B2gold Corp Q1 FY2021 Earnings Call

Good afternoon, my name is Jason, and I will be your conference operator today. I would like to welcome everyone to the B2Gold First Quarter 2021 Financial Results Conference Call. All lines have been placed on mute to avoid any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the call over to Clive Johnson, President and Chief Executive Officer. Mr. Johnson, you may begin your conference.

Thanks, Jason. Welcome to the conference call discussing our financial results for the first quarter of 2021. We appreciate your participation. We had another strong quarter, which you'll hear about from Mike. Our financial performance was impressive, driven by excellent operating results at our mines, allowing us to significantly beat our operating all sustaining costs. This success is especially notable given the challenges of COVID-19. It reflects the exceptional leadership, management, and teamwork among our employees at all sites, who remain committed to safe and responsible mining during the pandemic, while maintaining good relations with local governments. This ongoing trust has been built over time through our focus on fairness, respect, and transparency, which has proven valuable during a crisis like COVID. As a result, we were able to continue mining operations, pay taxes, sustain good-paying jobs, and keep our communities safe. Looking ahead, I see potential benefits in the mining sector as many governments evaluate businesses that performed well during COVID-19. Responsible mining has shown to be beneficial in these times. We will review our quarterly results, and then discuss the Gramalote project. We decided to delay the completion of the final feasibility study for Gramalote by about a year. If the economics look favorable based on our findings so far, we believe we can enhance the project through further optimization of drilling and other aspects. While we see positive economic indicators, we want to ensure we make it a better project, which is why we're taking this additional time. It's important to note that we initially hoped to have teams on the ground in September of this year, should there be a positive development decision. However, the government has shown interest in a phased resettlement approach instead of a full-scale resettlement before commencing construction. We have engaged in discussions with the government regarding this idea, and they have requested public consultation and a review of our proposal, which will take time. As a result, we would have faced a delay regardless of the economic factors involved. Bill will detail important aspects of our plans, including the necessity for additional drilling and other optimizations. Optimization can sometimes address negative factors, but in this case, there are several identified opportunities for improvement that we aim to pursue without altering our existing project boundaries, given AGA's pre-feasibility study authorization. We feel optimistic about the project, and we have had constructive talks with our AGA partner about our budget and next steps. We are disappointed not to see the robust economics we initially anticipated, but both we and our partners remain hopeful about the asset's potential. Our government relations are strong, particularly with Ethiopia and the Colombian federal government, who have expressed support for our efforts to develop a project that benefits everyone involved. We will continue to advance our resettlement programs and social initiatives, alongside our geological work. As for our corporate strategy, we remain focused on optimizing production and exploring development opportunities at Gramalote, while also considering additional production potential at Kiaka, specifically from the Anaconda area. We have applied for a mine and coal license extension with the government, believe we've met all legal requirements for this extension, and are in active discussions to resolve the situation favorably. It's crucial for us to proceed with mining operations at Anaconda and to maximize its potential, particularly given its proximity to the Fekola mill. We're committed to exploring and optimizing our resources effectively. We have dedicated significant resources to exploration, which has yielded positive results around our mines, improving our reserves and extending mine life. We have an extensive exploration budget this year, which reflects our successful return on investment over the previous years. Tom will discuss exciting investment projects and exploration efforts further, as we're continually looking for growth opportunities. While M&A activity has been challenging, we are disciplined in pursuing potential acquisitions that offer real value and accretion for our shareholders without overpaying. That concludes my overview, and I'll now hand it over to Mike for more detailed financial highlights from the quarter and our financial position, followed by Bill and Tom. Over to you, Mike.

Thanks, Clive. I think I can run through the results of the quarter fairly quickly. It was a good, clean quarter, and some nice results. So just starting firstly with revenues, we had revenue of $362 million on the sale of 257,000 ounces and realized an average price of $1791 an ounce. And overall, we sold 14,000 ounces more than we'd originally budgeted. And that's really a function of having higher production than budgeted in the quarter. So total production in the quarter, including our share of Calibre, was 221,000 ounces, basically 19,000 ounces ahead of budget. Total production from our three sites operating mines was 206,000 ounces, which was 18,000 ounces ahead of budget. So looking at those individually, Fekola, we produced 125,000 ounces, which is about 8000 ounces higher than budgeted. That's primarily a function of Fekola processing facilities just continuing to outperform. We had originally expanded Fekola mill to a notional annual throughput rate of 7.5 million tons. We did budget 7.75 million tons for 2021. But in the first quarter of 2021, we had quarterly record of almost 2.1 million tons, or an annualized rate of well above 8 million. So Fekola mill is outperforming and we're seeing more production as a result. Masbate was 58,000 ounces, some 1000 ounces ahead of budget, and that's a function mainly of higher than budgeted mill recoveries. If you look at the RFP that was processed in the period, we had better recoveries from the high-grade sulphide ore that we mined from the main vein in the period. And also, better recoveries from the low-grade stockpile, with some of which material we ran through the mill and that was originally mined from Colorado, but both of them had better recoveries. Then, Otjikoto production was 23,000 ounces, 2000 ounces higher than budget; now, that was really just slightly better in all fronts, process tons great recoveries. Looking at that in the context of cash costs per ounce produced, consolidated cash costs rested just for the quarter $609 per ounce, that was $54 lower than budget, and from our three operating mines $581 per ounce, and that was $60 less than budgeted. And if you look at the individual components, Fekola $503 per ounce, $55 less than budget, and the beat on budget, in terms of cash costs in France; is a function of a few things is higher than budgeted production, as I mentioned, and lower than budgeted mining and processing costs. We had lower budget maintenance costs for the mining fleet, and then we had lower budgeted processing costs at the mill, higher mill throughput and then lower signage's. Also, to note, the new Fekola power facility actually came online in the quarter slightly earlier than we thought. And we think that probably benefited cash costs by approximately $4 per ounce in the period against budget. Masbate $608 per ounce, cash costs $80 less than budget; and that's almost exclusively higher production in the period. We did have some savings of mining's cost that's mainly driven by higher production. Otjikoto was $940; that was $56 per ounce lower than budget. And that again is primarily a function of the higher production. Turning to all-in sustaining costs per ounce sold, consolidated including Calibre $932 an ounce, which was $146 lower than budget. And if you look at our three operating mines, it was $919 per ounce or $159 lower than budget. And that's a function of a few things; obviously, the lower cash costs as described a second ago, and also the higher than budgeted ounces sold; we produced more and sold more. And that has a positive impact on the sort of fixed capital element when you look at it in terms of all-in sustaining costs per ounce. And also, we had lower CapEx in the period, that's mainly lower sustaining capital, it's really the timing of fleet maintenance and rebuilds. So those are really the primary drivers - the capital class, we think are just timing and we think they'll reverse later in the year. Just to give you the individual components, of the all-in class, Fekola was $770 per ounce, that was $128 lower than budgeted, Masbate was $818, $194 lower than budgeted, Otjikoto $1475, which is a larger number, but it's still $214 less than budget. Just a reminder for everyone on the line, the production from Otjikoto was very significantly weighted to the second half of the year and the first half of the year we're processing almost exclusively from stockpiles at site, while we continue to strip the Otjikoto and shake pits. And when we get into those pits later in the year, especially the higher grade components of Wolfshag in the second half of the year, we'll see that production level significantly increased. Overall, production-wise, cash cost-wise, we still think we're on target for guidance for the year; guidance is maintained. Again, reminder, it's significantly weighted to the second half of the year; our production for the first half is between 390,000 and 415,000 ounces. And the second half is 580,000 to 615,000 ounces. And that reflects us getting into the better grade material in the second half of the year, both Fekola and Otjikoto. Masbate is fairly consistent as it goes all the way through the year. A couple of other comments on the operation, then Bill's going to give you some comments later, but just a couple other thoughts. At Fekola, what's not included in the budget or guidance for Fekola is any new material from the cardinal area. We're currently looking at that now and what we can pull into 2021 my plan, but that wasn't included in our budget or guidance. Fekola solar, I mentioned that that came online. I think we've now managed to source the remaining solar panels and get them on the way to site. They were on a ship at one point waiting to go through the Suez Canal. But fortunately, that's resolved. And so, we're still on track to finish the solar plant by the end of the second quarter. But in the meantime, we did bring it online, the first part of it, online earlier than expected. I got a couple of comments, I think, on really income statement, good results, nothing major to highlight; the earnings for the period were $99 million, earnings attributable to shareholders the company were $91 million, or $0.09 per share. And adjusted EPS was also $0.09 per share. Then, a few things to highlight on the cash flow statement. So, cash provided by operating activities was $146 million. So that's pretty close to our budget in the end. So we did have a beat, as I mentioned, on the cash cost side. So the costs of our operations were lower, but offsetting that, we had some working capital movements really related to the timing of that and certain tax payments that offset that. So we ended up pretty much right on budget for the quarter for operating cash flow. And assuming that gold price is $1800 for the full year, we're still on track; we think for that guided operating cash flow number of somewhere around $630 million, approximately $500 million that will come in the second half of the year, as we get into that higher grade material and higher production, higher sales. And just to remind everyone, that the second quarter's operating cash flow will be impacted by the payment of those outstanding 2020 tax liabilities, there's about $140 million worth of 2020 tax obligations that will be settled in the second quarter, the largest part of which is for Fekola, but $125 million of that total relates to either Fekola taxes or priority dividend payments, which are triggered as a tax. And we'll also have an addition of $140 million; we'll also have some other withholding tax payments we'll make for monies that we're going to pay remit up from sites as dividends to pull the cash up from sites. A couple of things to highlight in the cash flow statement; dividends to shareholders in the quarter were $42 million, $0.04 US per share. We're pretty comfortable with our dividend level right now, and annualized it would be $170 million US. We are paying one of the highest dividend yields right now in the gold sector. And it's a significant component of our 2021 free cash flows. So we will look at it again in the second half of the year, but as I mentioned, I think we're pretty comfortable with that level just now. The only other couple items I'd highlight on the cash flow statement, investing activities, just under $60 million for the period. That's about $18 million less than budget. And as I mentioned in the all-in sustaining cost discussion, some of that's timing on CapEx for mobile fleet and rebuilds at sites; we think that will reverse later in the year. And on the non-sustaining side, we were under fairly significantly; Gramalote was under $6 million. It's under budget. But we're continuing work on the feasibility study. So we expect that will reverse, and in fact, as we noted in the newest release, we are currently in discussions with AGA about increasing the feasibility study budget by approximately $34 million, so our share be $17 million higher than we've currently budgeted. And that would take us through to the end of our first quarter of 2022 when we expect to finish a feasibility study. Also wonder on the CapEx side, we were about $5 million under in the quarter and expiration, that's just a function of timing again, and we expect that to reverse later in the year. And so, overall, we finished Q1 $512 million in the bank and $600 million undrawn. We've got the full amount of our revolving credit facility available to draw. And so, we're in good shape, cash flow-wise, liquidity-wise, and it was a good, solid production quarter and results quarter. I think those are the main things I was going to highlight there. So, thanks.

Thanks, Mike. Bill, over to you. Here's an overview of operations, review, and a bit of an outlook for highlights from operations, and what we're looking at going forward.

Yes, sure. Thanks, Clive. Do you hear me all right? I do. Okay. Well, thanks. A lot of the stuff certainly was either hinted at by Clive or by Mike, maybe I can just provide a little more color, commentary to the actual operations. If you look, overall, obviously, we're quite happy with how everybody did at all three operations for the quarter, every site exceeded its budget. And we really didn't see any downsides as far as working forward into Q2 and into the second half of the year. Kind of going mine by mine, if you look at Fekola, great quarter. As far as development, I think everyone's aware, we previously said that our budget was run at 7.75 million tons per annum, we put out in the press release that obviously the mill is running much better than that. We're still holding it at kind of what we're saying is 8 million plus, but our life of mines are due here in the middle of the year. So we're going to take a good hard look at what we think that number is going forward. We certainly believe that we've got some potential to add quite a bit of saprolite from both Cardinal and from the main coder area. Discussing Cardinal specifically, we did receive our bulk sample approval. So we are right now out there starting to strip it, or we'll be heading to the mill or already started heading to the mill, I think, or if not, it's imminent. So we certainly see going through the rest of Q2 and in Q3, we will be developing that. And of course, as Mike insinuated or discussed, we see in 2022 and 2023 the potential for additional ounces to come from Cardinal which are not in our current life of mine. And the same story kind of holds true for main coder. You know, from the operations perspective, we're assuming that the current situation is resolved and we believe when it gets resolved, that we're going to see trucks saprolite into the Fekola mill in 2022. And given the fact that we have a large additional capacity for the mill, those numbers could be quite significant as far as changing the life of mines. So once that's resolved, I think in Q3, we're talking about coming out with what we want to do there and putting it into production in 2022. And I think it's important to note, while we're talking about trucking typical, we see that as like phase one of the project, Tom's group continues to drill out there. And we continue to have some success as far as looking at the hard rock. And so, once we get the phase one studies complete, and get it all set up for trucking, we really want to take a hard look at is there a potential to put another mill up in that area. And so, that will be the emphasis once we finished the trucking study and get that all put to bed, we'll move on to what is a trade-off look like trucking versus putting a mill up there. Real quickly on the solar side, Mike hit hinted at it, but solar plant is up and operating really well. I think we've been publicly stating that we're kind of at 75% completion. But the reality is, is we're probably higher than that; we've seen great, great returns on that solar as far as reducing our power costs. And we believe that in Q2, we're going to finalize that and we'll have the full benefiting starting in Q3. Going to Otjikoto, Otjikoto once again had a really nice quarter. No issues as far as mining or milling, right on schedule. The development is, as Mike pointed out, the key is the second half of the year, the development for getting into Wolfshag three remains on schedule; we don't see any issues there for meeting our targets. The underground remains, while it's a little bit behind, we still see gold coming out as projected in Q1 of 2022. So overall, no issues at all at Otjikoto. Maybe one of the things to talk about is, we are in the process of connecting up our overhead power line, that facility, the power facility at Otjikoto operates in standalone configuration, it's an island. We believe by connecting to the overhead power line that we'll be able to continue to reduce power cost here significantly throughout the rest of life of mine, by taking the off-peak power prices which I saw something, I think it reduces almost $0.04 a kilowatt hour for those hours that were on the off-peak hours. Looking at Masbate, Masbate once again, a great quarter. I continue to say that's the project that is probably just day in and day out just performs as designed. We continue to see better recoveries and better grade at Masbate, as we say every quarter, and that certainly contributes towards the overproduction for the quarter. The rest of the year there is kind of business as usual, we're in the process of developing another lift for our tailings that remains on schedule. So overall, on the operational side, everything completely as advertised and as predicted. Maybe talking a little bit, as Clive asked, a little bit about Gramalote. I think it's important to start out talking about what the feasibility was trying to do and really get our head around why we've now talked about on handcuffing maybe the project design from what the pre-feasibility was. When we took over the project, we agreed with AngloGold that we were going to basically hold the design, and the reason was is they had already pulled a construction permit. So the footprint had remained the same. And we basically had to just try and optimize within the existing footprint. What we found very early on is that there was a lot of things that we wanted to do. And some of these things were quite significant; things like re-diverting rivers in a different direction, moving infrastructure facilities, taking a look at the tailings pond. And in order to do that, we would have been required to open up the permit. So we've decided to go ahead and maintain the same footprint, but keep a log of where we were going and what we could change. And so, when the feasibility was done, remember, one of the key things was upgrading the resource from inverter to indicated. And that was very successful. And then updating the costs, when that was all said and done, we looked at it, we said, while this project is positive; we certainly think that there's a better project here. And so, we presented it to AngloGold, Anglo agreed with our concept. And basically, what we decided is that we were going to do some additional drilling, because we thought there was some further potential to increase the resource up to indicated. We were going to take a look at the engineering design as far as taking the handcuffs off and moving things around. And we thought it was still critical, because we do think this is a project and we do think this is something that we can move forward quite rapidly once we get what we're now considering kind of the updated feasibility. We wanted to make sure that the social aspects continue to move forward. So things like resettlement, we've been talking with Anglo, we've been talking to the government about how we can make sure that that stays on track. The Colombian government is in the process of formalizing some artisanal mining within the region. That's a very positive development. So we wanted to continue to support that. And we wanted to make sure some of the critical path items, things like bringing the power line into the region, continue to move forward. So all of these things we put together as a packet for AngloGold. Conceptually, they agree with the concept and we provided a budget to them; they're in the process of having a look at that. And we think very shortly, we will continue to move this project forward. We see the updated feasibility study coming out at the end of Q1. And, obviously, if it's positive, we would mobilize shortly thereafter. And I think, it was Clive that talked a little bit, it's really important to remember, the difference between our proposed new schedule and what the actual schedule was, was not that different, because when we talked about kind of doing the betway when we were going to do concurrent resettlement, the government came back to us and asked for us to do some additional stakeholder engagement, and to have them review the results of that stakeholder engagement. So we saw the potential for six-month delay in any case, so we're not really that far off of that schedule. Moving maybe now to Kiaka; I'm not going to spend too much time on that. As we've said and we continue to message, we do believe by the end of Q2, the results will be out. Clive, was there anything else that you wanted me to talk about?

Well, I think for good - maybe for the interest of people on the line. Maybe we should talk a little bit about some of the some of the issues between the PEA and the feasibility work. Now, the study when it comes on next year will not be an updated feasibility study. It will be the feasibility study. So now we've done the feasibility work has given us some economic indicators, but we have not completed the study. I think it's an important point, but can you maybe talk a little bit about some of the differences between the PEA and what we're seeing now and the feasibility work that we've done. Some of the factors behind that?

Yes, sure. I mean, some of the key ones relate to the resources, I said. Obviously for 43101 feasibility study, we can only use indicated, and we did the modeling only on grammar low to rich and didn't include the oxides in that. The pit design itself is changed a little bit based on some geotech issues related to the pit design. But the mining itself, the mining rate and the mining design remained exactly the same. On the milling side, we believe that we have a more elegant and more efficient milling process; we have looked at it certainly was cheaper, we've included some additional equipment that weren't in the pre-fees. And that's just due to level of detail. The tailings facility remained exactly the same. Power, overhead power lines come in, some of the key cost drivers which had changed, things like the power cost was slightly different. We had updated some of the costs due to inflation. And then one of the key ones, as you talked about already is resettlement. We want it to move people out sooner instead of the way that the way that the pre-feasibility had the resettlement was that it had a really long period where you had to fully complete resettlement before you can start construction. That said we were looking for concurrent resettlement there the issue there currently is a river that flows right through where the existing pit or where the future pit would be. There is a big tunnel where they diverted that. We think that there's a potential to make that a better project. So some of these issues, so those are the key differences.

Okay, thanks. Yes, I guess just maybe, from a strategic and a corporate point of view, we're quite well known for being aggressive. And there's a big difference between being aggressive and being reckless, I always point out to people, but in terms of the way we approach projects, the way we do it very safely and responsibly, but do it more quickly than some others in the industry may move. I think this is perhaps an example. And some people recognize that of our discipline, when we have a project that has some positive economic indications, albeit not as robust as it was before. But we took a look at it and said, well, what's the best thing to do and the best thing to do here, because we're famous for building quality projects based on quality work and attractive economics. So that continues. So this is an indication, perhaps, if anybody needed to know and I don't think they should have needed to know given our history, but an example of our financial and corporate discipline, where we think we can make a better project and our partners, and ourselves are prepared to believe in that concept, as well as the expense money to do it. So at the end of the day, the delay is appropriate to do a lot of very good work, and then have a look at what comes out; we're hoping we're going to have a significant improvement from the economic indicators that are positive or not meet our threshold given abstractly see so much upside, or super upside potential in the work that we're going to be doing. So, thanks. Thanks, Bill, for that. And I'd like to pass on to Tom Garagan about our large expression budget this year and some exciting new countries and targets for us.

Thank you, Clive. Hello everybody, as you know, we have an exploration budget this year of some $66 million to be spent, not only on our main projects, but also in grassroots exploration. In fact, in the grassroots exploration, we're looking at just over $27 million. Just brief comment on the exhibition around the mines that Mass body, we're continuing to drill on the pit edges and deeper portions of the pits where the pits get bigger, with the better gold prices that we're seeing now. In Mali, we're continuing to do exploration down plunge on Cardinal remains open and we'll continue to do exploration in the Anaconda area, as vettery remains open. In Namibia our exhibitions almost exclusively focused right now on what we call the OTG, 23 years old, which is about 100 meters away from our wall shake. We'll have more on that later as our work continues. But we view that as a positive sign for Otjikoto. Just in the grassroots exploration, you know, we're talking about significant budget. Within that budget, we're talking about over 30,000 meters of diamond and RC drilling on some of our newer targets. I'll mention specifically, we'll start with this Pakistan. Scenario we've been looking at, I hate to say this, because it could have as me a little bit but for probably close to 15 years, dating back to the bema days, in this scenario, we had visited back down and we continue to work on relationships with government and geologists in our country. And that led to us a few years ago being awarded some licenses in the country. The license we have, right near three world-class ore bodies, mercantile, which is everybody. You know, there's a large variety of numbers related to that. But it basically is the world's largest gold mine that over 2 million ounces of production per year. And then there are two other $10 million ounce deposits in the immediate area. Our work in the area to date has been trenching, auger drilling, some lab programs, and we're just about to start a 10,000 meter RC program this week; this will be followed later in with diamond drilling. This is an area of World Class deposits. So there's not seen a lot of exploration outside the exploration being done by the local government called them out. We're very excited about this. In addition to that, in Finland, we have almost 8000 meters of diamond drill planning on our property, we're currently earning, we've already earned 51% from the line and we're up and we're getting close to having 70% on this project; we're set about the area as on strike with a new discovery called Acuri and the geology of Acuri continues on to our ground, and we've had some decent golden armies in there in our overburden drilling and our chilled drilling. And then, also in some of our soil sampling, and certainly walk sampling. So we're excited about the potential for that, which is a whole something, something new that's just come up from just recently, we've been awarded licenses in Egypt to the historic mining area. Those licenses are just being papered right now. So I don't have too much detail on that at this time. We'll have more later but it's an area we've been, again been focused on for several years of doing grassroots exploration and evaluating the potential of areas. So we are excited about. And then we'll continue doing grassroots exploration and other targets in other areas of the world that hopefully will be available for more discussion now later on this year. Thank you, Clive.

Thanks Tom. Appreciate it. I think operator, I think we're ready to open up for questions now.

Your first question comes from the line of Tyler Langton from JP Morgan. Your line is open.

Good afternoon. Thanks for taking my question. Just to start with I guess Gramalote. Could you talk a little bit about, you know, to kind of make the economics more attractive, just the importance of either sort of increasing production at the project or kind of lowering operating costs or capital costs is trying to get a sense of maybe kind of what's sort of the most important or bigger focus?

Yes, sure. So certainly we see some potential for capital reductions. That's one of the big ones. Another one of the big ones relates to increasing the ounces, you know, that we can generate over the life of the project. And this includes kind of a drilling program within the existing design pit; there were a few ounces left within the existing pit which were in the inferred category, and then just outside of sight of the proposed pit, which would be in the measured indicated and inferred category. So we see those two things really as some of the key economic drivers. And in particular, if you look at the CapEx, as I said, there are some mostly related infrastructure projects where we think we can bring the cost down. Things where maybe the project's been designed for like 10 years now where people kind of lose focus if you had a blank sheet of paper could you optimize things? And that also relates to certainly the constructability of the project. And so those are some of the things that we're looking at as far as the OpEx, we don't see a lot of changes that between what we have now versus what we would have a year from now.

Got you. Okay, that's helpful. And then they just switching with Cardinal, I think maybe last quarter, you talked about that mind potentially contributing, I think, 20,000 to 25,000 ounces, kind of in Q2, that'd be kind of the main contribution for the year. Is that kind of still what you're thinking? I think maybe I heard some comments you are talking about maybe contributing in Q2 and Q3, just provide some more color there that'd be great.

Yes. I think what I said was, hopefully, what I said was 20,000 to 25,000 ounces over 2021. Starting in Q2, from the bulk sample, right. So we're talking about 20,000 to 25,000 ounces out of that bulk sample. But I will say that it looks to me like we're; while we do not have it yet. And now I must stress that. And I should also stress that. That is an inferred resource that we see it starting it really right now through the end of the year; we're going to start mining a card on. So there is potential that it could be a little bit more than that.

Thanks, operator. Hi Clive and B2 team. Congrats on a good quarter. And thanks for taking my questions. Actually, first couple of questions guys are on Gramalote. And thus I guess, I can direct to Bill. Now, you've already answered a lot of the questions I had; so good overview on that front but in regards to the additional, I guess, extended resettlement, just to make sure that I understand correctly, was this due to additional footprint needs to be added? Or is this resettlement always in the plans on the webs?

No, obviously, it was always even back in the AGA, there were there was a quite a big resettlement, which went along with it, we certainly have provided now more detail around that. And we're in the process of really working through our resettlement action plan. So a rap has been developed. And the difference really was, as I said, there was a condition precedent for the construction permit, which basically said you had to do all of the resettlement. So everywhere, in every region, you had to move everybody out. And what we realized is that there was a big chunk of it, which we could do. And then we can start construction. And there were some people on the periphery that we could then deal with as we got to that area. And so that's really the difference. But the overall result is basically the same. There are some people that are saying that they're in there, some people saying they're out. But in general, the quantum is pretty close to the same.

Okay, thanks for that. And just kind of talking about the optimizations that are expected is the plan basically, to get close to the economics shown in the PA before growing green light to the proxy? What I'm trying to ask is, is that a point where you would kind of walk away from Gramalote or in this kind of, you know, where is the point where you will make a decision essentially won't pronounce?

Here, that's quite probably answer that from an engineering standpoint, I mean, all we want to do is we want to make sure that it's got the best economics possible, and that it's most easy for us to build.

We plan to invest a similar amount alongside our partner, anticipating key ingredients and budgeting as previously mentioned in our news release. We are confident in this approach because we observe several positive indicators, even when we start to relax constraints on engineering and design. This suggests significant potential to move forward with the project. Currently, the economics are favorable. While some companies might consider options like hedging to enhance their prospects, our focus remains technical. We believe there's an opportunity for increased output and reduced capital costs. According to the feasibility study, sustaining costs were around the mid-$70s, indicating an attractive project that could yield a 15% internal rate of return. We are not in the position of pursuing a venture we consider unviable or misleading. We genuinely see a chance to develop this project effectively.

Perfect. Thanks, Clive and Bill. And, I have a more couple of more questions, but I'll let others ask questions, and then jump back in the queue.

Good morning, everyone; thanks for time today. Maybe if I can expand on some of the relative questions. Just in terms of the change in budget, is that largely drilling expense related in addition to the 18,000 meters of drilling, it was already planned this year?

You want me to answer that Clive? Yes. Yes, so Jordi, there's kind of three components there for sure. You're right, there is a big chunk of drilling, which goes along with that, and I can let Tom or Brian kind of maybe get more clarity there. But there's also an engineering component, which is more just the actual consulting and engineering aspect of it. And then if there's a social component, and like I said, we do want to push forward some of the key social issues and so we have put some money in there for things like basically preventing some sort of inflation happening with resettlement, purchasing land packages now, making sure that we've got the right areas available for resettlement. You know, those types of things also take up a chunk of the budget.

Okay, brilliant. And it's also mentioned of the powerline. Is that in terms of trying to bring it online to basically move the project forward or the project timing, forward progress with optimization?

Well, what we know is the power line is absolutely on the critical path, regardless of what happened, right? So we've been in negotiations with a couple of power companies down there, and I picked a group that we'd like to do the studies for. So they have to go out now and do a fully SIA, they have to do all the engineering. And basically, they have to design the route on the site. And so they're talking about something like a 28-to-30-month schedule to do that. So we decided at this point that we're going to put a little bit of money at risk to get those studies going. And so that's what that is.

Okay, that's excellent. And in terms of, if we stay on power, just a color. So obviously, if you call it two-thirds, solar panels is heading beyond capacity. Is that right moment, or nominal baseline, at least, with additional final 25% of panels in place? Do you speak to any linear sort of capacity increase there or you're kind of met with battery storage sort of limitations there for delivering more power into local grid?

So I'm super bullish on this. So I'm going to pass that one on to John Rajala, who's really more qualified to answer that.

Yes, we'll plan on trying to maximize our solar power usage; only 75% of the class is online right now. So because of the loss in panels, about 25% in the fire, and they're going to be on site very soon, and then installed, we plan on having that in operation by around the end of June or so. So it'll be up to 100% of capacity and hopefully increase, we should be able to increase the amount of solar power contribution from that. Does that cover it?

I was just wondering if there's going to be beyond the original expectations given the before.

Well, we think we have a good shot at it. We've been exceeding expectations, I guess what 75% capacity and operation; so hopefully, we'll be able to continue that with the additional solar panels installations.

That's great. And if I can just do one more, moving over to here, obviously experience on solar power, and looking at a tool, LNG solar source, and what sort of capacity you're thinking for that power plant.

The power plant we're looking at for a combined LNG solar plant. We're currently looking at about 30 megawatt plant very similar to for that right now. You know, optimization, you might want to kick that up a little bit, but it's in that magnitude.

Okay, thank you for that - for taking my questions. Thank you.

Thanks, Bill. Earlier on the call, you mentioned that the Anaconda trucking study was going to be continuing on this year. Could you clarify what the permanent challenges there relate to and I guess it sounds like you're still able to proceed with Anaconda? Or if not, what the sort of implications are in advancing that opportunity?

Yes, so I'll talk, as I said, so, I think Clive was pretty clear that they were kind of working through what our permitting issues are right now. But what we've always said it is a separate license, right. So it would have to go through the full permitting, and we're working on those studies right now. So obviously, for permitting, you would need a fully SIA, which we're in the process of completing right now; you would need some sort of feasibility study. And what we're calling that is kind of the phase 1 aspect of the Anaconda project, all of those it is our intent to kind of complete those in Q3, and then you would have to go and look at what the license conditions would be for actually bringing the product up, how it would be for totaling it through for all of those things would need to be discussed. So that's why we're talking about really, you're probably with the exception of maybe a bulk sample, you're probably not going to see any ounces, best case in probably in the second half of 2022 being trucked.

In that just so I understand that those answers that would be produced, you know, the minnkota permit, you know, the issues there do not affect the ability to tract the ore to Fekola.

All that stuff has to be resolved before we could do it for sure.

There's another - there is a few different licenses there, though there's another one; there's other licenses that are not impacted by this current discussions going on with the government about the medical license. So but yes, clearly, we should be very clear about that; we need to resolve this issue with the government about our right to the extension of the license, but hoping to resolve that shortly.

Yes, we haven't made significant progress on that yet because we are waiting for the results of the feasibility study at Kiaka to determine if it meets our criteria to proceed. We expect to have that information by the end of the year. If the development decision is favorable, we can consider our options regarding both Gramalote and Kiaka, as we've discussed potential paths forward. One option would be to stagger the construction teams; we do not plan to build both simultaneously, as this is crucial for our success. Alternatively, we can start with the earthworks and then transition the team to the next project, as well as having the mill construction team move from one project to the next after completion. All of this, of course, hinges on the feasibility outcomes, and we are currently working on updating the feasibility study, which will be our next step to compare with the mid-year release related to Kiaka.

Yes, we haven't progressed far on that yet because we're waiting for the results of the feasibility study in Kiaka to determine if it meets our criteria to move forward. We expect to have that information by the end of the year. If the outcome is positive, we can consider various options for development. We previously discussed the potential for developing both Gramalote and Kiaka. One option would be to sequence our construction teams, as we have a principle of not building and organizing simultaneously. This is crucial for our success and requires a strong team. Additionally, we could utilize the team for initial earthworks and then transition to the next project. The same applies to our mill construction team, as they would move from one completed project to the next. All these plans depend on the final feasibility study. Currently, we are working on updating this study, which will guide our next steps for the mid-year release in Kiaka.

Understood and then one sort of final one, just in the language in the release, the comments about Gramalote, I guess, the expanded footprint that could require the permit modifications that not affecting the license, but that potentially affecting the implementation schedule? You know, is that just for, I guess the project as it was if it was advanced here, or does the potential footprint change and the permitting changes affect the implementation schedule if it was advanced next year as well?

Will?

The language maybe is not quite as clear as it could be. So what we're really talking about the way it works in grammar out there in Colombia is that they kind of have three levels of permit modifications, right? So there's this kind of insignificant and these are things like when the resolution of your typography gets better and your role has shifted just a little bit, right and that there's no real kind of major social or environmental impact change. And those are kind of you do on the fly. And then there are these minor modifications where it might be where you're moving something around just a little bit. And once again, there are no significant environmental or social impacts or potentially positive social or environmental impacts. And those have a small review process. And you can kind of do those on the fly. And so those are the things that we've always been talking about inside of the existing permit, we can do that what we're talking about is kind of, as I said, taking the handcuffs off and looking at what we're calling potentially major permit modifications, where you're actually taking structures and maybe moving them into a different Valley or moving an access road somewhere else, which have real impacts which have to be investigated. So as we go along for the engineering process, now, we've got to start looking at, okay, this is really optimal. This is how much money it could save us. Is it worth trying to get a permit modification to do that? If it is, then you start talking with the government? You know, what would it take as far as updating your impact assessment? So all of those things are now going to be in play, as opposed to us just saying, okay, we're going to keep it, we're going to keep it to kind of be non-consequential or minors that we're talking about. Let's talk about majors. I don't like that the phrase that we're increasing the footprint because that's not necessarily the case; what we're actually doing is we're kind of modifying the footprint. And in that modification, we may be changing that the potential social environmental impacts, and those need to be evaluated.

Okay, that's a lot more clear. Thank you.

I think it's important to note there, you know, we talked a bit about it earlier on but the relationship with the Colombian government is very strong, very strong; Canada, Colombia relationship with the Minister of mines and the government there, the government are very supportive of responsible mining is an important part of their economy. So we've always said gravel, obviously in a great location in their mining district. Antioquia; if you flew over companies, and where's the best place to build the first large goldmine in the country; and probably pick up Gramalote. Absolutely tremendous local support and community and there's some disappointment now, because they thought this was going to crank up pretty quickly. But once again, if we are successful, what we're looking at doing this is a really important source of jobs. And there are lots of people working there now that continues, all that work continues, as we talked about, we settled on working with the government, small miners, and other things. So between ourselves and the GA, there's been a lot of good work done here. Over the years, it's important to note that I'm building these working with the local community and the federal government, and all governments. And there's a lot of support for this project. And it's really important to keep that in mind.

Okay. And then sorry, final question. You know, when you think about these potential changes and modifications in the footprint, are there permanent elements that you're able to accelerate before that first quarter 2022? You know, target date or does that sort of date then start the permitting process for these modifications?

Yes, well, that's a really good question. And the answer is, we have to look at that. That's really literally what we're doing right now. You know, as I said, it's a huge trade-off study, in our mind, on the potential delays. As far as permitting versus a potential economic benefits, as Clive indicated, I said already, we have a positive project now, but can we make it that much? Can we make it even better? You know, those are the things we're looking at, what I will tell you is, well, you have to remember that that resettlement still kind of is on that critical path. And so we're now working through that resettlement action plan. And that's really going to push us out into Q1 2022 in any case, and so, how do you play around with that? That's what we're looking at right now.

Thanks a lot for taking my call, guys. Just building on one of the last questions. There was mentioned of comparing Kiaka to Gramalote. Maybe they take this a bit further and is there a chance for some of the projects that Tom talked about to take priority over Gramalote saving the next 12 months? I mean, you've been in Egypt and Finland and in Pakistan for a few years now; which of these projects is most advanced, maybe even closest to the PDA?

Yes, I think. No, we haven't been working on immediate doors back for a couple of years. We've done some work in Uzbekistan as relatively and this is pretty early-stage software. We've done some longer drilling and things like that and we're doing some reverse circulation drilling and heading towards diamond drilling as well. I mentioned both. They're all pretty early stage. They're really big, attractive targets, but we don't want to - or some of them are at an early stage. So we're a long way away from talking about PEA in any of these things but we're in the elephant country and there is a certain chance we're looking at them. Tom can you - want to make a comment on that further?

I think that's pretty accurate. However, we're still early on in the game. But as Clive says, these are all elephant country targets. It's why we chose them. But I don't know that within a year - well for sure, not within a year, we're going to be replacing the other development projects with these.

Okay, great. Then even given the Gramalote, NPVs in the $500 million range at this point and obviously, as you mentioned, there's visibility for it to grow. But is this project perhaps of a magnitude now that's better suited to one owner? And it may be if you believe in the project, is now a time to increase ownership? What are your thoughts on that? We know from your previous comments that Anglo likes the project as much as you do. I can't speak for AGA, but we've had numerous discussions recently about being transparent and working together effectively in our joint venture. We are somewhat disappointed because the performance was not as strong as the economics indicated in the PEA. However, there is still potential for improvement. From what I understand, AGA is willing to invest significantly alongside us to enhance the project. It would be unexpected if we weren't considering adjusting our ownership stake at this time. We've dedicated substantial resources, and I believe we are on a promising path. You can ask AGA about their plans during their upcoming quarterly report, which is expected in mid-May. They have expressed interest in being active in Colombia and have other projects they are enthusiastic about. They view our partnership as essential for showcasing our capabilities. While we face some delays, we remain hopeful about our plans. We have always said we would consider increasing our ownership if the opportunity arises, but currently, it seems unlikely that there will be a seller willing to divest. Thus, it looks like we will proceed as is. Again, I can't represent AGA, but that's the information we've received.

Okay, great. Then even given the Gramalote, NPVs in the $500 million range at this point and obviously, as you mentioned, there's visibility for it to grow. But is this project perhaps of a magnitude now that's better suited to one owner? And it may be if you believe in the project, is now a time to increase ownership? What are your thoughts on that? We know from your previous comments that Anglo likes the project as much as you do.

Well, I think that everybody wants to see what the results are when we get back to the situation, because we both want to see a clear picture. So, while we have a very effective relationship going now; in this case overall we were offered a deal or we wouldn't have been in a position to think that board and the other boards would be willing to have a joint venture together; so we look forward to this moving on positively.

Yes, so we will continue to move together. I think what's really important is everybody recognizes that we do have a great asset in our hands.

There are no further questions. I now turn back over for closing comments.

Well, I think we've covered a lot of ground here and thank you for your time, and you're interested in some very good and interesting questions. We're pleased with the quarter obviously, and looking forward to another very good, productive year. Profitable production and loss of all this exploration and development opportunities that we see. So thanks, everybody, for your time. And obviously, if you have follow-up questions you can reach out to me in claim to put you into the person you want to or if you know, the person you want the answer from you can go directly. So, thanks for your time, everybody and stay safe. Thank you.

This concludes today's conference. You may now disconnect.