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spk00: Good morning. Welcome to Weston Goldmine's Q3 2023 Financial Results Conference Call. I will turn the call over to Lindsay Dunlop, VP Investor Relations, to begin today.
spk06: Great. Thanks, Operator, and good morning, everyone. Welcome to Weston Goldmine's third quarter 2023 Results Conference Call. Before we begin today, we'd like to take this opportunity to remind everyone that during this call, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could cause outcomes to differ materially due to a number of risks and uncertainties, including those mentioned in the detailed cautionary notes contained in yesterday's press release and in the company's management discussion and analysis dated November 8th, 2023. Yesterday's release should be read in conjunction with the MD&A and financial statements, all of which can be found on CDAR Plus and on our website. Following the prepared remarks, we will open the call up for questions. All figures discussed on this call are in Canadian dollars unless otherwise noted. I will now turn the call over to Anthea Bath, President and CEO, to begin today.
spk07: Thanks, Lizzie, and good morning, everyone. With wonderful calls at Western computers, I continue to be impressed with the team and enthusiasm and the many opportunities and potential of these assets. Speaking on the call with me today will be our COO, Fred Longaway, Interim CFO, Jonathan Singh, and Deep Exploration, Michael Schoen. Before we get into the operational details, I'd like to begin with a brief overview. As we disclosed with our last quarter, Q3 was expected to be the lightest quarter from a production and cash flow perspective, while we completed planned shutdowns at Eagle River related to annual mill maintenance, along with some other infrastructure upgrades. As well, we spent approximately $30 million in capex in the quarter, mostly related to the planned production ramp Akina. I'm very pleased to say that post-Q3, access to the $120 million nine meter level has been achieved. And Fred will walk through this in a bit more detail a little later. With 87,119 ounces produced at the end of quarter three and a production uptick expected in quarter four, we are well positioned to meet the midpoint of annual guidance at 110 to 130,000 ounces and are all in sustaining cost of US dollars, $1,620 to $1,800 an ounce. With that, I'll pass the call over to Fred to walk through some operational details.
spk11: Thank you, India. Hi, everyone, and thank you for attending this morning. As India noted, Q3 was a lighter quarter on production at the two sites, in line with internal projections. That being said, the two operations continue to deliver on key initiatives in Q3 that position us very well for Q4 and beyond. Starting with Eagle River, production in Q3 came in at 20,391 ounces as we performed our annual mail maintenance shutdown in July. Land repairs were performed on the grinding, filtration, and leach circuits, which resulted in the mill being down for a period of 14 days. Throughput was maintained at similar levels in Q3 of last year, despite the fact that the mill did not have the leachy stockpile for the lyre farm, with the underground mine bridging the gap. Development performances in Q3 continued to exceed budget targets, and production grades were consistent with expectations with the bulk of production coming from the high-grade falcon and 300 zones. With productivity and grades now consistently achieving forecasted numbers at Eagle, we're very confident that the operation can reliably sustain 80 to 90,000 ounces per year. That being said, we're launching a thorough benchmarking exercise at Eagle River, both on productivity and on cost, to try and improve our cost structure with a view to value. We will provide updates on this initiative in the coming quarters. At Kena, Q3 production came in at 7,369 ounces. Graves continued to track slightly higher than the upper end of guidance as a result of continued positive reconciliation in the A2 zone, where we continued to successfully cycle stoves entirely in shifts in Q3, demonstrating our ability to mine in some of the most challenging ground conditions on Aquinas. We continue to be excited with our base fill plant, which not only is proving an invaluable tool in cycling stoves effectively, but also enables us to return up to 45% of our tailings underground, a much higher proportion than what the PFS called for, putting less strain on our tailings capacity. The ramp to Keene Deep remained the key focus for the team in Q3, and we're happy to report that development performances continue to track ahead of schedule during the quarter. In fact, as of earlier this week, we've now reached 129 level access. We will now be focusing on developing the level infrastructure required to support mining activities, such as ventilation raises, escapeways, and power distribution on levels 127 and 129, with development into the ore in the A Zone set to start in early Q1 of next year. As we establish production on the horizon, high-grade production from stoping is expected to ramp up to reach steady state by the end of Q2. During Q3, we've been taking advantage of the ramp positioning to strategically target delineation holes into next year's production. The results received today confirm the continuity, thickness, and high grade of the A-zone at depth after the reserve block model. Finally, we received the required authorizations to proceed with the excavation of the Presque Isle ramp. The contractor has been selected, and we are currently installing support infrastructure at surface to begin excavation of the portal. In addition to providing an exploration platform for the western side of Kina, this 1700 meters ramp is expected to yield significant de-bottlenecking of material handling in the mine and ventilation benefits, as it will provide a second access to surface for Kina. So overall, earlier production in Q3 at the two sites, combined with gold sales, somewhat lagging production, plus cash costs and all in sustaining the right outside of guidance range. That being said, year-to-date costs remain in line with expectations, and we're very confident that full-year production from both months, as well as unit costs, will fall within the guidance range that we provided in January. Over to you, Jonathan.
spk09: Thank you, Fred. I guess I'll start with just an overview of the results from the third quarter. Previously reported Q3 production of 27,760 ounces was largely in line with expectations and brought year-to-date production to 87,119 ounces. Sales in Q3 were 27,000 ounces and were slightly impacted by the timing of final Dory sales. All-in sustaining costs of 2,711, or US$2,021, were up meaningfully over the first half results, but included the impact of a planned shutdown at Eagle River and the timing of capital We do expect to see improvement on performance in the fourth quarter of 2023, however, and continue to see the midpoint of cost guidance. We also project to be within the $100 million capital budget set forth in January. Cash flow from operations is $45 million, or $0.30 per share, including a $12.5 million tax refund and a $13 million of non-cash working capital adjustments. As a result of cash flow during the quarter, Total liquidity stands at $143 million, as we were able to maintain a revolver draw of $39 million and increase our quarter-over-quarter cash position by $9.5 million to $31 million. Subsequent to quarter-end, we did draw down $10 million of our revolving credit facility, which we plan to pay down by the end of the year. Balance sheet strength remains a priority for us, and we expect higher grades at Kena to drive costs lower and support strong cash flows in coming quarters. especially at current gold prices, allowing us to pay down the remaining balance of a revolving credit facility, as well as fund a range of opportunities to reinvest in the organization. Mike will now take us through an exploration review.
spk10: Thanks, John. For exploration, it was a very exciting quarter at Eagle River. Although it's early days, it looks like we have discovered another gold zone at the Eagle River mine that occurs within the volcanic rocks immediately west of the mine diary. Initial surface drilling returned high-grade hits within 200 meters from surface, with one hole returning 64.4 grams per tonne gold over a 0.4 meter core length. Meanwhile, underground drilling 750m down the interpretive plunge of this new zone has also intersected a similar style of mineralization and returned 33.4g per tonne over 0.4m core length. The gold mineralization occurs within an intermediate volcanic plastic similar to the host rock of the Falcon 7 zone, which is known to be a more brittle and a better host for gold mineralization than the encompassing mafic volcanic soil units. The drilling suggests the potential of a new subparallel zone with results consistent with those seen in early drilling of the Falcon 7 zone in 2019. Not only is this new zone near existing mine infrastructure, but demonstrates the potential for high-grade mineralization in a rock type that has seen limited drilling to date. Additionally, gold mineralization has also been discovered further to the west near the historic 9 zone. Gold occurs within steeply plunging shoots that have a similar frequency to the gold mineralization in the mine diary. All of this surface drilling is part of a renewed strategy focused on the upper areas of the mine, which also includes an assessment of remnant mine areas. Developing and optimizing the strategic plan around these potential resources could add incremental tons for processing at Eagle River's mill, which has spare installed capacity. Since the recent announcement of the new discovery, drilling has been ongoing along the interpretive plunge of the zone. Most recently, an underground drill hole returned 12 meters of alteration, quartz fading, and solidified mineralization, as you can see in the slide. All the assays are pending. We're excited to continue drilling this area as 12 meters thickness is well beyond the typical thickness of the mine. Elsewhere within the Eagle River mine, underground drilling continues to confirm the continuity and high grades of the 300 east zone at depth, and with wider widths returned locally could represent an area similar to the previously mined 303 legends. The continuity of the mineralization downpunge at 300 east also suggests that the other parallel zones, namely the 8 and 7 zones, have the same potential to continue at depth. The company has commenced directional drilling to aid in the extensions of the known zones at wider step-outset depth to provide an indication for future mining. At Kena, recent surface and underground drilling was focused on better defining our known resources. On surface, drilling was focused at the Perskill Zone, which is located 1.3 kilometres northwest of the Kena mine. the surface drilling has confirmed the continuity of the gold mineralization, with one hole returning 32 grams per ton of gold over 3-metre core length. However, as importantly, the drilling has confirmed the down-plunge potential depth, and this is going to be an area that we're going to continue to explore with the development of the ramp. The recent drill results support the decision to proceed with the exploration ramp from surface to test the down plunge extension of the deposit. The excavation of the ramp is now proceeding with the recent receipt of the required permits. Of course, the pressed gill zone is just one of several zones having the potential to offer a supplementary source of milk feed near surface or in the upper area of the mine for the spare in-salt capacity at the Keenan Mill. Recent drilling results from the Schottky and Dubuisson zones earlier this year, including 2.3 grams per tonne gold over 72 metres, indicates this potential. Both of these zones are accessible from the existing 33 level development that extends across the property. With so many styles of gold mineralisation observed east of the Keenan Mine, we are confident that as our exploration continues, we will be able to identify more zones of gold mineralisation. Within the Kena mine, drilling has been focused on better delineating Kena Deep A zones to de-risk the 2024 mine production, particularly given the high grades in the reserve model. To date, the delineation is in agreement with the previously drilled wider space exploration goals. One delineation hole returned 4,190 grams per ton of gold, or just over 4 kilograms per ton of gold over 0.8 meters. You can see this in the attached slide. Obviously, these types of intercepts provide confidence in the forecast for next year. Over to you, Adya.
spk07: Thanks, Mike. As you've heard, we remain on track for a strong fourth quarter and we're excited about the future of the business. As we highlighted on our recent Invest and Endless tour of both operations, we see four main near-term area objectives for success. Firstly, we need to continue executing on Kina rabbit development, which is now at the 129-meter level. Concurrent delineation drilling is improving our understanding of the resource, giving us a high degree of confidence in our near-term plans. Secondly, I continue to see opportunities for organic growth by utilizing the spare and store capacity of our mills and refocusing the strategy to re-optimize in our mine plans from first principles. Combined with an exploration strategy focused on developing near-mine potential, we are more effectively leveraging our fixed costs to sustainably improve our unit economics. Thirdly, the leadership team is coming together nicely with a genuine cohesion developing between all levels of organisation. Lastly, looking ahead, we expect a marked increase in cash flow in 2024, particularly at current gold prices. Preliminary budget plans suggest we are well positioned to achieve a net cash position in the coming months. coming quarters but also invest significantly in increasing our developed or inventory through capital development aggressively advancing our pipeline or near mine exploration opportunities and make overdue infrastructure upgrades to maximize the long-term value of these assets consequently i'm expecting the capital budget for next year to be consistent with this year's levels we look forward to providing the market with two years of production and cost guidance at each asset in january This initiative is part of our ongoing commitment to maintaining clear and forward-looking communication with our stakeholders. Thanks for listening today. And with that, I'll turn this line back to the operator for any questions.
spk00: Thank you. If you'd like to ask a question, please press star 1-1. Our next question comes from Aaron Lomba with TD Securities. Your line is open.
spk01: Hi. Yeah, thanks for the update and congrats on the good quarter. You mentioned you're going to give two-year guidance in January, and you mentioned the higher grades at Kiana are going to kind of kick in sometime in the first half of 2024. But can you just remind us what the mine and mill is kind of capable at Kiana? Just trying to get a rough guidance on what potentially you can do next year. I know you're catching up on development This year, and when I look at the last feasibility study, there's a little bit of a ramp up in terms of tons processed in the first couple years versus later in the mine plan. So any color, just to remind us on what the mining mill can do there, would be appreciated.
spk07: So, I mean, thank you for the question. I think just first of all, we should talk about permitted capacity on the mill and the potential of the mill. I think the mill's capacity and potential is about 2,040 tons. a per day. In the current plan, we're running more likely around 750 to 850, if I'm not mistaken. So we're way below the current capacity of the mill and the permitted capacity of the mill. Yeah.
spk00: That's it for me. Thanks. Thank you. Our next question comes from Don DiMarco with National Bank. Your line is open.
spk05: Well, hi. Good morning. Thank you, operator. And hello, Auntie and team. Congratulations on the quarter. Just a couple questions here. First one is, so you broke through on the 129 level. The ramp is there. It seems like this is earlier than targeted at the end of November. So does this shift your schedule forward for Kina Deep production in any way?
spk07: Well, Don, thank you. Nice to hear your voice. I think in terms of the internal updated plan, definitely we are quarter ahead of our internal plans, but obviously different from what you perceive in the PFS. But from an internal perspective, we are quarter ahead. And yes, it certainly will result in an uptick next year ahead of our previously perceived plans.
spk00: Thank you. Our next question comes from Ryan Walker with Eklon. Your line is open.
spk08: Hi, good morning, guys. Thanks for the call. So I just wanted to go back to the debt. So you said subsequent to quarter's end, you drew down another $10 million. What's kind of a net movement going to be in Q4 there? Do you still plan aggressive payback during the quarter?
spk06: Sorry, Ryan, could you repeat that?
spk08: Yeah, so just on the drawdown from the facility, subsequent quarter end, you drew down another $10 million. So I'm just wondering, during the balance of the quarter, are there repayments still planned? You've been fairly aggressive on the repayment front. Still plan to do that in Q4?
spk07: We plan, Brian, to go back to pay back the $10 million that we threw down by the end of the year.
spk08: OK. And then just on the capital budget, so around about the same $100 million-ish this year into next year, is that X any kind of savings identified during this cost initiative program? And is that kind of a number we should be sticking with into the foreseeable future?
spk07: Yes, absolutely. It's not any savings, but I think I can give you a bit of an understanding of what it really is. It's really for you know, focused on deferred development or development. We're trying to keep pushing on the ramp. And secondly, obviously looking at skill development as well. And lastly, I think it's important to note that it's about exploration and growing our exploration budget too. So I think it's really important to understand that we're going to keep pushing these three initiatives that help build the mine in the longer term. So you can assume that that will continue for next year.
spk08: Great. Okay. Thank you. That's it for me.
spk00: Thank you. Our next question comes from John Sklodnik with Desjardins. Your line is open.
spk04: Hey, yeah, thanks for taking my question, guys. I guess I'll just follow up on Ryan's question with that CapEx and not sure if I'm getting ahead here, but I wonder if you're able to break out kind of how you see that flat CapEx year over year broken out between maybe assets and sustaining versus growth or exploration?
spk07: i look at them together john but and it's sort of i mean let's get the guys to break it up better for me but from a if you look at it together i think what you'll see is that number continuing next year and like i said i'll repeat it again it really is around pushing development and ensuring that we keep pushing that ramp down because what we want to do is get to the next level that mine and obviously continue with our development and get ahead of ourselves inside eagle as well and secondly we really want to push our exploration and ensure that we're getting those programs really strong to drive the business in a more longer term and obviously put skills, including that capital as well for next year, which will obviously continue the year after as well.
spk04: Okay. Yeah, that makes sense. I guess one more just on depreciation. It's been a bit elevated in the last three quarters and just curious kind of how you see that going forward in a run rate into Q4 and into 2024 in terms of a per ounce number, if you have that handy.
spk07: Sure, I'll ask Ross to actually cover that. Ross?
spk12: Sure. So, John, you can basically model it on units of production. On a dollar per ton basis, we use 2P research for that. And given Keenan ranking up, that's why you're seeing that market increase. So, that's just the way I would model it.
spk04: Okay. No, that makes sense. Appreciate that. And that's all for me. Thanks, guys.
spk00: Thanks. Thank you. Our next question comes from Wayne Lamb with RBC. Your line is open.
spk03: Yeah, thanks. Morning, everyone. Just wondering, at per scale, what's the kind of magnitude of capex spend for the ramp, and what's kind of the timeline of events you're kind of contemplating there in terms of the development of the ramp and mining and connection to the 33 level? Just curious if you're able to provide a bit more context around that.
spk07: Sure. Wayne, I'll hand over to Fred on this one, if that's okay.
spk11: Right now, we're still working out the detailed numbers, I would say, for the budget exercise, but I guess in terms of scale for the ramps, about 1,700 meters, as I stated in the statement earlier, factor in the development cost of about 6,000 Canadian and so on. That's going to be in the schedule right now that we see as development. And this year and a little bit into next year, well, in 24, sorry, and then a little bit in 25 as well in terms of scheduling.
spk03: Okay, great. Thanks. And then just in relation to that CapEx commentary, should we also be thinking about a catch-up in exploration spend as well next year?
spk07: Yeah, you can absolutely assume that that's included inside the capital spend too.
spk12: Okay, great, thanks. That's all for me.
spk00: Thank you. Our next question comes from Jeremy Hoy with Canaccord Genuity. Your line is open.
spk02: Hi, all. Thanks for taking my questions. So Wayne actually covered a few of the things I wanted to ask. I guess just a clarification for me then. The mill of Kiana is permitted to 2,040 tons per day. Can you remind us of what type of capital would be required in additions to get to that level, or can it do that in its current state?
spk07: Yeah, Jeremy, it's very little capital that's required to do that. It actually is, I would almost call it... Yeah.
spk11: non-relevant actually capital do this although i was going to say that your particular exclusive this really is all the equipment is there it's merely about connection do you want to just comment yeah just provide a little bit more flavor here the mill has the installed capacity it's just that we're currently not using the secondary crusher at surface this is really the infrastructure that will bump up the tonnage to 3 000 plus And right now, we're bypassing this infrastructure. It's been dormant, I would say, for a few years. So, ultimately, the CAPEX is only to update the electricity, change a few conveyor belts, and away we go. So, minimum.
spk02: Okay, excellent. Thank you for the clarification.
spk00: Thank you. There are no further questions at this time. Thank you for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.
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