Aya Gold & Silver Inc.

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

Thank you, operator. And welcome to everyone who has joined AYA's first quarter 2025 earnings conference call. Here with me today, I have Benoit Lassalle, President and CEO, Hugo Landry-Tolschuk, Chief Financial Officer, Ilyas Ilyas, Chief Legal and Sustainability Officer, Raphael Beaudoin, Vice President of Operations, and Debbie Lalonde, 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 Raphael Beaudoin, IAS Vice President of Operations, and David Lalonde, IAS Vice President of Exploration, both of whom are IAS qualified persons as defined under National Instrument 43-101 Standards of Disclosure for Mineral 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 Lassalle. Benoit?

Thank you, Celicia. 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 billed last year, that was commissioned on December 30th, 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 billed on budget. It was commissioned on time. It was delivered to us a little bit later than expected, but it was commissioned on time. and Q1 is the first quarter of this brand-new plant's operation. You have on page 2 and 3 the forward-looking statement, and on page 4 we have the highlights of Q1 2025. So this Gunder mine expansion ramp-up continues to give us improvement in production, in cost reduction in 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 gold production. Our gold production is at 1,069,000 ounces, which is obviously a lot more than the previous quarter. Also very important in Q1 is the open-pit ore mined equal approximately 68% of the ore mined during the quarter, reaching our target open pit slash underground split. You know, 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%. at for the average of q1 as well the stockpile which we you know put together over the last two years uh was at the beginning of the year 300 000 ton of ore well at this quarter end the stockpile is at 281 290 ton so this is a buffer for the plant as we are bringing the open pit and the underground to the 3,000, 3,200 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. So 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%. And 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, and this will bring the recoveries to the level that we expect. You recall that our guidance for the year is mid-80s to 88, so we know that we're moving up from the 80 to where we are right now. So we understand why the recoveries were lower in Q1, And we also have been working on correcting the oxygen plant. And that is, as I said, is being done as we speak. So 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 is our cash position. And as of today, I am pleased to tell you that, you know, with the cash and the restricted cash at 37 million, and you have looked at our financial statement, you saw that we had a year 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. So 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 U.S. dollar credit facility, which has been accepted at the EBRD board, at IS board, and is being put in place. So when you look at the $37 million, when you look at the receivables 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, AIA is always an exploration story. I mean, 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 3,000 meters on the main structure and 1,000 meters on Zgounder Regional. I was there last week on site. We've reviewed the Zgounder Regional target, and Zgounder Regional will be a very interesting program this year. We'll have a very interesting program this year as we're seeing many, many new targets. At Boumadzine, which is our big project, which is continuing to give, we've 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. And we've had another stellar quarter. And 100% of all the incidents are analyzed. And we always make sure we get better. And we, in the quarter, also gave 2,364 hours of training. And that is something that we take very seriously, especially now that we're increasing the number of employees at Gundaher. And we're also increasing the number of employees at Boumadine as the drilling program gets to be bigger and bigger. So, of course, the ESG priority for us is on health and safety. And 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 local communities. We do this all the time. And we began a new community engagement project where the local committees present their programs. We have a committee made of local representatives and company representatives, and we select projects that we all want to see And so it's a very dynamic process, and we've started that this year. So Q1 2025, again, a strong quarter, good production for a ramp-up period, you know, very good cash flow and good profitability. On page five, you have some of the pictures, and 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. So it's strong, it's robust, and operating extremely well. On page six, you have some highlights, operational highlights. On the top left, you have the ore mine, so 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, so 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. And then we're following that. So on the oil process, again, another extremely important KPI for us. And 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. So the plant was at main plate capacity within a couple of weeks. It's now steady above main plate capacity. And you see this. on the OAR 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, and you will see grade improvement over the coming quarters. This is 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, and the stockpile runs at about 150 gram per ton. So that's something normal. And 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, so the 1 million ounces that was sold in Q1 was mainly ingots, and in Q2 it will be 100% ingots. Hence, 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 much below 18, but 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, and it's something that we're addressing. but the priority is really to get the plant to be above main plate 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 costs 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 2024 financial results. So the guidance is the same with the silver production between 5 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 recovery 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 year is that the grade globally should be between 170 and 200 gram 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 Secondaire and Boumadine. 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, extremely reasonable. Looking at the financials, I think it's very, very interesting to see Q1 2025 with revenue of 33 million. Of course, you know, we're comparing to Q1 2024, but 1 2024 was just the old plant now we have the new plant so it's hard to compare but these are record you know revenue it's it's a record quarter on every line the gross profit at 10 million the operating income at 3.3 the net income is almost 7 million and the operating cash flow is at 7.893 or 7.9 million and uh It's a robust quarter. These are robust results in a first quarter ramp up. And again, I come back to this because often we seem to forget that it's like a little baby. We're one year old. We're learning to walk. And people are saying, yeah, he's not running or she's not running fast. I don't know. It's like one year old here. We're three months old. We're running. This is running well above main plate, 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. And 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. So we expect the coming quarters to look even better. But this quarter here generated 7.8, 7.9 million of operating cash flow. So going on the bottom part of this slide, you see that the cash and restricted cash is at 36. that receivable that we kept for the end. Now, let me explain to you why this is there. Because we do want to beat the average price of the silver market. So 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. So 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, you know, the bid to come and hit our offer. And we're offering metal. It's not paper silver. It's metal. It's identified as such. And we normally beat the average of the month or average of the quarter. So if you look at the average realized price by aya and compare that to average silver price of the quarter we beat it steadily and that is being very disciplined on how we sell it and excuse me 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 in the cash balance And 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. So we are very comfortable going forward for the year. And next year, as Gunder keeps generating, you know, strong cash flow. The exploration program, as I've mentioned to you, you see the drilling here on page nine. We have two large domains, Gunder and Boumadine. Those are our main two domains. And the drill program, you know, at Gunder, at the mine, will be between 10,000 and 15,000 meters. At Boumadine, it will be between 100 and 140, but we're already at 42, so You can imagine that this will continue as it continues to give very, very good results. The TZ zone this quarter was increased from two kilometers to 2.2. We have lots of targets to the north of the main zone. We're drilling the south as well. We're continuing to drill the south. There's some eastern extension, and this project will just continue to grow as it has in the past two years. We're continuing there, and we're also adding additional ground on a regular basis. The Gounder Regional, very interesting, because at Gounder, 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're limited by the amount of ore that we can take out of the main structure, so we're drilling 10,000-meter you know, on Zgounder Regional where we've done detailed mapping. We have identified many targets and we are looking at some specific areas where we're seeing silver at surface. We have grab samples, we're seeing gold. And so it's very encouraging what's going on right now at Zgounder Regional. On Amismiz, the spin-out was completed. The MX2 mining Company is now a standalone. We had our first board meeting. The board's in place. The financing closed with $16 million. And MX2 is now on its own with the chairman, Rick Clark, and the team. I think they're picking up a lot. I think I know they're picking up a lot of ground. In Morocco, they're looking at different projects. And as well, they have the Amis Leeds project, which is very interesting. So that's a done deal for us. We own 42% of it. We're going to watch them develop this over the next few years. We're extremely pleased with the spin-out. And it just makes, you know, it gives management more time to focus on Zgounda, Zgounda Regional, and on Boumadine. On page 10, it's something you saw in February. It's in Q1. It's the updated resource model for Boumadine. Boumadine keeps giving. When you look at the silver ounces equivalent, it's 450 in total when you add indicated and inferred. But it's very good grade. It's close to 500 grams per ton. It's a very robust project. We've touched the tip of the iceberg on the main structure, which is the Bumazin structure, the main structure. We've drilled it down to 600 meters, but we did the resource calculation going down to 250 meters. It's got extension to the north. It also has extension to the south. It's got extension at depth, but at surface already, we're looking at 450 million ounces. If you prefer that in gold equivalent, It's like five million ounces of gold at five grand per ton. So it is a very strong tier one asset in a tier one country being developed. Often the question is, is it going to be an open pit underground? You see on the slide, it's about 50-50. 49%, we say, is pit constrained. 51% is underground. So 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. And of course, open pit is also straightforward and quite easy. So we are drilling this. We've already drilled 200,000 meters. We're continuing to drill. And this project is a project that we want to push towards production. And we are working on each phases of the PEA. But 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. And we currently own about 700 square kilometers of ground. Boumadine is already a mining permit, so it is ready to go. We've done all the work. We have started the chapters of the PEA because for us, to be convinced on exactly where we're going to put the tailing, where's the water coming from, where's the power coming from, knowing that the grid is at site, so the power is coming from the grid. But it is a unique project with tremendous potential. You see this east-west structure at the bottom. It's 21 kilometer long. It's giving us in gram samples copper and silver. It's different than the main zone, which is north-south, which is more gold, silver, lead, and zinc. The bottom, so the northeast structure, and there's a few that you can see on this map, are more copper and silver. So the east-west are copper and silver, and the north-south are gold and silver. So 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's between 12 and 14 drills turning. It's a large program, but that's giving some very, very good results. So recent development, I touched on a few. We saw the MX2 transaction in the quarter. AmuseMise was transferred into MX2, so that's done. As I indicated, we own 42%, and two of us, myself and Hugo, our CFO, sit at the board of MX2, and it will have a life of its own with strong shareholders, Good funding, $16 million, and some very good assets. We've also announced last Friday the April production, which we show continued progress. We're 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. And again, the element we need to work on is the recovery, but we explained why, and we explained it last Friday as well, that the main issue with the oxygen plant, which was mechanical, and that's being fixed. And last but not least is our partnership with EBRD that goes way above or beyond the $25 million credit facility. EBRD is our lender. We have $100 million construction facility with them. We've already started the discussion that this should probably get transferred into more of a long-term debt and not a construction facility. And that's something that they understand and that we're 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, and the restricted cash is with EBRD, so it's all the same family. And it's also indicated that they will support any initiative that we have in Morocco, including Boumadine and any other project that we want to look at, any other assets. So 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. So these are great developments that just occurred post the quarter. And so what's coming? The drill program is fairly ongoing with what we've done at Boumadine and at Gounder. So that is is being done, and it will continue throughout the year. We are working steadily on the PEA at Boumadzine. The chapters are being completed. The environmental chapters are just about done, and there's more work being done on the PEA. As I said, the right sizing of it is not yet all done because it's 450 million ounces right now of silver equivalent. but we keep finding. So we'll see at one point we're going to stop the resource and we'll 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've already identified all the solution for metallurgy. Next catalyst is 3,000 tons per day at Zgounder. We are there. This is ongoing. The ramping up is in steady state. It was a great quarter of Q1. We're continuing into Q2. It is a ramp up. So yes, we do have to fix the oxygen plant. And yes, we're changing a few pumps to make the plant even more efficient. Raphael and his team are looking at all aspects of debugging certain small parts of it to make it even more efficient. And though we're way above nameplate capacity, the plant's well built. It's in a great area where, you know, we're not stuck with water or rain or rainfall or snow or, you know, winter and ice. You know, it is beautiful. It's an area where, you know, you've got sunshine more than 300 days a year. And the plant is working extremely well. So we will provide a mid-year Boumadine update, which will come in the second half of the year, where we're working on which will include all the chapters of the PEA. And we're also finishing some drilling on the main zone. We're still hitting, as you see when we put out the press releases, very good grades and very good pockets. So we are working on a new Gounder plan, on a new Gounder 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.