Good afternoon. My name is Colin, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the B2Gold Second Quarter 2021 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise.
Thank you
for joining us. As the operator said, we're here today Talk about 2021 and continued strong gold production performance above budget, and we are on track to meet or exceed the upper end of our annual production guidance range, which sits between 970,000 ounces of gold to 1,030,000 ounces on a few other issues. The 3 mines continue to produce well. I think as we signaled very early and very often that the second quarter of this year was first half of the year was going to be lower production and the production weighted to the second half of the year. And the Q2 of this year, we knew it was going to be the weaker quarter on the financial results basis, which hopefully will be signaled out very well to the market.
That's all we're seeing the reality of that and we're also seeing a positive start to the second half of the year. In terms of overview, we'll hear that the 3 months continue to operate very well. We've worked very hard and diligently through the COVID experience with our local communities, our employees and The governments in the areas we work are very proud of the contribution from everyone. And I think that we really showed off the amount of social license and trust we have in the places that we work and that we were able to collaborate very early on in the mutual trust relationship to Ensure that we could continue to mine, which is critical in the countries we're in for the economy, but continue to mine, but only if we could do it safely. So I'm proud of the contribution from All of our employees and people.
So in terms of looking forward a little bit and talking about some of the catalysts going forward, I'll Now for those who don't make it through the whole call. But at the end of the day, we're as I said, we're on guidance to meet this year, but that does not include a couple of upside potentials. As well. We have the Cardinal zone, which is adjacent to the Fekola deposit, and we're looking we've already done a bulk test, and we're looking to start moving ore from Cardinal to some good grade material from Cardinal through the Fekola Mill, which is not included in any of our projections. So that could bump up production And then looking a little bit further out, we are looking at the Anaconda area, which consists of Minnequito and Bentacco.
As we all know, we're currently in a dispute with the government over the ownership of the Minicola license. We continue to discuss with the government looking to Solutions. We believe we have a legal right to an extension to that exploration license where we've spent $27,000,000 and have identified a significant resource that has potential to get larger and can be tracked down potentially to the Fekola Mill. But importantly, the Atacond area is really Two licenses in the Botanical North, just immediately north of Minnequoto has a significant amount of saprolite weather material at surface where we're good grades. That's actually where we would start mining the Anaconda area, and that's the license It is not under dispute.
So we're looking potentially subject to the final mine plan and the permit working with the government is our partner there as in Fekola as well. We'll be looking to start shipping ore potentially to separate it or down to the Fekola Mill. As early as the second half of starting in the second half, early second half of next year. The Fekola Mill, we talked about in the news release, but we've had spectacular performance in the mill from when we first constructed it and then through the 2 expansions of the mill and we're getting some very good tonnage throughput. So that's another upside Given the projections we made for Tunnay Street, but given the reality of what we're seeing, if that continues for the year, that's another potential positive upside.
And the saprolite really because of its weather nature material can run to the mill on top of the normal capacity for the mill. So there's some upside scenarios there. The overall picture of the Anaconda area, we think there's tremendous exploration upside in Minnequoto and then Bentancol and continue drilling Bentancol while we resolve hopefully positively resolve and get on with business in Minnekoto. In terms of that scenario, I just want to comment that, Mali has been a very good place to do business and for gold mining for many years as Randgold, now Barrick and Attest to and other companies including ourselves. So we expect to resolve this current situation and get back to exploring the Menacolone on Our partners, the government and the people of Mali in creating jobs in the short term.
But in the meantime, we'll go ahead with Bentacco as we would have started there anyway. But we think Mali is a good place to be in the gold mining business. We still believe that and we believe that the government will continue to honor the loss as it has for decades making it an attractive place for foreign investment in gold mine. Other than that, the Gramalote project, everyone knows we Decided to delay the feasibility study there, to do some additional work on engineering, looking at some different concepts there to lower the extensively to look to lower the capital cost. Looks like we're getting some traction there from some of the early indications from the engineers.
And also we're doing additional drilling in the Grand Alandria, which itself, but also on with 2 other areas Trinidad and Morehouse West. We're getting some interesting early results from Trinidad, which has been a low grade zone that might have added mine life Back in the day now, we're seeing some potentially a bit higher grade there. We'll see how that pans out. So we're now looking at because of COVID related delays and getting going on the drilling and adding some more additional drilling to the program for the Gramalote area. We're looking at hopefully early in the second quarter now for the release of the new feasibility study.
So we're optimistic that Bramallati can we can improve the project through some of the initiatives we have going on and we'll be able to talk about that, as I said earlier in the Q2. Other than that, we've got a very active exploration program going around, many targets around the world, things we've been working on in cases for years to get opportunities like Uzbekistan where we're drilling, exciting targets in Finland and of course all of our various brownfield programs around the mines. We've had great success over the years, continuing to add ounces and therefore mine life to our operating mines. Restoration will continue to be an important part of our growth profile. The Kiyaka project in Burkina Faso, we are We're updating the feasibility study there, and we're considering various alternatives to unlock the value of that for our shareholders.
M and A, we're looking definitely, we're always looking at opportunities. We don't see a ton of things that we really love out there that we think are fair value. We'll continue to look and look for opportunities. But for us to do M and A, it's more likely we'll find some different situation where somehow our bringing our expertise to bear With the opportunity that may suit us that may not have suited other companies. It's going to be a pretty competitive environment for M and A and we'll continue to Look at that and look at opportunities, but very selectively, we're not going to start overpaying for assets now we never have before.
So with that, I think I'll general overview, pass it over to Mike and he'll tell you about the financial position we find ourselves in continuing to Pay a very robust dividend, one of the highest dividend yields in the gold sector and talk about our strong cash position and our lack of debt and continued financial strength looking into the future. So with that, I'll pass it over to Mike Cinnamon to give us and update. We also have the entire B2Gold executive team on the line available to answer questions after Mike's given his presentation. So over to you, Mike.
Thanks, Clive, and Good morning, everybody. So just going to run through the quarterly results, quick comment on the year to date and then sort of where we are cash flow wise and balance sheet wise. So firstly on the quarter for the 2nd quarter, with $363,000,000 in revenues, That's from the sale of 200,000 ounces at an average price of $18.14 per ounce. So gold Still holding its own as everyone's seen in the quarter. It's kind of it's a bit range bound around that $1800 mark, but certainly holding its own.
And when we gave guidance on cash flows for the year, etcetera, right at the start of the year, we actually used $1800 gold. So right in that ballpark of where we thought when we were budgeting and giving guidance to everyone. Sales were 12,000 ounces higher than budget in the Q and that's really a function of the overproduction at the sites. So turning to that production for the quarter, so consolidated and including our share of caliber, production was 212,000 ounces, which is basically 10,000 ounces higher than budget. And that came really from outperformance from each of our sites.
Fekola, same kind of story as the Q1. The mill just the throughput of the mill continues to outperform even our expectations. We did budget 7,500,000 tons annualized throughput for the newly expanded Fekola Mill. But even in Q1, we did 2,290,000 tons, so Well in excess of what we budgeted. That's a combination of a few things, favorable over fragmentation and hardness and optimizing the grinding circuit, But it's all very promising.
What we did see in the queue was that to feed some of that excess production more than we thought we'd have. We did use some low grade stockpiles, which provided that sort of additional unbudgeted mill feed, and that did lead to slightly lower grade in the Q as a result. But overall Fekola 114,000 ounces or 4,000 ounces ahead of budget. Then Masbate 57,000 ounces production quarter. Again, 4,000 ounces ahead of budget.
And same story for Masbate as we saw in Q1. Mill recoveries continue to outperform our model and process grade from our transitional ore and Mainvane where we're working right now was above budget. We did actually have time in the queue to run a couple of metallurgical test campaigns, just to try and help us as optimize recoveries as we move forward into the harder ore later in the mine's life. And what we found from one of the test campaigns involved high grade ore from the main vein pit. So even though we had a bit of a downturn in throughput because of the campaign, we actually improved grade overall because of some of the tests that we ran.
So Overall, Ms. Batty, running very well and still beating the model on recoveries and grade. I know what you quoted with 27,000 ounces and that's 2,000 ounces ahead of budget. And really as you know and as we guided, I think in the budget and all the way through the year so far, a lot of the production from Ojikoto, majority of it was coming from stockpiles in the first half. And then Ojikoto, as we get into mining the higher grade in both Wilshire and Otjikoto pit in the second half of the year.
We're going to see a real upturn, I think, in the production from that mine. But in Q2, even when we mined from the sort of medium grade stockpiles, The grade that we actually got was actually better than model. So we saw a beat overall in the numbers for Ochikoto. So when you translate that into cash costs and this is on a per ounce produced basis. Overall, across all our sites and including our SugarCalvo, we're basically Right on budget, dollars 6.64 an ounce against the budget of $6.62 but there were some offsetting factors in there and offsetting sites.
So Fekola was $6.17 an ounce and that was about just over $70 an ounce higher than budget, but that's primarily a function of a couple of things. The first one, the main one is that we were running that lower grade material through the mill to feed the excess throughput. So lower grade leads to higher costs overall per ounce. And then we did see some higher costs in terms of higher than budget fuel prices. We've seen that across all operations.
I think I'm sure you're hearing the same thing from all mining operations. But even with that, we still managed to overall on consolidated basis to come in right on budget. So offsetting the Fekola, high cost, miss Batty was $6.16 an ounce produced, which is over $80 lower than budget. That's primarily a function of higher than budgeted production with generally online budgeted operating costs, although again fuel was higher at Masbate site. And And I know what you're going to $8.54 an ounce, again, just over $80 an ounce lower than budget and same kind of story, higher than budgeted production, slightly higher fuel costs and the stronger Namibian dollar, but that was also offset by higher than budgeted pre strip, so we saw some more cost capitalized So overall, right on budget for the Q, consolidated for cash costs.
All ins, we were overall basis $30 an ounce lower. That's a function as always of what happened with the cash cost in the Q And also lower than budget and sustaining CapEx is the primary reason that there's a beat on budget there. And most of that or all of that really is timing related. The main part that wasn't incurred on the sustaining capital side relates to, I guess fleet, fleet rebuilds and stripping, mainly at Fekola and Uchikoto, and we do expect to see that reverse in the second half of the year. But overall, dollars 30 per ounce lower than budget on a consolidated basis.
And just quick commentary on year to date. So year to date on production, We're 29,000 ounces ahead of budget, so really reflecting a very good first and second quarter that we had. And as Clive mentioned, I think you gave a good outline of some of what we don't have in our guidance right now relates to What we can get from Cardinal as we move into Q3, we expect it to come online at some point in Q3 and later in the year and also the higher production that's going through the Fekola Mill right now. So I think the engineers are working on those numbers so that we can try and factor them in. So right now, we haven't they weren't included in the guidance that we put out for the year, the budgeted guidance.
We do think there's definitely chance that we could beat the high end of our production range when that's factored in. So we expect to be able to give you a bit color on that as we move into Q3 as part of the Q3 reporting. And then just to comment on the cash costs and the all in cost for the year. So on a cash cost basis for the 6 months, we're $26 lower than budget. That really reflects the although we may have some cost Inflation cost pressures across the sites.
We're beating it on the production side. So overall, we're below budget there. And all in sustaining costs were $88 below budget, again, a function of those better cash costs and some of this deferred CapEx. We're also seeing on the all in sustaining cost side, we're also seeing of some fuel hedging that we've done. So as I mentioned, there were some higher costs fuel costs in the period, but we've been had a hedging program for quite a few years now, Where we hedge 50% of the first the next 12 months and 25% of the subsequent 12 months on fuel basis.
Those hedges right now at the end of the quarter were about $1,000,000 in the positive and we're seeing the benefit of those hedging gains when you look at the all in sustaining costs because they're factored in there. So guidance wise, like we say, at or above the high end of our production range of 9,700,000 to 10,030,000 ounces for the year. Haven't we guided on the cost, so expecting to meet or be within the ranges for our cost overall. And again, once we see the updated production numbers for Q3, we'll have a better idea of how that may impact any of the cost parameters. Just a couple other comments maybe on the operations themselves.
Clive mentioned Fekola and what's going on there and Cardinal. Fekola Solar Plant also came fully online in the Q the construction of the plant is complete. There's We're still working on a few commissioning things, but really it's there and it's expected to reduce Fekola's HFO consumption by over 13,000,000 liters of HFO per year. And we've already seen solar be very successful in Namibia and now we're seeing the benefit of it in Fekola. Menekwoto, I think Karl has already given you an overview on that.
And then just to comment on Otjikwoto, development of Wilshek, the underground mine continues. We've got the portal developments completed and now we're working on the underground primary underground ramp as we get and we hope to get into still bore production sometime in early 2022 as was forecast. Maybe just a couple of comments on some P and L items that don't fall automatically out of some of the production steps that we talked about. G and A is up a little bit in the queue and that's really primarily it's a function of 2 things, the increase in insurance costs, the whole industry is seeing insurance costs go up Unfortunately, that's just a fact of life. And part of that comes with higher gold prices because you have higher values and BI numbers to deal with.
And then some of it's just ongoing higher COVID costs as you manage the sort of COVID protocols at sites. Just pointing at the gains and derivative instruments, the $9,000,000 for the Q and 2017 for the year, That's fuel. It's almost all of that is fuel and that's just the positive gains on some of the hedges that we have in place. Taxes, dollars 50,000,000 for the Q. It's CIT withholding.
We're going to see higher taxes now as we're profitable at all sites and we'll be higher gold prices. And the one thing that's in there that You're going to see on an ongoing basis now, there was $18,000,000 in there for withholding tax, mostly for Fekola and mostly related to dividends as we pull money up from the sites. The loans at all sites have been repaid some time ago and now monies that are pulled up from sites repatriated Via dividend. So again, it's a function of being profitable and successful, but you're going to see some higher taxes there because of withholdings on dividends. Overall, earnings for the period earnings per share on adjusted $0.07 adjusted EPS $0.05 And then for the 6 months, EPS 0.15 $0.01 per share and adjusted $0.14 per share.
And the adjustments are primarily to remove unrealized derivative gains and DIT charges and credits. Okay. And then just finally, I just wanted to mention our comments on a few items in the cash We've spent a lot of time certainly trying to guide over the last couple of periods or few quarters as to how we feed cash flow unwind through this year. So it is definitely a tale of 2 halves this year. We had run about $140,000,000 in Q1 And we expect about $500,000,000 in Q2.
So overall for the year, we expect about $630,000,000 That's what we guided at $1800 gold and we expect to come in at that or close to that. So that guidance is unchanged. But what it did mean is that we had basically breakeven or just actually a slight cash outflow of $8,000,000 for the quarter for operating activities for Q2. And as guided frequently, that really relates mainly to working capital changes. And the biggest component of that is payment of last year's tax obligations, most of which relate to moly.
So paying off the Malian tax obligations and the government dividend, which is due in the June following the next year. So 2020 government dividend, ordinary dividend for Mali was paid in the Q2 of 2021. So a significant outflow there, but right as planned. I think when we look at what we guided at the end of Q1, We couldn't really be any closer for those cubes, I think, than how we turned out. So we're feeling very positive about the second half of the year.
And once now that the sites are getting into the battery grade ore both Namibia and Fekola. We expect to see a significant Turning that operating cash flow as we go through the next few quarters. Couple of other comments, maybe dividend paid, we paid, as Clive mentioned, we paid $0.04 per share again in the queue. Our dividend yield is somewhere just under 4%, so it's still right up there in terms of the gold business and we feel very comfortable maintaining that level of dividend. Distributions to non controlling interest you've seen the cash flow, dollars 7,000,000 outflow for the Q, dollars 9,000,000 for the year.
That's again a function of profitability. So We have minority those are related to payments to minority interest partners, both Mali, where the government has a 10% dividend interest and then in Namibia where we have a 10% minority interest partner at Faroochikoto. And finally, just to comment on investing activity. So $66,000,000 for the quarter, dollars 125,000,000 cash outflow year to date. We're about $30,000,000 lower than budget for the year to date number and about $5,000,000 of that relates to sustaining CapEx, so mostly stripping that we'll see rollover into next year.
And then non sustaining, There's about $24,000,000 behind and non sustaining right now. Dollars 9,000,000 of that relates to Gramalote, that's just a timing thing. We Certainly doing a lot of work there now, and I think we'll catch up those costs very quickly. And in fact, we're just in the process of finalizing Gramalote's revised budget for 2021 with our partners AGA. We just have to have that formally approved now in the joint venture meeting that's going to happen next week.
So the new budget there is $69,000,000 that's an increase from the $52,000,000 that we had originally in the budget and our shares roughly $9,000,000 of that additional for the year. And then we also expect to agree on an updated amount for the early part of next year. Right now, it's estimated to be about 17,000,000 To get us right through the final completion of the feasibility study for Gramalote. That revised look at that feasibility study and how we think we want to approach it there. So we think now the Grand Latte feasibility study will be done sometime in Q2 next year.
It's pushed out slightly from Q1 as a result of more drilling that we've now agreed with AGA that we're going to do at Trinidad and Monjas and also just ongoing COVID restrictions in Colombia, which haven't stopped us from doing work, but just makes it a little slower than we had planned. So like I said on that CapEx side, that $30,000,000 that we're under for year to date, we do expect to see that reverse and flow through Second half of the year. Sorry, I should mention. The other thing on the non sustaining CapEx that was under it's about $11,000,000 for exploration that hasn't been spent yet. But We've definitely got the plans and the teams assembled and working now at various sites.
So we expect to catch that exploration under spend up And the second part of the year. That leaves us at the end of the queue with $382,000,000 in the bank. And like I say, waiting for that, The big cash flow part of the year to come now in the second half of the year, approximately $500,000,000 from cash flow from operations to flow through. And we've got the line undrawn. We've got $600,000,000 line revolver sitting with our syndicated banks, it's undrawn.
So liquidity wise, we're in excellent shape. And that concludes my remarks on the financial side of the quarter. Back to you, Clay.
Thanks, Mike. I guess we'll operator, we'll open up for any questions now.
Stone Phone. You'll hear a 3 tone prompt acknowledging your request and your questions will be pulled in the order they are received. Okay. Your first question comes from Tyler Langton from JPMorgan. Tyler, please go ahead.
Hey, good afternoon. Thanks for taking my questions. Maybe just to start with Cardinal. I think you had previously talked about, it may be being able to contribute around, I think, 20,000 to 25,000 ounces this year. Is that still the case?
And then I guess start production, are there any sort of I guess permits or approvals that you need from the government?
Sure. Yes, thanks for the question, Tyler. I'll pass it over to Bill to answer that.
Yes, thanks. So the answer is yes, kind of for the whole year. That $20,000 to $25,000 is certainly within the range that we talked about. Remember that it is still a resource, an inferred resource. So we're still working through that.
But with that being said, certainly the initial bulk sample that we completed in Q2 did represent quite well what we thought was going to be there. So that number still holds true. And we have already we went through a full update to our environmental impact assessment. And that was approved and now we're just adding it to the mining plans. We actually have this next week, the ministry coming out to have a look at it.
And so certainly we see within Q3, we'll be ready to mine it fully.
Great, thanks. And then just sorry. Go ahead, Heather. Okay, thanks. Yes.
Just as a second question, just I think we've started seeing some inflationary pressures. I guess, can you just and you mentioned in the release some new pressures from fuel and other items. Could you just, I guess, provide a little bit more details on what you're seeing, whether it's materials, consumables, fuel, and if you sort of have any supply contracts or fuel hedges that kind of mitigate the impact this year.
Well, I think Mike can speak to you touched on it in his remarks about the fuel hedging. I don't know, Bill, do you want to talk about other views on inflation and what we're doing to mitigate the impact?
Yes. Well, certainly, we are seeing some inflationary pressures for sure, in particular on the shipping side. As everybody comes out of COVID, the shipping costs are up. But what we're doing as far as trying to mitigate it, As you know, in the last couple of years, we've become a major producer as opposed to a junior. And that's allowed us really to get global pricing everywhere.
So when we go prices on reagents and that type of stuff, then we're able to kind of get what all the big boys are getting the best price as possible. So I would say that certainly there is a pressure on inflation, but we're managing it as best we can for sure. And fuel, I think Mike was going to talk about.
Mike, on the fuel side, I don't have a lot to add that I already talked about. We are we have kept our fuel hedging programs up to date. So we're basically 50% hedged for diesel and HFO needs for the next 12 months and then 25% for the subsequent 12 months. So Right. And right now that's on the book.
It has a mark to market volume of $18,000,000 so it's $18,000,000 a positive. And then the other hedge that we've talked about historically, it's kind of like a permanent hedge, is we put the solar plants in firstly in Namibia, where we view that as part of the overall hedging approach to fuel and then obviously with Fekola coming online as well. We think that Reduces overall operating costs somewhere in that 3% range. So that's kind of part of how we're on a permanent basis are mitigating some of those cost
Okay, great. Thanks so much. That's it for me.
Thanks, Doug.
Your next question comes from Josh Wolfson from RBC Capital Markets. Josh, please go ahead.
Thanks. Just a quick question maybe on capital allocation. Obviously, this quarter was not necessarily representative of what the go forward cash expectations are going to be. But with second half of the year being much better and even beyond that with Gramalote. What's the current thinking in terms of dividend policy and what the excess cash is
Mike?
So on that front, Josh, I think a couple of thoughts. The first one is We're pretty comfortable like I think we're saying that our current dividend rate, we've got one of the highest yields out there. We put ourselves up there pretty quickly. And so we feel pretty comfortable maintaining those rates, certainly for the long term, Even given significant fluctuations in gold price, so that was one of the reasons for setting that at the rate we did. We are trying to balance cash flow generation with also and returning capital to shareholders with being a growth company as well as still a growth company.
So I think you'll see us run through And see where we get to by the end of the year and evaluate it then. But I think right now we're pretty comfortable with the rate we're at. We don't have any plans for share buybacks And we don't have any plans for any kind of special dividend or right now for any increase in dividend.
Yes, we'll continue, as Mike says, to look at that. At the end of the day, we're going to have a as we get into later this year and into next year, we're going to have a bit of an idea of what we think about Gramalote in terms of potential capital and the idea. I think most of our shareholders get it. We're paying a very healthy dividend, but we are a growth company, and we want to continue The opportunities for growth, whether it be the Anaconda we've talked about, whether it be Gramalote or other opportunities. So we think we've got the right balance for the shareholders right now, but we'll be looking at that as Mike said by the end of the year.
Now obviously, if gold were to make a significant move, then that I change our thinking there as well, but I think we've right now we feel we've got the right balance and let's see what we look like as we get towards the end of the year.
Got it. Thank you. And then maybe if I could tuck in one more just for Ojikoto, with the sequencing in the second half of the year. Is there any sort of key difference between 3rd and 4th quarter? Or is there going to be just a real stepwise change now with the great sequencing at
the bottom of the pit?
Bill, you want to talk about them?
Yes. I'm just looking at what grade we're feeding into the mill here in the second half. The answer is it's going to be pretty evenly broke out. So the first half, obviously, we had a very not a very high output, but the second half we're going to see it come up in Q3 and Q4.
Okay. And that how long does that sequence go for? Like does it go past year end 2021?
Well, we haven't done the 2022 budgets yet, so I'm a bit low to say exactly what it's going to be.
Okay. That's it for me. Thank you very much.
Okay. Thanks, Sean.
Your next question comes from Ovais Habib from Scotiabank. Please go ahead.
Thanks, operator. Hi, Clive and B2 team. A lot of my questions have been answered, But I did have a follow-up question on Cardinal. In regards to Bill, you mentioned that you do You have submitted the environmental and social impact assessment. Any kind of color that you can provide to us as to how those discussions are proceeding regarding the permit.
Yes, they're proceeding very well. Like I said, we submitted the bulk sample. Now they're just coming out to see basically to see where it's all at and to and not even I don't even think we need an official written approval, but they just got to make sure that we implemented it correctly within our mine plan. So we see mining there as imminent.
Perfect. And in terms of mining on Cardinal side as well, once you get the official, I guess, permit or whatever, Can you start in Cardinal right away? Or was there any pre stripping required? Any sort of CapEx required on Cardinal?
We can start right away. As part of our bulk snap, we had to move some material out to get some representative material. So it's been kind of a 2 for. We got the good metallurgical testing and we got some of the pre stripping done.
Okay, perfect. And just a little bit more color on the Anaconda side. You had mentioned that Menekwoto is not somewhere You wanted to start off mining in the first place, but there was opportunity to start on other areas of Anaconda. Would you look to do a bug sample similar to what you did at Cardinal? Or how should we look at Anaconda?
Yes, that's a real interesting question, Ovais, because originally we did talk about doing a big bulk sample there with the saprolite material. Certainly, the saprolite material that we have done some metallurgy on it and we think that it feeds quite well. But I guess that's not off the table. We would consider doing a bulk sample in the Bentacro area in Q4 this year potentially.
Okay, perfect. That's it for me guys. Thanks so much. Thanks, Luis.
Your next question comes from Don DeMarco from National Bank Financial. Don, please go ahead.
Okay. Thank you, operator. And thank you, Clive and team. My first question is for Bill. So Bill, there's a lot of moving parts at Fekola.
We've got low grade stockpiles we saw in Q2, you have the pit, cardinal and so on. What should we be thinking about in terms of grade for Q3?
So you want your question is what is the grade for Q3 at Fekola.
Yes. Well, I mean, obviously, direction will be higher than Q2, but we're just trying to get a sense of the balance of these 3 different components and so on. And if there's anything you can kind of whatever you're telling people at this point?
Yes, so in the budget, our grade kind of in Q3 were up around 2.8, 2.83. And then in Q4, we're between $2,500,000 $2,600,000
Okay, great. Dale, just continuing on, you confirmed Cardinal It's going to be still in that range of $20,000 to $25,000 for 2021. But how much might we expect in 2022? And you did release that 5 year guidance at the AGM. Is Cardinal included in that guidance?
And any color here would be appreciated.
Yes. So Cardinal is included in the original guidance that we released, but none of the Bentaco or Meninco to or any of that stuff is included. And so that is still yet to be factored in. The interesting real the thing that's really interesting about what we've going on there is we're going to have some optionality, which you mentioned. You talked about you've got the low grade stockpiles, you've got Cardinal, you've got some Cardinal saprolite, You've got potentially Bentacos saprolite.
So all these things are going to be put into play when we do the budget. And so that's why I can't say really what's going to be carrying on in Q1, Q2 of next year. And I just want to come back to the previous question you asked me because I didn't I actually saw the mining. The grade in Q3 is going to be 0.73. Okay.
And obviously, Cardinal is going to be lifting that a lot. But just to that second question, cardinal 20 ks to 25 ks for 2021, but that's probably a baseline for subsequent years, I would imagine.
Well, yes, I mean, once again, we haven't really scheduled it out because we don't know how it's all going to fit in with Bentacco and Anaconda. So The answer is there is as you know, the resource is quite big there.
Okay, great. And on Mantaco, So is there any concern that the mining license in that area north of Manikoto could be retracted? I mean, it's Are you feeling pretty confident in that? I mean, honestly, we hope to have the portion that was taken away restored. But what about risk to the rest of the property?
Yes, we see that as really low probability. The reality is, is that's still sitting under a very early exploration license. So there's still another I think another 7 years or 6 years of exploration potential there. So the fact that we're already willing to put it into production now and of course the government is in a need for cash. There are certainly other projects around which are getting their permits as normal.
So we see Meningoto as an anomaly, and we see it business as usual everywhere else.
Okay. Thanks, guys.
That's an important point. The Medicoda is a very different situation where we believe we have the legal right to an extension to allow us to get going on and file for an exploitation license. We believe under Malian law, we have the right That's at a very different stage. Once again, I mentioned we're discussing with the government. We also are in arbitration in Paris, which It's a big step, but we didn't do that lightly because we believe we should have a significant right here.
So but Menaco is a very different situation from Bentacol and We will the government and all indications are they're very keen to see us get going in that area initially with Bentacol. And ultimately, I think So I don't know if we'll see as the appropriate place to take ore from Manicoto. And Bentacol is, of course, the Ticola Mill, And that's not lost on a lot of people, including a lot of people, I would suggest, we would see in government and Mali.
Okay, guys. Good luck with the rebound and starting in Q3. Thank you.
Thanks. Thanks, Phil.
Your next question comes from Carey MacRury from Canaccord. Please go ahead.
Hey, good morning, everyone. Maybe a question for Mike on the operating cash flow guidance, dollars 500,000,000 in the
second quarter. Is that line up with
the midpoint of your production and cost guidance, I. E. Obviously, you're at the top end of the production guidance now. But if you do better on costs, could we see upside to that number?
On the operating cash flow side, yes. Yes, I mean, obviously, the more production you have, Arguably, it depends what the cost profile is. I would balance that on the other side, but we have seen some cost inflation. So Our view overall is I think we can meet our cost guidance, but the cost per ounce obviously can be Benefited from more lower cost production, say, from Cardinal in the period. But overall, I think I would view us as coming in on the range.
That's where we sit right now.
Okay, great. And then maybe a
question for Bill. I noticed in the MD and A you guys talked about the solar plant being completed. It looks like it's Just wondering if you can add a little color on potentially what that could translate into for you guys.
Yes. I mean, John Rahala is on this call. He's probably more appropriate to answer. But what I'll tell you is that We're definitely seeing Design Plus and given the fact that we're in the rainy season now, we certainly anticipate that we're going to be above where we thought the design capacity was going to be. I don't know, John, if you want to add anything to that.
No, I think that's a good summary, Bill. During the Q2, the solar provided 16.8% of the total power production, but that was only with 78% of the panels installed. So, it did really well for the number of panels installation, which is now completed, And we're doing testing and we've gone up as high as 30 megawatt power production, which is The rated capacity of the plant, so it's all looking good.
So high level, you mentioned savings 13,000,000 liters of FFO, which we can do the math on. But what is it like I assume the operating cost of the solar plant now that it's in is pretty minimal.
Yes, thanks for taking my question. So it's going to contribute to roughly $0.025 per kilowatt hour savings is I think is what we are projecting. So and we may have potential to even Exceed that.
And Kerry, just a reminder, I think I mentioned that in the remarks, we think overall when you look at home balance, it It reduces cash cost by about 3%. That's what we think the impact of solar is. We see similar kind of contribution in the Navy as well. Perfect. Thanks guys.
Ladies and gentlemen, And your next question comes from Anita Soni from CIBC World Market. Anita, please go ahead.
Hi. Thanks for taking my call. Good morning or afternoon, Clive and team. Most of the questions have been answered, but can you just clarify again one more time, It's been a long night. The just the Fekola sort of mix the components of how we're getting to sort of the higher production in the second half of the year.
So I was a little confused because I thought you said that in the press release, it says Cardinal is not part of the of what you factored into the grades and that could be additional upside, but I thought, Mike, that you had said that Just now that Cardinal was factored in. So I'm just could you clarify that for me? And then also secondly on the throughput levels, It seems like you're hitting above the throughput level at Fekola and you've guided to A slightly lower level on throughput for this for next year as a run rate. Is there something that we should be thinking about in terms of like additional bottlenecks Or the mine may be a bit constrained, so you can't run at that full level, I think it was 88.3 ks tonne per day that you did this quarter in 1 month.
Well, I'll start with the initial question about Cardinal, what is factored in. It's not factored into the budgeted numbers. It's not factored into current guidance. What I was saying in my earlier remarks was When we get more clarity on exactly how we see that flowing in Q3 and Q4, and we'll have a look at our guidance plan, See if there's any guidance where we would update that. And then my other comments on it just more recently, we're just it was in The question was do we see cardinals potentially benefiting cash costs?
And I would say, yes, I mean, in theory, it could For sure, because more production, hopefully lower cost. But we are not changing our guidance range even once right now, we haven't changed our cash cost range when we see What Cardinal looks like and give a bit more flavor to it in Q3, then we'll come back to you if we think it changes anything.
Okay.
Bill, you want to talk
about mill throughput or mill or john?
Yes, yes, I do for sure. And I also the second half of that question, I was asked if Cardinal there was we did a 5 year guidance, was Cardinal included in that? And the answer is yes, starting in 2022. So going forward, that was already included in our assessment for the next 5 year or 4 year guidance through 2025. As far as how do we see getting the additional ounces this year.
There's quite a few ways that could happen for sure. One obviously is the throughput, right? Our budgets for this year. We run at 7,500,000 tons per annum. We're currently running up there much closer to 9%.
And we're thinking, and once again, and this is we're always kind of coy about this, but we're basically thinking if we can get 1,000,000 tons of saprolite down there or something like that or 15%. We think that we could actually be running up around 9,000,000 tons per annum going forward. And so that's kind of what we're shooting for right now and that's what we'll be looking at for our budget. So what we have is we have this huge extra capacity versus what's in the budget versus which is what obviously generates the ounce profile versus what we're actually running. So you could have ounce profile from Cardinal.
You could certainly have it from stockpile. And as someone mentioned earlier, if we're real slick about it, we could actually pull a bulk sample from Bentacol and bring it down. So a bunch of different options.
All right. Thank you. That answers my questions. Excellent.
There are
no further questions at this time. I'll turn it back to Clive Johnson for closing remarks.
Okay. Well, thanks for your participation and your good questions. And we look forward to a very strong second half of the year and continued great performance in the mines. We're excited about proceeding with a little bit about looking at our development projects exploration and see what other opportunities come our way and we look forward to talking with you again soon. Thanks everybody.
Thanks, operator.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.