Yamana Gold Inc (AUY) Q1 2019 Earnings Call Transcript

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Yamana Gold Inc  (NYSE:AUY)
Q1 2019 Earnings Name
Might. 02, 2019, eight:30 a.m. ET

Contents:

Ready Remarks
Questions and Solutions
Name Members

Ready Remarks:

Operator

Thanks all for becoming a member of us this morning. Earlier than I flip the decision over, I must advise that sure statements made throughout this name right this moment might include forward-looking data and precise outcomes may differ from the conclusions or projections in that forward-looking data, which embody, however will not be restricted to, statements with respect to the estimation of mineral reserves and sources, the timing and the quantity of estimated future productions, price of productions, capital expenditures, future metallic costs, and the prices of timing of growth of recent tasks.

For a whole dialogue of the dangers, uncertainties and elements which can result in precise monetary outcomes and efficiency being totally different from the estimates contained within the forward-looking statements, please discuss with Yamana press launch issued yesterday saying first quarter 2019 outcomes, in addition to the administration’s dialogue and evaluation for a similar interval and different regulatory filings in Canada and america.

I wish to remind everybody that this convention name is being recorded and can be accessible for replay right this moment at 12.00 PM Jap Time. Replay data

and the presentation slides accompanying this convention name and webcast can be found on Yamana’s web site at yamana.com.

I’ll now flip the decision over to Mr. Daniel Racine, President and CEO.

Daniel Racine — President and Chief Govt Officer

Thanks all for tuning in. And welcome to our first quarter convention name. With me on the decision right this moment is Jason LeBlanc, our CFO. All members of our administration are with us within the room and can be accessible for the Q&A portion of the decision. We had a powerful first quarter, each operationally and from a sustainability standpoint.

Our complete recordable damage frequency fee declined to zero.6 throughout the quarter from zero.72 within the first quarter of 2018. We didn’t have any misplaced time damage at any of our operation within the newest quarter. Whereas we’re happy with executing on our One Group, One Purpose: Zero imaginative and prescient, we additionally acknowledged the significance of being ready. To that finish, we had an emergency response train at Jacobina throughout the quarter to check the preparedness of the mine, the neighborhood, and supporting authorities for critical incident. The train went properly and whereas we hope we by no means needed to implement our emergency protocols, we’ll proceed to carry such train to make sure we’re prepared for any situations.

Our first quarter manufacturing of 272,000 GEO ounces exceeded expectation, whereas all-in sustaining prices of $930 per gold equal ounces have been according to expectation. 12 months-on-year manufacturing rose 29% led by file manufacturing at Jacobina and a 6% enhance at Minera Florida. We had additionally benefited from new contribution from Cerro Moro. Our 2019 mine-by-mine outlook for manufacturing and price is unchanged.

Throughout the quarter, we introduced the mixing settlement for Agua Rica, which represents a major step towards the optimization of this compelling challenge. We took one other necessary step after we introduced the sale of Chapada to Lundin Mining for greater than $1 billion. The settlement contains $800 million of upfront money consideration, plus as much as $125 million primarily based on gold value, a few of which is straight away monetizable. It additionally embody a $100 million in money contingent on the event of a pyrite roaster by Lundin, and a 2.2% internet smelter return royalty on gold manufacturing from Suruca, that can be monetizable.

The strategic good thing about the transaction are many, not the least of which is considerably improved monetary flexibility. The upfront money fee can be allotted towards debt discount with compensation of our excellent revolver, the primary precedence, adopted by compensation of close to and medium-term debt. The sale may even facilitate doubling of our annual dividend to $zero.04 per share and we anticipate further enhance from money circulation. The sale may even permit us to redirect money circulation that might have been allotted to Chapada towards value-enhancing alternatives at Jacobina, Malartic, Cerro Moro and Agua Rica. These are natural alternatives to develop higher-margin manufacturing by greater than 150,000 GEO ounces per yr. We count on growth prices for these manufacturing to be decrease than the Chapada phased growth plan. And once more, as a result of it is an necessary level, we’ll fund this growth with money circulation from operations. I will speak extra about these alternatives in a second.

Following quarter finish, we organized for the sale of roughly 27,000 GEO ounces in precipitate stock from Cerro Moro for about $34.5 million. A second sale is predicted in June valued at greater than $10 million. Jason will speak extra about this sale later on this name.

Working outcomes for the quarter have been strong, each with respect to manufacturing and prices. On an unadjusted foundation, our internet loss was $four.1 million or nil per share. On an adjusted foundation, we earned $zero.02 per share. Money circulation from operations earlier than internet change in working capital adjustment was $103.2 million. This exclude deferred income from our copper superior sale program, totaling to $25.1 million. Copper manufacturing throughout the quarter was 28.1 million kilos. On a by-product foundation, taking copper as a by-product credit score, our GEO money prices and all-in sustaining prices have been $526 and $665 (ph) respectively.

Turning to our manufacturing consequence, the profit from Cerro Moro is evident with over 2 million ounces of silver and 38,500 ounces of gold throughout Q1. Trying on the 270,000 ounces, Gold equal ounces manufacturing complete, 236,000 ounces within the quarter was gold and silver manufacturing got here at three.02 million ounces, each are vital enhance from the yr ancient times and each are monitoring properly to steering.

Talking shortly to unit prices for the corporate, we’re throughout the steering vary for the yr on all metrics. Turning to the operation, manufacturing of 83 at Malartic — manufacturing of 83,670 GEO ounces at Malartic met expectation. Grades have been according to plan and recoveries have been much like the primary quarter of 2018. The Barnat growth challenge is advancing on plan with contribution anticipated later this yr, extra significant contribution to return in 2020 and 2021.

Our exploration applications are evaluating deposits east of the mine present open pit, together with the Odyssey, East Malartic, Sladen and Sheehan zones. We’re evaluating underground situations for Odyssey and East Malartic zone with research exhibiting potential to extend manufacturing by 75,000 ounces per yr. Further drilling from underground entry factors, useful resource delineation, and engineering can be required to advance East Malartic and Odyssey towards growth selections.

The allow permitting the event of an underground ramp on the Odyssey challenge was obtained in December 2018. At Chapada, manufacturing was according to expectation with 21,520 ounces of gold and 21.eight (ph) million kilos of copper. A number of initiatives assist mitigate the consequences of wet season contributing to a 37% year-over-year enhance in ore mined. Throughout the quarter, the mine centered on the waste motion in preparation for a push-back scheduled within the second quarter of 2019. Value management initiatives coupled with the decline within the Brazilian Actual versus the US greenback helped to drive decrease year-on-year prices. We count on the sale of Chapada to shut early within the third quarter of 2019.

As talked about, Jacobina continues to ship distinctive manufacturing. Excessive grade and processing fee contributed to file quarter of 38,617 ounces. Prices benefited from increased gold equal gross sales optimization initiatives and the depreciation of the Actual. Throughout the quarter, we accomplished 2,600 meters of drilling with a deal with defining new inferred mineral sources at grades increased than the lifetime of mine mannequin within the Morro do Vento and Canavieiras sectors. Up to now, drill outcomes are promising with a number of holes at considerably increased than reserve grades.

We’re evaluating a two-phase strategy to develop manufacturing at Jacobina past 150,000 ounces per yr. Part one considers a plant optimization to maintain processing capability at 6,500 tons per day which might enhance manufacturing to 165,000 to 170,000 ounces per yr. This section require very modest capital and is predicted to be carried out by mid-2020. Part two considers a plant growth to between eight,000 and eight,500 tons per day to realize manufacturing of greater than 225,000 ounces per yr.

Cerro Moro produced 63,000 gold-equivalent ounces within the quarter, with 38,471 ounces of gold and a pair of.02 million ounce of silver. The operation is on monitor to satisfy 2000 manufacturing steering. As was the case final yr, elevated mills feed grade continues to create capability constraints on the mine furnaces leading to valuable metals precipitate.

Subsequent to the quarter finish, we organized for the sale of a few of this stock which Jason will speak about extra in a second. We imagine there are extra reserves to be added at Cerro Moro after which we have launched an aggressive drill program this yr to seek out them. eight,200 meters of exploration and drilling was full in Q1. A rise in reserve would unlock alternatives to develop the mines processing plant and assist development of an influence line which might decrease working prices.

At El Penon, manufacturing of 46,000 GEO ounces in Q1 exceeded expectations, grade of three.56 grams per ton have been according to expectation. Underground mine growth actions that passed off in Q1 are anticipated to extend entry to increased grade gold and silver within the second half of this yr. We accomplished almost 21,000 meters of drilling within the first quarter with the deal with changing inferred mineral sources to measured and indicated class.

At Minera Florida, manufacturing of 19,654 ounces of gold benefited from increased grade from the PVS and Pataguas zone, partly offset by decrease mill throughput. Prices metrics improved by greater than 10% year-on-year as a consequence of increased gross sales, price management initiatives and a decline within the Chilean pesos. The up to date lifetime of mine plan which emphasizes increased tonnage and ramp up of manufacturing is predicted to start within the second quarter. 12,500 meters of drilling was accomplished within the first quarter. The deal with drilling was to transform inferred mineral sources to measured and indicated mineral sources at 9 veins throughout the core mine.

Earlier than I flip it over to Jason to debate the monetary, I wish to add a ultimate level about Agua Rica. The latest signing of the mixing settlement for the event and operation of Agua Rica was a major step ahead for the challenge to unlock worth, leveraging the prevailing infrastructure and facility on the Alumbrera mine would improve Agua Rica economics and scale back the challenge’s complexity and surroundings footprint. As I stated in the beginning of my remarks that it is a compelling challenge that give me, you some sense of simply how compelling. Preliminary research present the potential for mine life in extra of 25 years at common annual manufacturing of 520 million kilos of copper equal metallic for the primary 10 years of an estimated 25-years mine life. A pre-feasibility research is imminent and a feasibility research is predicted to be accomplished in 2020. Agua Rica represents a major monetization alternative and we look ahead to updating you because it develops.

I will now hand it over to Jason to speak about our financials.

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Thanks, Daniel. And good morning everybody. We delivered $407 million in income within the first quarter, in comparison with $455 million in the identical quarter final yr. Income was impacted by decrease gold and copper costs partly offset by increased year-on-year silver gross sales. Regardless of the decline in income, gross margin elevated by $10 million over final yr underpinned by operational outcomes and price enhancements.

Web earnings attributable to Yamana fairness holders was $zero.00 per share. This contains sure non-cash and different objects that will not be reflective of present and ongoing operations. Notable amongst these things was a $20.2 million non-cash tax on unrealized overseas alternate losses associated to the weakening of our working currencies versus the U.S. greenback. Excluding these things amongst others, adjusted earnings within the quarter would have been $zero.02 per share.

Money circulation earlier than internet change in working capital was $103.2 million throughout Q1. As Daniel talked about although, this excludes deferred income from our copper superior gross sales program. When adjusted for this system, money flows from working actions earlier than internet change in working capital would have been $128.three million, up from $84.1 million for the prior yr quarter. As a reminder, we could have our final supply underneath the copper superior gross sales program in Q2, which is about $25 million.

As anticipated, Q1 had a big working capital outflow with the seasonal nature of our operations and accrual cycle. However in Q1, we additionally had the impression of additional precipitate stock construct up and non-reversal from Cerro Moro. Moreover, with weaker native currencies, we had a non-cash impression from FX of about $10 million that went by way of working capital within the quarter. I will communicate to you shortly, however we’ll see a giant reversal of the precipitate stock in Q2. These things additionally impacted our internet debt and internet free money circulation in comparison with yr finish. With rising money circulation and the reversal of those impacts starting within the second quarter, we count on near-term enhancements in money circulation and internet free money circulation.

Our Q1 working money circulation is certainly not a consultant run fee for the yr. G&A bills throughout the quarter have been $21.5 million, down from $26.5 million a yr in the past. We’re additionally implementing a plan for additional G&A financial savings that can start later within the yr after closing of the Chapada transaction. The precipitate stock construct up at Cerro Moro resulted from above-plan silver grades and a constructive grade reconciliation. This created capability constraints on the mine’s furnaces since start-up. As Daniel highlighted earlier, we now have organized for the sale of roughly 27,000 gold equal ounces in Cerro Moro precipitate stock, which can be mirrored in gross income and money circulation of roughly $34.5 million within the second quarter.

We count on to make an extra sale of precipitate in June of roughly $10 million following which we count on stock ranges to be maintained. Now we have ordered an extra furnace to raised handle any additional capability constraints and we’re at present assessing whether or not it will likely be put in or whether or not the flexibleness of promoting gold and silver in precipitate kinds is a greater resolution to handle stock.

The sale of Chapada will permit us to considerably enhance our stability sheet. With the proceeds of the transaction, we can be decreasing our gross debt ranges by repaying our revolver and shorter tenure mounted time period debt. Upon closing of the transaction which is predicted within the third quarter, our internet debt-to-EBITDA ratio will decline to 1.5 instances. However trying forward, we count on our internet debt-to-EBITDA ratio to lower to 1x by the tip of 2021.

Our stronger stability sheet, however extra exactly, the higher monetary flexibility it affords, is a key catalyst for what’s subsequent for Yamana. This contains the pursuit of near-term worth enhancing natural progress tasks, higher commitments to our exploration efforts and alternatives to enhance shareholder returns.

With that I will now flip the decision again to Daniel.

Daniel Racine — President and Chief Govt Officer

Thanks, Jason. To conclude, I’ll spotlight a number of key factors. Put up Chapada, we can be left with the portfolio of high-quality valuable metallic property with variety of compelling alternatives for progress. This sale permits us to considerably and instantly enhance our stability sheet. This in flip would permit us to make a significant return of money circulation — of money to our shareholders by way of our dividend enhance whereas additionally offering us with monetary flexibility to pursue our natural progress alternatives utilizing money circulation from operation.

Lastly, I wish to remind everybody that we now have our AGM this morning at 11:00. And with that we’ll be glad to take your questions.

Questions and Solutions:

Operator

Thanks. (Operator Directions). Now we have a query from Ralph Profiti from Eight Capital. Please go forward. Your line is now open.

Ralph Profiti — Eight Capital — Analyst

Thanks operator. Good morning. I would prefer to ask two questions. Firstly, on the growth at Jacobina, since you’ve talked about increased reserve grades and better mining grades coming, ought to we be serious about Part 1 although as extra of enhancements round issues like dilution across the pillars, mining strategies? I am simply making an attempt to get a way of splitting the 2 phases, what really is happening significantly in Part 1 to get us these further ounces.

Daniel Racine — President and Chief Govt Officer

Right here we now have onerous time to listen to you Ralph, however I believed it was on Jacobina. For Part 1 is mainly placing the mill at 6,500 tons per day with the precise reserve grade. So there is not any change in grade. It is minimal capital, it is just a few optimization on screening and stuff like that. So it is pretty straightforward to realize. Part 2 is mainly 25% is a few mill tweaking after which about the remaining is, you realize, rising our underground capability to succeed in 7,500 or eight,000 after which on the finish eight,500 tons per day. So it is pretty straightforward, the mine is already reaching many of the tonnage. After which Part 1 can be accomplished by this time subsequent yr.

Ralph Profiti — Eight Capital — Analyst

Okay. Yeah. Thanks for that. Jason across the precipitate gross sales, have you ever locked in these costs already? Does that occur by way of spinoff contracts? How does the pricing mechanism for receiving these revenues work?

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

No, there’s — there is not any locking of the costs. So we talked about in Might, there, so we can be uncovered to gold costs like our regular course gross sales could be. When it comes — it is rather much like what we might do on our concentrates, on the precise sale the place we might lock within the costs on the level of sale. So, I would count on these to be a few weeks out.

Ralph Profiti — Eight Capital — Analyst

Okay. Obtained it. Thanks guys. Thanks very a lot.

Operator

Thanks. The subsequent query is from Tanya Jakusconek from Scotiabank. Please go forward. Your line is now open.

Tanya Jakusconek — Scotiabank — Analyst

Nice. Good morning everyone. Possibly the primary one for Jason. Are you able to simply speak to us about what the online contribution to income could be from the precipitate as a result of there’s different elements in there? I feel there’s tax implication and royalties are, after which clearly a price for treating the precipitate.

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Positive. You already know, Tanya, I’d assume, it is similar to what we might do with our dore gross sales. So that might be within the vary of in all probability just a little underneath 2% of gross proceeds could be an inexpensive price to use for, you realize, payable metals, remedy refining costs, logistics etcetera. So, actually from our perspective no totally different than a dore sale,

just a little bit extra intensive to handle however from a price perspective it is a very environment friendly.

Tanya Jakusconek — Scotiabank — Analyst

All proper. So, if we take out, assuming 98% is coming to you that might been in that ballpark.

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

That is good. Yeah.

Tanya Jakusconek — Scotiabank — Analyst

Okay, good. After which when do you count on that working capital to alter, or you realize to clearly get these moneys again by way of the yr? When are you anticipating that reversal?

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

It might be fairly evenly balanced all year long Tanya, to not be too exact about it. Clearly, Q2 we will have a giant windfall from that precipitate that I discussed. Then we might count on regular course on that. Past that it will be the traditional type of sequence on the opposite working capital sort objects.

Tanya Jakusconek — Scotiabank — Analyst

Okay. So if we have been to take the precipitate add of the Q2 after which evenly distribute no matter is remaining for Q3, This fall that might be a adequate assumption.

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Yeah that might be truthful.

Tanya Jakusconek — Scotiabank — Analyst

Okay.

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Tanya, the opposite factor I wish to spotlight now simply whereas we’re on the purpose of working capital, is on the Chapada sale, as you realize, is a part of these — on asset sale like that we’ll have a working capital switch, I assume, with that sale to the acquisition and sale settlement gives for a dedication to maneuver $33 million of working capital foundation that buy and sale settlement to Chapada. So that might be a part of a working capital motion exterior of what I simply talked about for the yr.

Tanya Jakusconek — Scotiabank — Analyst

Okay. And that might be in Q3?

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

That might be Q3, sure.

Tanya Jakusconek — Scotiabank — Analyst

Okay. Good. After which perhaps one for Daniel, simply on that Jacobina once more and it is to do with Part 2. I am simply questioning, I do know that you’ve got talked about that you simply’re permitted to 7,500 tons a day, and also you stated of the $100 million capital, I feel 25% could be within the mill tweaking, the remaining could be within the underground. What must be executed on the tailing facet?

Daniel Racine — President and Chief Govt Officer

On the tailing facet, we’re OK for now. Now we have to consider the long run. And a part of the research is to have a look at both a dry stack tailing or paste fill. As you realize, we’re mining in Jacobina now for a few years, there’s many open cease there. After which it’s going to make sense to in all probability swap to a paste fill, however we’re — the fellows are finding out proper now we now have to do some check on the fabric we now have from the tailing to see what’s the very best choices. However finally, we’ll swap to a really totally different sort of tailing that we now have proper now.

Tanya Jakusconek — Scotiabank — Analyst

After which in case you have been to go to that 75 or 85 I imply, what tailings capability capability do we now have proper now?

Daniel Racine — President and Chief Govt Officer

Now we have to examine that, Tanya. I do not know by coronary heart, but it surely’s fairly lengthy. I feel it is proper now if we might proceed on the precise fee, we now have over 10 years.

Tanya Jakusconek — Scotiabank — Analyst

At your present fee?

Daniel Racine — President and Chief Govt Officer

On the present fee. So at 6,500 tons per day, for instance, we’re OK for 10 years.

Tanya Jakusconek — Scotiabank — Analyst

Okay. So I can do the mathematics there. Okay. Thanks a lot.

Daniel Racine — President and Chief Govt Officer

Yeah. So perhaps round eight years would it not enhance capability.

Tanya Jakusconek — Scotiabank — Analyst

Okay.

Daniel Racine — President and Chief Govt Officer

However that is additionally saying that we proceed the identical sort of tailing. After which we can’t, if we go dry stack, it takes numerous a — quite a bit much less place. And if we put — if we go together with paste, then we put about 40% to 50% again underground.

Tanya Jakusconek — Scotiabank — Analyst

Okay. That is it. Thanks.

Daniel Racine — President and Chief Govt Officer

Thanks.

Operator

Thanks. The subsequent query is from Josh Wolfson from Desjardins Securities. Please go forward. Your line is now open.

Josh Wolfson — Desjardins Securities — Analyst

Thanks. Trying on the 2021 steering and adjusting out Chapada, seems to be like there’s about 75,000 gold equal ounces that might signify a rise from 2019 numbers. I feel you realize the corporate has already supplied particulars for half of that representing upside from Malartic and Jacobina. You already know, in any other case, I’d have anticipated perhaps internet declines from El Penon and Cerro Moro. So, is it secure to imagine the opposite half, 35,000-40,000 ounces of progress is de facto strictly pushed by Minera Florida at this level?

Daniel Racine — President and Chief Govt Officer

No, no, the 150,000 is correct now round it is 75,000 from Jacobina and the opposite 75,000 ounces is a mix of Canadian Malartic and Florida. So, there is not any lower at Cerro Moro. There can be a slight enhance at Florida. After which after we go forward with the Odyssey and East Malartic — at Malartic, it is 75,000 ounces Yamana primarily based on the 50% foundation.

Josh Wolfson — Desjardins Securities — Analyst

Okay.

Daniel Racine — President and Chief Govt Officer

That might clarify the 150,000. So, 150,000 is a mix of 75,000 at Jacobina plus Canadian Malartic and Florida for the opposite 75,000 ounces.

Josh Wolfson — Desjardins Securities — Analyst

Okay. Particularly for 2021 now, the place I assume Malartic steering has already been issued for 350,000 ounces.

Daniel Racine — President and Chief Govt Officer

Sure.

Josh Wolfson — Desjardins Securities — Analyst

So plus 2020 over 2019, after which Jacobina, I assume the corporate has already supplied indications of upside of 15,000. Particularly for 2021, it seems to be like there may be nonetheless progress from Minera Florida, El Penon and Cerro Moro indicate of about 35,000 to 40,000 ounces which seems to be prefer it may solely be pushed from Minera Florida. Is that affordable?

Daniel Racine — President and Chief Govt Officer

No. It is a combine on all our operations Josh. It isn’t solely Florida. Florida is a part of it. However we see progress at different operations too. Jacobina, we’re conservative in our numbers. So, we see extra coming from Jacobina, that is what we’re saying. At Jacobina, we’re assuming the precise grade. However as we talked about many instances within the final quarter and this quarter once more, the grade we’re drilling is above three grams after which we see our sources and reserves going up once more this yr. So, if we might assume the precise grade that we see proper now on the mill and sooner or later that designate the distinction simply by itself.

Josh Wolfson — Desjardins Securities — Analyst

Okay.

Daniel Racine — President and Chief Govt Officer

After which perhaps to be clear on Jacobina, we do not have to go to eight,500 tons per day if we assume that the grade we’re hitting proper now, that is what we will have sooner or later. At 7,500 tons per day, we’re already reaching that 225,000 ounces per day with out rising our allow and something. So there’s many choice at Jacobina by both a grade or throughput.

Josh Wolfson — Desjardins Securities — Analyst

Okay. And for the capital spending for Jacobina for the second section that $100 million, when would the timing of that spending happen. And I assume when would the corporate make the choice to start out that spending program?

Daniel Racine — President and Chief Govt Officer

The spending will not occur earlier than 2021 and 2022 and it will in all probability be in two phases. The primary one can be to deliver from 6,500 to 7,500 tons per day. After which in 2020 to 7,500 to eight,500.

Josh Wolfson — Desjardins Securities — Analyst

Okay.

Daniel Racine — President and Chief Govt Officer

A lot of the capital can be within the second a part of the reply. So in 2022.

Josh Wolfson — Desjardins Securities — Analyst

Okay that is useful. If there might be further disclosure for the 2021 company manufacturing steering that might be useful. I assume, there’s numerous modifications at Jacobina year-by-year.

Daniel Racine — President and Chief Govt Officer

Okay. Yeah.

Josh Wolfson — Desjardins Securities — Analyst

Nice. Thanks very a lot.

Daniel Racine — President and Chief Govt Officer

Thanks.

Operator

Thanks. The subsequent query is from Mark Llanes from Credit score Suisse. Please go forward. Your line is now open.

Mark Llanes — Credit score Suisse — Analyst

Hello. Most of my questions have already been requested, however simply to recall the debt maturity schedule, I imagine, there was 2022, 2023, 2024 and 2027, are there any discussions in the mean time to have the ability to retire these earlier?

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Mark, what we have stated is clearly first precedence is revolver after which past that we’ll have a look at choice will go to the near-term maturities. However you realize that is a plan that is being developed and can be executed upon concurrent with the closing of Chapada. So —

Mark Llanes — Credit score Suisse — Analyst

Okay. After which simply second query on Cerro Moro, on the silver grade, I do know that you’re mining above — I imply processing above-plan on the silver grades. Are you able to give me further shade on the silver grade profile for the remainder of the yr?

Daniel Racine — President and Chief Govt Officer

However you are proper to this point since we began to mine at Cerro Moro, we now have higher grade than anticipated. However for the remainder of the yr it ought to go to a typical reserve grade. So, round 650 grams per ton.

Mark Llanes — Credit score Suisse — Analyst

All proper. Thanks very a lot.

Daniel Racine — President and Chief Govt Officer

We have been extra on the 800 to 900 for the reason that starting of this manufacturing.

Mark Llanes — Credit score Suisse — Analyst

Okay thanks.

Operator

Thanks. The subsequent query is from Mike Parkin from Nationwide Financial institution Monetary. Please go forward, your line is now open.

Michael Parkin — Nationwide Financial institution Monetary — Analyst

Thanks for taking my questions guys. I’ve bought many of the element I am in search of, simply questioning with the Jacobina expansions, ought to we search for any unit prices enhancements on a per tonnage foundation with Part 1, or would it not actually be probably extra of a Part 2 change on that, on these type of metrics?

Daniel Racine — President and Chief Govt Officer

A small impression on Part 1 Mike. Totally on Part 2 there can be a big impact. The impression on Part 1 can be extra on the associated fee per ounces than the associated fee per ton as a result of we’re on the identical tonnage, virtually identical tonnage we’ll produce extra ounces. The most important impression will come from Part 2.

Michael Parkin — Nationwide Financial institution Monetary — Analyst

Okay. Any type of sense of magnitude?

Daniel Racine — President and Chief Govt Officer

That is tough proper now to say. We’re nonetheless doing the research. However when — we’ll will come again later this yr to point out the numbers.

Michael Parkin — Nationwide Financial institution Monetary — Analyst

Okay, thanks guys.

Operator

Thanks. The subsequent query is from Don MacLean from Paradigm Capital. Please go forward, your line is now open.

Don MacLean — Paradigm Capital — Analyst

Good morning guys. Good morning. Daniel, it has been some time since we have chatted. For a few of us who’re kind of simply coming again to have a look at the title in additional element once more was this beneficial. discount within the debt coming forward. It would be very useful to get an inventory of the natural progress tasks that you simply’re referring to however in a precedence sequence. And I do not know whether or not you possibly can enlighten us a bit extra on what the capital and the contribution could be? However simply to perhaps prioritize them on the very least for us.

Daniel Racine — President and Chief Govt Officer

Nevertheless it’s fairly clear for us. Don, primary is Jacobina by far, as a result of it is giving us the very best return on all our tasks, then for certain Canadian Malartic is an efficient challenge to us, in all probability second, then we now have some enchancment at Florida and different mines that we now have to. Agua Rica is essential for the corporate due to the monetary side of it. In order that’s mainly the checklist, however primary is, for certain, Jacobina and quantity two Malartic.

Don MacLean — Paradigm Capital — Analyst

And the Jacobina would come with each phases that you’re referring to?

Daniel Racine — President and Chief Govt Officer

Sure.

Don MacLean — Paradigm Capital — Analyst

The section 1 is type of a standard —

Daniel Racine — President and Chief Govt Officer

Don, section 1 could be very easy after which mainly virtually no capital. So it is a straightforward one to determine.

Don MacLean — Paradigm Capital — Analyst

And would section 2 kind of stack up once more on the prime of the precedence checklist?

Daniel Racine — President and Chief Govt Officer

Yeah.

Don MacLean — Paradigm Capital — Analyst

Okay nice. Okay that is useful. Thanks.

Daniel Racine — President and Chief Govt Officer

Thanks Don.

Operator

Thanks. The subsequent query is from Anita Soni from CIBC. Please go forward. Your line is now open.

Anita Soni — CIBC World Markets — Analyst

You had an open pit at Cerro Moro, are you absolutely underground there now?

Daniel Racine — President and Chief Govt Officer

We did not hear you Anita.

Anita Soni — CIBC World Markets — Analyst

Sorry, at Cerro Moro, when it comes to the underground proportion of the ore feed, how a lot is that now?

Yohann Bouchard — Senior Vice President, Operations

Yohann right here talking. We nonetheless have two years, numerous mining with the open pit at Cerro Moro. So we — at this second about 25% is coming from underground and remaining from open pit. And we’re planning to start out the brand new mining zone, underground mining zone in Might.

Anita Soni — CIBC World Markets — Analyst

Sorry, in Might. Okay. After which secondly on the Canadian Malartic, what do you suppose is the timeline for Odyssey and East Malartic to start out up? And secondly, the useful resource base that you’ve got in inferred class, is that embedded within the Canadian Malartic inferred sources that you’ve got in your reserve useful resource assertion?

Daniel Racine — President and Chief Govt Officer

For the primary a part of your query like we talked about a number of time, we’re doing the research proper now, that ought to be accomplished by late this yr, early subsequent yr. Then we’ll include our accomplice and announce precisely what we’re planning on doing, growth off of it. If we see we give a go, we’ll begin subsequent yr. After which it ought to be accomplished by the tip of 2021 to have the primary ore coming by way of the mill.

Anita Soni — CIBC World Markets — Analyst

All proper. After which secondly, the depreciation charges at Cerro Moro, was that booked on a manufacturing foundation, or is that booked on gross sales foundation? So, given that you simply bought lower than you produced, would we count on that to go increased subsequent yr, sorry subsequent quarter when the — yeah?

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Gross sales foundation, but it surely should not change that a lot on a per ounce foundation Anita. It is about $500.

Anita Soni — CIBC World Markets — Analyst

Sorry $500 per ounce, or $500 differential.

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Yeah, $500 per ounce.

Anita Soni — CIBC World Markets — Analyst

Okay. All proper. Thanks very a lot. These are my questions.

Operator

Thanks. There aren’t any additional questions registered right now. I wish to flip again the assembly over to Mr. Racine.

Daniel Racine — President and Chief Govt Officer

Yeah. Thanks everybody for becoming a member of our name. I’ve no additional feedback. Thanks, and have a superb day.

Operator

Thanks. The convention has now ended. Please disconnect your traces right now and we thanks in your participation.

Period: 50 minutes

Name contributors:

Daniel Racine — President and Chief Govt Officer

Jason LeBlanc — Senior Vice President, Finance and Chief Monetary Officer

Ralph Profiti — Eight Capital — Analyst

Tanya Jakusconek — Scotiabank — Analyst

Josh Wolfson — Desjardins Securities — Analyst

Mark Llanes — Credit score Suisse — Analyst

Michael Parkin — Nationwide Financial institution Monetary — Analyst

Don MacLean — Paradigm Capital — Analyst

Anita Soni — CIBC World Markets — Analyst

Yohann Bouchard — Senior Vice President, Operations

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