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spk10: So hello, everyone, and welcome to the Victoria Global video and conference call to discuss the company's third quarter 2022 financial results. So listeners are encouraged to read the Victoria's third quarter audited financial results report and the MD&A, both available on the company's website and on CDAR. Joining us on the call today are John McConnell, President and CEO, Marty Rendolph, Chief Financial Officer, and Mark Aranto, Chief Operating Officer. Please note that listeners and viewers will be muted while management gives a short review of the results. And after the review, there will be an opportunity to ask questions. To register a question during the presentation, please do so in the chat function, and the question will be addressed during the Q&A session. Also note that this video call will be recorded and available for playback on the company's website. We will be making forward-looking statements on this call and encourage all participants to see our disclosure documents, including our corporate presentation, AIF and MD&A, and the cautionary notes therein, which can be found on CEDAW and the company's website. I will now turn the meeting over to John McConnell, Director, President, and CEO.
spk05: Thanks, Lenora. Good morning, afternoon, or evening, everyone. I'll provide a brief summary of the quarter, then pass the call to Marty and Mark to provide more details. First and foremost, the Eagle Mine continued its strong safety record with no lost time injuries again this quarter. At September 30th, our team had worked 2.7 million hours lost time incident free. Operationally, the third quarter of 2022 was a challenging one for the Eagle operation. Due to a combination of factors, including an unplanned shutdown for localized forest fires in Yukon early in the quarter, and higher than expected unplanned maintenance downtime of our crusher and conveying circuit due to both supply chain and labor challenges, we stacked less tons on the leach pad than we had planned in the quarter. Despite the lower stacking rates in the third quarter, our gold production was within our expectations at approximately 50,000 ounces. This production level is attributable to strong heat bleach performance in the quarter, as recoveries continue to trend in line with our expectations. As previously announced in late September, the overland conveyor that delivers ore from the crushing plant to the heap leach facility at Eagle experienced a failure. This belt was replaced within our initially estimated timeframe and stacking operations resumed in the third week of October. As a result of the conveyor belt failure and subsequent repairs, we withdrew our production guidance for 2022. Clearly, not meeting our production guidance is disappointing to us and our investors. We will update the market on final 2022 production results in January. We also look forward to releasing an updated mine plan and technical report for Eagle in the first quarter of 2023. On the exploration front, we achieved a major milestone in the quarter, releasing a maiden resource for the Raven discovery at the Dublin Gulch project. We were pleased to report an initial 1.1 million ounce resource at an average grade of 1.7 grams per ton on only three field seasons and 18,000 meters of drilling. This discovery is located approximately 15 kilometers east of Eagle. We plan to update the maiden resource in the first half of 2023 and look forward to sharing with you the results of our 2022 exploration drilling at Raven in the coming months. I will now turn the call over to Marty Rendell, our Chief Financial Officer.
spk04: Hi, everyone. I will briefly discuss our financials. before passing it over to Mark to discuss operations. Currency will be in Canadian dollars unless specifically mentioned otherwise. During the quarter, we produced about 50,000 ounces of gold and sold about 45,000 ounces, resulting in revenue of approximately 100 million. That is about 16% lower than the 120 million in revenue generated during the third quarter of 2021. The revenue difference is the result of reduced ounces sold. The gold price during the quarter in US dollars was also lower than the previous year. However, this was predominantly offset by a more favorable Canadian US dollar exchange rate. So in Canadian dollars, the gold price was similar to the previous year. Cost of goods sold was 65 million during the quarter compared to 48 million in the third quarter of the previous year. The increase is due to inflation and working capital changes in inventory, specifically gold inventory. The lower gold sales and revenue combined with higher costs year over year certainly reduced profit margins. However, both gross profit at $16 million and operating earnings at $12 million remain positive. The strengthening US dollar resulted in a foreign exchange loss on our US denominated debt of 15 million for the quarter, contributing to a net loss of 9 million or 13 cents per share. At the end of September, 2022, the company held cash and equivalents of 36 million compared to 31 million at the end of December, 2021. I'd like to remind the listeners that we use our revolving credit facility to manage our treasury. Therefore our cash balance generally stays fairly consistent while debt will fluctuate to match liquidity needs. Working capital at the end of September, 2022 was 103 million compared to 63 million at the end of December, 2021. The increase is primarily attributable to higher gold inventory, primarily on the heap leach pad. During the most recent quarter, total capital expenditures were 29 million, while nine months year to date, total capital expenditures were 88 million. This is comprised of sustaining capital, capitalized stripping, and growth capital and exploration. A detailed breakdown is shared within our MD&A. I'll now review our non-IFRS performance measures. Once again, the detailed numerical breakdown along with commentary on the calculation of the non-IFRS measures can be found within our MD&A. During this section, I will use US dollars for unit-based numbers to allow for uniform comparison with our peers. The average realized price per ounce of gold sold during the most recent quarter was 1,717 US dollars. This compares with the third quarter of 2021, where the average realized price was 1,806 US dollars per ounce. Cash costs per ounce of gold sold during the most recent quarter was $1,116 US dollars compared to the third quarter of 21 where cash costs were $708 US per ounce. All in sustaining costs per ounce of gold sold during the most recent quarter were $1,489 US dollars. This compares to the third quarter of 21 where all in sustaining costs were 961 US dollars per ounce. Free cash flow during the most recent quarter was negative 9 million Canadian. This compares to the third quarter of 21, where free cash flow was positive 32 million Canadian. EBITDA, or earnings before interest taxes and depreciation and amortization, during the most recent quarter was positive 21 million Canadian. This compares to the third quarter of 21, where EBITDA was positive 68 million Canadian. I'll now turn the call over to Mark Aranto, our Chief Operating Officer.
spk07: Thanks, Marty, and good morning or afternoon, everybody. Starting off, to emphasize John's point on safety, We're proud of the workforce and the strong safety culture and record that we enjoy at the Eagle Goldmine. As John mentioned, 2.7 million lost time incident hours free, and that extends over two years. That combined with our total recordable injury frequency, which has consistently trended down since the commencement of production at Eagle, and currently stands at an industry enviable 1.1 year to date. The third quarter this year saw us working through some operational challenges, most notably in the quarter we stacked 2.1 million tons of ore onto the heat bleach pad. This stacking rate was below our plan due to higher than expected unplanned maintenance, as well as a shutdown in July for local forest fire activities. That said, we continue to optimize our maintenance schedules, supply chain, inventory, and labor force, and we expect to see our crushing and conveying assets show higher availability as these improvements are implemented. Despite these challenges, there were some significant highlights in the third quarter. We mined 5.1 million tons of ore and waste in the quarter, and that's an increase of approximately 18% quarter over quarter. The improvement was largely due to a combination of haulage fleet performance and shorter waste hauls as we successfully established a new waste dump location late in the third quarter. Despite lower than planned tons stacked, our leaching performance on the heat bleach pad was strong in the third quarter. Recoveries are continuing to trend in line with our forecasted levels and we saw an approximate 7,000 ounce reduction in our in pad inventory in the quarter. Our ore reserve reconciliation continues to be excellent with an average grade stacked in the quarter of 0.88 grams per ton and an average over the first nine months of the year of 0.84 grams per ton. This is in line with our mine plan. As we've disclosed, following the end of the third quarter, stacking operations were down for approximately three weeks to repair our 1.5 kilometer overland conveyor belt that connects the crushing circuit with the heat bleach pad. And thankfully, due to having the required belting and inventory and the performance of our on-site maintenance and operations team, this repair was completed without any major issues. As John highlighted, the initial resource at Raven was a significant achievement for our exploration team. And they've been able to quickly turn our grassroots discovery into a sizable resource with a grade of approximately two and a half times that of the Eagle Reserve grade. In addition to the 18,000 meters of drilling that is currently included in the Raven resource, we drilled approximately 25,000 meters at Raven during the 2022 field season, which we concluded in October. These results will be released as they're available and will be included in an update resource for Raven, which we expect to release in the first half of 2023. And finally, I'd like to welcome to our management team, Tim Fish, who joined us as Vice President and General Manager of the Eagle Gold Mine in October. Tim is a metallurgist with over 40 years of experience, and we're very pleased to have him on board on an on-site management capacity. John, I'll turn it back to you for concluding remarks.
spk05: Thanks, Mark and Marty. In summary, the third quarter presented us with a number of challenges, but we also saw many indications that the Eagle Gold operation is in a strong position to improve its performance. We continue to work to deliver those results in the production levels that we know the mine is capable of. Thank you all for listening, and we'll now open the call to Q&A.
spk10: Okay, if you have a question, please raise your hand. The raise your hand function is in the menu bar at the bottom of the screen. And John, to get started, we have a question from Chris Thompson. Actually, Chris has got his hand up. So Chris, if you'd like to unmute.
spk03: I'm here. Can you hear me? Yes. Yeah, look, I just need a sense, I guess, of unit costs per ton, obviously, you know, looking at, I guess, the ounces sold and the ounces produced, you know, on a quarterly basis, I think they were the highest quarterly ever. So it somewhat muddies the picture there. But I was way out on my cost expectations. I just needed to sort of clarify what those costs, unit costs are and what we can anticipate on a forward looking basis. And I totally understand inflationary concerns and what have you. Maybe just speak and just clarify that, please.
spk07: Did you get that up, Marty?
spk04: Speak to that. little bit different because when we do our unit costs, our mining costs, processing and G&A per ton, we include a number of capital items such as capitalized stripping. And so the numbers aren't going to match to the financials where you're looking at cash costs and operating costs that are not capitalized. What I can say is answer the second part of your question and get back to you on the tonnage later and try to break out those capitalized numbers. But you did ask about the differential between ounces produced and ounces sold. And what I can tell you is generally what you'll see is our sales ounces are 5% below our production ounces. And that's due to the royalty, which we pay in kind or in metal to a Cisco royalty. So that 5% will always be a difference. Any difference above or below that 5% is purely due to timing of shipments. And we ship every couple weeks. So you'll see this quarter we're about 7% or 8% below production, whereas last quarter we might have been a little bit less than 5%. So 5% is normal. Other than that is timing. I can talk about the cost a little bit. When you look at our unit costs, we're really being hit on both sides. So the numerator obviously is costs. And as you mentioned, Chris, that is up significantly due to inflation. And the denominator is due to ounces. And compared to a year ago, we did produce 10% less ounces and we sold about 14% less ounces. And so that's why you're seeing a very significant increase in our unit costs. And just to touch on the inflation subject a little bit, it deserves some attention. If you look at a year ago, just for example, we'll look at fuel, which is one of our larger cost drivers. A year ago, we were paying approximately $1 Canadian per liter of fuel delivered to site. During Q3, it hit a high of $2, so 100% increase. Now that was the highest we've seen at two and it's since settled back down. And most recently we're paying $1.70 to $1.80 per ounce delivered to site. So it's just a massive inflationary hit. And it does hit our direct cost of fuel. But as you can imagine, those fuel costs indirectly hit everything from travel and supply delivery to our consumables. So it's across the board. So our current costs are reflecting that $1.80 per ounce delivered to site. And if it goes up, our costs will go up a little bit. And we do hope that there's some more relaxation coming over the next little bit and we'll experience some savings.
spk03: Thank you, Marty. Just one more quick question, if you would. Maybe just update us on plans for Project 250. Is it off the table now or is it something that we can see sort of maybe commencing next year?
spk05: Yeah, it's John, you know. Chris, we've got to learn to walk before we run. Right now, our goal is to get to 200,000 ounces per year in 2023. We still think something plus 200,000 is achievable, but we want to get to a steady state 200,000, and then we'll worry about going to plus 200,000.
spk02: All right, John, thank you very much. Marty, thank you very much.
spk10: Okay, and Mark has a question.
spk06: Hey guys, this is Marcus calling in for Heiko. Can you guys hear me all right? Yes. Okay, great. Regarding the downtime on the crushing and conveying circuit, can you provide an estimate for the indirect expenses from this downtime? And can you give us an estimate as to the direct cash costs involved in fixing it back up? Just trying to get a sense of terms, nothing exact needed. Okay.
spk05: Yeah, you know, the direct costs were probably in the order of a million dollars. That's the cost of the conveyor, plus the cost of a contractor to come to site to assist us with installation of the new conveyor. Marty, have you got an estimate on the cost of the delayed ounces?
spk04: If we're specifically chatting about the delayed ounces due to the conveyor, which was, as you'll recall, approximately a three-week down, that equates to about 15,000 ounces. And 15,000 ounces in Canadian dollars is approximately $33 million, which is going to be deferred.
spk06: Okay, gotcha. And then just following up on the conveyor expenses, in a prior release you talked about using the downtime to take care of some other maintenance needs. What exactly was done during the quarter, and should we budget some higher expenditures in our cash flow model for the quarter, given maintenance that was essentially pulled forward?
spk05: Mark, can you summarize the work that was done in addition to the conveyor?
spk07: Yeah, Marcus, I think in general, you really don't need to be putting in any extra cost items. It would have been, we just brought some of that work forward opportunistically. We rebuilt one of the crusher heads. We did some skirt liners. We did a bit of work on our grasshoppers and a little bit of shoot work on the liners. So really nothing, you know, nothing that's outside a normal course.
spk06: Okay, fair enough. That's it for me. Thanks for taking my questions.
spk10: Okay. And Dominique Doucette has a question. Dominique? Yes, we can hear you, Dominique.
spk08: Okay, thank you for that. I'm taking a question. I'm just curious, first off, I'm quite very impressed with the way that you are progressing with your money. And I'm just curious, if I'm right, I think that before a receding prediction of either and we should be studying. And I think we were expecting a grade, a low grade, lower than the 0.751. And when I look at the data, Your production statistics are always producing higher than 0.8% of the time. So I'm just curious, are you expecting a decrease in the gold grade in the future, in the next couple of years? Or the rate should be at the same and then higher than the previous expected grade before production?
spk05: Yeah, Dominique, it's John McConnell. I don't think your microphone is working very well, but I can read your question in the chat. And I think what you're asking is if we anticipate the grade will come down from the 0.88% to closer to 0.7 in future years as per the mine plan. And that is correct. Life of mine is lower grade. So we do expect, you know, these grades at plus 0.8 continue for the next two years. And then you will see the grade drop closer to 0.7. Mark, do you have anything to add to that if I didn't hear the question completely?
spk07: No, I think you nailed it well, John.
spk05: Anything further, Dominique?
spk09: Thank you. That's fine for me. Thank you for answering.
spk10: And Mohamed has a question. Go ahead, Mohamed.
spk00: Thank you. Hi, John, Marty, and Mark. Thanks for taking my questions. Can you guys hear me? Yes, fine. Thank you. So just to maybe dive in a little bit more on the cost pressures that you're seeing. So I know that you talked about the cost pressures faced on the fuel side. Have you experienced anything on the labor side during this quarter?
spk05: No, we didn't make any adjustments to salaries or wages during the quarter. One thing thing i would say though is that you know we are still below ideal employment levels in other words we're operating with less people than we really need and we make up for that by using some contractors and generally the contractors are a little more expensive than your own employees so uh i don't have an exact number for you but uh we do see higher costs around labor and lower productivity sounds good uh thanks that's pretty helpful um and i think i'm just my second question on the updated mind plan and technical report that's coming in the first um
spk00: half of next year. What could we expect from this? I know that you had some positive exploration results. Would there be any update to the reserve and resourcer? Would this mainly be to reset production cost expectations, given the mine plan had a slightly lower cost for next year compared to what you've been seeing for the last three quarters? Mark, you want to address that?
spk07: Sure. Yeah, well, there's pretty two technical reports. One will be for Raven. You recall, we just, as we just talked about, we just released that. We will incorporate the 25,000 meters of drilling that occurred this year. That's the technical report with its associated resource estimate that we expect to be in the first half of the year. So probably the you know, it always takes a bit of time to get those results in. So I would expect sometime in Q2. For Eagle, the technical report for that project, we're aiming for Q1. And certainly we are looking to reset costs, mine plan. We did do some drilling that we've announced that's been both laterally and to depth at Eagle. So we're looking to see how much of that drilling will increase or replace reserves. And we'll get that out in Q1. Most interestingly are the ounces laterally. Obviously they come a bit earlier in the mine plan and at better costs. So that's what we're looking to do at Q1 of 2023.
spk00: Okay, perfect. That's helpful. And just a last question for me on, I guess, your cash balance and your current liquidity positions. So just noting that you have about 114, 114, 115 million outstanding on your loan facility, your credit facility, and about $60 million outstanding in your term facility available. and $60 million available in your term facility. Are you comfortable with the level of liquidity that you have given your commitment and CapEx needs over the next four quarters? Marty?
spk04: Yeah, Mohamed. When we look out into 2023, we feel we're in good shape cash wise. We're looking at a lot of different scenarios and working through our budgets now, as well as lots of sensitivity so we feel with the room we've got remaining on our revolving credit facility and our cash. that we're in good shape. That being said, when we start stressing some of our cases and if there's shocks on the gold price or operations or exchange rates, if inflation goes even higher than we're seeing now, then our cash balance becomes tight. So we're always looking at ways to add to our flexibility. You'll recall earlier this year, we added to our revolving credit facility as we paid down our term facility. So there's some opportunities to do that same type of program this year. That being said, we do think we have enough, but it's always nice to have a little more flexibility in what's a little bit of uncertain times surrounding inflation. That's good.
spk02: Thanks a lot. That's very helpful. Thank you. Okay, just if anyone else has a question, please raise your hand. Okay, John, you can unmute yourself.
spk01: Thank you. John, I see that we had to raise equity and borrow a little money to finance the company this year. And with the gold price falling, things I guess are a little tougher. as well as costs having inflationary pressures. What is the game plan next year to maybe repay a little bit of debt and avoid going to raise equity or borrow?
spk05: Yeah, we did not raise equity this year, John. I will let Marty address the liquidity.
spk04: Yeah, just to confirm, John and John, we did raise a small amount of equity early in the year specifically for exploration. So we raised $20 million flow through at a significant premium to the share price due to tax, Canadian tax law. So we did raise $20 million that's specifically earmarked for exploration, primarily at Raven. Of that $20 million equity we raised earlier in the year, we spent approximately half of it, so $10 million, and we still have $10 million remaining that we can spend next year on Raven. On the debt side, you're right, we did have a net draw on our debt. We paid down significant debt on our term loan, but we borrowed a little more on our revolvers. So certainly as we head into next year, again, we're finalizing all of our numbers and it's going to depend on production and gold price and inflation, but we are focused on paying down debt. That's what we're going to do with all of our free cash flow from next year. And we do anticipate being able to completely pay off the term debt next year. Again, dependent on gold prices and production.
spk01: Thank you.
spk10: Okay. And Mohamed has a question again. Go ahead, Mohamed.
spk00: Sorry, guys. Yeah, just one last one for me on your growth CapEx guidance of $18 million for the year. Just looking at what you had quarter to date, total span of about $17 million, including your growth exploration of $13 million. So when I'm looking at your total growth CapEx and exploration guidance of $31 million compared to that $17 million, Do you expect a span of $14 million in Q4 or should we defer that into 2023?
spk04: Marty? You lost me a little bit on those numbers, Mohamed. I want to make sure we're not confusing U.S. and Canadian because we do switch around a little bit. Absolutely. So are you looking at just that growth capital?
spk00: I'm looking at both growth capex and growth exploration. to maybe just tie back into what your quarter-to-date span was. Maybe I'm not including everything that I'm seeing, so just wanted to get maybe a reconciliation of that quarter-to-date.
spk04: If we look at our... If we look at our growth capital, exploration is essentially done. Our exploration program at Raven wrapped up in October. There may be some small costs, a million dollars or less for assaying and camp cleanup, but it's essentially done, growth exploration. We will have a little more growth capital in Q4. Some of it to do with the water treatment plant and pad expansion, a couple other smaller things. But we do anticipate, you know, somewhere between 5 to 10 million Canadian in Q4 in growth exploration and capital.
spk02: That's perfect. Excellent. That's very clear. Just checking if anyone else has a question. And if you do, please raise your hand.
spk10: Okay, well, thank you, everyone, for your questions. As there's no further questions, we will close the meeting. Have a great day.
spk05: Thanks, everyone.
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