Earnings Call Transcript - EGO Q4 2022

Operator, Operator

Thank you for your patience. This is the conference operator. Welcome to the Eldorado Gold Fourth Quarter and Year End 2022 Financial and Operational Results Conference Call. Please remember that all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be a chance for questions. I would now like to hand over the call to Lisa Wilkinson, Vice President, Investor Relations. Please proceed.

Lisa Wilkinson, Vice President, Investor Relations

Thank you, operator, and good morning, everyone. I'd like to welcome you to our fourth quarter and year-end 2022 results conference call. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures in our management's discussion and analysis, as well as the risk factors set out in our annual information form. Joining me on the call today, we have George Burns, President and Chief Executive Officer; Phil Yee, Executive Vice President and Chief Financial Officer; and Simon Hille, Senior Vice President, Technical Services and Operations. Other members of the senior leadership team will also be available for the Q&A session. Our release yesterday details our fourth quarter and year-end 2022 financial and operating results. This should be read in conjunction with our fourth quarter and year-end financial statements and management's discussion and analysis, both of which are available on our website. They have also been filed on SEDAR and EDGAR. All dollar figures discussed today are US dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy from our website. After the prepared remarks, we will open the call for Q&A. At this time, we would invite analysts to queue for questions. I will now turn the call over to George.

George Burns, President and CEO

Thanks, Lisa, and good morning, everyone. Here is the outline for today's call. I'll provide a brief overview of Q4 results and highlights before passing it to Phil to go through the financials and Simon to review our operational performance. Then we will open the call to questions from analysts. In light of the devastating earthquakes that took place in Turkey and Syria at the beginning of February and earlier this week, I, on behalf of the Eldorado team, would like to extend our condolences to those impacted by the disaster. In the immediate period following the initial earthquakes, our mine rescue teams from Efemçukuru and Kisladag mobilized to the impacted area. A number of these team members are highly trained in underground mine rescue, a much-needed skill for earthquake rescue and recovery efforts. The teams were able to save several lives and recover victims so they could be returned to their families to grieve. Additionally, Tüprag, Eldorado's Turkey subsidiary, donated blankets, raincoats, and other essential supplies to support those in the earthquake-affected regions. Working with our colleagues in Turkey, we will continue to provide aid and assistance to support the relief efforts as needed in the days, weeks, and months ahead. Fortunately, our operations are located over 1,000 kilometers away and were not impacted by the earthquakes. We will continue to assess the situation, and our top priority, as always, is to ensure the continuing safety and well-being of our team members. I would like to thank our entire team in Turkey for responding so quickly and compassionately to this tragedy. These efforts have been an inspiration for all of us. We faced operational challenges in early 2022. However, through diligence and resilience, we improved operational performance continuously over the year. Fourth quarter production was strong across all assets, which resulted in second-half production being 20% higher than first half. Our full-year production of almost 454,000 ounces was 1% below the bottom end of our guidance range. In conjunction with our financial release yesterday, we published our 2023 guidance and five-year outlook. We have introduced Skouries into our longer-term outlook with commercial production expected by the end of 2025. We are forecasting gold production to be between 675,000 and 735,000 ounces by 2027, representing a 55% increase over five years. Simon will speak to the operations and our guidance in more detail later in the call. Now touching on cost. We continue to face inflationary pressure similar to the wider market. Throughout 2022, we experienced price increases for commodities and consumables, including electricity in Turkey and Greece, and fuel and reagents at Kisladag. As a result, our full-year 2022 cash operating costs and total cash costs were above our consolidated guidance, while our all-in sustaining cost was within guidance, driven by our disciplined management of sustaining capital. Phil will touch on our cost in more detail later in the call. Shifting to Skouries. In December, we announced the milestone news regarding the Greek bank financing and conditional board approval for the full restart of the project. The project-level financing covers €680 million or 80% of the expected funding required to complete the project at competitive interest rates. The remaining 20% of the project funding will be fully funded by Eldorado. The financing is subject to customary closing conditions, which are expected to be completed in the first quarter. The Skouries financing announced has delivered on our multi-year strategy in Greece, including the approval to deploy dry stack tailings, the amended investment agreement, investment in early works construction, and finally, a fully funded financing package that allows us to shift into project execution and achieve commercial production by the end of 2025. On the sustainability front, in the fourth quarter, we completed our first-ever integrated SIMS compliance audit at Lamaque. As part of this global process, a delegation of auditors, including colleagues from our operations in Greece and Turkey, reviewed Lamaque's performance as set out in our internal standards referred to as the state and ability integrated management system. PWC provided limited assurance against all the Mining Association of Canada's sustainable mining protocols and site compliance against the World Gold Council's responsible gold mining principles. The completion of the audit is a major milestone for Lamaque and Eldorado as we journey towards full implementation of SIMS and leading ESG performance against our peers. I'll stop there and turn things over to Phil for a review of the financial results.

Phil Yee, Executive Vice President and CFO

Thank you, George. Good morning, everyone. Slide 6 provides a summary of our fourth quarter and full year financial results. Eldorado reported net earnings attributable to shareholders of $42 million or $0.23 per share in the fourth quarter and net loss of $49 million or loss of $0.27 per share for the full year. After adjusting for one-time non-recurring items, including deferred tax expense related to foreign exchange translation and write down of assets, adjusted net earnings were $26 million or $0.14 per share in the fourth quarter and $10 million or $0.05 per share for the full year. Free cash flow in the quarter was $11 million, primarily due to higher sales. Cash operating costs averaged $741 per ounce sold in the fourth quarter and $788 per ounce sold for the full year, which was 5% above the 2022 guidance range, mainly driven by price increases for commodities and consumables. All-in sustaining costs averaged $1,246 per ounce sold in the fourth quarter and $1,276 per ounce sold for the full year, which was in line with the guidance range. In 2023, our consolidated cash operating cost guidance is $760 to $860 per ounce sold and all-in sustaining cost guidance is $1,190 to $1,290 per ounce sold, which reflects ongoing inflationary pressures related to key consumables, such as cyanide, electricity, diesel, explosives, cement, and labor. In line with commitments under our collective bargaining agreement in Turkey, labor costs increased in January 2023 to support our workforce with a rising cost of living related to high inflation rates. Labor costs in Turkey are based in lira, which has remained stable in recent months. As a result, cost increases in local currency are not expected to be offset by currency movements as they have in the past. Capital expenditures on a cash basis were $81 million in the fourth quarter and $290 million for the full year, which included continued investment in growth projects at Kisladag and early works at Skouries. Income tax recovery was $24 million in the fourth quarter and $61 million for the full year. Current tax was lower in 2022 compared to 2021 due to lower sales volumes, partially offset by lower investment tax credits. Turning to Slide 7, at quarter end, we had unrestricted cash and cash equivalents of $315 million, up slightly from last quarter. We continue to focus on maintaining a solid financial position, which provides flexibility to unlock value across our business. With that, I'll now turn it over to Simon to go through the operational highlights.

Simon Hille, Senior Vice President, Technical Services and Operations

Thanks, Phil, and good morning. I'd like to start with a health and safety highlight. Recently, Eldorado's Quebec exploration team received the Safe Day Every Day Gold award for the greatest number of work hours without a reportable injury among Canadian exploration groups from the Association for Mineral Exploration and Prospectors and Developers Association of Canada. I'm very proud of the team for this recognition as it demonstrates the strong safety culture. Now moving to our operating results. We produced 128,453 ounces of gold in the fourth quarter with a cash operating cost of $741 per ounce sold. Full-year 2022 gold production was 453,916 ounces, which was just below the bottom end of the guidance range, driven by lower production at Kisladag and Olympias. Looking ahead to 2023, our consolidated gold production guidance is forecasted to be 475,000 to 515,000 ounces, down slightly from our previously published 2023 guidance, which takes into account modifications to the production plan and anticipated turnover at Lamaque, as well as a slower ramp-up at Kisladag with the commissioning of the final agglomeration drum in the first half of the year. Slide 9 looks at our operations in more detail. Starting at Turkey. At Kisladag, fourth quarter production was 40,307 ounces and cash operating costs were $709 per ounce sold. In the fourth quarter, eight larger high-capacity conveyors were installed, which improved material handling and on-belt agglomeration. As we mentioned last quarter, in conjunction with the North heap leach pad, we have also purchased an agglomeration drum, which will treat a final split for all the HPGR products to improve quality, consistency, and permeability on the pad. We are confident that we will have the agglomeration drum commissioned in the first half of 2023, as the equipment is on-site and construction is progressing well. With this investment, stacking is expected to continue on the existing leach pad until mid-2023, at which time stacking work is expected to commence on the new North heap leach pad. Looking ahead to 2023, Kisladag's production guidance is between 160,000 and 170,000 ounces of gold. To achieve this, Kisladag is expected to mine and place on leach approximately 12.5 million to 13 million tons of ore at an average grade of 0.7 to 0.75 grams per ton. At Efemçukuru, fourth quarter gold production was 21,362 ounces, with cash operating costs of $738 per ounce sold. Gold production, throughput, and average gold grade at Efemçukuru were in line with the plan for the fourth quarter and the full year. For the year ahead, Efemçukuru's production guidance is forecasted to be 80,000 to 90,000 ounces of gold. The site is expected to process approximately 530,000 to 550,000 tons of ore at an average gold grade of 5.5 to 6 grams per ton. Now moving to Lamaque, fourth quarter gold production was 51,349 ounces, a 20% increase over last quarter, driven by higher grade and increasing throughput performance at the mill. Cash operating cost was $541 per ounce sold. Resource conversion drilling from the Ormaque exploration drift will continue in 2023, targeting the upper two-thirds of the Ormaque deposit. Results of conversion drilling up to mid-2023 will be incorporated in our mineral resource and mineral reserve update at the end of the year. In 2023, Lamaque's production guidance is 170,000 to 180,000 ounces of gold, and this is based on mining and processing 860,000 to 870,000 tons of ore at an average gold grade of 6.25 to 6.75 grams per ton. Finally, moving to Greece. At Olympias, fourth quarter results were 15,435 ounces and the cash operating cost was $1,325 per ounce sold. Overall, 2022 production for Olympias was below plan due to lower than expected tons processed and the availability of ore stopes. We continue to implement operating initiatives designed to improve productivity. Next year, Olympias production guidance is 60,000 to 75,000 ounces of gold, and the site is expected to mine approximately 460,000 to 490,000 tons of ore at an average grade of 7.5 to 8.5 grams per ton. I'll stop there and hand back to George for closing remarks.

George Burns, President and CEO

Thanks, team. We have an exciting year ahead of us. We are focused on delivering our operational guidance and transitioning to project execution at Skouries. Our priority is to continue to implement our growth strategy with production expected to reach between 675,000 and 735,000 ounces of gold by 2027, which will position us well to maximize value for all stakeholders. Thank you for your time. I will now turn it over to the operator for questions from our analysts.

Operator, Operator

Now our first question comes from Kerry Smith of Haywood Securities.

Kerry Smith, Analyst

Congratulations on a good quarter, guys. For Skouries, my first question is you have $240 million to $260 million of CapEx this year, and could you just maybe kind of give me a rough idea as to what the CapEx might be like for 2024 and 2025 to finish out that project? Just the spend.

George Burns, President and CEO

Yes, next year we expect the capital cost to ramp up above that $250 million midpoint of guidance and then drop down in the final year. We'll obviously have some revenue coming in the second half of 2025 as we do the commissioning.

Kerry Smith, Analyst

So, if I was to assume $300 million for next year and then I guess we assume US$750 million in total just half the difference in 2025. Would that be reasonable then, George?

George Burns, President and CEO

That's reasonable, Kerry.

Kerry Smith, Analyst

And just on the €680 million debt package that you've pretty much got finalized, and you hope to have it all signed up and done here by the end of the quarter, how will the dry down schedule work? Can you, Phil, maybe just remind me how that schedule will work, like how you have to spend equity as you spend the debt or whether you can spend so much debt before you have to fund any more equity? Just how it will work.

George Burns, President and CEO

Maybe, I'll answer high level and Phil can jump in. So the way it works, Kerry, is it's an 80/20 split between ourselves and the project financing. We've pre-funded part of the capital required to reach commercial production from the investments we did last year that were part of the feasibility study. So we're a bit ahead of the game. And so the banks have to play catch up at a 4:1 ratio on the funds we completed last year. So there’s €120 million of bank-based pre-funding, €30 million basically. And so we don't expect to spend anything off our balance sheet once we do the first drawdown in the first quarter until Q3 of this year.

Kerry Smith, Analyst

So in Q3 is when you think you'll start participating in terms of funding then?

George Burns, President and CEO

Yes. I mean, we're still funding; we are ramping up the construction activities. In fact, this week we poured concrete for the first time on this restart. So yes, we're continuing to fund in Q1. Once first drawdown happens, we expect the funding to come from the banking syndicate until the third quarter of the year, and then we'll be at an 80/20 funding rate after that.

Kerry Smith, Analyst

And just on Kisladag with the drum agglomerator, what sort of recovery are you expecting once that agglomerator is up and operational?

George Burns, President and CEO

So Kerry, what's included in our guidance right now is still a 56% recovery that was justified as part of the capital investment for HPGR. This year, the first quarter was pretty challenging for us. We had an abnormally cold winter, but we also found the need to add cement as a binder to get good permeability through that finer ore that came out of the HPGR. And so those challenges are really why we didn't hit our guidance last year. And as you saw, each quarter, we ramped up the tonnage and began to deal with the reality of agglomerating cement on the conveyor belt. So we are back, I'd say, at the run rate we had on a tonnage basis prior to cement agglomeration. What the fine ore drum does for us, it makes it a better agglomerate product. We are going to be agglomerating the fines in the crushing circuit and that will be combined with the coarser material. And so the cement won't be added on conveyor belts; it will be added in the crushing facility. We think that's going to give us some additional relief on the conveyance system itself. Now in terms of what ultimately recovery ends up, we are pretty optimistic we're going to beat the 56%, but we haven't publicly put a number on it. Bottom line is, we know we can get better permeability through the pad and that has a pretty positive effect on lead cycle time. And ultimately, we think we can further optimize how fine the HPGR crushes the ore with a better agglomerate, and that could lead to better recoveries. So we are not putting a pin on what we think that upside is, but we believe this year we will be able to really sort that out with final agglomeration commissioning being completed mid-year. We will have about six months to understand the benefits we are getting out of that optimization between crushing finer and maintaining good permeability through agglomeration. So pretty optimistic we can beat the 56%, but we haven't included that upside in guidance, and it's really too early to pin a number on it.

Kerry Smith, Analyst

And what is the size of the fraction coming out of the third stage of crushing, like how fine is fine, and what percent is that?

Simon Hille, Senior Vice President, Technical Services and Operations

We’re probably planning around 30% of the tonnage to go through the final agglomeration, and it potentially has a higher capacity than that. But the plan at this moment is to take that 30% feed rate. To the size of the articles, the answer is probably less than 1 mill on average, that's what we are sort of classifying as fine.

George Burns, President and CEO

And just a little color around it. We’re really trying to get the fines to stick together in kind of valves to create that permeability and allow oxygen to get into the pad. You want a little bit of course to get in there with it to give the core of those agglomerate valves to have something to build upon. But basically, we're trying to get the finer material with a bit of coarse into that drum to make a good agglomerate and to take pressure off the transfer points between the grasshopper conveyors, which is where we're doing the mixing currently.

Kerry Smith, Analyst

Yes, almost seems like maybe the mill would've been the way to go, and you're getting pretty fine there now.

George Burns, President and CEO

Yes, Kerry, hindsight's always 20/20. If you'll recall, the mill scenario was $0.5 billion capital upfront. So at a high metal price, the mill's a better answer. But based on decisions we had at the time, we made the right decision with heap leaching.

Kerry Smith, Analyst

And just last question, if I could. Just when would Ormaque be incorporated into the mine plan, when will we have a reserve there, when will the drilling be to the level where we can get a reserve? Is that the end of this year then, George?

George Burns, President and CEO

So we're doing the infill drilling as we speak. We're making good progress on that. And we need an adequate amount of conversion to be able to call it a reserve. I'd say we're on track with getting that done end of the year, early next year. And we'll do a technical report when that's all completed. In terms of the timing for bringing on Ormaque, I mean, we need new trade-off studies to say what's the best solution here. You can make arguments right now on both sides. If you bring Ormaque in early, you really have two mining fronts, and as we get deeper in Triangle, that would be a positive. Of course, if we do that, we need to put some capital upfront to put in ventilation and set up for scope. So we'll be doing a trade-off study as we complete the ore reserves to determine what the optimum life-of-mine scenario is for Triangle and Ormaque.

Kerry Smith, Analyst

And that trade-off study won't happen until you've got the infill drilling done. So that would be a 2024 event then, I guess, to do the trade-off studies?

George Burns, President and CEO

Correct. That's correct.

Operator, Operator

Our next question comes from Tanya Jakusconek of Scotiabank.

Tanya Jakusconek, Analyst

Thank you very much for the capital, but you answered for Kerry with respect to Skouries, and how that's going to pan out over the next few years. What I also wanted to ask is how should we be thinking about the sustaining capital going through as we go to that 700,000 ounces per annum rate by 2027? If I do a quick calculation right now, it looks like you're paying about $250 an ounce on sustaining capital. Seems a bit low relative to some of the other companies that are coming in at 350 to 400. Just wondering how I should see that going forward?

George Burns, President and CEO

Well, I mean, when you look at the existing portfolio on sustaining capital, I think the run rate on sustaining is going to continue. So if you're talking about over the five-year guidance, it's really about bringing in Skouries. And for Skouries, the copper byproduct revenue is going to pay all the sustaining and operating costs. So we end up with a slightly negative ASIC.

Tanya Jakusconek, Analyst

And just also my other question has to do with, just how do you see the year play out? You’ve obviously given some guidance that the second half is going to be stronger with Kisladag having a stronger performance. What about Lamaque? Because Lamaque last year had a higher grade in the first part of the year and then lower grade. Just wonder how Lamaque plays out this year?

George Burns, President and CEO

So for Lamaque, it’s again, this year going to have a bit of a stronger second half than the first half driven by grade, probably not as significant as it was last year for sure. And then the first part of the question?

Tanya Jakusconek, Analyst

It was just how that's panning out. So if I think about your production profile during the year, would it be like a 45 first half, 55 second, would that be a reasonable assumption given Lamaque and Kisladag both second half?

George Burns, President and CEO

Yes, that's a good assumption. And just to follow-up on Kisladag, really what's driving Kisladag, we are doing a tie-in to that HPGR; we are doing a rebuild on the HPGR for the first time. So we have tied that shutdown to get all that work done on time. So we are going to be down for a number of days during that tie-in. And then we are expecting some better performance in the second half, I guess, from a grade recovery perspective.

Tanya Jakusconek, Analyst

And then my other question has to do really with Olympias, and just the expansion permit. I'm just going to try and understand what's going on there? And in your five-year guidance, what have you assumed for that? Because we have continued to wait for this permit. I think it was 2022, now it's 2023, in terms of how do we deal with the ore. So I just kind of wondered what you have in your forecasts and where we are on your thinking there and the permit?

George Burns, President and CEO

There are a few components to your question. First, regarding the permitting process itself, we are seeking a modification to the EIA, which requires public consultation. After this consultation in Greece, several government departments review the feedback and address all environmental concerns. We have completed the consultation and are now moving through the comment period from the various departments. We are in the process of finalizing the document that will guide our Kassandra operations. The key change here is the capacity increase in the mill and the ability to extract more tons from underground. We are monitoring factors such as noise, vibration, water quality, and air quality. While this process has taken longer than expected, I am confident we will receive that permit this year. It is not critical for the ramp-up of Olympias. Our five-year guidance assumes we will obtain the EIA and make minor capital investments to allow for higher throughput at the plant. There are some capital expenditures included for the Stratoni area and for underground support. The main focus is to extract more tons from underground. Last year, we made significant progress, especially in the fourth quarter with our highest underground output. However, from a cost perspective, our performance at Olympias was not ideal. Our challenge is to lower costs while increasing production simultaneously. A major factor driving costs is our workforce size. We closed the Stratoni Mavres Petres operations last year due to a lack of reserves and outdated equipment, deciding it would not be profitable in the current climate. We did not lay off any employees, but we are currently employing more staff than necessary to operate Olympias. As a result, our costs have not declined despite improvements in productivity and efficiency. This year is when we anticipate change. With the Skouries operation ramping up, we expect to create numerous jobs during construction, and as production begins, we will add operating jobs. We want to ease the impact on our workforce and facilitate transitions from redundant positions to new construction and operational roles. Currently, we are managing a higher labor burden, but we are also improving productivity and efficiency. Based on our guidance, we expect increased production this year and anticipate a significant reduction in costs compared to last year. After we ramp up production following the permit and continue to enhance efficiencies while supporting nominal capital investments, we expect to see substantial gains in production, reduced unit costs, and improved margins and profitability.

Tanya Jakusconek, Analyst

If I remember correctly, the expansion was supposed to cost around $60 million. Should I still be using that number?

George Burns, President and CEO

Yes, 650 is still the number. And from a current perspective 400...

Tanya Jakusconek, Analyst

I was talking about the CapEx.

George Burns, President and CEO

I thought you were talking production. Could you repeat the question?

Tanya Jakusconek, Analyst

Yes, it was just on the expansion, when you said there's some money that have to get to do all of that besides the underground, which I'll leave. But everything else on the infrastructure, I think getting to that 650 tons like that was going to cost about $60 million. Is that still...

George Burns, President and CEO

Yes, that number has come down a bit. We're in the range of $35 million to $40 million in the reason for the drop, we have had success in debottlenecking the plant this year without substantial capital. So looking at that success, we have taken down that expansion number to between $35 million and $40 million.

Tanya Jakusconek, Analyst

And then just in your five-year plan just to finish off, when you have assumed you get your EIA this year and then when are you going to the expanded rate?

George Burns, President and CEO

In 2025, we are assuming we are at the expanded rate.

Tanya Jakusconek, Analyst

And given we are having all of some movement of people from Stratoni and from Olympias going to Skouries. What would be the holding cost we should think about through the income statement for Stratoni this year?

Phil Yee, Executive Vice President and CFO

I think as George outlined, Tanya, we do expect to see the holding costs under study until Skouries restarts construction. So in the long term, we are anticipating current maintenance costs for Mavres Petres-Stratoni to be in the range of $2.5 million to $3.5 million a year.

Tanya Jakusconek, Analyst

And so anything on the sustaining you can help me with longer term or should I use that 250, or maybe $150 million per year?

Phil Yee, Executive Vice President and CFO

On the sustaining CapEx? So the sustaining CapEx, I think, for the current operations is probably pretty consistent with what we have seen in 2022. And then you add on Skouries, and the sustaining CapEx for Skouries would be in line with the feasibility study. But overtime, as we go through the five-year plan, you're going to see sustaining CapEx at Kisladag and Lamaque to start to decrease.

Operator, Operator

Our next question comes from Mike Parkin of National Bank.

Mike Parkin, Analyst

Just a follow-up question on Olympias. You report the tons milled for the operation. Are you building a stockpile? I've noticed that the tons milled in 2022 compared to 2021 was relatively flat, yet you mentioned that the performance from the mine is improving.

George Burns, President and CEO

No, we don't have much of a stockpile. What you noticed as a challenging first quarter at Olympias was largely due to COVID affecting our entire portfolio for the first time. We experienced high absenteeism, and all of our sites were impacted. Thus, Olympias faced those challenges in the first quarter. The notable improvement came in the second half, with an increase in tonnage at Olympias. Overall, there wasn't much year-over-year improvement, but when comparing the production from the second half and fourth quarter at Olympias to previous quarters, there was a significant increase.

Mike Parkin, Analyst

So it's fair to assume that what is milled corresponds with what is mined?

George Burns, President and CEO

There is just very little capacity to stockpile material at Olympias underground around the surface.

Mike Parkin, Analyst

Any increase in production year-over-year is primarily based on grade until we can bring this expansion online in 2025, or are you anticipating some improvement in tonnage year-over-year as well?

George Burns, President and CEO

Yes. We're expecting tonnage improvement this year over last year. So fourth quarter, again, we had good tons, but we didn't in the first half. So we're expecting to get better tonnage out of Olympias and more consistency this year than last.

Mike Parkin, Analyst

And again in 2024, you'd expect tonnage to be up again?

George Burns, President and CEO

We are focusing on increasing production from underground as quickly as possible. Once we reach the plant's capacity limits, we will need additional capital for expansion to address this issue. Additionally, there are several ongoing projects at Olympias that will enhance our economic performance this year. We have been operating with a transformer at full capacity, but we have completed a new, upgraded transformer that will be beneficial for our expansion and will reduce our electricity costs since we were operating at the limits of the old equipment. We expect to connect to the national grid in the first half of the year. We are also implementing motion blasting to allow for longer blasts and improved productivity in mining. This equipment, being manufactured in Europe, is set to arrive in Q2 and will enhance drilling, blasting, and overall mining efficiency. While we acknowledge this process has taken longer than anticipated, it is crucial for establishing credibility at Olympias and achieving profitability. We are currently addressing a significant bottleneck related to ventilation by constructing new ventilation fans that will greatly improve airflow, enabling us to mine more areas underground concurrently. These initiatives are aimed at boosting our team's productivity and achieving a full-time workforce consistent with Olympias being profitable, which we expect to see in the first half of this year.

Operator, Operator

That is all the time we have for today. This concludes the question-and-answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.