We do have too many people still have on site. It's something that we're addressing, but the priority is really to get the plant to be above nameplate and steady at its new tonnage is to get the grade back up, to get the recoveries back up, and all of that will push the cash cost down. Then coming to page seven of the presentation, we are confirming the guidance for this year. So the guidance that was presented to you last March for the financial, the 2024 financial results. So the guidance is the same with the silver production between five and 5.3 million ounces. For this year, we will exit the year on 1.5 million per quarter in Q4. This is our objective. This is our goal to be at 1.5. The cash cost will be between 15 and 17 and a half. In this case, the sustaining capex is very small. So on the ASIC, you have to add about a dollar, a dollar and a half only to the total cost here. The recoveries is something we've discussed. The guidance is between 84 and 88. Feasibility study was saying it should be around 91. Our goal is to really be on a consistent basis around 89, 90, and hopefully push it even higher. The focus is on this, is on the underground grade, and on the recoveries. The guidance for the grade globally should be between 170 and 200 grams per ton. We're seeing some higher grade pockets that we will be attacking this year as well, which will be part of the production going forward. And the exploration is always so important. At Zgunder and at Boumadin, the exploration program in dollar is between 25 and 30 million. In meters, it's around 160 to 180,000 meters of drilling. I also go back to the drilling cost in Morocco. The drilling costs are extremely reasonable. We're seeing drilling costs between 125 a meter to 160 a meter, depending where we are and on what project, and if it's core or diamond drill, or if it's RC drilling. But the costs are extremely reasonable. Looking at the financials, I think it's very, very interesting to see Q1 2025 with revenue of 33 million. We're comparing to Q1 2024, but Q1 2024 was just the old plant. Now we have the new plant. So it's hard to compare. But these are records, you know, revenue. It's a record quarter on every line. The gross profit at 10 million, the operating income at 3.3, the net income at almost 7 million, and the operating cash flow is at 7.893 or 7.9 million. It's a robust quarter. These are robust results in a first quarter ramp up. Again, I come back to this because often we seem to forget that it's like a little baby where one year old, we're learning to walk, and people are saying, yeah, he's not running or she's not running fast. No, no, it's like one year old here. We're three months old. We're running. This is running well above nameplate, but it does take time to become smooth, consistent, grade to be higher, recoveries to be where they need to be, and costs will be coming down. But this is where we are. It's built. It's well built. We have identified the reason for the recoveries, and we are working on that. You're in a position where we're already profitable. Q2, Q3, Q4 will be even better as production goes up, as costs will come down. We expect the coming quarters to look even better. But this quarter here generated $7.8, $7.9 million of operating cash flow. Going on the bottom part of this slide, you see that the cash and restricted cash is at $36. That receivable that we kept pretty yet now. Let me explain to you why this is there because we do want to beat the average price of the silver market. We are very choosy on how we sell our silver because we have liquidity. We're well funded, so we don't need to rush. We build inventory in Geneva. We have the silver available for a transaction, and we sell it normally by moving the market up. We will price it above market, and we wait for the market to move up and come and hit. The bid to come and hit our offer, and we're offering metals. It's not paper silver. It's metal. It's identified as such. We normally beat the average of the month or average of the quarter. If you look at the average realized price by AYA and compare that to average silver price of the quarter, we beat it steadily. That is being very disciplined on how we sell it. The reason is we sold last day of the quarter a large amount of silver, and that created a receivable, which technically, had we sold this three days before, it would all be in the cash balance. As I said, the EBRD credit facility of 25 million, that is done. We need to finalize the documentation. It's been approved, and with this, we are in a position where total liquidity available for the company is about $73 million. We are very comfortable going forward for the year, and next year, as we go there, we will be able to continue to generate strong cash flow. The exploration program, as I mentioned to you, you see the drilling here on page nine. We have two large domains, Gunder and Bumadzin. Those are our main two domains, and the drill program at Gunder, at the mine, will be between 10,000 and 15,000 meters. At Bumadzin, it will be between 140,000, but we are already at 42,000. You can imagine that this will continue as it continues to give very, very good results. The TZ zone this quarter was increased from 2 kilometers to 2.2. We have lots of targets to the north of the main zone. We are drilling the south as well. We are continuing to drill the south. There is some eastern extension, and this project will just continue to grow as it has in the past two years. We are continuing there, and we are also adding additional ground on a regular basis. The Gunder region is very interesting because at Gunder, as you know, if we add another structure where we have another source of ore, we will be able to push the plant higher. Currently, we are limited by the amount of ore that we can take out of the main structure. We are drilling 10,000 meters on Gunder regional, where we have done detailed mapping. We have identified many targets, and we are looking at some specific areas where we are seeing silver at surface. We have grab samples. We are seeing gold. It is very encouraging what is going on right now at Gunder regional. On Amis Mirz, the spinout was completed. The MX2 mining company is now a standalone. We had our first board meeting. The board is in place. The financing closed at $16 million. MX2 is now on its own with the chairman, Rick Clark, and the team. I think they are picking up a lot of ground. In Morocco, they are looking at different projects, as well as the MSD's project, which is very interesting. That is a done deal for us. We own 42% of it. We are going to watch them develop this over the next few years. We are extremely pleased with the spinout. It gives management more time to focus on Gunder regional and on Boumadin. On page 10, it is something you saw in February. It is in Q1. It is the updated resource model for Boumadin. Boumadin keeps giving. When you look at the silver ounces equivalent, it is $450 in total when you add indicators and inferred. It is very good grade. It is close to $500 per ton. It is a very robust project. We have touched the tip of the iceberg on the main structure, which is the Boumadin structure. We have drilled it down to 600 meters, but we did the resource calculation going down to 250 meters. It has extension to the north. It also has extension to the south. It has extension at depth. At surface, we are looking at 450 million ounces. If you prefer that in gold equivalent, it is like 5 million ounces of gold at 5 grand per ton. It is a very strong tier 1 asset in a tier 1 country being developed. Often the question is, is it going to be an open pit underground? You see on the slide, it is about 50-50. 49% we say is pit constrained. 51% is underground. In Morocco, underground mining is not an issue. Underground miners are available. The cost of underground mining is extremely low compared to Canada or the world. Of course, open pit is also straightforward and quite easy. We are drilling this. We have already drilled 200,000 meters. We are continuing to drill. This project is a project that we want to push towards production. We are working on each phases of the PEA. As long as we keep drilling and we keep finding, well, the size of the plant and the flow sheet has not yet been defined. This is, we always say this is like the magic map or the secret map. This is the geophysics of Boumadine. In the middle, you see the main permit. You see the main structure and then you see all these other targets that we have. We currently own about 700 square kilometers of ground. Boumadine is already a mining permit. It is ready to go. We have done all the work. We have started chapters of the PEA because for us to be convinced on exactly where we are going to put the tailing, where is the water coming from, where is the power coming from, knowing that the grid is at sight so the power is coming from the grid. It is a unique project with tremendous potential. You see this east-west structure at the bottom is 21 kilometers long. It is giving us in grab samples copper and silver. It is different than the main zone, which is north-south, which is more gold, silver, lead and zinc. The bottom, so the northeast structure, there are a few that you can see on the right. The east-west are copper and silver. The north-south are gold and silver. Very interesting land package. We are looking to add the little pieces that are missing. We are the only player in the area because we have most of the land. We have the team there. We have a very large team. The exploration team there is a little bit more than 200 people. There are between 12 and 14 drills turning. It is a large program, but that is giving some very, very good results. A recent development, I touched on a few. We saw the MX2 transaction in the quarter. MSBs was transferred into MX2. That is done. As I indicated, we own 42%. Two of us, myself and Hugo or CFO, sit on the board of MX2. It will have a life of its own with strong shareholders, good funding, $16 million, and some very good assets. We have also announced last Friday the April production, which we show continued progress. We are showing very good plant availability, very good throughput, very good mine throughput. Mining production was good. At the plant, it was good. Availability was excellent. Again, the element we need to work on is the recovery, but we explained why. We explained last Friday as well that the main issue was the oxygen plant, which was mechanical, and that is being fixed. Last but not least is our partnership with EBRD that goes way above or beyond the $25 million credit facility. EBRD is our lender. On Esgundair, we have 100 million construction facilities with them. We have already started the discussion that this should probably get transferred into more of a long-term debt and not a construction facility. That is something that they understand and that we are going to be looking at in the coming months, in the second half of the year. The $25 million is the credit facility just to give us additional liquidity, though we have close to $40 million of cash and restricted cash, but the restricted cash is with EBRD. It is all the same family. It is also indicated that they will support any initiative that we have in Morocco, including Bouma Dune and any other project that we want to look at, any other assets. EBRD is our long-term financial partner in Morocco. They support the country. They support AYA and they absolutely like to work with us and the way we work with our ESG values going forward. These are great developments that just occurred post the quarter. And so what is coming? The drill program is fairly ongoing with what we have done at Bouma Dune and at Esgundair. That is being done and it will continue throughout the year. We are working steadily on the PEA at Bouma Dune. The chapters are being completed. The environmental chapters are just about done and there is more work being done on the PEA. As I said, the right sizing of it is not yet all done because it is 450 million ounces right now of silver equivalent, but we keep finding. So we will see at one point we are going to stop the resource and we will do a phase one PEA just to see where we are and also bring in the metallurgical aspect of it, which is being worked on as we speak and where we have already identified all the solution for metallurgy. Next catalyst is 3000 tons per day at Esgundair. We are there. This is ongoing. The ramping up is in steady state. It was a great quarter Q1. We are continuing into Q2. It is a ramp up. So yes, we do have to fix the oxygen plant and yes, we are changing a few pumps to make the looking at all aspects of debugging certain small parts of it to make it even more efficient. Though we are way above main plate capacity, the plant is well built. It is in a great area where we are not stuck with water or rain or rainfall or snow or winter and ice. It is beautiful. It is an area where you have sunshine more than 300 days a year and the plant is working extremely well. So we will provide a midyear BOUMADIN update which will come in the second half of the year where we are working on which will include all the chapters of the PEA. We are also finishing some drilling on the main zone. We are still hitting as you see when we put out the pressure very good grades and very good pockets. So we are working on a new Zgunder plan, on a new Zgunder model and on a new technical report which will be available before the end of the year. So this completes my presentation. I would like to turn it over back to the operator for the question period. Thank you.

Thank you. As a reminder to ask the question that is star 11. Once again that is star 11. To remove yourself from the queue please press star 11 again. One moment while we compile the Q&A roster. Our first question will come from Cosmos Chu from CIBC. Your line is open.

Thank you Benoit and team and congrats on a very solid Q1. Maybe my first question is on your balance sheet here. Just to confirm Benoit as you mentioned there was $11.6 million in receivables at the end of Q1 which were related to sales that were made at the end of Q1 or Q2. Was the entire $11.6 million received in Q2? If I were to look at your cash balance I would just take your Q1 and quarter cash balance and add 11.6.

Cosmos, thank you for the question. Yes, so the 11.6 was a receivable at the end of Q1. So it was sold. It was booked as a sale in Q1 because it was sold except the money was not yet transferred because there's a couple of days with our refiner where there's a process and we have to wait a few days. So the money was indeed received in the first few days of Q2 and it was in our cash balance. Now knowing now that we do produce over a million ounces per quarter you have a lot of receivable, you have a lot of rollover but normally we would try to sell the week before the quarter end so we have booked the sale and we have the cash in the bank. But again as I indicated we're waiting for the right price. I mean sometimes 50 cents or one dollar the volatility is so high that we wait for 33, 33.5 and hence that created this kind of discrepancy at quarter end of a very high receivable which was converted into cash in the first few days. But the 11 million is in the sale of Q1 and it's just not in the cash it's in the receivables.

Yeah I just want to make sure that the entire 11.6 million essentially plus minus can be viewed as cash and I think you confirmed that answer for me. And then maybe on the balance sheet as well as you mentioned Benoit you have another 25 million dollar line of credit from EBRD. As you mentioned I think it's been approved but you still need final documentation so you know in terms of timing when can you if you need to when can you start drawing on that line of credit when does it become available to you. And in terms of the terms around that additional facility I don't think I have seen any details yet. Are there any details they can share with us at this point in time or how does it compare to the construction facility that was put in place by EBRD a few years back?

I've passed it over to he can give you the real all the detail and the timing of it Cosmos and but yeah we have all the information too that we can share.

So hi Cosmos. So yeah we've thanks good thanks. So we've we've secured it so it's gone through approval that EBRD so now we have to do the documentation. We our objective is to have that done before the end of Q2 and then it would be available to draw. It's a corporate loan so it's a loan to to IA Canada. We're providing some security we're providing some security on some of our subsidiaries in Morocco. EBRD already has a lot of the securities anyway because they're a secure creditor on Sgunter. In terms of the in terms of the the loan parameters it's very similar to our construction loan. I think we announced it so it's two-year term bullet payment at the end and the interest rate is is exactly the same as our construction loan. So SOFA plus five.

Great thank you. Maybe switching gears a little bit on grade. Benoit and team you know very solid in Q1 163 grand per ton but you know in your APRO numbers it might have dipped a bit again and so I guess two parts to my question. Number one you're targeting 170 or 200 grand per ton for your average for the year to get to your guidance. Could you maybe talk about you know to the to the to the point where you can share with us what that quantum of increase could be like when are we going to start seeing the 170 or even 200 grand per ton is it Q2 or is it Q3 or is it Q4 and then going back to the month of April what happened you know that caused the little dip once again in April was it again as you talked about Benoit the underground performance or you know anything else you can share with us.

Yes well look Cosmos I'll defer over to Raphael who's in Morocco as you know he's always on site and he oversees the operation and you're right the April grade was a little bit lower and maybe Raphael would you comment on you know why April and as well what's what kind of improvement you're seeing with the team going forward knowing that for Q4 you know our objective is to be around 200 in the open pit and probably 170 in the

open pit. Hello yeah okay

well maybe we've lost okay so I guess we've lost Raphael that's why he's he's he's on site so but but yeah he's

always on site I was with him three weeks ago so I can attest that he's

yes yes and and the internet is good on site so he should not be he shouldn't be you know the issue is that with the open pit the open pit we have three meters spacing on the drilling we're very precise we know exactly what we're mining where we're mining it the underground is is where because of the spacing at 12 meter spacing we are we know we are making you know sometimes the wrong decision on on dilution or or missing the structure so we have it we are addressing this the the open pit doesn't need any addressing the open pit is is you know we're in the top level as we discussed in Q1 we did hit at one point a couple of zone of oxide so that had a small effect on recovery but that's not permanent that's just the top layer the open pit is is hitting you know the grade that we're looking for you know this deposit has some pockets of very high grade material it's it's got some lower grade area so look we're still comfortable that in in every quarter the grade will improve from this quarter it will improve and we we are keeping our guidance between 170 and 200 we know that so far in May you know the the throughput that the mine is excellent we're getting the tonnage out we haven't yet confirmed all the grade but it's it's now that the recovery is kind of done it's not done because we're fixing it now but we know the problem that the only a kpi left to for us to really focus on is making sure the grade falls in line and it will the deposit is there the you know and we've done a lot of of tests to make sure that you know it's all there it's just mining it correctly and and we're working on that so it will improve every quarter the objective is in q4 as i said to be around 200 in the open pit and hopefully 172 you know around there in the with the underground

i don't know if rafael has joined us yet but i was going to also ask a question on recovery 80 recovery you're targeting 84 to 88 in terms of you know the quantum of increase quarter over quarter could you give us a sense or in terms of is that could that go up faster than your potential increase in grades given that you know you've identified the issue it sounds like it's a mechanical issue how fast can we see it hit say even the lower end of your guidance of 84 yeah

so cosmos i'll pass it over to you go sits on the production meeting every day and they you know of course it's a top top priority so you go do you want to

yeah so on on on recoveries we have a very specific issue it's on the it's on the oxygen plant we have a repair team there currently as we speak and we have the equipment provider that's going to be on site as well this this month is it going to take two weeks or or three weeks or four weeks to fix we're assessing that right now but it's not like the equipment and it's repairable so we're going to repair it and then once that's done we expect recoveries to go up one of the really important things for us was to ensure that you know we had no you know or leaching issues so we've bottle roll tested all of the all the tails there's absolutely no issue we've never had a recovery issue at at at zygmunt and so as soon as this mechanical issue is solved with with with dissolved oxygen we expect recoveries to to to improve there's there's nothing suggesting that it's once this is solved it will not be

great thanks man while you go and team those other questions thank

you thank you cosmos one moment for our next question our next question will come from line of brice adams from desk jardins your line is open

good morning ben one thing thanks for the presentation and for taking my questions the first one is on cash balances again when does the restricted cash become available the disclosure talks about final completion of the expansion obviously that's different to commercial production can you add color when that cash becomes available and at the same time i know it can swing around with working capital changes but are you able to comment on the current cash balance as of mid-may

oh cash balance as of in may is basically what we've had what we had in our as of the end of march plus plus our receivables and a bit of working cap so it's it's it's similar it's similar to what we had to had end of march plus a plus a few million

and the the restricted cash that that stays restricted until until the end

of the loan until the end of the loan so it's a it's a it acts in a debt service recovery account so if ever for whatever reason there wasn't it's an additional security for the secured creditor so if ever we didn't have the cash to cover our biannually interest or principal payments then we would use that cash to to pay for that at that time

okay thanks i had a different understanding but that clears it up my second question is on the open pit mining rates what's the size of the fleet today how many trucks and loaders were added this year and from the site visit a few weeks ago thanks very much for hosting us i got the contract rates as two dollars per ton waste and four dollars per ton ore has that or does that change with further fleet increases at zagunda could those rates potentially reduce with economies of scale

yeah so um so yeah on the costing that's about right but that includes drilling blasting hauling analysis uh so i think that's that's all in and then yeah as time goes and the fleet increases we expect to see a little bit of of uh of cost improvements that and we're as we've changed our plan here we're in discussions with our mining contractor uh as we speak on that and

then the fleet yeah the fleet has increased uh how many i know i don't know if he's back on because he would know this by heart uh but you go and i were not in that detail but bryce if you want you can drop us just a note and i'll we'll forward that to rafael and we'll send you the answer back today

that would be grand thanks so much

thank you our next question on the line of don demarco from national bank your line is open

thank you operator and good morning ben wall and team congratulations on a great quarter so ben wall first first comment question is on throughput so throughput's been running consistently about nameplate you know we see from the april update it was 3024 tons per day is this attributed in part because you've been processing some of that softer oxide ore in the upper open pit and with that as you get deeper into it would you expect the throughput to maybe normalize down to nameplate or is 3000 tons per day just kind of the new standard

thanks don for this question i think is the quality of the construction and and we you know rafael said it from the beginning it's going to produce much more than the nameplate because it's just well built it's well designed it's extremely good equipment we needed to go through the ramp up to to debug certain pumps and and and a few little items totally normal but the throughput at 3025 is is is on the low end we believe with that we will be able to maintain more like 3200 going forward with with the plan that we have right now and then rafael and his team are going to look at optimizing that because they're little items that that can be you know done few things could be done and even push it even further but yes so the throughput you're right we reach nameplate in two weeks and we hit it we then did not hit it consistently now we are hitting it consistently above nameplate capacity and it will continue this way the plant is is very very well built very robust as you you saw it it's open air so it's got a lot of room to maneuver there's lots of room for maintenance and and the oxide or or the hard rock did not make much of a difference the the capacity the the you know the the jaw crusher and the cone crusher and all that we have capacity we even have spare part capacity we have a full cone crusher in as a spare part we do have capacity to grow so now the plant is just built that way we always knew it was built that way and as you know we even build it bigger that at the right time we can add another ball mill two more tanks and really grow its capacity by probably another 50 so it's the overbuilt oversized we knew it we know that the limiting factor is is the the mining we know that and that's why we're pushing so hard on the regional play to find we'd love to find a satellite bit and and then be able to just push the plant even further

okay well that's great and it's yeah certainly i saw the plant looks very well constructed and you know i heard you talk about the expectation to increase recoveries is it fair to say too the you know that increase in recoveries isn't going to compromise the throughput rate in any way

not at all not at all no no the recovery is a mechanical issue and we we understand why we rafael is there with a full team and we we've done the test as you go said the bottle roll test it's not related to metallurgy it's really mechanical sadly you know and again when you use an e p c contractor you have some pluses and some minuses and and it was it was a fixed price contract you remember it was a very good fixed price contract they've done you know a good job the plant's robust the uh the the plant the oxygen plant is substandard to what we would like to see and they and we're fixing it now and we were i mean we we tried to change it throughout construction but we were not able to due to the nature of our contract and now well we're fixing it so it's really the oxygen plant that's causing the recovery to be a little bit lower also when you have you know when you're starting the ramp up you know we're putting some some of the stockpile through it which is 150 gram per ton so the you know we're not pushing any you know high grade material if when we are going to get into the high grade zone of the deposit which we have we'll definitely want the the recoveries to be in the top 80s and not low 80s just because you know we don't want to send silver to the to the tailing dam so it's the the recovery is a separate issue the plant is working very well and will continue to work well and we have a very good crew on site that are operating this plant and no there's no look you know you saw we even take all the crushing and milling from the old floatation plant we send that over to the new plant there's no more concentrate being produced it's all now ingots and the the the Merrill Crow system is operating well it's robust it's operating well so there's no issue it's now fixing the recoveries and making sure that the grade from the underground is where it should be and will be off to the races

okay great well thank you for that and something else that we're looking at is the inflection to free cash flow okay and so we saw with q1 that your cash flow from operations is you know step change higher over quarter and and so i'm just trying to understand too the pace of spend i mean commercial production was declared at the end of the year we saw some capex and q1 do you expect that capex to kind of you're changing to an open pit is there additional capex related to that or is the capex going to kind of moderate over there these coming quarters and what are your thoughts in terms of cash flow from operations and potentially you know the quarter that you

know the quarter that you're talking about right now and and in q2 so there's no capex related to the open pit the open pit is a contractor it's a very large local contractor very well as finance contractor they're putting in new equipment rafael will give us how many trucks and how many excavators there but they're increasing the size of the trucks as well and they're paying all that on their own and we're we have a fixed price contract with them on waste and on ore and it's it's a very good business relationship so there's no capex there the fact that we're going much larger open pit than originally planned last year the capex to move the infrastructure is about a million dollar so nothing really to to to not nothing important and sustaining capex really is the development of the underground because we want to go and develop the underground so we need to bring you know the ramp back down and there's about eight million this year that we're going to do on on developing the the underground so the sustaining capex is extremely low when you look at at this mine it's it's really developing the underground because we know that we do have some very high grade chutes at different level and we want to bring it all the way down within the next 18 months to be at the bottom of the structure where we have also silver accumulation at the contact with the granite so so if you you know assume and again we're just going to do you know math of if you assume 1.2 million ounces that we're selling right now at 33 even actually 33.5 so far this quarter but let's say 33 and if you use the the cash cost that we had and the all in the sustaining cost which is around 21 this quarter it's going to be better in q2 but let's use q1 that gives us about 12 dollar an ounce of free cash and that's net of the sustaining capex and all that so it's for q2 it's it's you're looking at it and again this back of the envelope but you're looking at about 12 million of cash flow you go do you want to add to that because you're controlling the numbers no

i think that's a good estimate

so we are generating cash now and and you know absolutely we're you know our gna is extremely low if on an industry standard and the the costs are coming down so that we didn't even take that into account but the costs are going to be coming down as the denominator increases the production increases as i said in in in the original and at the beginning we have like still programmers for our the computer systems there we have people for the the the the plant we have the oxygen plant so we do have way too many people still that are that are affecting our cash costs and our costs so it's over the next three quarters q2 q3 q4 you'll see the cash costs come down and our guidance is still clear between 15 and 17 and a half and we will be there and and hence the free cash flow has started last quarter continuing this quarter and there's very little sustaining capex very very little okay

that's great yeah

you know you know the big the big the big capex or cash component is our drilling program which is between 25 and 35 million but that's totally discretionary it's a decision that we we take and and we have all the money to fund that so that that's that's not an issue but the discretionary here decision is to fund the the drill campaign which we will continue to fund because again this gundeya regional looks super interesting and boom adin is is continuing to get

okay thanks for that maybe it just as a final question benoit you mentioned that there'll be a boom adin mid-year update just wondering if you could tell us what the the scope of that update is i know that one of the things some people have been watching is is that any potential improvements in recoveries is that something that might be covered in that mid-year update and what else might we expect of course this would probably be in advance of the pa later on next year early next year i would imagine right

so look we're looking boom adin is a is an evolving project we're getting some breakthrough on on on different aspects so we didn't mention that we would have a mid-year study that will be published because we're working with outside engineering firms that specializes in the recovery of pyrite ore and we will have the that study in in mid-year however we're working on other things different things so that may evolve a little bit and we could we could and i'm not it's not a promise but we're looking to maybe have a pa ready before 2026 maybe in 2025 but it's a dynamic process so i we can't commit to anything right now because it's a very dynamic process but it's dynamic in a very positive way and that is something that could change a little bit the parameters of what we publish but we'll keep you abreast of of what's happening okay

great we'll look forward to that um that's all for me then good luck with the rest of q2

thank

you

don one moment for next question our next question will come from line of alvarez habib from scotia bank your line is open

thanks operator uh hi ben wine i team uh yeah congrats on a good quarter uh a lot of my questions have already been answered but i do have two questions maybe maybe sticking with cash costs um you know ben while you talked about cash costs kind of coming down um you know obviously we've seen cash costs decrease by about 30 quarter quarter um you know guidance for the year is around 15 to 1750 are we expecting a drop in cash costs again in q2 or is more the second half is where we'll see the improvements in cost take place

so uh look we're we're we're do we are managing cash costs extremely extremely tightly and it will be a function of the denominator so you know the denominator is a function of the recovery of the grade so but but if for us we also manage costs on a per ton basis and we're showing it to you on a on a per ounce basis but i can assure you on a per ton basis we are below our budget which is we're managing it very very tightly if we meet the guidance and again because we don't know yet rafael is working on the recoveries and all that but if we do meet that our target budget that we have for q2 absolutely you will see another step decrease in cash costs and you'll see the same in q3 and the same in q4 it's a function of the denominator but on a ton basis we are where we want to be and even lower so it's uh it's a percentage and you you will see a decrease and that's why our guidance is between 15 and then if q1 is 18 and we want to be on an average at 15 and 16 we need to be lower than that in q4 so you will see a decrease in cash costs absolutely

thanks for that uh and just moving to you talked about um you know the team is working on uh improvements in the underground grade now you provide more color on this i mean do you need more great control drilling more development change of mining method any sort of color on that would be great

yes so there's no change of mining methods it's mainly more definition drilling so definition drilling to be applied more systematically when we get to certain zone and enhance not being forced to certain sunnage but really forcing the team to respect more the grade than the tonnage while the open pit compensates for the tonnage so that's why we're pushing the open pit to be higher at 70 percent of the total tonnage and and so there's no change in mining method there's no there's no change in in in in how we approach it except now we're focusing much more on grade we have our geos working on on the mining plan on grade reconciliation on on ounces reconciliation all of that is there it's not that the answers are not there because we reconcile every quarter the our problem was dilution and sometime missing part of the structure because our 12 times 12 definition drilling wasn't tight enough and they did not have enough time to do more drilling because we we wanted some some throughput and some output from the line so we're slowing down when needed and and we're following this very closely so no change in mining method and nothing like that just you know going back to maybe more craftsmanship mining instead of bulk mining the underground

that's great Benoit those are my questions thank you for taking my questions and yeah good luck on Q2.

Thank you very much and look we'll we'll we'll stay in touch Ove thank you for your question.

One moment for our next question do we have a follow-up from the line of Bryce Adams from Desjardins your line is open.

Thank you operator yeah one follow-up question please on the O2 plant sounds as though some of benefits are being realized already without knowing all the details of what happened there is there any recourse against the EPCM for the delayed startup of the O2 plant or that's not something that you would be considering?

No we are considering that Elias is on the call with us our in-house chief legal officer and we are absolutely considering recourse we're assessing all of this we are we are we're taking this very very seriously and it's there is a cause for compensation and we are negotiating with them and the legal team so yes yes we're taking this very very seriously and hopefully in the next quarter or two we'll be able to come up with a compensation package for this and a few other things that you know as you know with the EPC contractor when you finish the job it's it's never you don't go for a weekend of honeymoon you always have extras and things that you dislike and so we're not going on a honeymoon weekend in Marrakech we're actually going to go to a debate this in their boardroom but yes there is a recourse and we will you know in due course we will be able to establish the quantum but it's there is damage

thanks Benwa appreciate that look look for forward to future updates

we

will keep you posted on all of this

thank you I'm not showing any further questions I want to turn the call back over to Benwa for any closing remarks

thank you so much well thank you everyone for being there look it's been a long call over an hour I think we've covered every part that needed to be covered we take our KPIs very seriously at the mine site and we're working on them anything that we haven't covered send us a an email well you know we'll send that over to Rafael or David who's online as well on geology and we will reply to you very quickly look we are into now free as Don asked free cash flow territory we are starting to build on our cash balance obviously the top priority stays for us the drilling at Boumedzin the drilling at Sgoundère and Sgoundère regional we have a beautiful plant that we've built for 140 million dollars which you know as again under on a replacement cost value in anywhere around the world would be like 500 million it's it's it's very robust I always give the example if you go to Marrakesh that city was built 2 000 years ago and it's still standing so and that's how they build things in Morocco so look we have a robust plant it's really working well we know the KPIs that we need to work on and and but the big big value creation swing will be on the Boumedzin study that's coming through over the next few quarters we are seeing great progress we are seeing you know things that that we will incorporate in a PEA and that should be you know already based on many variables on David's drilling program on new discoveries and all that it's affecting you know the flow sheet and the quantum of production per per year but that being said it's already in in gold equivalent 5 million ounces at 5 gram we did that in two and a half years we've touched a small portion of the of the territory there's much more to come and again this is a mining permit in a mining country the time to construction is quick in Morocco the permitting is already done and financing of the project is spoken for with EBRD and a couple of other players in country you know that AYA in Morocco is bankable with the local banks and they did participate in the 100 million dollar financing that was put together and they will they would they will participate in EBRD financing on Boumedzin so you know there's no oh can they finance that I would say it's there can they get permitted it's already there is are the ounces there they're audited they're 43 101 and we're finding it we're finding some more so now we need to work on the PEA that's going to be the big driver for the coming 18 months of you know of value creation plus good they're producing as good there as our cash flow machine it will produce and as you know we've seen that in the past we we did this in the past in at semaphore we did exactly that we had one small mine that paid for all the other mines and at the end you know we were producing many hundred thousand ounces of gold so it's that we're in the same position here we have a smaller mine that will produce a lot of cash which will allow us to develop this tier one asset which is called Boumedin which we're working on right now so thank you very much for your time I know we're above the one hour that it was set aside but it was a good quarter we're working hard on Q2 and we will be available throughout the the Q2 in the summer to answer any of your questions so thank you very much and we'll be on the call in August for to a view of Q2 thank you

thank you for your participation in today's conference this does include the program you may now disconnect everyone have a good day