K92 Mining Inc.

Thank you for standing by. This is the conference operator. Welcome to the K92 Mining 2024 First Quarter 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 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then 0. I would now like to turn the conference over to David Medlack, President and CEO. Please go ahead.

Thank you, Operator, and thanks everyone for attending K92 Money's 2024 First Quarter 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 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.

Well, thank you, Dave, and welcome, everyone. As always, we begin with safety, K92's number one priority. Now, K92 has historically operated one of the best safety records in PNG as well as the broader Australasian region as shown in this chart. And as we stated in our previous conference call, we take the increased lost time injury frequency rate we achieved in 2023 very seriously. Multiple actions have been taken. Two independent safety audits have completed, the first in the second half of 2023 and the second in April of this year. While overall our systems were found to be comparable with other operations in Australia and the Asia-Pacific region, opportunities to improve safety were identified and many improvements have already been realized. Additional safety technologies have been progressively introduced, such as in-cab monitoring and the implementation of our proximity detection and collision avoidance system, which is nearly complete. Further enhancements and systems beyond this are also planned. I think culturally there are multiple positive leading indicators, including a significant increase in job safety assessments for several consecutive quarters. As part of our expansion process, management and supervisory capabilities have been enhanced and expanded, including to provide a major focus on safety and training. In Q1, there were no lost time injuries, and I'm pleased to highlight that this is now the third consecutive lost time injury free quarter. I'd like to reiterate that K92 relentlessly pursues our goal of achieving zero harm among our workforce. So I'd now like to provide an update on the non-industrial incident that occurred on the mining lease on March the 10th and which resulted in a deceased employee as well as the issuance of a Form 29 by the Mineral Resources Authority or MRA. I know that the Form 29 required a temporary suspension of underground activities on March the 13th as it was initially incorrectly interpreted as a mine accident. On April the 8th, we announced that the MRA had vacated the Form 29 through letter and the operations were resuming imminently. This letter followed a presentation that was delivered by the Independent Safety Auditor to the MRA, which highlighted that our underground safety management plan was good, conformed to criteria in ISO 45001, and had been implemented. The safety auditor also noted that no substandard document process or systems were found and that the underground safety management plan was comparable to other operations in Australia and Asia. Since restarting, operations ramped up in April and have now returned to normal and we're pleased with the focus and motivation of our workforce. In terms of the proximity detection and collision avoidance system, installation is nearing completion, as noted in the prior slide. Lastly, in late April, the coroner's report confirmed that the incident is non-industrial. It is deemed not to be a mine accident, and it is a jurisdiction of the Royal Papua New Guinea Constabulary or the police. On ESG highlights, K92 is extremely proud of its positive impact on women's empowerment. The five female graduates shown on the slide are within a larger group of outstanding female leaders and future leaders in our company. They work in a range of roles within the company, including but not limited to mining engineering, sustainable agriculture and livelihoods, finance and community affairs. Some of the female graduates are also previous scholarship recipients, including the inaugural Women in Mining Scholarship. Our women's empowerment programs are wide ranging, focusing on education and healthcare training and awareness, business development, developing our workforce, and partnering with academia and are designed to deliver long-term and diverse positive impacts. K92 is extremely proud of the positive impact that we're having in Papua New Guinea, and we look forward to announcing our latest sustainability report in the next couple of months. Now, moving on to operational performance, during the quarter, Kadantu Goldmine slightly exceeded budget with 27,462 ounces gold equivalent produced, even with the temporary suspension of underground operation for the final 22 days of the quarter due to that non-industrial incident. During the quarter, a total of 130,632 tons were processed at a head grade of 7.2 grams per ton gold equivalent, and cash cost $934 an ounce, all in sustaining cost $1,366 an ounce. As annotated on the chart, all in-sustaining costs have been elevated for the past few quarters as the company continues to make considerable investment in that Stage 3 expansion, particularly in 2024, with costs then expected to decline considerably after delivering Stage 3 expansion next year. I think it's important to highlight that the non-industrial incident had a moderate impact on our Q1 production of about 3,000 to 4,000 ounces, and we expect a moderate impact in Q2 as previously disclosed. Q1 was on track prior to the incident to be our best first quarter on record, and there's certainly a lot of positives to build on going forward. As outlined in our operational guidance earlier in the year, the second half of the year is expected to be our strongest. So we reiterate our 2024 guidance. In terms of key operational quarterly physicals, K92 has demonstrated the ability to sequentially expand the operation for several years, with physicals in Q1 clearly impacted by the temporary suspension of underground operations for the majority of March, as well as the completion of the twin incline. In Q1, a major positive in terms of operational physicals was realized with a process plant delivering multiple records earlier in the quarter. A new monthly throughput record was achieved in January, averaging 1,843 tons per day, or 35% greater than the Stage 2a design throughput. A new weekly throughput record was achieved in January, averaging 2,149 tons per day, which is 50% greater than the Stage 2a design. And finally, A new daily record throughput was achieved on the 21st of January of 2,389 tons processed, 74% greater than that stage 2a design. So the process plant has clearly demonstrated that with the tons in front of it from the mine, it is extremely capable and provides significant optionality going forward. I think the records also highlight the potential of the stage 3 process plant. which has used the same design parameters as a Stage 2a process plant and is therefore potentially capable of significantly greater throughput than the 1.2 million tonne per annum nameplate design. With that, I'll now turn over to our Chief Financial Officer, Justin Blanchet, to discuss our financial results for the first quarter.

Thank you, John. Hello, everyone. During the first quarter of 2024, we had quarterly revenue of $59.8 million, a 48% increase from prior year. We sold 27,996 gold ounces at an average selling price of $2,016 compared to 17,602 ounces at an average selling price of $1,807 in the prior year. As at March 31, 2024, there was 1,677 gold ounces in inventory, including both Concentrate and Dore, a decrease of 3,608 gold ounces when compared to December 31 due to timing of sales. During the first quarter, 2024, cost of sales was 40.9 million, compared to 23.7 million in the prior year. or $32.9 million compared to $16.7 million when excluding non-cash items. Cost of sales is higher as expenditures incurred during the temporary suspension were expensed directly to cost of sales. In addition, there was a reduction of costs capitalized as development. During the first quarter of 2024, cash flow from operating activities before changes in working capital was $20 million compared to $16.5 million in the prior year. As at March 31, 2024, we had $73.4 million in cash, cash equivalents, and short-term Treasury bills, while spending $18.1 million in expansion capital in the quarter. We had a working capital balance of $89.2 million and had no debt on the balance sheet. As John mentioned, during the first quarter, the Kanantu Gold Operations produced 24,389 ounces of gold, 1,443,300 pounds of copper, and 35,650 ounces of silver, or 27,462 ounces of gold equivalent. We sold 27,996 ounces of gold, 1,582,668 pounds of copper, and 38,812 ounces of silver. We incurred a cash cost of $934 and an all-in sustaining cost of $1,366 per ounce of gold, which was significantly below our selling price of $2,016 per ounce. Our first quarter cash cost per ounce of gold increased to $934 from $758 in 2023. The increase was due to the higher cost of sales mentioned earlier. It is important to note that we will 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.

Thank you, Justin. For the exploration growth section, we begin with an update on the Stage 3 and 4 expansion, which are designed to fundamentally transform K92 into a Tier 1 mid-tier producer through sequentially increasing production to 300,000 ounces per annum and then to 470,000 ounces per annum. Importantly, this transformation is happening near term with the commissioning of the Stage 3 process planned for late April 2025. I know this is a slight extension from our original timing of late March 2025 due to a longer and significantly wetter rainy season and also some impact from the Form 29 suspension. Now that delayed the completion of the site earthworks and subsequent handover to the contractor. Fortunately, the impact occurred early in the mobilization process, resulting in limited variation to costs. The delivery of Stage 4 expansion remains on track, targeting second half 2026. As at the end of April, 52% of Stage 3-4 growth capital has either been spent or committed. And as a reminder, the process plant is the largest growth capital package, and that was awarded in July 2023 on a lump sum fixed price basis, significantly de-risking the project for K92. We're pleased to report that GR Engineering Services, or GRES, is now fully mobilized on site. So this video clip begins with the design layout of the process plant, which, as outlined in the integrated development plan, is a conventional single stage crush sag-ball mill combination, followed by gravity and flotation recovery, producing a copper-gold concentrate and dore. The recovery method is the same proven method as we use in the Stage 2A expansion, with the new plant having a much more optimized design and an enhanced process control, which includes real-time product analysis. We now pivot to show recent drone footage of the construction site, starting with the primary crusher, where we installed pilings prior to handing over the site to GREZ. Now moving towards the surge bin and reclaims plus stockpile area, which is not on the critical path, so we've seen limited work to date. That's followed by the sag and ball mill area, which as you can see, GREZ is already well underway with work on the mill footings and foundation. And then towards the wet end of the process plant, where you can see GREZ is already underway, completed work on the concentrate and tailings, thickeners, footings, and foundations. Over to the right is the long lead and material laydown area. I think it's important to highlight there's been a surplus area for the construction materials and long lead items, which de-risks the project in terms of inventory management. Then in the far right are the offices for Gress and the various subcontractors, which are now operational. And then lastly, as we continue along, these are the designated areas for the reagents, water services and concentrate filtration and storage head. Again, this is not on the critical path, so limited work has been completed in this area to date. I think it's fair to say we're excited with the increased construction activity, which is gaining significant momentum, and we're looking forward to providing further updates on the process plant construction in due course. On the paste fill plant, front end engineering and design is almost complete. And as shown on this slide, we've got the latest designs. The image on the left is our tailings filtration plant design utilizing plate and frame pressure filters. The image on the top right is our surface storage system near the portal area for the filter cake and binder before it's transported underground to the paste plant itself. with the design shown in the bottom right image here long lead item ordering is progressing the pumps which are the longest lead item were ordered in q1 and the remaining long lead items are to be ordered shortly work towards award of the construction contract is well advanced Beyond the Stage 3 and 4 expansion surface works, multiple near-term major infrastructure upgrades that are fundamentally transforming the mine productivity are being put in place, with the twin incline already effectively completed. As part of the expansion, we're also putting in place a series of ore and waste passes to efficiently leverage gravity to connect the main mine to the highly productive twin incline infrastructure. As shown in the images, the raised bore rig and associated power pack is underground with electrical commissioning to begin imminently, followed by the commencement of boring operations. The first raise will be to upgrade our ventilation to the main mine, and that will be followed by waste and ore passes. These various infrastructure upgrades, combined with a tripling of the mining fronts in 2024, as shown in this slide, are set to fundamentally transform the mine and business into a Tier 1 mid-tier producer near term. Now, in terms of exploration, we're drilling Cora-Cora-South, Judd-South vein systems, Arakompa vein system, and of course, A1 porphyry. On May the 6th, K92 reported a total of 140 holes at Cora-Cora-South and Judd-South, which we believe continue to demonstrate that this is a world-class deposit with significant upside potential. I think for the results at Cora, there are three key takeaways. Firstly, is the discovery of a new potential dilatant zone to the south beyond the existing resource envelope, highlighted by hole KUDD0053 intersecting 78.5 meters at 27.3 gram per tonne gold. second is the expansion and upgrade of a large zone of high grade within the resource as demarcated by the larger lip with a dashed black line in multiple areas drilling results where higher grade than the resource with highlights including KMDD 0657 recording 6 meters at 47.27 gram per ton gold equivalent in K2. KMDD 0662, 9 meters at 40.35 gram per ton gold equivalent also in K2. And then KMDD 0634 recording 12.1 meters at 18.9 grams per ton gold equivalent in K1. These results I think are particularly important as they're immediately above the main workings setting ourselves up well for the stage three expansion over the near to medium term in that area. And then thirdly, it's a significant higher grade mineralization intersected from step out drilling to the south from the underground drill drives shown by the small ellipse located on the left, including KMDD 0652 with 9.3 meters at 15.3 gram per ton gold equivalent, and KMDD 0654A recording 17.5 meters at 23.79 gram per ton gold equivalent in the K2 vein. These holes continue to support our view that Cora, Cora South's best grade is at depth. i think it's important to highlight that exploration to the south continues to intersect high-grade copper as any as annotated in the k2 long section with multiple significant stepper intersections approaching four percent copper in addition to recording high gold these intersections have extended the high-grade copper zone further to the south and continue to confirm our thesis for high and potentially increasing copper grades as we drill further to the south towards the A1 porphyry. Now Judd also delivered some impressive drilling results with two key takeaways. Firstly is the expansion vertically of a high-grade zone, the J1 vein, as shown by the large dashed black line ellipse, and very importantly, at significantly higher grades than the resource with multiple plus one ounce per ton intersections, including JDD0025 with 4.1 meters at 69 grams per ton gold equivalent. jdd 0231 with 3.67 meters at 41.05 gram per ton gold equivalent and jdd 0239 with 2.7 meters at 44.48 gram per ton gold equivalent by cora this is particularly important as it's immediately above the main mine workings and so again it's setting ourselves up well for that stage three expansion into that area Second is the intersection of significant mineralization to the north from a 300 meter stepper in an area which effectively has no drilling, highlighted by KODD0055, recording 9.85 meters at 7.58 gram per ton gold equivalent. In late February, K92 announced the first drilling results at Arakompa for 32 years. Arakompa, as shown on the map to the right, is located approximately 4.5 kilometers from the process plant, so that makes it closer than Kora and Judd. Historically, Arakompa has recorded limited drilling, with a total of only 18 largely shallow holes for a total of 1.8 kilometers drilled, so averaging just 100 meters depth. Our initial drilling results reporting two holes were exceptional. The second hole recorded four high-grade loads, including 7.2 meters at 24.8 gram 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 gram per ton gold equivalent these intersections are within a bulk intersection of 219.8 meters at 1.59 grams per ton gold equivalent and within that a higher grade core of 149.4 meters at 2.12 gram per ton gold equivalent as shown in the cross-section mineralization started near surface and the entire width of that corridor is still to be drilled. Importantly, the target size is also very large, comprising a 150 to 225 meter wide corridor of mineralization containing these high-grade veins with a known mineralization strike of 1.7 kilometers and a known vertical depth of 500 meters as shown in the plan view and long section here. And as you can see, the system is open in multiple directions. We're pleased to report that exploration at Arakompa is accelerating. From the recent drone footage, we begin at the Arakompa exploration camp, looking towards the Markham Valley in the distance. The exploration camp, as you can see, is a significant facility, since we believe that we'll be drilling here for an extended period. As the drone footage rotates, the Kanantu Gold Mine Accommodation Facility, or Kumien Camp, which I think some analysts on the call would be familiar with, can be seen in the distance, with a process plant just hidden from view. And that's located, as I mentioned, 4.5 kilometers from Arakompa. We now pivot to footage of the exploration drills operating. Drilling at Arakompa commenced with a single rig, and after the exceptional initial drilling results, we've increased the number of rigs to two. We're shortly adding a third rig, with its drill pad construction almost complete. Conditions for drilling are good. The rock is competent and penetration rates and productivity are better than Cora and Judd. Now from the footage, you'll also notice that topography towards the Markham Valley is relatively gentle, with a positive attribute for constructing road access and hopefully the eventual transportation of mine material downhill to a process plant. Now here's some of the fresh drill core that our drone crew filmed as it was coming out. While the core footage is not from one of the high-grade loads, you'll notice that the rock is still well mineralized. An important feature of Arakompa is the presence of significant background gold-copper mineralization between the high-grade loads. This indicates, as we mentioned, the potential for bulk mining from those initial results at intersection of almost 220 meters at 1.59 gram per ton gold equivalent, within that higher grade 149 meters at 2.12 gram per ton gold equivalent. The rock, as demonstrated here, is competent, and the mineralization is certainly easy to visually distinguish. For the high-grade loads, the mineralization has similarities to Kora and Judd. We look forward to providing an update on our exploration at Arakompa in the near term. And with that, operator, we'd like to commence the Q&A session.

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 are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. The first question comes from Ralph Profiti with eight capitals. Please go ahead.

Thanks, Operator John. Thanks for the presentation and the videos. So firstly, as it pertains to development and total material mined, just wondering, you know, if you're, you know, the original target was 1.6 million tons of total material mined for 24. Just wondering if you're kind of back to that run rate, at least, and sort of whether or not that target's still good for 2024. Okay. Thanks for that, Rob.

It took us until basically end of April to get ourselves back up to our budgeted run rate. We obviously have dropped some of our meters of development during that suspension of operations. In terms of total tons mined for the year, we're still looking at that 1.5 to 1.6 million tons for the year.

Okay, great. Yeah, thanks. A question on the dilatant zones, and it's still early days, and we've got some indication on the May 6th press release on where you're going with that. I'm just wondering, even though it's still early days, is it the view that from a dimension of these zones that both vertically and along strike they're the same dimensions as the veins themselves, or are we going greater long strikes or perhaps even greater depth extent, dilatants versus veins?

I think I know what you're asking here, but let me answer, and if I didn't answer it, then just add to it. At this point, we think, and as you say, we've got limited information so far. It appears that the have more vertical extent than horizontal extent. So less a long strike, more dandip. It is still early days, but it appears that you have multiple dilatant zones. Certainly, we've seen at least one instance where a dilatant zone in Judd Patrick Corbett- is also in that same northing we're also seeing a dilatant zone in core which may suggest, obviously, with some sort of. Patrick Corbett- cross cutting structure that is contributing to that latency but again it's still it's still early days and we're obviously targeting some of those areas with additional drilling so that we can actually. David Sloan- fill out and understand what we've got because clearly they've got a very significant potential in terms of answers within the resource and also areas which can provide a lot of a lot of tons. David Sloan- At very, very good grades for for mining and will require some potentially some different design in terms of how we mine them.

Yep, that's what I was looking for. Thank you, John.

The next question comes from Alex Tarantew with Renton Financial. Please go ahead.

Hey, guys. Good morning. A couple of questions. First one on the traffic year alone. I know that it's been in works for a while. Any update there you can tell us? I mean, obviously, $73 million in cash in the balance sheet now, so there's no need to use that soon, but I'm just wondering any insights on the progress that would be appreciated.

Well, thanks, Alex. Okay, so the traffic loan, as I think you're aware, has two elements. One is the loan itself. The second is the new offtake. The new offtake provides approximately... an extra three percentage points of payability. The system in P&G is that the mine has a gold export license. It has it for life of mine, and that is issued by the central bank. The central bank then subsequently approves any offtakes. So we have approval for the current Rupert Clayton, traffic or alone and we have approval for the current ABC dory optic changes and you require central bank approval again and obviously that's to do things like stop transfer pricing, for instance, so they review the contract we've received the draft letter. Rupert Clayton, of approval. Rupert Clayton, For comment which we gave, and so now we're waiting the final letter of approval for. for the offtake and then obviously that then allows the loan. So it's just a process with the central bank, same as the Reserve Bank or whatever, and they are a quasi-independent government entity, same lines as you'd see in Australia or Canada.

Okay, good. Well, it sounds like it's making progress then. Okay, second question I have is then, Q1, obviously you guys had a bit of downtime there, but despite processing a bunch of stockpile, the grade was still pretty solid. I got to say better than I expected. Any color you can give on grades for the rest of this year or kind of what you're seeing now? Are they in line with plan or a little bit better?

Look, I think it would be fair to say that first quarter grade was better than budget. and uh we're not we're not sort of saying that that'll continue for the balance of the year uh so we're we'll obviously stick with our our budget in terms of what we're going to do be doing etc etc for the balance of the year um i i think the positives we've got right now is that we do actually have some stock i think we've already developed about 5 000 tons of stockpile So we do have some stockpile there. We don't see ourselves running with a high stockpile until probably the fourth quarter when our mining rate starts to accelerate and we start developing stockpile for the commissioning of the stage three plant. We're certainly starting to see more benefit from all the work that we've put in to open the mine up we have got certainly more flexibility than we had 12 months ago and so that does give you an ability to get maintain your your your grades and offset any lower grade slopes that are part of the plan to combine them with higher grade and maintain a more constant grade. And that obviously helps the plant as well in terms of recovery and operations. And I think we're certainly seeing in this corner, for instance, that our grades right now are running fairly much on budget. And our recoveries right now are marginally above budget.

Okay, great. You know, just one more, just if I may. Just curious, and your comments there kind of lead into this question, made me think about something here. With the Phase 3-4 ramp-up schedule, you're targeting mill commissioning in late April, but with underground mining, I mean, what's your target to kind of get to the 1.2 million ton per annum rate? I know, obviously, it does normally take some time. But then I'm just also curious, given the, you know, the, the success you guys had been having, um, you are already have the 500,000 or whatever it's 600,000 a ton per year mill at the moment running. Um, are you looking at opportunities to kind of keep that one going or it's just kind of shut it down once the other one starts up and then restart it once you have the capacity and just, just looking to get your, your latest on the, on the ramp up schedule and potential to keep tons even higher.

So I think from a mining perspective, you're looking towards the end of the third quarter next year to hit you 1.2 million tons per annum ore. So the idea is you've built up a stockpile and you start commissioning in the second quarter. You continue that into the third quarter while your mining is still building up. You've built that stockpile to help with that commissioning. I think at this point, it's very much the view that we would shut the existing plant down. As you say, it's 600,000 tons per annum capacity. And in fact, if you look at the peak throughput we've achieved on a daily basis, it's over 800,000 tons per annum. And on a weekly basis, it's like 750,000 tons. So the throughput of the mill is an interesting opportunity almost, if you like, in as much as the design parameters that we've used for the new plant are the same as for the old plant. So those design parameters said that the old plant could do 500,000 tons per annum. It's now doing 600,000 tons per annum, and it can do more. The design parameters say that new plant can do 1.2 million tons per annum. Now, as you know, with a plant, the main constraint is your crushing milling capacity, your combination capacity, if you like. The existing plant has an 875 kilowatt mill, and it's got a bit over 300 kilowatts of crushing capacity, 40 kilowatts of crushing capacity. So you've got about 1.3 megawatts of crushing milling capacity. And let's be conservative and say you're doing 600,000 tons per annum. The new plant has two of 1.85 megawatt mils, 3.7 megawatts, and about another 400 in the crusher. So you've got a bit over four megawatts, three times the power. And right now we're saying it's going to do twice the tonnage. So one of the things that we've done with Graz is that we redesigned the back end. so that we can add additional flotation capacity very easily. And the idea there is that with the de-bottlenecking and with the comminution capacity that we have, we believe we'll get significantly better than 1.2, and that's certainly initially the view of Graz as well. So right now, we have an integrated development plan that says get to 1.2, And that's, as I said, around the third quarter towards the end of the third quarter next year, and then continue to expand underground so that you can get back, so you can get up to a 1.7 million ton per annum towards the end of 26. And then restart the existing process plan. And so you do a step change, if you like, from the 1.2 to going up to 1.7 or potentially 1.8, we think it's more likely that you're going to be de-bottlenecking the existing plant and expanding what you can get through there. Now, that doesn't mean you're going to get to 1.8 in the existing plant, so there may be a step at some point, but you can see that we're starting to look at what is the potential for this new plant, and certainly we have a view based on what we're seeing in the existing plant that you're going to get significantly more than 1.2 million tons per annum through it and so you'll be coming back to how can you ramp up your underground and again things like these dilatant zones become an important part of that as does potentially things like arocompa as well so that sounds like a lot of good work ahead thank you thanks alex

The next question comes from Stephen silk with people, please go ahead.

hi guys congrats on the quarter just two quick ones for me here, I guess, just on critical path, you know with the. plant slipping a little bit and the underground obviously shut down for a few weeks, you know just wondering what kind of the critical path items are here. And then the second one for me, do expect to see kind of an elevated ASIC through the next three quarters to try and make up some of that ground that was lost in Q1. Thanks.

Thanks, Steve. In terms of a critical path, a critical path remains the plant. Obviously, we've got all the long lead items and what have you. And we'll obviously be looking at whether there's potential to bring some of those critical path issues in the construction and what have you back a bit and improve what we've given now. And we're working with Grez on that. And as you'd expect, within their contract, they've got a bonus for finishing early and a penalty for finishing late. subject to the usual things of extensions of time where there are circumstances, and there obviously have been in this case. The other critical path is in your paste fill, and the paste fill is commissioning in the third quarter. You absolutely want to have your process plant commissioned and stable before you start trying to commission a paste-filled plant. Although unlike many paste-filled plants, because we're doing a filtration to produce a cake and then transporting that by truck up to the mine area and then actually making our paste underground, there is more of a decouple from the plant to the paste-filled plant. and that's, I think, one of the advantages of it. So paste fill, third quarter, and paste fill is obviously important in terms of that ramp up of underground. So that's a key area for ramping up and maintaining that 1.2 million tons per annum and then building on it in the underground. In terms of costs, yeah, I would certainly expect that we'll see slightly elevated all-in sustaining costs, certainly in comparison to what we've done in the first quarter, as we do some of that catch-up, as you mentioned.

Perfect. Great. Thanks so much. That's it for me. I'll open the line to anyone else. Thanks, Steve.

The next question comes from Andrew McKittichuk for CMO Capital Markets. Please go ahead.

Hey, John. Congrats on navigating a challenging quarter. I think remarkably well. A lot of great questions have already been asked. Just two short ones. I just want to come back to this dilatant zone. Maybe you could just offer some sort of context as to where the areas where these dilatant structures have been intercepted lie in comparison to the existing mine plan. Is that already either inside the mine plan and the mine plan has to be adjusted for these different thicknesses or is it essentially right next to it? What is the actual logistics and timing and impact here?

Okay. Patrick Corbett- Certainly, for instance, the most recent dilatant zone that we've indicated is not in the resource area, so it obviously won't be in the mine plan. The current mine plan, which is the existing, which is based on the existing integrated development plan, it was Patrick Corbett- that forms the basis of a stage three and stage four development, did not have the dilatant zones because they weren't identified at that point in time. they have been identified as part of the updated resource that was put out late last year so that's when we moved from the the 4.9 million ounces to i think the 7.1 million ounces overall resource 2.3 i think it was million of measure indicated and the balance being inferred we're updating that integrated development plan, the 43-101, which will have the same as we had in the past. So it will have the stage three DFS, stage four PEA to take into account the expanded resource. And so the mine plan there will certainly have the dilatant zone that we had identified as part of the resource update in the mine plan. will not have the latest one because it's not in the current resource.

Just a quick financial question. The financial statements have a note disclosing the callers. What level of flexibility do you guys have to reschedule, delay, adjust delivery on those obligations.

Okay. Justin, do you want to answer that one? Sure. Thanks, John.

Excuse me. The financial callers are just based on the QP hedging, so for the three-month period, and they are fixed.

They are required to pay two months after settlement. Okay, I guess that's clear.

That's all I've got. I'll hand the microphone to the next speaker.

Thanks, Andrew.

Once again, if you have a question, please press star, then 1. The next question comes from Michael Gray with Adentus Capital. Please go ahead.

Good morning, John, Dave, Justin. Great to see the no LTIs the last three quarters. Great on the safety performance. Appreciate the answers, the detailed answers, especially on the design of the processing plant and the potential going forward in terms of expansion capacity. My question, just one question on the scope of the program. Can you just speak to the philosophy on whether you're going to really, with the three drills, sketch in the size of the system, both the high-grade and the bulk mineable potential? or are you going to systematically step away and build out resources?

Ira Compa is a bit of a moving piece. As we've indicated there, we started off with a single rig. We're currently running two rigs. we're preparing pads so that we can actually run three rigs for the balance of 2024. There were 18 holes drilled there previously, I think over a strike length of about 600-700 meters. 18 holes, 1.8 kilometers of drilling, so the average hole was only 100 meters deep as you as you would have seen from from what we were saying we're looking at a corridor which is which is around 150 to 225 meters wide and around you know one well we've seen surface that it goes for up to 1.7 kilometers so clearly the work that's been done in the past has not covered even the entire corridor. And in fact, I think today we haven't drilled anything that's gone through the entire corridor. So it is still early days in terms of understanding exactly what the potential of Arakompa is. Clearly, there is analogies with Korajat, if you look at the overall width there and the fact that while we have a J1, we've also got a J2, J3, J4, J5, don't have the same continuity as J1, but we're seeing perhaps areas where J2 comes in and has good continuity or better continuity. And we certainly think that there's probably one or two veins that are competent, have the continuity, and that's what's been shown in the past. And maybe the other ones are coming and going. But it's still really early days yet. We initially certainly had envisaged that it was very much a core style mineralization and that we were targeting a high-grade vein because that's what the previous work had sort of indicated. We think potentially the previous work may while it's got a continuity and showing a vein, they may not necessarily have drilled the same vein at each time that they've done it. I don't think they, we still don't know. So it's still very much developing in our own mind. We are looking at an initial resource. We'd initially thought towards the end of the year, but it'll probably be into the new year, looking to get an initial resource at that point, which will then help us determine how we want to take that forward. Because certainly the initial idea was very much a Kora-style development. The fact that it's on top of a hill, we've got over 500 meters of of vertical extent and potentially more. And the bottom of that hill is around that 800, 700 RL, similar to what we're seeing at Cora. And so the idea of replicating the going into the side of a mountain and up on a high grade system was obviously an attractive model given the proximity to the plant as well, where it's actually closer to the plant than Judd and Cora. And in fact, it's an easier run. It's a very gentle run in there. There's no major river to cross, et cetera, et cetera. The bulk mining, of course, potentially changes that quite dramatically in terms of just the volume that you'd be and the fact that you'd have to build a brand new plant and a big one. High grade, as I said, we've got this thing where the new plant certainly we believe is going to do significantly more than 1.2. And does that give you the potential to have the existing plant sitting there waiting for something like Arakompa to run it and being able to run both of those things at the same time? early days and and we're and we're sort of painting pictures right now yeah and perhaps sometimes we run ahead of ourselves because this whole region just seems to give and give sounds like it's going to be dynamic i know i appreciate the background and um very exciting thank you thanks mike

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