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spk04: Thank you for standing by. This is the conference operator. Welcome to the K92 Mining 2023 fourth quarter and annual financial results conference call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to David Medlack, President and COO. Please go ahead.
spk00: Thank you, Opto, and thanks, Evan, for attending K92 Money's fourth quarter and 2023 Annual Results Conference call. We hope you and your families are doing well. In addition to myself, we have on the line John Lewins, Chief Executive Officer and Director, and Justin Blanchett, Chief Financial Officer. I would also like to remind everyone that after the remarks from management, the call will be followed by a Q&A session. As we will be making forward-looking statements during the call, please refer to the cautionary notes and risk disclosure in our MD&A. and slide two of the webcast presentation. Also, please bear in mind that all dollar amounts mentioned in the conference call are in United States dollars unless otherwise noted. Now, I'll turn it over to John to provide you with an overview.
spk06: Thank you, David, and welcome, everyone. We begin, as always, with safety, K92's number one priority. As shown on the chart, K92 has operated with a safety performance that has been significantly better than the industry average since the start of commercial production. However, in 2023, our lost time injury frequency rate increased, and we take this extremely seriously. We've undertaken many actions to address this, and we've got more underway. In the third quarter, an independent safety audit was completed following the incidents in the second quarter. The findings from the audit indicated that our safety procedures and systems were generally good, with room for improvement primarily in our frontline supervision to make sure that safety procedures and systems are always followed. We have an additional independent safety audit underway as we look for further opportunities for improvement. We've introduced various technologies to improve safety, including in-cab monitoring of our entire surface fleet and that of our contractors operating on site. Implementation of other safety-enhancing technologies are currently underway, such as proximity detection system for our underground mobile fleet. Culturally, we've seen multiple positive leading indicators, including significant increase in job safety assessment, and we've also had changes to our personnel. We're required to drive this. I'd like to reiterate that K92 is relentless in its pursuit of our goal of achieving zero harm amongst our workforce. I'll now discuss the non-industrial incident which occurred on the mining lease on March 10th and which resulted in a deceased employee. Initially, the incident appeared to be an industrial accident. However, preliminary findings from K92 and the Royal Papua New Guinean Constabulary, which are the police, indicated the death was non-industrial, suspicious, fatal incident. K92 continues to work with the relevant government authorities under the Criminal Code Act and the Mining Safety Act to support the investigations. At this point, the Mineral Resources Authority are still treating the incident as an industrial accident and as such ordered temporary suspension of underground activities through the issuance of Reform 29, pending the completion of action orders in relation to an independent safety audit and the installation of a collision avoidance system. Work on these action orders is underway and we're in process by K92 prior to the issuance of the action orders. We have accelerated these and they are well advanced in terms of progress. Given the non-industrial nature of the incident and what we believe are misapplications of the Mining Safety Act in issuing the Form 29, K92 has appealed the Form 29 through various channels. This process is now well advanced and we expect to receive a positive outcome shortly with operations resuming immediately thereafter. In terms of impact to production, there's a moderate impact in Q1 production and is expected to have a moderate impact to Q2 production. K92 is working to resolve this expeditiously and will provide another update in due course. On the ESG front, K92 is extremely proud to have received the award for Outstanding Community Humanitarian Initiative for its Women in Mining program at the P&G Resources and Energy Investment Conference in Sydney in December 2023. The program champions women's empowerment initiatives, including upskilling and preventative health care. This is the second consecutive year K92 has been recognized with an industry ESG award. During the fourth quarter, K92 established a MOU with the Don Bosco Technological Institute. The MOU focuses on a number of areas designed to support and grow talent in Papua New Guinea, including information exchange, technical assessments, engineering studies and research, and participation in K92's tertiary scholarship and industrial trainee program. K92 now has four MOUs with tertiary institutions in Papua New Guinea, which is the University of Papua New Guinea, University of Technology and Lay, University of Garoka, and now Don Bosco. In February 2024, we welcomed the class of 2024 for the K92 graduate program and also the inaugural pre-vocation program shown on the left and right images respectively. These programs are designed to provide invaluable work experience training to develop local talent and future leaders in their respective fields. For more information on K92's many ESG initiatives, I would encourage you to read our sustainability reports found on our website. Moving on to operational performance, during the quarter, Kenantu Gold Mine produced a record 39,101 ounces gold equivalent with 151,908 tons processed at a head grade of 8.7 grams per ton gold equivalent. Cash costs, $430 an ounce and all in sustaining costs, were $1,062 per ounce gold. Quarterly cash costs were the second lowest on record. For the year, we produced 117,607 ounces of gold equivalent, exceeding the top end of our updated production guidance of 111 to 116,000 ounces gold equivalent. Cash costs $585 an ounce beat the original guidance range of $620 to $660 per ounce gold and all-in sustaining costs at $1,162 per ounce also beat the original guidance of $1,180 to $1,300 per ounce gold. As annotated on the chart, oil and sustaining costs have been elevated for the past few quarters as the company continues to make a considerable investment in the Stage 3 expansion, with costs expected to decline considerably thereafter. In terms of our key operational quarterly physicals, K92 took a major step forward in Q4, delivering record total ore tons processed, record total development meters, and record total tons mined. A major positive for several quarters now has been the performance of the process plan, particularly after the commissioning of the final part of the stage 2a plant expansion in May. In Q4, the process plant throughput averaged 1,651 tons per day, exceeding the stage 2a design throughput rate of 1,370 tons per day by 21%. A new weekly record was also achieved in Q4, where we averaged 2,136 tons per day, which is 56% greater than the stage 2a design throughput. A daily record was also achieved in Q4 of 2,320 tons processed on November the 19th. Now that's 69% greater than the 2A design throughput rate. The process plant has certainly shown that if the tons are in front of it from the mine, it is extremely capable and provides significant optionality going forward. The records also highlight the potential that the Stage 3 process plant, which basically uses the same design parameters as the existing plant, is potentially capable of much greater than its nameplate design. I'll now turn the call over to our Chief Financial Officer, Justin Blanchet, to discuss our financial results for the fourth quarter.
spk01: Thank you, John, and hello everyone. During the fourth quarter, we had record quarterly revenue of $75.3 million, a 22% increase from prior year. We sold 33,273 gold ounces at an average realized selling price of $1,898 compared to 35,212 ounces at an average realized selling price of $1,652 in the prior year. As at December 31, 2023, there was 5,285 gold ounces in inventory, including both Concentrate and Dore, a decrease of 781 gold ounces when compared to September 30 due to timing of sales. During the year, we had record annual revenue of $200.3 million, a 6% increase from prior year. We sold 97,355 gold ounces at an average realized selling price of $1,869 compared to 110,654 ounces at an average realized selling price of $1,711 in the prior year. Q4 cost of sales was $35.9 million compared to $29.8 million in the prior year. Cost of sales is higher primarily due to the increased costs associated with the operation of the Stage 2A expansion with operational activity increasing from 121,686 tons in Q4 2022 to 151,908 tons in Q4 2023. For the year, cost of sales was $111.4 million compared to $96.3 million in the prior year, or $77.7 million compared to $74.7 million when you exclude non-cash items. Cost of sales before non-cash items on a per-ton basis decreased from 2022 due to efficiencies created with the Stage 2A expansion, which resulted in the company increasing total ore mined from 448,079 tons in 2022 to 506,318 tons in 2023. Q4 2023 cash flow from operating activities before changes in working capital was $38.6 million compared to $26.6 million in the prior year, a new quarterly record. For the year, we saw a record cash flow from operating activities before changes in working capital of $82.1 million compared to $72.5 million in 2022. As of December 31, 2023, we had $79.1 million in cash-in-cash equivalents and short-term treasury bills, while spending $64.2 million in expansion capital for the year and a working capital balance of $99.6 million. The company also has no debt on the balance sheet. As John mentioned, during the fourth quarter, the Kanantu Gold Operations produced 33,309 ounces of gold, 2,728,623 pounds of copper and 56,502 ounces of silver or 39,101 ounces of gold equivalent. We sold 33,273 ounces of gold, 3,061,956 pounds of copper and and 63,301 ounces of silver. We incurred a cash cost of $430 and an all-in sustaining cost of $1,062 per ounce of gold, which was significantly below our realized gold selling price of $1,898 per ounce. During the year, the Kanantu Gold Operations produced 100,533 ounces of gold, 7,690,477 pounds of copper, and 160,628 ounces of silver, or 117,607 ounces of gold equivalent. We sold 97,355 ounces of gold, 7,512,951 pounds of copper, and 159,202 ounces of silver. We incurred a cash cost of $585 and an all-in sustaining cost of $1,162 per ounce of gold for the year, well below our realized gold selling price of $1,869 per ounce. Our 2023 cash cost per ounce of gold increased to $585 from $538 in 2022. The increase is primarily due to processing lower-grade material compared to the prior year. It is important to note that we continue to see downward pressure on costs via economies of scale as operations ramp up and the Stage 3 expansion is complete. I will now turn the call back to John to continue with the rest of the presentation.
spk06: Thank you, Justin. The exploration and growth section will begin with what I think you'll agree is a powerful demonstration of the transformation and value created by K92 through exploration. This first long section is from May 2017, when K92 discovered Kora North. Kora and Uatompe combined had an inferred resource of 1.65 million ounces. The next launch action is from late 2021 with Cora, Utompy and Cora North combining to form one large resource, collectively referred to as Cora, and covering over a kilometre in strike and over a kilometre vertically. At this point, the high grade at Judd was only recently discovered and there was a limited amount of drilling completed. Fast forward to our latest resource announced in late 2023, CORA has significantly grown along strike and Judd has significantly expanded in all directions. In terms of numbers, the latest resource update increased measured and indicated by over 13% and inferred by over 70%. Grades reported are high. Measure indicated recording 2.6 million ounces at 10 grams per ton gold equivalent and inferred recording 4.5 million ounces at 8.5 grams per ton gold equivalent. Importantly, this was achieved net of almost two years of production depletion and was very cost effective with mineralization intersected in almost every hole and a discovery cost of less than $8 an ounce gold equivalent. The updated resource further solidifies Kenantu as a world-class, large, high-grade gold system, as shown in this chart provided by BMO. Now, in late February, K92 announced its 2024 operational guidance, forecasting production of 120,000 to 140,000 ounces gold equivalent and cash costs of $820 to $880 an ounce, all in sustaining costs $1,440 to $1,540 per gold ounce. Match costs and all-in sustaining costs are briefly elevated during 2024 due to the significant investment for Stage 3 and Stage 4 expansions which are underway. Production is expected to be strongest in the second half of the year as operations progressively expand ahead of the commissioning of Stage 3 expansion. In terms of exploration, the company forecasts spending between $17 and $20 million, and we see significant value creation in the near term from this. Lastly, the company forecasts growth capital of $145 to $160 million in 2024. and 40 to 50 million in 2025. The total growth capital is now forecast to be 210 million, which is a 12% increase from the stage four expansion PEA. And that's driven by global cost inflation as the study's effective date was over two years ago. And we've also had a few minor scope changes. We view this as a positive outcome. As well, we've been receiving many questions in relation to the elevated cash costs and all in sustaining costs. So we've created several slides which we hope will illustrate why costs are expected to be briefly higher over this 2024 period and why a significant decrease is expected upon delivery of stage three and then stage four expansions. The key point to remember is that 2024 is a transition year with a significant amount of investment being made in terms of sustaining capital, operating development and increasing overheads ahead of this expansion. We begin with the mining operating costs, which increase considerably in 2024 due to an increase in the total amount of waste tons mined. Importantly, this is a six-fold increase in operating development. from 2023 and that reports to our unit costs and our cash costs mining costs are expected to decline considerably at stage four run rate driven by the significant decrease in tons of waste that are mined the significant increase in highly productive low-cost long-haul stopping tons increasing from 25 percent in 2024 to 55 percent at that run rate And then, of course, the significant productivity gains from the underground infrastructure, which is being completed this year and early next year and will be discussed later in the presentation. In 2024, we've significantly increased the G&A costs on site ahead of that Stage 3 and Stage 4 expansion as we expand our workforce and support for the expanded rates. At the run rate, we expect only a moderate increase in G&A costs and the total G&A costs, while obviously significantly increasing throughput by almost threefold, thereby significantly reducing the unit G&A costs. In 2024, there is a moderate increase in processing costs due to additional overheads ahead of Stage 3 and Stage 4 expansions. With the Stage 4 plant operating at a throughput rate which is three times greater than 2024, we expect to realize significant economies of scale. The performance of the plant to date, as discussed earlier in the presentation, has been very strong, and we see potential to ultimately achieve better costs than the PEA in the processing. To summarize 2024 is very much a peak year in terms of unit costs and we see a significant reduction in all operating costs categories thereafter. Importantly, in addition to reduction in unit costs, the expansions are planned to deliver significantly more metal, multiple times greater than 2024, and at a lower total sustaining capital expenditure than 2024, which will further drive down cash costs and all in sustaining costs. We would encourage you to read these presentation slides in more detail after the conference call. In terms of our production growth strategy, K92 remains on track for commissioning the Stage 3 expansion commencing the end of Q1 2025, transforming the company into a Tier 1 mid-tier producer. As at the end of February, 49% of Stage 3 and 4 growth capital has either been spent or committed. In late March, GR Engineering commenced mobilization to site with the earthworks for the process plant largely handed over from K92 to GR Engineering as shown in this recent drawn image. The process plant is the largest growth capital package. It was awarded in July on a lump sum fixed price basis and significantly de-risks the project for K92. On the paste fill plant, front end engineering and design are almost complete. K92 has taken a lower technical risk approach for the design, producing a filter K product at the process plant as shown in the image on the right, then trucking the product to the underground paste fill plant the design shown on the image on the left through this approach paste fill for the entire mine plan is delivered through either gravity or a single stage of pumping orders for the long lead items pumps have been placed executing orders for the remaining items are well advanced and the tender process for construction is underway other surface packages for the expansion are also progressing well with contracts recently entered into for the maintenance facilities and the warehouse expansion Beyond the stage three, stage four expansion surface works, underground multiple near-term infrastructure upgrades are being put in place. The twin incline is effectively complete and as shown in the two side by side pictures here, the twin incline shown on the right is a major improvement and game changer in terms of our capability to move material out of the mine. We're looking at tracks which are 40 or 50% larger and travel at four times the speed from that which we're currently operating. The twin incline, as we've noted in previous presentations, is also capable of moving material well beyond the requirements of stage four. As part of the expansion, we're also putting in place the series of ore and waste passes to efficiently leverage gravity to connect the main mine to the highly productive twin-incline infrastructure. Raiseable works are planned to commence shortly. with the rig and heads on site. The underground setup is almost complete. The first race will be to upgrade ventilation in the main mine, followed by waste and ore passes. Upon the completion of the second race, which is a waste pass, we expect a significant ramp up in material movement rates from the mine. These various infrastructure upgrades, combined with a tripling of mining fronts in 2024, as shown on this slide, are set to fundamentally transform the mine and business over an 18-month period into a Tier 1 mid-tier producer. Now, in terms of exploration, we are drilling the Cora, Cora South and Judd South vein systems, the Arakompa vein system and the A1 porphyry. In late February, K92 announced the first drilling results at Aracompa in 32 years. Aracompa, as shown on the map on the right, is located approximately four and a half kilometers from the process plant, which is actually closer than Cora and Judd. Historically, Aracompa recorded limited drilling, with a total of 18 largely shallow holes drilled for a total of only 1,800 meters drilled. Our initial drilling results reported two holes, and they were quite exceptional. Our second hole recorded four high-grade loads, including 7.2 meters at 24.8 grams per ton gold equivalent, 5.7 meters at 9.9 grams per ton gold equivalent, 5.3 meters at 6.1 grams per ton gold equivalent, and 3.6 meters at 3.4 grams per ton gold equivalent. These intersections are within a bulk intersection of almost 220 meters at 1.59 grams per ton, with a higher grade core of almost 150 meters at 2.12 grams per ton gold equivalent. And as shown on the cross-section, mineralization starts near surface. While it's still early days, the target size is very large, with a non-mineralization strike of over 1.7 kilometers. within a 150 to 225 meter wide corridor and a non-vertical depth of 500 meters as shown in the plan view and long section here. The system is open in multiple directions. The log mineralization as shown in the core photos, which was also on display at our booth at PDAC for those on the webcast who viewed it, shows similarities to Cora and Judd. In terms of host rock, Arakompa is hosted in tonalite to diuretic rock, while Cora and Judd are hosted in metasediments. We're obviously very encouraged by the drilling results thus far at Arakompa, and I'm pleased to announce that a second drill rig has recently commenced drilling. With that, operator, we would like to commence the Q&A session. Thank you.
spk04: Thank you. To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then 2. The first question comes from Owais Habib with Scotiabank. Please go ahead.
spk05: Thanks, Operator. Hi, John and Kenai too. Just a couple of questions from me. In regards to the shutdown, John, you mentioned that the impact is going to be moderate in Q1 and Q2. What is the cutoff point where this shutdown starts to impact 2024 guidance? And is there an opportunity to catch up on the ounces that you lost in Q1 and potentially Q2?
spk06: Thanks, Aves. So I think, first off, in terms of Q1, we believe we're pretty close to our budget in terms of our production for Q1, which is obviously finished now, but we haven't finalized our accounting yet. Certainly in terms of our guidance for 2024, We are not updating our guidance based on this incident, and certainly we believe that we can certainly ameliorate the impact of the shutdown to a large extent. not least because, as you'll be aware, towards the end of the year, we start developing a fairly significant stockpile of material ahead of the commissioning of the expansion in 2025. In terms of when that would start impacting on our 2024 guidance, I would say it would be well into the second half of April before that had any potential to impact on our 2024 guidance.
spk05: Perfect. And John, do you have any stopes that are available to you right now in terms of blasting that you can recommence operations as soon as you get the order from the regulators?
spk06: Yes, we do. We actually blasted multiple stoves after the issuance of the Form 29, as they were already charged, and obviously we couldn't leave them to sleep for an extended period. So there were a number of stops that were fired immediately after the actual issuing of the Form 29.
spk05: Got it. And just further to this question, you know, I mean, this suspension, does this impact, you know, your underground development that you needed to complete in preparation for the expansion expected in Q1 2025? Again, is there a catch-up process there as well?
spk06: Yeah, look, certainly it does impact on our development. And yes, we'll have to catch up some of those meters. And that's something that the guys on site are looking at as to how we catch up those meters.
spk05: Okay, that's great, John. And that's it for me. So thanks for taking my questions.
spk06: Thanks, Ovais.
spk04: The next question comes from Alex Tarantiu with PI Financial. Please go ahead.
spk09: Hi. Good morning, everybody. Thanks for taking my questions. Just sticking with the same theme here from Ovais, correct me if I'm not understanding the Form 29 and the stoppage here. Devin Glennie, Assuming your appeal of form 29 doesn't work and see how much time would be needed for the various we'll call it, I guess, safety initiatives to to to be implemented in these memories request. Devin Glennie, You know just a little bit kind of confused or questions on you know what's actually needed to be done and how much time that will take before you can restart underground operations.
spk06: Okay, thanks, Alex. So two things. One is independent audit. We'll actually present the findings from the independent audit to the MRA on Friday. And I'll be on site on Thursday going through those. The second thing is the proximity system for our mobile fleet. And as we've said, that's something that we've already started a process on in terms of putting that system into our fleet. And we would see that we would be installing that later this month, starting to install that later this month. And those are the two issues that the MRA have raised. Okay.
spk09: And then during this stoppage of the underground, has any surface construction activities or any exploration been impacted?
spk06: At this point, surface exploration has not been impacted. And surface construction has not been impacted to this point in time. However, some surface construction would be impacted again if the suspension takes us into probably the second half of April.
spk09: Okay. Okay, great. And the last question kind of related, you know, you noted second half of April, maybe before your guidance is impacted, you know, suggest to me that there's, you know, some good grade, high grade tons that you can, that are available to catch up on here. But, you know, related to that, I guess, how much stock, is the mill still running at the moment? Do you have, you know, some low grade stock still available to be putting through the mill?
spk06: The mill is not running right now. We ran with stockpile. We had a program to replace both trunnion bearings, which was due to happen in the second quarter, towards the end of the second quarter. We brought that forward. And we've completed that. In fact, we just completed that. And we are also doing a realign on the mill, which again was scheduled for later in the quarter. So that the impact in terms of overall running time is not a significant issue for the mill. And I think as you're aware, Alex, the mill, actually runs at a higher throughput rate than the mine can produce, certainly until the fourth quarter of this year. But certainly, we had a reasonable stockpile prior to the stoppage, and we've milled that stockpile during the latter half of March.
spk09: Okay. That's it for me now. Thank you.
spk04: The next question comes from Nicholas Dion with Coromark Securities. Please go ahead.
spk07: Hey, guys. Congrats on the Q4, and congrats on the drill results at Arakampa. Just one for me, and sorry if you've already spoken to this, but maybe just to reiterate. It looks like a few items, including operating costs and mill throughput, are better than expected in Q4 on the Stage 2 mill. And so I'm just wondering what that might mean for the upcoming Stage 3 expansion, how many inferences or read-throughs we can make there.
spk06: Yeah, good question. Certainly, when you look at the numbers that we're getting out of the existing plant, I mean, it's doing up to anything up to sort of 50% beyond the design throughput. As you'd be aware, with a brand new plant, you already build in a certain amount of fat, I guess, for lack of a better term, into your designs. Generally, you... you look at the hardness of material that you're going to deal with, and you allow about 15% harder to be able to get your early rate throughput. In other words, you ensure that the mill can achieve the designed early rate when you're about 15% harder than the average of the ore hardness. We certainly believe that there is a very significant potential for the mill to do well beyond the nameplate capacity, which is the 1.2 million tons per annum. And we've, in fact, modified the design or the layout of the plant to allow us to be able to expand the float capacity at the back end of the plant in the event that we can get significantly more through obviously the mill itself being the part of the plant that basically determines what you can get as a throughput. So we've allowed that potentially we'll get a significant amount higher than the nameplate through the mill. That being the case, we've allowed to expand the back end of the float to cater for that. And already the filtration section is designed to be able to handle significantly more than that because it's designed for a stage four in any event.
spk07: Thanks, John. And just on the cost front, Ed, how are the costs?
spk06: Oh, on the cost front, yeah, look, certainly, you know, we've achieved our PEA sort of costs while we're running Stage 2a. That has potential for us to get, to see better costs mainly due to A, the overheads of people and management, B, in relation to power, in relation to reagents and those sort of things, they're pretty much related to your actual throughput rate. Not much potential there, but certainly in those two areas, we think there is a potential for us to see maybe 10% better than we've allowed in the PEA.
spk07: Great. Okay, thanks. That's it for me. Thank you.
spk04: The next question comes from Arun Lamba with TD Securities. Please go ahead.
spk03: Thanks operator, just in terms of development. So without accounting for the shutdown, I know you did just under 900 meters on average per month in Q4. Please remind us what the expectation is of where you're going to get to by the end of this year. Is it kind of slightly north than 1000 meters? What are the expectations?
spk06: The expectations are, as you say, a little north of 1,000 meters a month by the end of the year. And, of course, the meters that we're doing have changed significantly from last year. Last year, every month, we were getting over 200 meters a month out of the twin incline. And now, of course, with that completed, that means that the meters that we're getting are all associated with opening up the ore body itself. So just maintaining 900 meters, already you're putting 200 meters a month more into opening up the ore body itself. Got a little bit still going on puma, which is the twinning of the puma as part of our ventilation. But we're basically over 200 meters a month more going into opening up the mine because we're no longer doing the twin.
spk03: Thanks for that, John. And then just lastly for me, I know you're well-funded, $80 million in cash, no debt. Just in the MV&A, it kind of commented how the $100 million loan conditions haven't been satisfied to access that. Are there any major conditions that are pending to be able to get access to that facility, or is it simply given where the balance sheet is, you didn't need the money in Q1 and you're just kind of saving interest? Just any color on that would be great.
spk06: Certainly, we didn't need it in Q1. We don't need it in Q2 either. The only issue that we've got to finalize is approval from the central bank in P&G. And the approval from the central bank is both for the modified offtake agreement and for the loan itself. In Papua New Guinea, you have a gold export license. Every gold company has one. We have one. And every time you change an offtake, either for your copper gold con or for your bullion, it needs to be approved by the bank, which, of course, is fairly important from the government's perspective to ensure that you're not getting transfer pricing and all those sort of things that can occur. And so you've got to go through a process with the central bank, which you've gone through twice before, of getting approval for an updated offtake agreement. This is not, given that we get about three percentage points improvement in an offtake, that's not major, but it is a process that you go through. I actually met with the central bank last week and from them shortly.
spk03: Great. Thanks, John. That's it for me.
spk04: The next question comes from Andrew McKittichick with BMO Capital Markets. Please go ahead.
spk08: Hi, John. Lots of questions. Just one point of clarification. I think earlier you mentioned that because you're building or scheduled to build a material stockpile in the second half of this year, that to some degree gives you some flexibility in Dealing with this delay in mining, delay in underground development that's been going on here since March 13th is because essentially you can absorb some of that in the stockpile and or defer a little bit of that stockpile or development or mining into next year. Is that the correct interpretation of that comment?
spk06: Yeah, correct. We can catch up throughput in the third, fourth quarter if required. Okay.
spk08: Well, that's it for me. Thanks for all the detail, and I'm sure everyone's waiting for further positive updates from the MRA, and we'll stay tuned.
spk06: Thanks, Andrew.
spk04: Once again, if you have a question, please press star, then 1. The next question comes from Steven Sook with Stifo. Please go ahead.
spk10: Yeah, thanks, guys. Just a quick one for me. John, you mentioned you're doing a reline on the mill. How long do you expect that to take before the mill will be, call it, ready to be running again?
spk06: The reline would be ready by the end of the week, latest. Relatively short rubber line move.
spk10: Got it. And then just changing tracks a little bit here, I had a question about the taxes. They seem reasonably low on the cash taxes compared to the profit generated through the year. If you could just provide a little color there, is there incentives for the dollars being rolled back into the mine for the expansions, or how should we think about that run rate? Thanks.
spk06: Okay. Within P&G, we pay GST for materials that we purchase, et cetera, et cetera. And we're entitled to get a credit back for any GST that we pay. And the credit generally comes by reducing it from the corporate tax that you pay. And I think we've accumulated quite a significant amount of GST. And I think it's around $12 million. I'll just ask Justin just to comment on that. I think it was in that sort of region, Justin.
spk05: That's correct, John, yeah.
spk06: Yeah, so that would come off our corporate tax.
spk10: Okay, makes sense. Thanks, that's it for me. I'll open the line for anyone else.
spk04: This concludes today's, the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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