Welcome, and thank you for joining us today for Burgundy Diamond Mines Investor Webinar. My name is Lorena Charest with Burgundy Diamond Mines, and I'll be hosting today's presentation. Today you'll be hearing from CEO and Managing Director Kim Truter and CFO Brad Baylis, who will provide an update on the company's quarterly performance, market operations, strategic initiatives, and mine life extension.
Before we get started, please note that the presentation is not intended to provide financial advice or for and it contains forward-looking information, opinions, and estimates, and they're given for illustrative purposes. The full disclaimer can be found in the presentation slide deck available on the ASX.
The Q&A in the chat will be open for all attendees. In some cases, your questions will be answered following the presentation. As a reminder, the figures in this presentation are in U.S. dollars, and I'll pass that over the presentation to Brad Baylis, CFO.
Thanks, Lorena. Yeah, I'd like to thank everyone that's taken the time to join us for the call. I think we've had an exciting quarter, so very happy to share with you where we're at. So I'm going to start off with the highlights from Q4. Like Lorena's mentioned, all figures in the presentation are U.S. dollars.
So yeah, very good quarter from a revenue perspective, up 37% from the corresponding period in 2022, where we achieved $121 million. Our average realized price for the quarter was $93 a carat, down 2% from the prior corresponding period in 2022. Important to note.
Important to note that the, you know, that part of the reason for the lower realized price is due to the fact that we had some carats that we didn't sell in Q3, some lower value carats, and we brought them forward into Q4. Carats recovered, up 19%, for the corresponding period in 2022, so fantastic result, with regard to carats.
Our grade was also up 12%, versus 2022. And carats sold for the quarter, up 1.8 million, up over 40%, over the corresponding period in 2022 of 1.3 million carats. You know, and this was in line with the previously announced December sales performance that was released in December. Total tons mined of 4.3 million tons, down 33%, from the prior period in 2022.
You know, main reason for this was just lower waste stripping, so, we didn't need to move as many tons in the quarter. Tons processed through the plant, again, the process plant is performed outstanding this year, and we're up 6% over the same period in 2022. Our unaudited EBITDA of $60 million for the December quarter and very strong balance sheet and inventory. We ended the year with $94 million in cash, up 107% from Q3.
You know, we did reduce our diamond inventory down 23%, and we'll look for more opportunities to try to carry less in the future as well. End of the quarter, with net debt, excluding the rough diamond inventory of $35 million, down 60% from Q3. So from a sales perspective for the three months ended, again, sold a lmost 1.8 million carats.
Again, I'll highlight, 40% above what the same period was in 2022. And again, on the revenue side, $166 million versus $121 million in 2022. And the revenue's slightly lower than the guidance we provided in December, and that's just due to a couple of customers hadn't paid for their December purchases until early January, so we didn't record the revenue until January. So it's about a $4 million difference there.
Again, on the realized price, like I mentioned, realized price was impacted by the fact that we brought forward some lower value goods from Q3. It just wasn't the right time to sell them in Q3 and sold those in Q4, so it's definitely bringing down our realized price per carat for the quarter.
Cash cost per carat, slightly higher than the same period in 2022, driven primarily by higher fuel cost in 2023 as compared to 2022. And then also we had a couple of unplanned maintenance activities in 2023, very cold December, which resulted in a number of unplanned issues with our fleet.
Cash margin slightly down, obviously driven by the factors around the cash cost being slightly higher, which is also creating a bit of a drag on our cash margin. I'll pass it over to Kim now to give you an update on the diamond market.
Thank you, Brad. Fantastic. Good morning and good evening, everyone. Thank you for joining us. Look, a couple of points here about the market. I mean, first of all, what we are seeing is a bit of stability in the market, which is very encouraging. And as a result of that, when we look at our last few auctions that Brad mentioned, generally the prices we've been receiving have been improving, which is fantastic.
Some of that has been driven by the fact that we are seeing some improvements in some sectors in the retail industry, so depending on who you read. But I see today even LVMH's performance in Europe's been fantastic, so it does depend on which sector we're talking about.
Generally the supply into the midstream slowed a little bit, mainly because of the sales suspension by the major companies, both De Beers and Alrosa, as you'll recall. And also we saw that moratorium from the Indians lifted at the end of December. And I'm sure a lot of people have been reading about the G7 sanctions.
We're heavily involved in some of the work to support that work, and those will be fully implemented this year. Because of all those things, the supply chain is definitely showing signs of stability, which is very important, and very favorable to our Canadian origin, very strong focus on provenance and a lot to do with those G7 sanctions, a bit of a focus on using technology to track diamonds as something we're having a close look at.
It's just something to be aware of. I mean, we're obviously seeing that the younger generation are particularly interested in origin and sustainability, so that obviously plays in our favor, because we perform well in both of those regards. And the other thing that is that the lab-grown diamond prices continue to drop, and there's no doubt that they are now selling in a very different segment in the sort of the cheaper fashion jewelry segment.
And so, you know, when you look at that whole mix of issues there, the quality of the Ekati product and, of course, the Canadian provenance, remain very valued in the market. That graph on the right-hand side, by the way, is available in a public report that's issued by Paul Zimnisky.
I mean, you can just see how the prices have moved around this year, sort of declined in the third quarter and then a pick back up in the fourth quarter, which really reflects what we've been seeing. We've put a few special stones up for people to look at. I think the biggest stone we recovered in the quarter was that one on the left-hand side, a 75-carat white stone, a beautiful yellow stone, a beautiful white stone in the middle there.
But probably the most valuable stone is that one on the right-hand side there, that vivid yellow. It's an amazing stone. In fact, I think when we had our customer visit back in October, one of the customers wanted to buy it on the spot, so it's a beautiful stone, that one. Just a bit of an operations update to build on what Brad said.
You can see, tons mined for the quarter, as Brad said, quite a bit down compared to 2022 because, effectively, the strip ratio is reducing as you go deeper in the Sable pit, and therefore you don't need to move the waste tons. Ore tons up, as you can see, tons processed up, carats recovered way up, grade up a little bit. And then, of course, our diamond inventories as a result of that, all that, went up.
And this is talking about, you know, the carats sitting somewhere in our pipeline. So, yeah, very good result from an operational point of view, I guess, shows that Burgundy's got a firm hand on the asset and the teams have been performing very well. Just an update on the Point Lake project.
As you recall, the Point Lake Project now's during this year takes over from the Sable pit, which is the existing open pit. Just a bit of an update on some of the progress. Most of the water has now been pumped out of that pit. There's a tiny bit left in the right at the bottom of the excavation we've been digging, which we'll take out just when we need to get there. We've received the open pit mining approval.
The pre-stripping will start at the end of March, so at end of March and April, and then full-scale production will occur in Q4 as Sable winds down. And you can see that sort of timeline down the bottom there, all the phases we've gone through for Point Lake. So Point Lake's looking good.
We're in very good shape and ready to go. I'll just hand back to Brad here for the next couple of slides, and Brad will give you a bit of an overview of some of the financial numbers and then also sort of 2024 guidance. So back to you, Brad.
Thanks, Kim. Yeah, so again, as I mentioned earlier, so we ended the end of the quarter off very strong position from a cash perspective. You know, we did complete 4 sales in the last quarter of the year, three regular sales and one special sale. So, you know, we ended the year quite nicely with, you know, full sale sell-through of all of our products, so we weren't left with any product at the end of the day.
So yeah, on the diamond inventory side, this is kind of our normal current normal work in progress diamond inventory, which we are looking to try to release some of that in the future. You know, bank loans, you know, no change from previous quarter. Other obligations, so some small downward change there, and that's related to our capital leases and our notes convertible.
And you know, puts us into a consolidated net debt position of $35 million compared to just under $90 million at the end of the last quarter. And then when you factor in your diamond inventories, you know, that puts us in a pretty strong position. So you know, despite all of the difficult rough diamond market, especially early in the fourth quarter, we did end the year in a very nice position.
We were quite happy with where we ended up. Onto our 2024 guidance. So for ore tons mined, we expect to be between 4.2 million and 4.7 million tons, 14.7 million to 15.7 million total tons mined. Tons processed between 4 million and 4.4 million. Carats recovered between 4.9 million and 5.3 million carats. And then carats sold, kind of the same, as recovered. So we expect to, you know, match or beat the performance from 2023. Back to Kim for an update on a business update and mine life extensions.
Thank you, Brad. So have you just broken us down into, I guess, the different segments of the business? The Upstream obviously refers to things up at the mine. Midstream is that sort of middle part of the business, so, you know, things like selling rough and, you know, rough diamonds. And then Downstream is sort of your retail end.
But Upstream, primarily focused on the Ekati operation. You can see we've heavily focused on sort of fleet optimization, making sure we're running the right equipment, getting our truck utilization up and all the equipment utilization up. So just generally trying to squeeze as many efficiencies as we can out of the assets that we've already purchased.
We've already done some internal benchmarking to make sure we know where we sit, and we're using sort of internationally recognized reporting standards when it comes to things like truck utilization and maintenance and so the usual mining metrics. And we've done some benchmarking to see where we sit.
We're still looking at various roster changes to make sure that we've got the optimum roster arrangement in terms of making sure our leaders and our operational people are there when we need them. So there's still a bit of work in progress there. And of course, that involves changing flights and various things, so it's quite a complex change, which we're still working through. We'll talk shortly about some of the mine extension work, so I'll come back to that.
And then, similarly to support that mine extension work, quite a big program happening during this quarter, which I'll probably come back to as well. In the midstream, we are looking at alternative viewing locations. Currently, our viewing location is in Antwerp, in Belgium, and we are looking at increasing it.
We're going to trial it in Dubai as well, so have an additional viewing arrangement when we might have others. The whole purpose of that is to see if we can attract more customers to both view our diamonds, but more importantly, more customers to actually bid on our diamonds. So we'll have a look at how that goes.
We're also looking at where our diamonds are sorted. Currently, they're sorted by a third party in India, and we've been doing a bit of work to see if there's sorting arrangements. We are leaning towards the diamonds being sorted at the Ekati mine site, but we'll probably make that decision in the next few months.
We are looking at a few sales partnerships to see if we can leverage partnerships, specifically those that have very clear and direct links into luxury brands. So that's something that's afoot. And then we're also just looking at how our diamonds are sorted in preparation for sale to see if there's any finessing we might need to do to make them even more favorable for people to buy.
Downstream, we're just making sure that we can look at optimize any technology we're using in terms of how we do things without, you know, cutting and polishing. We are looking at developing a more enhanced sale platform to give people access to the polished diamonds so they can view them and obviously get excited about buying them. And again, looking at various sales partnerships.
So as you can see, quite a lot of work going on in all these dimensions of the business, you know, all the way downstream. And then just the final slide to talk to the mine life extension, a very exciting you know, lots of work been going on. Just a reminder on the right-hand side t he brown boxes are where we're mining today, both Sable and Misery, and the green are the areas we're bringing into play in the future.
Probably starting off there right at the top, the primary mining license in Canada is your water license, which we've had renewed for another 10 years, which is very, very good. We've both, as a result of that, updated our long-term plan, and we've optimized it yet again. We'll keep doing that optimization work to make sure we got the optimum sequence of development of the various assets. I mentioned Point Lake.
We've done a series of pit optimization work just to make sure that the pit shape and size is the optimum one from a financial point of view. That work's been completed, and as I mentioned early on, we'll start that pre-strip shortly. Sable, we've identified a portal location, and we'll just finalize that once we've done a full geotechnical review to see whether that's the right place to put it.
Our plan is to actually develop the portal in August this year, and we'll then start the actual decline, probably in early 2025. We've also got some geotechnical drilling that'll take place in this quarter.
The drills will be coming up the Winter Road shortly, and then we'll be drilling doing some geotech drilling and taking them back out on the Winter Road at the end of the period. We're actually starting on the permit application for the Sable underground as well. We've mentioned previously that there's a remnant stockpile over at Fox.
We have done some sampling, and we've looked at various upgrade options, using some quite good technology, some of which we actually used over at the Ellendale Project in Australia. We plan to start processing some of that remnant stockpile in the second half of 2025.
Then in Misery, the geotech and ore body extension drilling work will also happen in Q1, and that'll inform us about how much longer we can keep mining at Misery. Indications are, probably three to four years of Misery and hopefully longer. So that's a bit of an update on all the mine life extension, all of it's firming up.
The good news is that we're not getting any negative surprises. Generally speaking, things are looking very, very positive as we keep looking at all these options. So that's our update for today. I'll hand back to Lorena.
Hi, thank you. We did receive a few questions in our chat. One of them is, any additional permitting required for Point Lake, for potential expansion?
That's a very short answer. The short answer is no. So we now have basically the full permit to mine Point Lake.
Okay. And, the next question is, could you touch on the sales cycle for 2024? Could we assume some customer restocking early in the new year? Are you seeing improvements or indications of improving demand?
Yeah, I mean, I'll be jumping in here as well, but just to remind people, we typically have 10 regular auctions a year, and then we have three special auctions, which are sort of scattered throughout the year as we accumulate special stones. So we're not going to change from that formula, at this stage. So we still plan to have the 10 and the three.
I think the best indicator of demand is often when we open up the next auction, to our customers is seeing how many of them book their slot for viewing. And, our Head of Sales was telling us that she's just started already getting people booking for the next auction. So already we're starting to see an indication that there's strong demand.
Brad, I don't know if you want to add to it, but I think we're pretty comfortable that the demand for our, for especially for Ekati and Canadian product, is very much still there. Brad, over to you.
Yeah, and we just completed our first sale of the year. I guess, you know, last week was the auction. And yeah, again, it was kind of a similar story. Now, we do expect January to be a fairly good month just because it is the restocking period.
But we did have full bookings. We even had to open up some additional viewings on the weekends in order to accommodate all our customers. And that sale went very well and sold all the available goods. So if that's an indication, and like Kim said, yeah, we're already starting to receive bookings for the February sale, which is not until closer to the end of February.
Great. And just to add to that, another question is, someone was commenting that it's great to see diamond inventory levels lower in Q4. What level of inventory are you targeting in the future? Should we assume less than one quarter of production? How is the diamond sales pipeline streamlining processing? Or progressing? Sorry.
Yeah, as we mentioned early on, just to remind people, we typically carry somewhere between $120 million and $180 million in our pipeline of diamonds. Those diamonds are typically accumulated in four different locations. They start getting accumulated at the mine site. They then move over to Yellowknife in Canada, and they're waiting for the government valuation to occur.
They then get shipped over to India to get sorted, and then they go back to Antwerp for viewing and final purchase. When we talk about moving the sorting arrangement potentially back to the mine site, that could trim off a few weeks of that pipeline. So that would see that whole pipeline reduced by a couple of weeks. So that's probably the biggest initiative that'll shorten that pipeline.
As I mentioned early on, we'll probably lock that in in this quarter and get the benefit probably in Q2. So that's sort of the plan at the moment. And then you'll see an ongoing, let's say, carrying inventory range of possibly between $100 million and $150 million or $160 million. So I don't know if you want to add to that, Brad.
Yeah, like, I think one of the big barriers to shortening it further is the government valuation. So before we can export our goods, wherever that might be, whether it's India, Dubai, Antwerp, the goods need to be valued by the government. And I think this is a bit of a historical thing where we've got these 10 sales, and it's all linked to the way that De Beers sells.
And so the government valuations are kind of scheduled around those 10 De Beers sales. It's something that I think we'll work to try to work with the government to see if there's another way for us to do it. But that's definitely a harder change to make than some of the things that Kim was referring to.
Yeah, and maybe just adding to that, the government of the Northwest Territories has just changed in terms of the top level of the government because they've just had their recent election. We've already started engaging with the government. We have excellent relationships with all of the government members. And so I think we're in a very strong position to influence their stance on that valuation.
So moving on to more financials, can you clarify the forecast CapEx and tax estimates? So the question reads, based on current guidance of 5 million carats sold and a cash margin of $28, the company is on track for $140 million EBITDA. And the question is, can you clarify the forecast CapEx and tax estimates?
Perfect, Brad, question.
Our capital for the year, approximately $175 million. Now, a lot of that is related to the pre-strip at Point Lake. So a good chunk of that is Point Lake pre-strip. We do also have our sustaining capital budget for the year, which is around $50 million.
And the reason it's higher than kind of what our normal run rate would be for sustaining is there was some carry forward, some catch-up related to 2023 projects that didn't get completed, which is something typical that we tend to see in sustaining capital where not everything gets done in the year. But that's kind of the plan right now.
As far as tax numbers, yeah, I'd say it would be fair to say about $20 million tax payable. We're still working through the final numbers, but rough estimates, we've got a tax payable amount this year of about $20 million.
Another financial-related question is an update about the surety bond extension and the surety payments?
Yeah, we'll tag team on this one. The progress generally has been quite good. We've done a few things when it comes to the sureties. We've canvassed new surety providers. The market's a little bit flat when it comes to new surety providers. So we did get one company that put an offer on the table.
But we are in a heavy dialogue with the existing surety holders, and we are making progress to extend the payment duration of the existing surety arrangement. Our starting position is a four-year payment schedule and or potentially longer. And as I said, we are making progress towards that, and we should hope to resolve it in the next month or so.
The next question is really about Life of Mine. Are you planning on releasing a Life of Mine update in 2024 encompassing Sable underground, Point Lake optimization, etc.?
That's a very, very good question. It's a little bit chicken and egg, I'm afraid. We do actually have a long-term plan that goes out a long way. I t's just we're not able to make it publicly available until we've pinned down some of the work that we mentioned early on. So as soon as we are in a position to release that plan with updated information, we will do so.
Now a question around sorting. Will you be bringing sorting back to India to increase your operating costs? Or sorry, will you bring the sorting back from India, increase your operating costs, or have any major CapEx outlay?
Yeah, again, I'll let Brad answer this. But I mean, the short answer is it's much of a muchness when it comes from a cost point of view, because if we brought it back to the mine site, we would plan to use machine sorting, which is the latest technology.
And there's a bit around whether we do QA or don't do QA b ut to be honest, the costs are very, very similar when we look at using machine sorting at the mine site versus where it's done now in India. I don't know if you want to add to that, Brad.
Yeah, well, and you do get a big offset on shipping. So instead of us shipping it all over the world, by moving it to the mine site, we do save on shipping costs. So, i t will be slightly more than what we pay now, but it's not significant. I think the release of inventory will outweigh the small increase on cost.
Yeah, I can't agree more.
I think that actually wraps up the questions that I've got. Unless anyone has any further questions to ask in the chat, please feel free to add them. I'll just wait a moment.
While people are thinking I mean, maybe some concluding remarks, but while people are thinking they have questions. But when you look at their Q4, it really demonstrates how Burgundy has put their stamp on the operation. And as I said earlier, on a real credit to the team. I mean, it's a really fantastic performance for Q4 that sets us up perfectly to get into a fantastic performance for 2023. Sets us up perfectly for 2024.
And as Brad mentioned, it puts us in a position to fund the development of Point Lake, to fund Misery extension and to get Sable started, the Sable underground started. So we're in a very strong position to execute the things that we've been talking about, and we are feeling pretty confident about this year. Any other questions, Lorena?
I don't see any in the chat. Yeah, we're just wrapping up. No other questions unless yeah, I don't see anything else. Oh, someone's raised their hand. Sean, I will see if I can give you the floor. If you can maybe provide a question in the chat, that might be the easiest way to respond to you. Let me just see if I can find Sean in the chat here. No, I can't find anyone named Sean in the chat.
That's a lot of new questions, Lorena.
Yep. Oh, I got one more. Is there any risk that you will need to raise capital to complete your projects, or are you comfortable with your current cash generation?
Yeah, that one. We're comfortable with the current cash generation. We've modeled a fairly conservative price assumption for the year. We've included that number that Brad was mentioning around for 2024, so the $175 million. We've included a provision to pay the sureties on a four-year payment schedule. That's been our assumption for this year. So yeah, all things considered, we're pretty comfortable.
I think there was one last question that came in under the wire here. Ekati Mine had an EBITDA of $200 million annually. Now we're talking a projection of $140 million. Is it because we are investing in the extension of the life of the mine?
Yeah, I'll let Brad take that one.
Well, really, the biggest reason is the impact of the diamond market, right? So we've lost, you know, 15%-20% from a price perspective. So, you know, if you start to see that come back, you know, even portions of it, that just goes straight to the bottom line. So really, it is a factor of decrease of the rough diamond prices.
Yeah, and that's why it's so important that we keep doing the things we're doing around provenance and our selling processes, making sure that we are competing very, very favorably in the market, which we are. I think we're doing very, very well in terms of our selling processes. So, we're pretty confident that revenue will come back during this year.
Fantastic. I think that wraps up all of the questions here. Kim, did you want to say some closing remarks?
No, I did just once again, repeating what I said earlier. I think we're in a very good position. We are very happy with the team. The assets performing very well. The, the downstream in Perth, is doing some very, very good work. We'll talk about some of that work probably in the next investor call. Our selling processes i n Antwerp is working very, very well as well.
So broad across the Board, the, the business i s performing well. We're now looking at what else we can get our hands on during the year. So, some exciting news should hopefully unfold as we as we keep embarking on the year. So once again, thank you for your interest and support, and we'll keep performing.
Thank you.
Thanks.
Take care, everyone. Bye-bye.