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spk17: Good morning. Welcome to Westom Goldmine's conference call to discuss the company's financial and operating results for the three and six months ended June 30, 2024. As a reminder, this call is being recorded. Your host for today is Trish Moran, Westom's Vice President of Investor Relations. Ms. Moran, please go ahead.
spk24: Thank you, and good morning, everyone. Before we get started, I would like to point out that during today's call, We may make forward-looking statements as defined under Canadian securities law. I ask that you review our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed today on this call are in Canadian dollars, unless otherwise noted. Our press release, MD&A, and financial statements are available both on CDAR Plus and our corporate website, westdome.com. With us on today's call is Anthea Bath, Westone's President and CEO. Fred Mercier-Langevin, our COO. Fernando Ragone, our CFO. Neil de Bruyne, our Director of Geology. And Raj Gill, SVP Corporate Development and Investor Relations. Following management's formal remarks, we will then open the call to questions. And now over to Anthea.
spk02: Thank you, Trish, and good morning to everyone. The second quarter marked a breakthrough for Westone with record-setting results. Safety is a top priority for us, and we continue to improve our safety culture through a structured approach with key initiatives developed and implemented across the operating site. Our safety stats continue to improve, and we had the best quarter in recent history. On a year-to-date basis, there have been zero last-time incidents. I'd like to thank the team at Westone for all their efforts in this regard. In addition to safety, Q2 also set a record for production, which significantly boosts our free cash flow position to its highest point in over two years. The strong performance led to an increase in our cash balance, which topped $50 million as at June this year, and enabled us to pay off our revolver. I'm pleased to say that we are now debt-free and expect the balance sheet to continue to strengthen going forward. Of course, a major driver of this course's success was our milestone achievement at Kena. As planned in Q2, Kena was able to commence mining and processing of the high-grade ore from the Kena Deep 129 level horizon. This is a significant milestone for Kena. We're now mining as per the original anticipated plan, showcasing the step-changing grade and therefore the increase in gold produced and the subsequent reduction in site oil and sustaining costs when compared with both quarter one of 2024 and quarter two of 2023. Over Eagle River, our cornerstone mine maintained a decade-long history of delivering high grades and consistent performance. With its proven track record, Eagle remains a key part of West Ham's future. While the immediate future is secured through the great work of our teams, we are excited about the prospects for Westerm. With both operations running well and positioned to meet their respective 2024 targets, we are focused on positioning Westerm for the medium to the long term. Given our strong balance sheets, we are able to be deliberate in how we think about driving value for the long term. Now that Kena is set up for success in 2024 and well beyond the end of this decade, we are focused on further extending its growth profile. We have set in motion several initiatives, which we believe will add value in the near term to the Kina mine and have more longer-term initiatives planned out. Since Kina Deep is contributing to production, we can now turn our attention to honing in on costs and focusing our efforts toward optimization of the current profile and the model. As well, we're making good progress on the development of the Preskill exploration ramp, which will serve to further enhance Kina's operations, exploration, and strategic flexibility. We will thus be able to leverage the 33 level. Kina has an extensive portfolio of exploration targets, which is a key strategic imperative. We continue to prioritize the multiple opportunities across a highly prospective 75 square kilometers land package on the Gold Corridor in Maldore. This is a prolific gold area and is known for its interesting geology and we're still very early on in our exploration phase. The team at Kina have checked many boxes over the past 12 months. and will continue to work on delivering high-grade ore and improving profitability. Moving on to Eagle River, with a strategic growth initiative, born from a rich resource base having provided 30 years of mining of some of the highest grades in Canada, it continues to maintain its position as a high-grade producer today. The Eagle River mine has always had three to five years of mine life ahead of it, and we're now looking to increase that duration and increase output over the coming years. Our strategy to deliver this is straightforward. full-term ongoing mine plan optimization, improving our cost profile, and more drilling. Optimization remains a key priority at Eagle, where costs have escalated over the last number of years, impacting our resource conversion and the value of our asset. We have identified initiatives that are at various stages of execution and anticipate that results will yield value over the next year. We're in the process of examining productivity drivers, cost inputs, and our maintenance practices for value. Based on our history of discoveries, we're very excited about our exploration activities. It's a large structured program, and the team has completed significant upfront technical work. For several years, Western has focused on funding growth at Keenis with a cash flow generator, the Eagle River. Going forward, we're restoring the balance to set both sides up for many more years of success. As well as the two producing mines, we're working on company-wide strategic initiatives to draw value. This includes achieving synergies and supply chain efficiencies and constructing a global resource model. More about this in the coming quarters. Now over to Fred to review the quarter's operating highlights.
spk08: Thank you, Anthea. Good morning, everyone. As mentioned, Q2 was an outstanding quarter for us. On the back of the much-anticipated ramp-up at Kena, we established a new record for quarterly gold production with 44,000 with 35 ounces produced. This is even more impressive considering that this was achieved in Tadman with one of the best porting health and safety performances in company history. Gold production at Eagle River came in at 19,272 ounces in Q2. While quality grade was consistent with Q2 of last year, the number of tons processed was 90% lower due in part to variations in stockpile. The number of status mines during this period was 12% forward compared to Q2 of last year, primarily due to the shift in the focus of development and mining activities to the 300 zone at greater depth. As part of our annual LIFO mining planning cycle this year, we're taking a step back to evaluate our options at EGLE at an asset level. There are several potential opportunities we identified that could serve to leverage the fixed cost structure of the asset and fill the 1,200 tons per day mill. These options include a newly developed global resource model to evaluate the full potential of historical resource inventory across the product. Year to date, Eagle River Mine has produced 44,171 ounces of gold, an increase of 2% over the first six months of 2023, despite production no longer being supplemented by the sensitively nichey stock class. Eagle River continues to be a consistent producer, and as such, we expect it to achieve its 2024 production guidance. On the development side, high priority phases towards the high-grade 300 zone at depth continues to track ahead of schedule, setting us up to grow production back to historical highs in 2025. At Kena, the second quarter was bolstered by the benefits of the much-anticipated high-grade ore from Kena Deep, specifically from the 129-level horizon, where stoking activities started in mid-April. These results are the culmination of two years of dedication and hard work from our team at site. Compared to the corresponding period in 2023, Q2 production tripled to 24,763 ounces, a quarterly record for heating. Ore process rose 11% to establish a new record quarterly since restart of operations, with 57,699 tons processed. And finally, plant recovery improved to 99%. Year-to-date, the mine has produced 33,186 ounces of gold, more than double what was achieved over the first six months of 2013. Grade 15 of this quarter exceeded our expectations. In fact, rather than ramping up gradually throughout the year as anticipated, rates stepped up considerably in Q2 to 13.5 grams per ton, the high end of our guidance. While we're happy with those encouraging early results, we still expect grades to fall within the guidance range for the full year. On the development front, as the 129 level horizon is now in production, we have resumed development of the ramp towards the 136 level horizon and expect to reach the 136 level access by year end. This new horizon is expected to come online in Q3 of 2025 and provide additional flexibility for production. At Brecht Hill, underground development from the port will commence in mid-April and the ramp is approaching 450 meters. The development crew is now hitting its stride. This ramp remains a priority for us as it provides several benefits to the current operations, such as improved ventilation for secondary transportation and egress. However, what makes the Presque Isle ramp so exciting is what it means for the future growth of Quina. First, it will enable us to supplement Quina deep production starting in late 2025 by adding incremental feed from the Presque Isle zone. Second, the ramp will serve as a key exploration platform from which we will be able to grow the Presque Isle zone at depth and probe the underexplored western side of Kena with access to zones such as the S-196 and northwest zones. And third, it will provide the 4-kilometer 33-level infrastructure and all of its prospective targets with the link to surface to further supplement Kena deep production and extend the mine lines. To enhance the multifunctional nature of this ramp, we continue to optimize its design for flexibility and to maximize its ability to create value for us in the future. So overall, it was a strong quarter where our teams and sites continued to deliver on objectives to set new records for WestDome and establish a new chapter for the company. Now, since this is my last conference call with WestDome, I'd like to take this opportunity to extend my most heartfelt and sincere thanks to everyone who contributed to making my time here so special, starting with our people in operations, our head office team, the management team, as well as the board of directors. Today, as I reflect on my journey with the company, I'm immensely proud of what has been accomplished over the past two years. Our collective efforts have led Wesdome to record levels in both production and health and safety, setting a strong foundation for future success. These achievements are a direct result of the unwavering dedication and resilience of our employees, the strength of our partnership, excellence of our assets, and the strategic guidance of our leadership. And now, over to Neil, who will update you on our exploration program.
spk07: Thank you, Fred, and good morning. Across the company, we have made significant progress with our extensive exploration activities here today, completing almost 80,000 meters at our Eagle River Bight and Dena property. We are planning to support 185,000 meters by the end of this year. This gives you an update on our exploration program. Starting with the recently discovered Southland Preliminary Zone. This zone is similar to the Southland Sailing Zone in that it is located in a volcanic, demonstrates the potential for globalization in the only to explore volcanic waves up the mine, and opens up exciting possibilities for the discovery of future zones. What is particularly encouraging about the drilling results from Southland Preliminary Zone especially potential with uplifts of the nuclear optimization to the surface, extending over a potential 800 meters, and the zone opened down by a stability control effect. The finding of a 5.3-level zone remains top priority for us due to its potential for growth. Therefore, drilling will continue with additional 20 holes per annum per year end, focusing on extending the zone up and down a bunch and targeting certain sectors in the zone for resource conversion. Exploring the individual cancer management problems of a company that's now having a G-Psychological Survey, a G-Psychological Survey, a G-Psychological Survey, a G-Psychological Survey, a G-Psychological Survey, It is not a key priority for other evil rivers. It is ideally located towards a different part of the market, with an altitude of 50 meters of a 30 mile infrastructure and at a relatively shallow depth of 600 to 750 meters. The zone continues to grow down plus ongoing drilling means preferring the dead potential and industrialization. Additionally, the zone proximity related to mine development and surface terrain has significant growth as a source of world opportunity process to be mined in the future. To date, over 10,280 metres in 39 holes have been completed, returning significant gold values of a minimum worth of 58.2 grams over 2.8 metres and 59.7 grams over 2.6 metres. This shows East Luton Dover to represent a unique type of street building in the mine and remains a focus area for us at the stand ongoing drilling. An additional 28 holes were slagged for the second half of the year to better define the resource and continue to expand as our own zone now plunged. Turning now to the 300p zone, we've successfully produced analysis from hydro-colonization and throughput. Our exploration objective here is to continue to upgrade resources and grow the zone for future mining. The reason to complete the 12.1 level zone platform is that it has been lower in elevation compared to previous levels It facilitated our input drilling, as well as our ability to drill previous areas down much that were either partially or fully inescapable. Here today, we have drilled 8,015 metres across 28 goals at 300 metres. Input drilling continues to confirm the consistency of our impact minimisation, which currently extends to the 60m level. Recent results include 32.5g at 6.6m, and 25.7 grams every 3.6 meters. And the 300 meters remains key for future production at Kipo River, and additional 25 holes across 15,000 meters are planned to be now adhered. Our understanding of the structural controls of the 300-zone ATV continues to improve. Several other zones will make open ATVs, and additional control will be carried out for the purpose of fixing the downforce extension of the historic ECHO zone, as well as zones with a demand of between 711, 811, and 388. As TINA deep, drilling continues to expand and define existing high-grade zones and TINA deep football zones and start with areas from the 103 and 127-metre built platforms. The football zone is comprised of three sub-areola zones and is located within 30 metres of the A2 zone, at an extent of over 300 metres and remains open laterally and down flat. These zones would prove beneficial to TINA in geometry and to potential fitness to light with several mining options.
spk15: We also have confirmed the zones to be in a more comfortable nature for canning coastlines, with 5.7 grams of 3 meters and 30.8 grams of 5 meters.
spk07: Furthermore, learning results from the structurally-folded path of observation of genotypic policy, underscoring the high-grade nature of peanut-eat-nuggets with the cost of canning of 20.7 grams of 5 meters. ENAP remains a variety due to its high-grade manager, its growth potential, and the opportunity to both large salt converter and high-grade Alster vertical meter. Exploration during the central point of degeneration in the second half of the year. ENAP continues to target several areas in an under-explored rich area after initial reconnaissance from those who detected narrow, high-grade condensation at the contact of basalt and sheared ultramarine grass. In the third quarter, we will use our journey to commence surface exploration to test the reinterpretation of the song zone, confirming the zoological expectation and converting the large, deep-furred geostorming in the pavement. Our surface journey campaign will also focus on testing the continuity of the Northwest Zone and the historical geostorming for which change has deeply depended in the science-fog corridor. This fall, we anticipate commencing a geoprogramming on the surface to test the depth potential of the Arctic perspective where the high-grade resource remains open. Follow-up drilling from underground will further define the source of the spill exploration rate. Today, in 2024, we have completed 28,000 metres of drilling now and anticipate doing upwards of 40,000 metres during the third quarter, including more than 20,000 metres of surface drilling Thank you. That concludes my remarks.
spk18: Thank you, Neil, and good morning, everyone.
spk05: It was a strong second quarter compared to Q2 2023. Assumptions of gold increased by 25%, and the average realized price of gold increased 21% to $3,192 Canadian dollars, or $2,333 US dollars. These factors drove growth of 51% in revenue and increasing cash margin by 2.5 times, growth in operating income to $45 million from a loss of $6 million, a more than 200% increase in EBITDA to $68 million, and a net income of $29 million, up significantly from a net loss of $5 million a year ago. On a balance of goals-solved basis, we saw across the board improvements with a decrease of 29% in cost of sales, with a decrease of 26% in cash costs, and a decrease of 12% in only in sustaining costs. With this quarter's strong financial performance, we generated significant cash flows. Year-over-year operating cash flow tripled, $57 million, or $0.38 per share. While this was our fourth consecutive quarter of positive free cash flows, it represented a major breakthrough. During the quarter, we repaid $29 million on our revolving credit facility, fully paying off our bank debt. Free cash flow of $28 million was strong, even after paying over $25 million in capital expenditures. Accordingly, our balance sheet is considerably stronger heading into the second half of this year. With zero debt and a growing cash balance, we ended the quarter with $200 million in available liquidity and a positive working capital of $31 million. If you compare this to where we were at year end, when we had nearly $40 million in debt and a negative working capital, we had come a long way in only six months. If current gold prices stay in the current range, we expect our balance sheet to continue to improve throughout the remainder of this year. In fact, with gold prices at record level, about $2,500 U.S. versus our budget of $1,875, there is an upside to our cash flows, which give us the flexibility to potentially accelerate exploration and development activities previously slated for 2025. For every $100 U.S. price increase in gold prices, our annualized operating cash flow increases by between $15 and $20 million U.S. Overall, it was a strong quarter and a strong first half of the year. And now, over to you, Anthea, to wrap things up.
spk02: Thank you, Fernando. It was a strong first half of the year, and we remain on track to meet our 2024 production and cost guidance. As a reminder, production is expected to be back-end weighted with approximately 55% to 60% of production targets in the second half. Before we go to Q&A, I'd like to extend our heartfelt thanks to Charles Maines, He retired yesterday as a board member and our order committee chair. As indicated, he is retiring from the industry. Since joining us in 2017, Chuck has brought decades of expertise in industry, accounting, tax, and finance. His deep knowledge and strategic insights have been instrumental in guiding this company through a period of significant growth and transformation. We deeply appreciate his dedication and the pivotal role he has played in our continued success, and we wish him all the best in his retirement. We also regret to say goodbye to Fred, He'll be leaving at the end of September. During his tenure as Chief Operating Officer, Fred has demonstrated exceptional leadership, leading to significant improvements in safety performance and new operational commitments. Fred has built a strong team, and I'm confident that our two site general managers, along with our recently appointed SVP Technical Services, will maintain seamless operations in the interim while we conduct the search for a new CRO. On behalf of the board and everyone at Western, I'd like to express our gratitude to Chuck and Fred for their many contributions to Western, and we wish each of you all the best for your future. Operator, you can now open the line for questions.
spk17: Thank you. We will now begin the question and answer session. To join the question queue, you may press star 1 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star 11 again. We'll pause for a moment as callers join the queue.
spk16: The first question comes from Ralph Profiti with 8 Capital.
spk11: Thanks, operator. Good morning, everyone.
spk06: Anthea, can you help me understand, as we look at the mine plan in Kena in 2025, where those ore sources are coming from? It seems as though there will be some spillover from that 129 level and the 136 level coming in Q3 and perhaps some press keel towards the end of 2025. And just wondering, as you think about operational flexibility, will you be looking at mining from multiple levels now that development is in a much better position in the mine plan?
spk02: Thank you, Ralph. And yes, that's absolutely correct. If you look at the plan for 2025, it's exactly that. There'll be mining from 129, 136, as well as for skill towards the latter part of the year. It provides the business now with much more flexibility than we had in 2024, as you rightly point out.
spk06: And are we seeing similar grades at 136 versus 129? Yes, we are. That's excellent to hear. Okay. Second follow-up question, please, on how you're thinking about the exploration and evaluation budget at Kena, right? Only $7 million, you know, was earmarked in 2024, but that's a multifaceted, stepped-up effort at Kena. It seems like there's significant room for upsizing.
spk02: Yeah, so our budget at KINA is a little bit higher than that, which includes all types of drilling. So I think it's closer to 15, if I'm not mistaken. So, yeah, there's absolutely opportunities for continued exploration in KINA. We keep working with the team on prioritising where we should actually spend more money, actually. So right now we have a strong plan in place. I challenge my team all the time to see if we can find opportunities to drive more success at KINA.
spk06: Great, that's helpful. Thank you, and thank you to Fred and Charles, and best wishes to them. Thank you.
spk17: Our next question will come from the line of Wayne Lamb with RBC.
spk10: Oh, hey, morning, guys. Thanks for taking my question. I guess first question at Eagle River. Just wondering, as mining shifts away from the Falcon Zone and more towards the 300 zone at depth, do you anticipate any... change in the mining costs? And then maybe just curious on the optimization on costs there. Is there any more of a definitive timeline on how things are going with the study or when the results might be released?
spk02: Okay. Thank you, Wayne, and it's nice to hear you. Yeah, regarding mining in Eagle, I'll just Yes, we're moving. There's a lot of mining coming, obviously, from the 300 zone. It's deeper, obviously, than the Falcon itself. However, we continue to work on our optimization efforts to try and drive the cost optimization opportunities inside Eagle. So, yeah. Regarding the second question, I didn't quite get that.
spk10: Just on the cost optimization study that's ongoing.
spk02: yeah so yeah that work is well underway and i think you'll see it start reaping rewards over the year there's a lot of work we've done in setting up the benefits of what that cost program looks like um so i think we would be able to talk a little bit more about that in the coming year okay great thanks and then um maybe moving to kena um obviously
spk10: The first quarter, in terms of mining the higher grades from the 129 zone, pretty spectacular. And the grades this quarter were already at the top end of guidance and lower end of cost. Just wondering, as you continue to ramp up through the second half, do you anticipate potential upside to guidance on grades or costs?
spk02: I think we, you know, if you look at the year itself, I think we're still guiding towards the range, as we said. But obviously, quarter one was lower, as you know, in terms of our grade. So you can work out the implications for the second half. So I think, essentially, I would plan towards what we guided in terms of our current grade profile.
spk13: Okay, great. Thanks. And then maybe just last one.
spk10: Just in terms of the management changes, this will be the third change in COO over the past few years and the exploration role seems to have turned over as well. Just wondering in terms of continuity of the team or stability in terms of the operations, maybe if you might be able to speak to some of the changes at the top.
spk02: Yeah, I mean, change, we always like to keep stable and we always like to ensure we have a strong team. I think we will continue to work on ensuring that that stability remains in West Dome and fill those positions as efficiently as we can and ensure that the teams are maintained. But the transition plan that we have in place is strong. And I think West Dome is well positioned with what we have in place right now to assure the plans we have going forward.
spk09: Okay, perfect. Thanks for taking my questions.
spk17: As a reminder, if you'd like to ask a question at this time, that is star 1-1. Our next question will come from the line of Don DeMarco with National Bank Financial.
spk23: Thank you, operator, and good morning, Antti. First off, Fred and Chuck, I just want to say thank you for all your contributions and wish you the best in your endeavors. So this is directed to Fred first. You're more than a quarter into Keen and Deep. How are the grades and the widths reconciling with expectations? Is it sort of on track or better than expected, more optimistic, or how would you assess this at this stage?
spk08: Hi, Don. Well, first of all, thanks for the kind words here. I mean, as far as our experience in Kina Deep so far, the grades are comparing favorably to our short-term models, so we're happy to see that. In terms of productivity, things are lining up with our assumptions. So, yeah, so far, so good.
spk23: Okay. Okay, well, we'll look forward to the back half of the year with that, and certainly... Then just shifting, staying at Keenan, but looking at Presqu'ile, on the ramp, the ramp's advancing. Do you expect to connect it with the mine, actually use it for ore haulage, and even the timing of potential first ore? I mean, of course, you do need to sort of do the drilling and upgrade to reserves and so on, but maybe if you could give us a timeline in the upcoming milestones we might expect for this project.
spk02: OK, so we plan to break through in November next year, Don, and then hit into level 33. In terms of the ore, I think you can plan towards the second half of next year for skill ore coming through. You can look at the key milestones being that this year we'll be pulling about 1,500 meters in the ramp in terms of the work order into the ramp right now. It gets us close to the skill ore body where we can start looking at drilling from underground. you know, we plan on moving between 250 and 400 tons per day in late 2025. So I think that will give a bit of an indication of more or less our thinking around a prosciutto load.
spk23: Okay, thank you. And just maybe as a final question, we saw this week the deal between Goldfields and Cisco Mining, and this is sort of right in your backyard in Quebec. Does this, just be interested to get your thoughts on this acquisition, and does it maybe
spk02: change your your strategy for m a or or evaluating companies in any way i think you know we consistently removing in our m a and we consistently reviewing different opportunities you know does it change our way we think and not really we will keep being disciplined in our approach um yeah we wish them well okay okay great well that's all for me so um
spk23: Thank you, and good luck with Q3.
spk17: Thank you so much. Thank you. There are no further questions at this time. This concludes this morning's call. If you have any further questions, please contact Trish Moran at investatwesdom.com. Thank you for participating today. Thank you. Thank you. Thank you.
spk12: Thank you. you music music
spk24: Thank you, and good morning, everyone. Before we get started, I would like to point out that during today's call, we may make forward-looking statements as defined under Canadian securities law. I ask that you review our slide presentation for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Please note that all figures discussed today on this call are in Canadian dollars unless otherwise noted. Our press release, MD&A, and financial statements are available both on CDAR+, and our corporate website, westdome.com. With us on today's call is Anthea Bass, WestDome's President and CEO, Fred Mercier-Langevin, our COO, Fernando Ragone, our CFO, Neil deBrun, our Director of Geology, and Raj Gill, SVP Corporate Development and Investor Relations. Following management's formal remarks, we will then open the call to questions. And now, over to Anthea.
spk02: Thank you, Trish, and good morning to everyone. The second quarter marked a breakthrough for Westone, with record-setting results. Safety is a top priority for us, and we continue to improve our safety culture through a structured approach with key initiatives developed and implemented across the operating site. Our safety stats continue to improve, and we had the best quarter in recent history. On a year-to-date basis, there have been zero last-time incidents. I'd like to thank the team at Westone for all the efforts in this regard. In addition to safety, Q2 also set a record for production. which significantly boosts our free cash flow position to its highest point in over two years. The strong performance led to an increase in our cash balance, which topped $50 million as of June this year and enabled us to pay off our revolver. I'm pleased to say that we are now debt-free and expect the balance sheet to continue to strengthen going forward. Of course, a major driver of this course success was our milestone achievement at Kena. As planned in Q2, Kena was able to commence mining and processing of the high-grade ore from the Kena deep 129 level horizon. This is a significant milestone for Kena. We're now mining as per the original anticipated plan, showcasing the step-changing grade and therefore the increase in gold produced and the subsequent reduction in site oil and sustaining costs when compared with both quarter one of 2024 and quarter two of 2023. Over Eagle River, our cornerstone mine maintained a decade-long history of delivering high grades and consistent performance. With its proven track record, EGLE remains a key part of WestDerm's future. While the immediate future is secured through the great work of our teams, we are excited about the prospects for WestDerm. With both operations running well and positioned to meet their respective 2024 targets, we are focused on positioning WestDerm for the medium to the long term. Given our strong balance sheets, we are able to be deliberate in how we think about driving value for the long term. Now that KINA is set up for success in 2024 and well beyond the end of this decade, we are focused on further extending its growth profile. We have set in motion several initiatives, which we believe will add value in the near term to the Kina mine and have more longer-term initiatives planned out. Since Kina Deep is contributing to production, we can now turn our attention to honing in on costs and focusing our efforts toward optimization of the current profile and the mold. As well, we're making good progress on the development of the Preskill Exploration Ram, which will serve to further enhance Kina's operations exploration and strategic flexibility. We will thus be able to leverage the 33 level. KINA has an extensive portfolio of exploration targets, which is a key strategic imperative. We continue to prioritise on multiple opportunities across our highly prospective 75 square kilometres land package on the Gold Corridor in Maldore. This is a prolific gold area and is known for its interesting geology and we're still very early on in our exploration phase. The team at Keenan has checked many boxes over the past 12 months and will continue to work on delivering high-grade ore and improving profitability. Moving on to Eagle River, with a strategic growth initiative born from a rich resource base having provided 30 years of mining of some of the highest grades in Canada, it continues to maintain its position as a high-grade producer today. The Eagle River mine has always had three to five years of mine life ahead of it, and we're now looking to increase that duration and increase output over the coming years. Our strategy to deliver this is straightforward. Full removal, ongoing mine plan optimization, improving our cost profile, and more drilling. Optimization remains a key priority at Eagle, where costs have escalated over the last number of years, impacting our resource conversion and the value of our asset. We have identified initiatives that are at various stages of execution and anticipate that results will yield value over the next year. We're in the process of examining productivity drivers, cost inputs, and our maintenance practices for value. Based on our history of discoveries, we're very excited about our exploration activities. It's a large structured program, and the team has completed significant upfront technical work. For several years, Western has focused on funding growth at Keenis through trash flow generated at Eagle River. Going forward, we're restoring the balance to set both sites up for many more years of success. As well as the two producing mines, we're working on company-wide strategic initiatives to draw value. This includes achieving synergies and supply chain efficiencies and constructing a global resource model. More about this in the coming quarters. Now over to Fred to review the quarter's operating highlights.
spk08: Thank you, Andrea. Good morning, everyone. As mentioned, Q2 was an outstanding quarter for us. On the back of the much-anticipated ramp-up at Kena, we established a new record for quarterly gold production with 44,135 ounces produced. This is even more impressive considering that this was achieved in Tegnum with one of the best quarterly health and safety performances in company history. Gold production at Eagle River came in at 19,272 ounces in Q2. While quality grade was consistent with Q2 of last year, the number of tons processed was 90% lower due in part to variations in stockpile. The number of status mines during this period was 12% lower compared to Q2 of last year, primarily due to the shift in the focus of development and mining activities to the 300 zone at greater depth. As part of our annual LIFO Mines planning cycle this year, we're taking a step back to evaluate our options of EGLE at an asset level. There are several potential opportunities we identified that could serve to leverage the fixed cost structure of the asset and fill the 1,200 tons per day mill. These options include a newly developed global resource model to evaluate the full potential of historical resource inventory across the product. Here today, Eagle River Mine has produced 44,171 ounces of coal, an increase of 2% over the first six months of 2023, despite production no longer being supplemented by the sensitively niche stock class. Eagle River continues to be a consistent producer, and as such, we expect it to achieve its 2024 production guidance. On the development side, high priority phases towards the high-grade 300 zone at depth continues to track ahead of schedule, setting us up to grow production back to historical highs in 2025. At Kena, the second quarter was bolstered by the benefits of the much anticipated high-grade ore from Kena Deep, specifically from the 129 level horizon, where stoking activities started in mid-April. These results are the culmination of two years of dedication and hard work from our team at site. Compared to the corresponding period in 2023, Q2 production tripled to 24,763 ounces, a quarterly record for heating. Ore process rose 11% to establish a new record since restart of operations, with 57,699 tons processed. And finally, plant recoveries improved to 99%. Year-to-date, the mine has produced 33,186 ounces of gold, more than double what was achieved over the first six months of 2023. Grades keen on this quarter exceeded our expectations. In fact, rather than ramping up gradually throughout the year as anticipated, rates stepped up considerably in Q2 to 13.5 grams per ton, the high end of our guidance. While we're happy with those encouraging early results, we still expect grades to fall within the guidance range for the fall year. On the development front, as the 129 level horizon is now in production, we have resumed development of the ramp towards the 136 level horizon and expect to reach the 136 level access by year end. This new horizon is expected to come online in Q3 of 2025 and provide additional flexibility for production. At Brecht Hill, underground development from the portal commenced in mid-April and the ramp is approaching 450 meters. The development crew is now hitting its stride. This ramp remains a priority for us as it provides several benefits to the current operations, such as improved ventilation for secondary transportation and egress. However, what makes the Cresthill ramp so exciting is what it means for the future growth of Quina. First, it will enable us to supplement Quina D production starting in late 2025 by adding incremental feed from the Cresthill Zone. Second, the ramp will serve as a key exploration platform from which we will be able to grow the Cresthill Zone at depth and probe the underexplored western side of Kena with access to zones such as the S-196 and northwest zones. And third, it will provide the 4-kilometer 33-level infrastructure and all of its prospective targets with the link to surface for further supplement Kena tea production and extend the mine lines. To enhance the multifunctional nature of this ramp, we continue to optimize its design for flexibility and to maximize its ability to create value for us in the future. So overall, it was a strong quarter where our teams and sites continued to deliver on objectives to set new records for Westome and establish a new chapter for the company. Now, since this is my last conference call with Westome, I'd like to take this opportunity to extend my most heartfelt and sincere thanks to everyone who contributed to making my time here so special, starting with our people in operations, our head office team, the management team, as well as the board of directors. Today, as I reflect on my journey with the company, I'm immensely proud of what has been accomplished over the past two years. Our collective efforts have led Wesdome to record levels in both production and health and safety, setting a strong foundation for future success. These achievements are a direct result of the unwavering dedication and resilience of our employees, the strength of our partnership, excellence of our assets, and the strategic guidance of our leadership. And now, over to Neil, who will update you on our exploration program.
spk07: Thank you, Fred, and good morning. Across the company, we have made significant progress with our extensive exploration activities here today, completing almost 80,000 meters at our Eagle River line and Dena property. We are planning to surpass 185,000 meters by the end of this year. they could easily update our exploration program. Starting with the recently discovered South of the Pre-Level Zone. This zone is similar to the South of the Pre-Level Zone in that it's located in a volcanic, demonstrates the potential for globalization in a highly explored volcanic space up to nine, and opens up exciting possibilities for the discovery of future zones. What is particularly encouraging about the drilling results on South of the Pre-Level Zone especially potential with of the new . Extending over a potential 800 meters and the zone open down . Defining the top priority for our utility . Therefore, drilling will continue with additional 20 holes per area, focusing on extending the zone up and down and targeting certain sectors in the zone for resource conversion. Exploring the individual cancer management priorities of a company that is trying to make a new clinical, top-notch medical treatment process, a G-Physical Survey plan in 4.3 is anticipated to provide a stability and traceability machine to assess or identify the neutral factors for potential new immunization shoots. It's essential, though, to not have key priorities for other people with them. It is ideally located towards a different part of the target, about 350 meters of a 30-mile infrastructure, and at a relatively shallow depth of 600 to 750 meters. The zone continues to grow down, but is ongoing drilling and preferring the dead potential and regionalization. Additionally, the zone proximity related to mine development and surface terrain is a significant growth and a source of world opportunity for us to mine in the future. To date, over 10,280 meters and 59 holes have been completed in terms of significant gold values of a minimum width of 58.2 grams over 2.8 meters and 59.7 grams over 3.6 meters. This shows East Luton Dome could represent a new type of street building in the mine and remains a focus area for us at the stand on Dome and Drilling. additional 28 holes planned for the second half of the year to better define the resource and continue to expand as their own zone down planche. Turning now to the 300p zone, we've successfully produced analysis from hydro-colonization and throughput. Our exploration objective here is to continue to upgrade resources and grow the zone for future mining. The reason to complete the 12.1 level zone planche is that there has been lower elevation compared to previous levels It facilitated our input drilling, as well as our ability to drill previous areas down much that were either partially or fully inescapable. Here today, we have drilled 8,015 meters across 28 goals at 300 meters. Input drilling continues to confirm the consistency of the impact immunization that currently extends to the 600 meter level. Recent results include 32.5 grams at 6.6 meters, and 25.7 grams over 3.6 meters. And the 300 teaser remains key for future production at Beeple River, and additional 25 holes across 15,000 meters are planned to be now adhered. Our understanding of the structural controls of the 300-zone update continues to improve. Several other zones will be made open at this, and additional control will be carried out for the purpose of selecting the downforce extension of the historic 800 zone, as well as zones with a demand of between 711, 811, and 388. As keen updates journey continues to expand and define existing high-grade zones and extend these football zones and start with areas from the 103 and 137-metre built platforms. The football zone is comprised of three sub-areola zones and is located within 30 metres of the A2 zone at an extent of over 300 metres and remains open laterally and down-close. These zones would prove beneficial to clean-out the geometry and potential thickness to light with several mining methods offered.
spk15: We also have confirmed the zones to be in a more confident nature for pan-coastal. 5.7 grams of 3 meters and 30.8 grams of 5 meters.
spk07: Furthermore, learning results from the structurally-folded plasma population of genocidity policy, underscoring the high-grade nature of phenolphthalein, has caused the panning of 20.7 grams of 5 meters. Keynotes remains a variety due to its high-grade manager, its growth potential, and the opportunity to both large salt converter and iron-grade ounce per vertical meter. Exploration during extension for degeneration in the second half of the year. Jolien continues to start with several areas in an under-explored rich area. After initial reconnaissance, Jolien will see the second barrel of high-grade mineralization at the contact of basalt and sheared alternative rice. In the third quarter, we will use our journey to commence surface exploration to test the reinterpreted Nissan zone, confirming the geologic expectation and converting the large-scale curve into a new table. Our surface journey campaign will also focus on testing the continuity of the Northwest zone and the historical geological zone for which Shane has dearly appended his science-fog corridor. This fall, we anticipate commencing a geoprogram on the surface to test the potential of the Arctic perspective non-plastic surface drilling, where the highest-grade resource remains open. Follow-up drilling from underground will further define the resource of the spill exploration rate. Today, in 2024, we have completed 28,000 metres of drilling and anticipate drilling upwards of 40,000 metres during the third quarter, including more than 20,000 metres of surface drilling at the desolation and spill zones that run further into the niche area. Thank you. That concludes my remarks. And now, I'm looking for Landry, who will take you through this quarter's financial thoughts.
spk18: Thank you, Neil, and good morning, everyone.
spk05: It was a strong second quarter compared to Q2 2023. Assumptions of gold increased by 25%, and the average realized price of gold increased 21% to $3,192 Canadian dollars, or $2,333 US dollars. These factors draw a growth of 51% in revenue, an increase in cash margin by 2.5 times, growth in operating income to $45 million from a loss of $6 million, a more than 200% increase in EBITDA to $68 million, and a net income of $29 million, up significantly from a net loss of $5 million a year ago. On a balance of goals or basis, we saw across the board improvements with a decrease of 29% in cost of sales, with a decrease of 26% in cash costs, and a decrease of 12% in only in sustaining costs. With this quarter's strong financial performance, we generated significant cash flows. Year-over-year operating cash flow tripled, 57 million, or 38 cents per share. While this was our fourth consecutive quarter of positive free cash flows, it represented a major breakthrough. During the quarter, we repaid $29 million on our revolving credit facility, fully paying off our bank debt. Free cash flow of $28 million was strong, even after paying over $25 million in capital expenditures. Accordingly, our balance sheet is considerably stronger heading into the second half of this year. With zero debt and a growing cash balance, we ended the quarter with $200 million in available liquidity and a positive working capital of $31 million. If you compare this to where we were at year end, when we had nearly $40 million in debt and a negative working capital, we had come a long way in only six months. If current gold prices stay in the current range, we expect our balance sheet to continue to improve throughout the remainder of this year. In fact, with gold prices at record level, about $2,500 U.S. versus our budget of $1,875, there is an upside to our cash flows, which give us the flexibility to potentially accelerate exploration and development activities previously slated for 2025. For every $100 U.S. price increase in gold prices, our annualized operating cash flow increases by between $15 and $20 million U.S. Overall, it was a strong quarter and a strong first half of the year. And now, over to you, Anthea, to wrap things up.
spk02: Thank you, Fernando. It was a strong first half of the year, and we remain on track to meet our 2024 production and cost guidance. As a reminder, production is expected to be back in weighted with approximately 55% to 60% of production targets in the second half. Before we go to Q&A, I'd like to extend our heartfelt thanks to Charles Main, who retired yesterday as a board member and our order committee chair. As indicated, he is retiring from the industry. Since joining us in 2017, Chuck has brought decades of expertise in industry, accounting, tax, and finance. His deep knowledge and strategic insights have been instrumental in guiding this company through a period of significant growth and transformation. We deeply appreciate his dedication and the pivotal role he has played in our continued success, and we wish him all the best in his retirement. We also regret to say goodbye to Fred, will be leaving at the end of September. During his tenure as Chief Operating Officer, Fred has demonstrated exceptional leadership, leading to significant improvements in safety performance and new operational commitments. Fred has built a strong team, and I'm confident that our two site general managers, along with our recently appointed SVP Technical Services, will maintain seamless operations in the interim while we conduct the search for our new CROs. On behalf of the Board and everyone at Western, I'd like to express our gratitude to Chuck and Fred for their many contributions to Western, and we wish each of you all the best for your future. Operator, you can now open the line for questions.
spk17: Thank you. We will now begin the question and answer session. To join the question queue, you may press star 1 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star 11 again. We'll pause for a moment as callers join the queue.
spk16: The first question comes from Ralph Profiti with 8 Capital.
spk11: Thanks, operator. Good morning, everyone.
spk06: Anthea, can you help me understand, as we look at the mine plan in Kena in 2025, where those ore sources are coming from? It seems as though there will be some spillover from that 129 level and the 136 level coming in Q3 and perhaps some press keel towards the end of 2025.
spk02: just wondering as you think about sort of operational flexibility will you be looking at uh mining from multiple levels now that development is in a much better position in the mine plan thank you ralph and yes that's absolutely correct if you look at the plan for 2025 it's exactly that they'll be mining from 129 136 as well as the skill towards the latter part of the year um It provides the business now with much more flexibility than we had in 2024, as you rightly point out.
spk06: And are we seeing similar grades at 136 versus 129? Yes, we are. That's excellent to hear. Okay. Second follow-up question, please, on how you're thinking about the exploration and evaluation budget at Kena, right? Only $7 million, you know, was earmarked in 2024, but that's a multifaceted, stepped-up effort at Kena. It seems like there's significant room for upsizing.
spk02: Yeah, so our budget at Kina is a little bit higher than that, which includes all types of drilling. So I think it's closer to 15, if I'm not mistaken. So yeah, there's absolutely opportunities for continued exploration in Kina. We keep working with the team on prioritising where we should actually spend more money, actually. So right now we have a strong plan in place. I challenge my team all the time to see if we can find opportunities to drive more success at Kina.
spk06: Great, that's helpful. Thank you, and thank you to Fred and Charles, and best wishes to them. Thank you.
spk17: Our next question will come from the line of Wayne Lamb with RBC.
spk10: Oh, hey, morning, guys. Thanks for taking my question. I guess first question at Eagle River. Just wondering, as mining shifts away from the Falcon Zone and more towards the 300-zone at depth, do you anticipate any... change in the mining costs, and then maybe just curious on the optimization on costs there. Is there any more of a definitive timeline on how things are going with the study or when the results might be released?
spk02: Thank you, Wayne, and it's nice to hear you. Yeah, regarding mining in EGLE, I'll just to a bit of an idea yes removing there's a lot of um mining coming obviously from the 300 zone it's deeper obviously than the falcon itself however we continue to work on our optimization efforts to try and drive the cost optimization opportunities inside eagle um so yeah regarding the second question i didn't quite get that just on the cost optimization study that's ongoing yeah so yeah that work is well underway and i think you'll see it start reaping rewards over the year there's a lot of work we've done in setting up the benefits of what that cost program looks like um so i think we would be able to talk a little bit more about that in the coming year okay great thanks and then um maybe moving to kena um obviously
spk10: The first quarter, in terms of mining the higher grades from the 129 zone, pretty spectacular. And the grades this quarter were already at the top end of guidance and lower end of cost. Just wondering, as you continue to ramp up through the second half, do you anticipate potential upside to guidance on grades or costs?
spk02: I think we, you know, if you look at the year itself, I think we're still guiding towards the range, as we said. But obviously, quarter one was lower, as you know, in terms of our grades. So you can work out the implications for the second half. So I think, essentially, I would plan towards what we guided in terms of our current grade profile.
spk13: Great, thanks. And then maybe just last one, just in terms of the management changes.
spk10: This will be the third change in COO over the past few years, and the exploration role seems to have turned over as well. I'm just wondering in terms of continuity of the team or stability in terms of the operations, maybe if you might be able to speak to some of the changes at the top.
spk02: Yeah, I mean, you know, change, we always like to keep stable and we always like to ensure we have a strong team. I think, you know, we will continue to work on ensuring that that stability remains in Western and fill those positions as efficiently as we can and ensure that the teams are maintained. But the transition plan that we have in place is strong. And I think Western is well positioned with what we have in place right now to assure the plans we have going forward.
spk09: Okay, perfect. Thanks for taking my questions.
spk17: As a reminder, if you'd like to ask a question at this time, that is star 1-1. Our next question will come from the line of Don DeMarco with National Bank Financial.
spk23: Thank you, operator, and good morning, Antti. First off, Fred and Chuck, I just want to say thank you for all your contributions and wish you the best in your endeavors. So this is directed to Fred first. You're more than a quarter into Keening Deep. How are the grades and the widths reconciling with expectations? Is it sort of on track or better than expected, more optimistic, or how would you assess this at this stage?
spk08: Hi, Don. Well, first of all, thanks for the kind words here. I mean, as far as our experience in Key to Deep so far, the grades are comparing favorably to our short-term models, so we're happy to see that. In terms of productivity, things are lining up with our assumptions. So, yeah, so far, so good.
spk23: Okay. Okay, well, we'll look forward to the back half of the year with that, and certainly... Then just shifting, staying at Keenan, but looking at Presqu'ile, on the ramp, the ramp's advancing. What do you expect to connect it with the mine, actually use it for ore haulage, and even the timing of potential first ore? I mean, of course, you do need to sort of do the drilling and upgrade to reserves and so on, but maybe if you could give us a timeline in the upcoming milestones we might expect for this project.
spk02: OK, so we plan to break through in November next year, Don, and then hit into level 33. In terms of the ore, I think you can plan towards second half of next year for skill ore coming through. You can look at the key milestones being that this year we'll be pulling about 1,500 meters in the ramp in terms of the work order into the ramp right now. Gets us close to the skill ore body where we can start looking at drilling from underground. you know, we plan on moving between 250 and 400 tons per day in late 2025. So I think that will give a bit of an indication of more or less our thinking around a prosciutto load.
spk23: Okay, thank you. And just maybe as a final question, we saw this week the deal between Goldfields and Cisco Mining, and this is sort of right in your backyard in Quebec. Does this, just be interested to get your thoughts on this acquisition, and does it maybe
spk02: change your your strategy for m&a or or evaluating companies in any way i think you know we consistently removing in our m&a and we consistently reviewing different opportunities you know it doesn't change our way we think and not really we will keep being disciplined in our approach um yeah we wish them well okay okay great well that's all for me so um
spk23: Thank you, and good luck with Q3.
spk17: Thank you so much. Thank you. There are no further questions at this time. This concludes this morning's call. If you have any further questions, please contact Trish Moran at investatwesdom.com. Thank you for participating today.
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