Mountain Province Diamonds Inc.

Q4 2022 Earnings Conference Call


spk_0: the morning ladies and gentlemen and welcome to the mountain province i and could do for for and fourteen two thousand and twenty two conference call and webcast at this time i'll answer no listen only mode oh into presentation will will conduct the question and answer session and if at any time during the schools require immediate assistance please by start with zero for the operator this school is being recorded on thursday and much twenty three two thousand twenty three and i would like that during the conference over to mark wall president and ceo be school
spk_1: wide thank you very much good guys to every one resolving solution to a to for and four year one twenty two results for one am his born worn on the president and ceo of the company also present on his call is stephen thomas se a phone read mackey a vice president and head of sales and marketing look file a teacher officer doctor april hi would achieve sustainability officer and doctor tom mccandless a vice president and head of exploration the team will be viable for any questions you might have at the end of this pool firstly would like would want to draw your attention to a cautionary and forward looking statements this presentation will be posted on our website for anyone who needs additional time to review the statement mountain province is a canadian and producer mining canadian diamonds to the high standards of corporate social responsibility and that's something that we continue to be proud of we own forty nine percent of the get to play mine in the northwest territories with the be as owning the remaining sixty one said we operate with a joint venture agreement with a foreperson management committee to from the these into from our province we have appointed to be as the operator of the acid and that has resulted in the operating systems have to be as an anglo american being applied to the assets including the high standards of course corporate social responsibility that i've already mentioned in addition to the five thousand two hundred and sixteen hector's of joint venture brown concerning the existing mining operations mountain is the one hundred percent on of more than one hundred and thirteen thousand hectares of holly perspective brown that sounds to get your classes that we refer to as kennedy north project did i'll speak to twenty twenty two and four years and twenty twenty two to four results and how mountain province diamonds has changed as the last twelve months i'll speak to our focus areas for twenty twenty story and give a high level outlook for twenty twenty four matter city i will provide enough day on the work were doing around growth and the preliminary results so far stay the same time will discuss the financial performance of the company and read ahead of sales marketing with bought an update on the doesn't market and all then close out the presentation while there are many positives from twenty twenty two that all get into it in a moment the safety performance of the mine did not meet my expectations including a trilogy fatal accident german court a story and will never and be is have undertaken an exhaustive investigation to avoid a similar incident with regards to this type of heavy mining equipment anywhere else in the world and the side management same a laser focus on ensuring a safe work place in twenty one ensuring the safety of all workers a the employees or subcontractors must be a ferrari before we turn into a twenty twenty two resulted it's helpful to review the situation at the end of twenty twenty one when we had three hundred million dollars us in bombs terming in december twenty twenty two with no refinancing in place and concern among some shareholders that this would be a hobby deluded thing we had it gets a bit or ratio of around two point nine to one we had a twenty twenty four mine plan that was away on three point two million carats as reportedly have forty three one i one typical reports were approximately two hundred and seventy million dollars is right down sitting on a balance sheets we had no money serial organic growth prospects on the joint venture land we had a twenty nine same forty three one i one technical report implies valuing our share of the joint venture at five hundred ninety five million canadian dollars pre tax free royalties andrew review the situation again later we have refinance their bonds that a non per cent coupon with zero the dilution the shareholders this attractive refinance was once again supported by a major shareholder mr down with desmond amongst others we also repay us sixty million dollars in debt during twenty twenty two from operating cash flow we moved our trailing get to a the from around two point nine to one to around one point nine to one at the beginning of twenty twenty fourth we might a significant discovery the and connected to the her not the kids that is potentially a catalyst to transition get your place to an underground producer with additional drilling on the what giving the a transition to undergrad morning proves to be feasible and we're setting that potential right now this would lead to significant mine was extension are also studying any potential opportunities to bring the kelvin and florida deposits into any future plan we completed the work to write back two hundred and forty million dollars on the year in twenty twenty one balance sheets driven by the improved company and market outlook during twenty twenty two we updated and issue that forty three one or one typical report on the get to play mind showing a pre tax free world fiancee the have one point three billion dollars and improvement of or six hundred and thirty eight million dollars on the previous study leading to an afterthought that's insane of nine hundred and sixty four million can i mean dollars on our share of the gotcha class it on when the twenty twenty four my plans been revamped from that published in our light forty three one i one with the planned current production increased to twenty twenty four hour to be a plans year a positive cash flow an additional debt reduction the twenty twenty two production plan was on the significant pressure with a tenfold increase in sight cause nineteen cases the twenty twenty two compared to twenty twenty one the recovery plan developed let the mind to produce five point five two million carats to the year with a strong team for in a challenge me to for inflation and cause we can find that cause despite the additional expenditure on target nine same related matters inflation across the spectrum and very high diesel prices to finish the year at the bottom of the original guidance for cost to tom frieden and one dollar above original guy audience for cost per carat produced all that coming together to deliver a record annual adjusted ebitda at one hundred and seventy seven point two million dollars i would some up twenty twenty two as a year with many difficulties and challenges and also one with many achievements as i believe we left twenty twenty two much stronger than we entered into it on support of for and soviet results a quick review of the four year twenty twenty two highlights as i've already stated
spk_2: and adjusted ebitda of one hundred and seventy seven point two million dollars revenue of almost three hundred ninety nine million dollars the highest revenue in the company's history average value per carat of us one hundred and twelve dollars and the successful respond
spk_1: dancing transaction as already stated with no dilution to existing shareholders despite the challenges and twenty twenty two we saw production resulting to for reflective of what the mine is capable all with production of one point six two million cars the fourth quarter represented a twelve percent increase in car production relative to keep three and a twenty nine percent increase relative the key to have twenty twenty two we were my intensive to managing be inflationary cost pressures seen across north america one of the signs on balancing the operational in human resources to mom's required to run or were month mining operation with a skilled workforce as with any mining operation with such a high ratio of six costs relative to the variable the main driver of valuable always tend to fall on how many times can be processed especially in our case where account we have a large stockpile ahead of plan this effectively means the plant utilization must be maximize which is a key metrics we will continue to focus on that will go into more detail on the operational aspects of quarter for in the next few minutes but i'm starting from home and on the sustainable development efforts to twenty twenty two the team continues to work hard to further his community involvement the national mourning association of canada rewards for the me hardy har joint environmental monitoring programs was certainly a highlight for me the award of twelve scholarships by guess who play mine to the top northwest territories graduates from of or correlate colleges early learning and showcase programs was another highlight the scholarship so many potent funding gap part time students living in the northwest territories who are ineligible for government funding because of the part time status another program that i believe is especially powerful is the recently launched baby bundle program in this program to get a clear mind has partnered with the government of the northwest territories to tackle the issue of infant mortality in the northwest territories it was determined that many cases is different mortality would preventable and this led to the development of this program were around six hundred baby bundles will be delivered to every mother of an infant born in the northwest territories for the next four years all hundred of these bundles have already they distributed but my cup of these bundles has been determined by the health ministry and includes essential supplies information and resources to help new mothers and you families during the important early size of a child was now moving to twenty twenty three and a year ahead as strategy remains consistent firstly we will continue to focus on safety sustainability and operational performance at the mine level second level focus on organic price of get your playing kennedy both on the undergrad the central we're viewing options to include the thirteen point six million indicated carrots and seven point four million in third carrots from a tell when unfounded deposits into possible mine plans as well as a targeted exploration program third we will continue to improve our balance sheet by working on reducing dead directional lean towards a one to one to a the ratio as we focus on continuing to repay debts awards at target will we would review all opportunities to minimize get costs and maximize cap little allocation options and force we will continue to optimize assault pipeline and look for ways to manage your costs for benefiting from uptown nimble cells platform your i raised or twenty twenty four mine plan while it's not necessary to review and update our entire point three one one typical for it is appropriate to provide a general outlook on productions twenty twenty four which due to a widening of your body and other changes is now estimated to be four to four point for me you cowards up from the three point two seven six million carats as published in the time forty three one oh one technical report while some additional parents have come into the plan on to the loss of the mine the overall plan from twenty twenty five onwards is material the sign we will continue to review the twenty twenty four plants as a part of the normal strategic business planning process during this year to see through the optimization an improvement we are now isn't twenty two thousand and three we know that quarter one forget your claim is a very busy time with almost four hundred kilometers of australia's having been constructed and the movement to the mind of most of the stores in equipment for the years taking place that work is on schedule and going well at the signs on morning and processing operations take place to the coldest temperatures and the most challenging conditions of years with temperatures the range of minus fifty degrees not uncommon for few one is always a challenge it sets the operation operational to deliver results through the form here
spk_3: a woman help hand over to our city or that and fall to provide additional details on our operating results
spk_1: thanks mark
spk_4: now going to walk through to for is operating performance with some reference to four year twenty twenty two results as well
spk_1: during the fourth quarter
spk_5: ten point one four five million times where mind total times or plus waste which includes seven hundred six thousand or times that compares to ten point eight one three total tons mind and one point o two million tons of aware that reminded to four of twenty twenty one what processing and twenty twenty two to four the process plants reports at eight hundred twenty thousand tons of kimberlite added average grade of one point nine six cares for time which resulted in seven hundred ninety four thousand carats recovered attributable to mounted province
spk_1: or this processing result the bridge to queue for of twenty twenty one the year prior where we process eight hundred thirteen thousand tons at a great at one point eight six where we recovered seven hundred and forty one thousand carats recoverable attributable to mount province and one point five one one at a hundred percent for the entire twenty twenty two operating year we mind almost thirty four million total times including four point one million tons of or also and twenty twenty two three point one million tons process to navigate one point seven eight across a year for total attributable care production at two point seven million carats or for a point five two on one hundred percent basis your prior to that twenty one we process just shy of two point one million tons of or at a great have to point out to slightly higher grade which resulted in just over three million church recovered of trip it over to us and six point two two nine at one hundred percent
spk_5: so to summarize twenty twenty two his performance with processed almost the same quantity of or times as in twenty twenty one albeit at a slightly lower grade resulting in fewer carrots recovered start up twenty twenty three were well positioned with stockpile et year and twenty twenty two over one point seven million tons containing over two point seven million carats
spk_1: i will build on the stockpile and twenty twenty three as the or mighty outpaces the plants throughput rate this was set up well for twenty twenty four where we enter a period of highway stripping testifying down through the top section of the to so or body
spk_5: now moving on to the hearn northwest extension and our or granic organic growth opportunities at the mine
spk_1: i'm on a touch on some exciting things were working on to a non unlock value at doctor quake as you may recall and twenty twenty two we discovered what we now call the her northwest extension a previously unknown occurrence of kimberlite part of the heard our body and last year the jv drilled this extension to better understand it extends and now and twenty twenty three are continuing to drill destroy campaign at home
spk_5: the newest round of drilling at her is focused on testing the extensive the or body gets gets as well as generally increasing our understanding of the or body below the current pit
spk_1: additionally this year's program has meters allocated to the any x and to the or bodies with a similar goal a better understanding is or bodies below the current pit limits all this resource information is feeding into our internal study which is looking at the potential gotcha quaid transition to underground mining early indications are positive but the remains much work to be done we expect to be able to share more information with the market regarding the progress of these initiatives in the later stages of twenty twenty three
spk_6: now going ahead of back over to steve are cfl who's gonna run through the financial results of the company for to four and twenty twenty two thank you ma'am and good morning everyone five months ago having just don't become the i said did i was looking forward to being able to to future financial progress to the company building on the strong performance in twenty twenty one i'm pleased to say that i can do that this morning given the financial results for twenty twenty two
spk_1: before discussing specific aspects of the financial results and since and material transactions flowing into the twenty twenty two financial statements on the says provide a high level financial or to deal with the business although over year so some operational changes impact done in recovery the benefit of cost control and some time and price on the underpinned recruit financial results in respective turn over and earnings from operations were normalized he twenty twenty one for the exception will impact
spk_4: been ten reversal netflix russo said for operating income net income earnings per share and adjusted ebitda
spk_1: the balance sheet with strength and considerably with the company refinancing by and long term debt on competitive to notion terms of use without any dilution to equity the succession refinancing was achieved with a nude commitment from our team and as and in particular a major shareholder mr tusk it is worth noting also that we should public financing achieved the going concern know which has been in the financial statements skew to twenty twenty initially due to concerns about coded impacts but more recently reflecting the pending refinancing challenge has now been removed from the statements with both concerns effectively manage
spk_4: lawfully to the twenty twenty two financial statements you wouldn't report from kpmg is by situated in respect to the current year twenty twenty two numbers and twenty twenty one comparative as we voluntarily be registered to terminate as you see reporting obligations
spk_6: perry our intention announced in twenty twenty we expect the simplifications to deliver corporate cost efficiencies going forward
spk_7: now turning to the balancing the year and so too long term debt of two hundred and forty five million us comprises one hundred ninety five million u s of nine percent senior notes june twenty twenty five and the fifty million us dollar junior secured
spk_6: reddit facilities june twenty twenty seven during the year we pay down a hundred and ten million us against is expiring senior secured notes using sixty million dollars from operational cash flows about drawing down the junior credit facilities in two for twenty twenty two a choose changes in the above debt instruments has had material impacts in the financial statements on i will highlight those shortly not surprisingly the were teaching working capital position of the company has changed significantly to have positive balance of a hundred and twenty nine million dollars for twenty twenty two compared to the negative two hundred and seventy six million or twenty twenty one year round a negative one hundred makes two million at the start of the quarter this is due to the debt was classification in twenty twenty two now as long term debt
spk_1: absent back impact the comparable working capital numbers would be one hundred million dollars for twenty twenty one compared to this is a hundred and twenty nine million looking at current assets valued inventory other one hundred and sixty one million dollars though consistent with the parents at the start of the quarter has changed materially from one hundred and ten million dollars at the end of twenty twenty one
spk_7: this increase of fifty one million dollars is largely explained by a twelve million dollar increase in supplies resets in the higher volume and terrorism cost of few housing stock which was purchased ensued love twenty twenty two with prices spiked due to the invasion of are you
spk_6: ukraine for this year i can confirm that navy own few has been delivered on the winter road at twice the skin line or below budgets
spk_1: secondly the significant increase in the value of your stockpile by twenty six million dollars doubling its value compared to get rained twenty twenty one reflects the planned grumps in the volume of your stockpiled point one million times over the course of the year which from source future process store
spk_4: lawfully the value of rough diamonds which are passing through the same was pipeline as increased by twelve million dollars for in a nine percent increase in volume and eighty percent increase in costs per carat much of which is attributable to not in the cash depreciations accounted for in the stock
spk_1: would you current assets is a two to two million derivative asset an increase of approximately one and a half million compared to twenty twenty one
spk_6: three million of the twenty twenty two balance is the found you assigned to the redemption features within the see a secured notes which constitute an embedded derivatives asset this value is offset by in derivative liabilities translated on outstanding hedge currency products valued at nine hundred thousand dollars
spk_1: with current liabilities the one liability reflects the says value of the warmer right hold under to related party junior credit facility establish the team won twenty twenty two the chasing valuation is primarily due to changes in the volatility and risk for your interest rates factors underpinning the calculation causing the liabilities to reduce in value from fifteen million dollars as reported in two one two seven point two million dollars now
spk_6: we didn't long term liabilities is the canadian dollar equivalent value of the us one hundred ninety five million secure you notes table and the us fifty million junior credit facility translated as the prevailing year and the rate of one point three five five canadian to the us dollar as mentioned earlier you need to leave in twenty twenty two specifically to for impact of the increase in each restraint in the junior credit facility is booked in town in that period and that results in a ten million dollar increase in the carrying values alone
spk_1: and the finance expense which impacts net income this noncash impact to now will have the effect of reducing interest charges going forward
spk_6: secondly to note so that facility the change in terms to differ interest and principal payments until after the secured loan notes or repaid resulted in a five million dollar reduction in the you value of the decks and an equivalent deemed it's will contribution as the lungs provided by a related party didn't bridge worldwide limited irrespective the secured notes payable accounting value of the loan isn't to spite of what size transaction costs of seven million dollars which comprises the original submission discount asleep to send a collision us dollars five million plus capitalize transaction related fields and
spk_1: that is offset by the three million dollars in bed it's derivative asset mentioned earlier other material liabilities on the balance sheet includes the decommissioning and restoration liability which has reduced by twenty million dollars since the start of the year due to the significant increase in the risk free interest rate in that calculation increase in the fourth quarter for the commission's liability by three to four million dollars is in line with the increase in the i'm discounted liability which reflects the impacts of increase inflation assumptions in those catch fire
spk_6: lawfully the different tax liability which is established in respect of future mining village table have increased by approximately twenty one million dollars a year resetting setting the profitability of twenty twenty two with taxable production income or hundred and sixty two norman millar yeah and dollars that searching the said which has been deferred through the utilization of available testicles
spk_1: turning to our earnings he twenty twenty two the company sold approximately two point seven million carats at an average prices us one hundred and twelve dollars per carrots or hundred and sixty forty six dollars canadian to generate three hundred ninety million eighty nine million dollars in turn over
spk_6: this compares to twenty twenty one when approximately three point two million carats was sold and an average price of us seventy five dollars for terrorists or ninety four dollars canadian for revenues of two hundred ninety eight billion two for sword seven hundred and fifty eight thousand chart sound us dollars ninety four dollars a corrupt compared to a hundred nine thousand character at us eighty four dollars to paris in the comparative to for twenty twenty one period
spk_1: those price as expected as come off of the unprecedented pizza next one it remains at a very healthy level to the end of the year production costs of you managed in line with plan despite the general inflationary pressures the material spike and fuel prices are rising into one twenty twenty two of the cost of hurting to us to weekend and out like the schedule and specific code be related to venture measures the test foster son who treated next have capitalized or thing as eighty nine dollars a tonne remains as third twenty twenty one
spk_7: this resulted in earnings from operations for twenty twenty two of a hundred and seventy million dollars compared to a hundred and forty million for twenty twenty one and signal these tests general right
spk_6: he has generated slows from operating activities for twenty twenty two was a hundred and seventy three million dollars versus a hundred and thirty in twenty twenty one and that enables the sixty million dollars pay down us of the local know mentioned earlier before i moved to discussing net income it is worth noting that twenty twenty twos adjusted ebitda was a record after hundred and seventy seven million dollars versus a hundred and thirty five million for twenty twenty one
spk_1: the result in ebitda margin based on sales is forty six percent in twenty twenty two comparable to forty four percent for twenty twenty one no gap measure is formulated to normalize for some of the flyers which passed three income statement to derive the next income number which is seventy point four million in twenty twenty two e's materially different to the two hundred ninety seven million dollars for twenty twenty one that was due to the two hundred and forty one million dollar impairment reversal so in twenty twenty one absent that transaction the comparable eat dog number for twenty twenty one would be approximately fifty six million dollars looking for adjusted ebitda a key for a twenty three point four million dollars compared to the food year of hundred and seventy seven million looks disproportionately large
spk_6: the main drivers for this is the impacts of the twenty point three million dollar noncash realized sx lost a rising chiefs all on the cancellation of the existing debt that shit that quarter compared to the full year equivalent impact of twenty three million dollars
spk_1: within the food you eat it or of hundred and seventy seven million if these respective realize losses were excluded from to for and the phone jury better off than to thought would be approximately one quarter of the soviet a bit our amount
spk_5: specifically a deriving net income for twenty twenty two at seventy point four million dollars the nets finance expense of forty six point four million compared to forty point four million in twenty twenty one include several material adjustments equaling fourteen twenty million
spk_6: dollars and rising irrespective accounting for certain aspects of both lungs ten million of which is expected the junior credit facilities which i mentioned earlier other region cause of six point five million is explained by the six point two million dollar reduction in the fair market value of a liability for warrants which i also disgusting of the derivative losses of of the derivative loss of two point five million for twenty twenty to one point five is ineffective currency contracts have settled during the year with the hedged right below the providing spot run your privilege derivative lacing twenty twenty one was negligible the company continues to use country hedging to fly certainty in canadian recruited results from which all income is ambiguous dollars that nearly navy operating costs are included in canadian dollars
spk_1: other than says a payment of interest on loans and some marketing related costs this policy will continue in twenty twenty three with an intention to cover approximately sauce if i'm canadian dollar costs three pages
spk_6: the foreign exchange loss of twenty eight billion dollars for twenty twenty two compared to a and of two point three million dollars for twenty twenty one reflects the significant sense name of the us dollar over the year from an open exchange rate with two to six to a clumsy right have one point three five
spk_5: the last prices are realize loss of twenty three million dollars in respect of the see me a secured loan know section as rights
spk_1: the are different to those that with providing and when they're young was taken out in december twenty two
spk_6: young realized loss of five million is primarily in respect of the translation of the junior credit facility from the rate of one twenty five providing when the money was taken out march twenty and twenty twenty two compared to be arrangements says right of one point three five and it is notable that into for there is a five and six million dollar fx game as the us so they're actually weekend from the opening right one point three eight to the closing ranks of one country size
spk_1: moving to net income off the tax for twenty twenties to there is a deferred tax of twenty one point two million dollars in the morning routine and that is similar in quantum to listen to the tougher tax charge of twenty point seven million dollars arising in twenty twenty one
spk_7: all of the above results in a medic income of forty nine point two million dollars for twenty twenty two compared to two hundred and seventy six million dollars and twenty twenty one which excluding new payment reversal impact of two hundred and forty million with comparably be approximately
spk_1: thirty six million dollars
spk_4: twenty twenty two net income equals earnings per share of twenty three cents on a basic and fully dilated basis and succeed for with net income of nine point four million sword cents per share on a basic and diluted basis
spk_6: specifically net income taxes for is lower than the average for the previously sequences given the comparatively lower selling price compared to the average for key want to three but help by proportionately higher volume of same thing to for at twenty nine percent of the food is sad additionally the impact of the unique ten million dollar finance expense landing in that quarter if adjusted for would result in cheerful for being a relatively profits food period compared to previous foetus in conclusion twenty twenty two seem becomes destabilized it's financial position with three and five year term loans which provides management with adequate one way to formulate the have to tap them structure going forward helped by a deliberate balance sheet
spk_1: the company made significant inroads into reducing the deaths and intends to do so in twenty twenty three and returned the capital to the lenders who have long supported the company
spk_6: this financial goals will be delivered as the company continues to generate the significant cashflows seen in twenty twenty two which will be achieved through driving production to me guidance and benefiting from our sales process the capitalizes on the positive market sentiment seen throughout twenty twenty two
spk_8: and would just continue into twenty twenty three a that provides an appropriate segways to turn the presentation overturned read maxis of the p diamond in sales and marketing read
spk_5: thank you steve after comments on the down and market twenty twenty two which was certainly in a bad for your fur traders it all started on an exuberant dealt with strong rough diamond price increases low inventories ever bus demands throughout the done and pipeline
spk_9: but russia's invasion of ukraine rising inflation and ongoing covered lockdowns in china brought uncertainty to the rest down and market and left on and prices
spk_5: van for palestine softened and manufacturers began to accumulate higher inventory particular in the top and categories of polished this was met with rough market price decreases during soo choo choo train as year progressed can see consumer spending in the us kept the market steady crisis from later and que three and which reports of solid sales during the all important us retail holiday period
spk_9: positive price or match and was restored by year end and this was helped by an easier time at zero cloud covert policy which fjord hopes of a research and chinese retail sector and boosted market sentiment market sentiment
spk_5: at the end of the year and into twenty twenty three
spk_9: one team market development we saw during twenty twenty two with at smalls proud that other lower price point diamond saw sustained price growth which is this last year in the misty price performance by size index we continue to see that these categories of diamonds are experiencing strong demand alongside reduce supply as a market continues to adjust to the closure of ago and the reduction and supply caused by sanction on russian diamonds
spk_5: worth noting here get over forty percent of the value of get your place production profile comes from got smaller than one church which positions man province well to benefit from this development
spk_10: the to for twenty twenty two prices for larger higher value rough diamond assortments also stabilized and though the outlook for twenty twenty three as cautious for this category the market is looking for to positive movements here when china replenishes it's stock at the recently added recently reopened jewelry
spk_9: tell sector lastly we see overall that increasing consumer demand for ethically and sustainably source scans is driving to roll out of provenance and traits ability platforms through the diamond pipeline down to retail
spk_5: and we look forward to this evolution towards positive marketing based on a done his origin as a development that will further support demand for our product and twenty twenty three and well into the long term
spk_11: and with that are headed back over to mark for his closing remarks
spk_1: thanks right as you've heard twenty twenty two was a transformational year for the company to rewrite our priorities as we move and twenty twenty three firstly will continue to focus on safety sustainability and operational performance at amman on level secondary will focus on organic growth at gets her quiet and kennedy both on the off ramp potential reviewing options to include the thirteen point six million kind and seven point four million instead carrots from kelvin and found i into possible mine plans as well as a toddler exploration program certainly we continue to improve about shaped by working on reducing reducing get directional a towards the one to one day to the the russia as we focus on continuing to repay debt towards our target we will review all opportunities to maximize to minimize dead costs and maximize capital allocation options and force we will continue to optimize the south pipeline and look for ways to manager costs for benefiting from animal sounds platform that raises just described we to twenty twenty three with a robust on and market with strength in the small gym coli goods the we're known for in a world where the production of that will diamonds has been in decline from twenty seven same levels we continue to has the advantage of delivering canadian diamonds in school market for a purchases care about diamond origin even more so in the backdrop of the ongoing conflict in ukraine we have a growth plotline to keep us focused on ways to extend the mine was as we work with the be is on delivering india sites production
spk_0: my take is now available to take any questions you might have think you need a suggestion we will help it into question and answer session should you have a these pesticide felt like to one on your telephone keypad he will hear a treat on trump's acknowledging request questions will be taken in the order received should you wish to cancel your requests to express the stars felt by the to if you're using a speaker forty sleeves the handset before pressing any keys
spk_12: your first question class on the line of female much can be from rochefort invested in space glad
spk_1: desks per hour mark everyone at thank you for a very good girl presentation appreciated
spk_5: couple questions first one with the covered issues you had to turn to productivity drums are getting people are supply chain issues etc and and maintenance i think suffered during covered with where are you now
spk_1: in terms of rectifying some of that you are with you have the skills and and staffing levels that did you need are you are you close to it now thanks good question i think the issue with poison what's important to understand is that what happened in twenty twenty two with the only common variant specifically is the regulations that we were fighting under created by the government's meant that all clear contact needed to go into quarantine in a remote locations was that deed in a situation where a lot of people who were even testing positive would not actually seek but we were required to put a lot of people into quarantine of we had so certain stances were thirty forty percent of the entire workforce with florence aimed at one time which in a remote location where you can move them because you're not allowed to that is moved from all sides the you have to leave the thugs quarantine for significant periods of time in their rooms was really quite devastating a difficult for the operation so we worked closely with government as and the government were supportive but as with all things in government took time to change those regulation size of was a more equitable and reasonable porn same requirements for thousand nine seven cases on site so while there is bright medical facilities great care facilities is disclosing issue really causes problems once the government changed those requirements some we rival to better manage the circumstances remove people from side to change how things are working with thornton vincent the time or for a lot easier outside years away also with that was that we all my this type of was pretty tough on on everyone all of us it was especially tough with you imagine working in a remote mines side were you wearing a mask all of the times your away from your family for extended periods of time because the rosters were increase as state mention fat to four weeks from two weeks so it created a real a degree of stress on the workforce that is all male been returned and recovered that we certainly did do with a period where towards the end of cause that a bunch of folks decide they just wanna have a rest so they were a lot of skill people who the last ensuring that jury decides now have time to rebuild that it's got the quarantine issues have gone the regulations from the government or causing as issues have gone there is still a degree is at testing and maintenance of orange and issues it as completely gone was the starting of the site is now where we needed to be we're actually looking at at the moment to would slightly over just to make sure that we
spk_13: bring the maintenance the you correctly raised as a as a primary point of issues and concerns that to exactly where it needs to be a long answer but the headline is there was many puts the cause those issues those inputs of all male be managed and we are rebuilt back to way
spk_12: yea we need today okay so sounds like you're very based on what you were thinking sixty nine months ago you're very happy with where you are now yes the courage to in terms of on the new things you looking at the underground operations excedrin and and and shared a eccentric does were in a word what is the beers
spk_1: lucky to looking strongly at those actions as well we're working together with the is on those options what what we have with to be a mango american is we we have all almost to seniors you feel like we have to be is that were a company now ride and them were absorbed into anglo american as a large company so there are a number of
spk_5: the rules to work through that are that a rational hurdles that a that a major company would have in order to look at the an investment decision so the work is actually being done by the to be his team we are supporting that work so if it's dubious themselves that a doing the word
spk_12: without support in order to assess of an lines those opportunities from a financial and lots of mine perspective is that answers your question
spk_1: okay thank you last question the start started two thousand twenty three than for the primate from the winter rory century if you're happy disinterest the way the operations of started well into the first quarter or you recently happy with without production levels etc so far while we're talking about twenty twenty two but i he got a high level i would say since my early introduction to the diamond districts i'm never happy with court one quarter one is it is a quarter where it is so active with this oswald with the with the weather with the weather conditions the i don't think they would ever be a cool the one that i would say that unhappy with quarter a one has proceeded site forty the ice road has gone well as active as that as that ages forty four million liters of diesel has moved along that on strike together weird very large pieces of women like thought replaced replacement vibrating grizzlies for joel crushes come crushes new roles for a high pressure groaning role which is a very large piece of gear as well so
spk_0: am i happy i'm not happy with caught a one on never never gonna be has with quarter one because there's so much going on
spk_12: to sit atop the mine up for the rest of the year that some it it's a it's a very very difficult quarter every year already paid very much work
spk_1: thinking and next question cos on the line opposing miscue from pc the a piece glad hi everyone thanks for i don't recall maybe a follow up on a previous question looking at the life of mine beyond twenty twenty nine could you keep feeding the the plan at capacity which just turned underground or or do you think you will need or from the kennedy assets as well and a i guess that afraid that
spk_3: yeah and so beyond twenty twenty nine would it need to be a combination of turn underground and kennedy or could it be more of an either or situation
spk_5: i hope i think rather than still much thunder i will i'll let mad have a crack of that's
spk_1: sure thanks paul for the question so again still early days we've done some high level mind planning scenario analysis to answer the exact questions that you are asking and we have some preliminary guiding answers to these types of questions but findings are that and an underground mining scenario at gotcha quake under certain assumptions of mining method could essentially fill the plants about eighty percent of the way
spk_5: beyond twenty thirty beyond the end of of open pit reserves
spk_1: so the plant would be eighty percent phone via underground now that again leaves open the opportunity to top up the plant with external were sources those being be kennedy assets which we own so these are all in flux and either all opportunities and scenarios that we are continuing to the ss and determine their economic and practicality of viability of mining and how we get those into the mine plan so checked long story short underground depending on some assumptions you make probably won't feel the plants but we would like to look at the opportunity to integrate kennedy and that said ongoing discussion happening with us and our jp partners one that puzzle just add to that for poll that specifically to the question around hon corona as i a high grade and potentially significant underground
spk_5: resource opens the opportunity for underground option that was any eggs and to zone and father's reform as we as we move with your body size the the reason that was so excited about
spk_0: the is that it has the potential to unlock the option our the all on the ground as and yet to serve as well as the tell flower night deposits and and that's why you hear us keep talking about her and it is we see it potentially is the key the walked to unlock the that potential both underground and kennedy yet get your point
spk_1: okay that route understood it very clear thank you very much
spk_5: thank you once again if he was the a question please pass star and one on your telephone keypad
spk_1: there are no for the question at this time discontinued i operator i have some questions from the web castle and in a readout and will have management answer them so the first question comes from stacey muirhead stacey just stacey from stating your had capital management and question read how do you envision you're spending plans for twenty twenty three will break down between continued debt repayment further development of kennedy noise
spk_6: earth and marketing initiatives
spk_1: these i know that you are widely in the wins damn smart and no thank you for the questions i said i know it sounds a bit of a generic ounces of optimized capital allocation but you're given the importance of the poems story the investment in the projects in conjunction with the beast keep the sun pattern underground opportunity moving food will be some dates i mentioned des moines speech that we will be focusing on delivering the banning she just as we getting twenty twenty two that will be a focusing twenty twenty three because we think that creates options for the a business in due course so we will be focusing on that is
spk_6: well
spk_1: and all of that is achieved not just by the maximizing the revenue for the equations also keeping a close consume the coast we spend otherwise the mine the in conjunction with the palmer so yes investment in posts significant reduction in the debt is what we would hope to achieve in two thousand twenty three but not compromise our ability to invest in the current project
spk_5: is or anything like that at that by enlisting says he pets i would add
spk_1: where we're fortunate to have bondholders don't we non and we we know that there are thoughtful and sophisticated bondholders the arrival to talk with around options all to application of capital to grow this now we want to return capital to our bondholders because that's what we've committed to do at the same time we are we are able to engage with our bondholders of my a well known to was so where i able to have very good and rational discussion so we're confident that will be able to act funded through the platform that we see in front of us k excellent i gotta set of to questions from mister michael won first question when do management expect a that even at ratio of one to one to be achieved and then the second part of the question what steps are being taken to market the company to investors and address the heavily discounted share price i guess on the first one thanks michael i do well on the first one giving giving a specific date directional you that was want to go of course we've got david us dollars and where we got costs in canadian dollars which can be a good thing with i was a positive effects right bubbly reporting of revenue into nineteen dollars so i'd have to take a guess on exchange rate on have to take it gets on dom and cross on a range of things so that we we purposely said that we want to direction we move towards
spk_14: a density be dull russia one the one giving an exact date of one will do that
spk_1: it would be would be too many variables for me to get settled on stage wilkinson to come in and take a shot is he is he would like your second point is a point that multiple investors have discussed with begin and it's obviously a hot topic with we've reported one hundred and seventy seven million dollars of adjusted even dar against a shift cross that is significantly less than that
spk_15: and yes we need to do more to continue to market the company to communicate externally of the company and the prospects of the company we will be in in london
spk_6: in april
spk_1: to to be doing that we're in discussions with different individuals around how we can more effectively market the company we to are frustrated with the share price of the company and the i agree with you that we need to the more and we will do more to market the company
spk_6: externally to get value into the share price stage have anything to add
spk_1: the north i wouldn't
spk_5: so yeah i will stick to their home sir
spk_1: many variables driving or future financial cash flow the conceding to getting the deck down under
spk_16: not sensible defense secretary who knew that the direction we're heading in the zone
spk_9: tim
spk_17: okay great i have now a question from a cure and hodgson of penury gordon and the question reads had there been any surprising trends in diamond demand during to one twenty twenty three beyond what had been
spk_9: i anticipated read that one sounds like it's in your podium yeah texture and it's a good question
spk_5: i would say that
spk_9: stay i a better than the talk and we we just see it true twenty twenty two
spk_5: but i would say that we are seeing as and of where i don't i don't know if i'd call it a surprise but ah
spk_9: it'll continue upward
spk_5: price performance in the smell cheap and brown colored diamonds as that we have a fairly large position and adapt your quake the sustained increase i is a welcome surprise
spk_9: maybe we should have been surprised by with the absence of argyle
spk_5: i'm with what's going on i would increase sanctions on done is cutting out of russia i think it's also becoming a more important
spk_9: input into manufacturing centuries in india right now
spk_5: i'm it goes all those elements combined are are helping to sustain the price growth or that product area for the medium term and and were saying
spk_9: right three the pipeline increase usage of those goods right down to the retail end jewelry side so i think that's important
spk_8: ah another welcome some a welcome and i again i wouldn't call it a surprise but it's a it is a new development is a or a it's become more important is how provenance intractability platforms are now looking at smaller
spk_18: are going gets smaller sizes
spk_5: before it was kind of a one carrot up at adventure we're see increased interest in a in a guaranteeing provenance and a certainly providence of arcades as can a good source product that will travel with pride of diamonds like ours
spk_19: go to the consumer level
spk_5: it's becoming increasingly sophisticated and it's
spk_20: and it's obviously welcome from what we're seeing so far in twenty twenty three am and i would expect to keep to continue
spk_21: with a meaty you know a little bit of an earlier push
spk_5: for
spk_1: replenishing stock i certainly out of asia so i'm it's it's it's up to watch this space to see if it continues through junior but definitely also an additional welcome welcome development if they read i now how i one final question from the webcast and good questions from andrius address or more and the question reads what is the rough time line until you will have enough data to decide how to go forward with heard tomorrow you want to see who are ah so for one month
spk_5: okay
spk_1: so as i mentioned before we will throw the kind of latter half of twenty twenty three we hope to be able to share more information with the market as we progress both the drilling campaign and hearn and the internal study which were working on and and this low of study is going to inform the next stage age gate of investment decision around fine process kimberlite tailings and placement and things like that so
spk_5: there are a few stage gates that we need to get through
spk_1: and they will the next one we expected at the and twenty three and then little be another stage gates of full commitment to investment i don't think we'd be in that are making a fool decision for underground before you know the end of of twenty twenty four at the earliest but every level of the stage gates decision is going to increase or call
spk_0: finance and and the accuracy of our

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