Thank you for standing by. This is the conference operator. Welcome to the Centerra Gold Second Quarter 2023 conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star, then zero. I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications with Centerra Gold. Please go ahead.
Thank you, operator, and good morning, everyone. Welcome to Centerra Gold's second quarter 2023 results conference call. Joining me on the call today are Paul Tomory, President and Chief Executive Officer, Paul Chawrun, Chief Operating Officer, and Darren Millman, Chief Financial Officer. Our release yesterday detailed our second quarter 2023 results. This should be read in conjunction with our MD&A and financial statements, both of which can be found on SEDAR, EDGAR and our website. Presentation slides are available on Centerra Gold's website to accompany this webcast. Following the prepared remarks, we will open the call for questions. All figures are in U.S. dollars, unless otherwise noted. Before we begin, I would like to caution everyone that certain statements made today may be forward-looking and are subject to risks which may cause our actual results to differ from those expressed or implied.
Please refer to the cautionary statements included in the presentation, as well as the risk factors set out in our annual information form. Certain of the measures we will discuss are non-GAAP measures. Please refer to the description of non-GAAP measures in our news release and MD&A issued yesterday. I will now turn the call over to Paul Tomory.
Thank you, Lisa, and good morning, everyone. After three months at Centerra, I've now had the opportunity to visit our operations and projects and engage with employees, the investment community, and other stakeholders, and I'm optimistic for the opportunities that lie ahead. In the second quarter, we've already achieved several milestones that are setting Centerra up for strong performance in the second half of the year. Most notably, at the end of May, we received approval of an EIA for the Öksüt Mine from the Turkish Ministry of the Environment. We continued to enjoy strong local community support for the project, and with all the necessary regulatory approvals in hand, we restarted full operations on June fifth and produced over 20,000 ounces of gold in a month.
Looking ahead, we expect Öksüt to produce between 180 and 190,000 ounces of gold in 2023, which will make it a significant contributor to our expected stronger second half performance. Turning to Mount Milligan, we remain on track with our plan to have stronger production in the second half of the year. Our full year production guidance for both gold and copper are unchanged, including Öksüt, our full year consolidated gold production guidance is between 340 and 360,000 ounces. Paul Chawrun will speak to our operations in more detail later in the call. One of my top priorities has been to evaluate all of Centerra's assets with an ultimate goal of developing a comprehensive value-maximizing strategic plan.
Key aspects of this will include a view on the Molybdenum Business Unit, with an assessment of the potential for a restart of operations at the Thompson Creek mine, continuing to drive operational and technical improvements at Mount Milligan, repositioning our approach at the Goldfield Project to target higher returns, and lastly, assessing opportunities for growth in gold production. In conjunction with our asset level strategy, we're also developing a capital allocation framework focused on optimizing shareholder value. By taking a systematic and diligent approach, our goal is to direct our capital in three ways: return to shareholders, invest in internal projects, and for external M&A opportunities. Stay tuned as we expect to roll out this new strategic vision for the company in the coming months, which will serve as a crucial step in our journey to maximizing value to our shareholders and other stakeholders.
Shifting to Nevada, I'd like to provide an update on the Goldfield Project. Paul Chawrun and I had the opportunity to visit the project in June, and we think it presents a great opportunity in a top mining jurisdiction. Based on my experience building projects and operating mines in Nevada, and with what we see at Goldfield, we will be pivoting our approach. Most importantly, we'll focus for now only on the oxide and transition material, principally in the Gemfield and nearby deposits. This will allow us to reevaluate the project's scope of work to achieve a lower CapEx flow sheet and to maximize returns. Second, we believe the project has upside potential from its large, underexplored land position. As a result of this change in focus, we will take more time to further explore the property before releasing an initial resource estimate.
Our full-year exploration guidance at Goldfield has been increased to between $16 million and $20 million, up from $10 million previously. This strategic pivot is in line with our disciplined approach to capital allocation and will allow us more time to target a higher return project. We continue to have a positive outlook, we want to achieve a higher return profile before we proceed with development. Turning now to the Molybdenum Business Unit. As mentioned earlier, we're developing a strategic plan, which is expected to incorporate a number of aspects for value maximization. First, we continue to progress our PFS study on the restart of the Thompson Creek Mine, we remain on track to release highlights later in the third quarter. Second, we're assessing the strong operating synergies that will exist between the Thompson Creek Mine and the Langeloth Metallurgical Facility. Moving on to slide 5.
Centerra is committed to sustainable and responsible mining practices, this is demonstrated through our ESG commitment and accomplishment. Today, I'd like to highlight that we've achieved full conformance with the World Gold Council's Responsible Gold Mining Principles during our year three assessment. This accomplishment reflects our commitment to responsible mining practices, proactive risk management, and continuous improvement in our relationships with stakeholders and local communities. We understand that ESG is an ongoing journey, we'll continue to work diligently towards our goals and initiatives in the coming year. I look forward to updating the market on our commitments and achievements going forward. With that, I'll pass the call over to Paul Chawrun to walk through our operational performance in the quarter.
Thank you, Paul. On slide 7, we show the operating highlights at Mount Milligan for the quarter. The Mount Milligan Mine produced over 40,000 ounces of gold in the second quarter, a 24% increase from last quarter, and produced 13.8 million pounds of copper. As we mentioned in the previous releases, we always expected the production of Mount Milligan in 2023 to be weighted towards the second half of the year. However, production in the quarter was impacted by lower than planned recoveries due to mine sequencing, which resulted in more oxide ore than planned in an ore waste transition zone in phase IX. We are now deeper in phase IX and have mostly mined through the ore waste transition zone.
Copper grades are expected to improve in the second half of the year as the mine progresses deeper, which is expected to improve metal recoveries compared to the first half of the year. Mill throughput in the second quarter was 5.6 million tons, with the site achieving record tons processed in both May and June. Gold and copper sales at Mount Milligan were lower than production in the second quarter, mainly due to timing of bulk shipments. In July, concentrate shipments from Mount Milligan were not materially impacted by the union strike at the Port of Vancouver. We expect to have four concentrate shipments in the third quarter and are targeting another four shipments in the fourth quarter. The timing of shipments and associated sales between quarters may be affected by logistical delays from union strikes at the port.
Our Mount Milligan production guidance is unchanged for gold and copper and is back half weighted for the year. We expect 2023 gold production to be near the low end of guidance of 160,000-170,000 ounces, while copper production is tracking towards the midpoint of guidance of between 60-70 million pounds. Gold production costs were $1,255 per ounce in the second quarter, and all-in sustaining costs on a byproduct basis were $1,599 per ounce. All-in sustaining costs were impacted by higher mining costs, including general inflation on labor and consumable costs, lower gold ounces sold, partially offset by lower sustaining CapEx.
We have increased our Mount Milligan full year 2023 all-in sustaining cost guidance to $1,125-$1,175 per ounce, as we are seeing lower amounts capitalized to the TSF, higher maintenance costs, higher rehandling costs, and consumables. This year, the wildfires have been quite severe across Canada and continue to be active in British Columbia. We have been fortunate at Mount Milligan and have not been impacted by the wildfires so far this year. Finally, we congratulate our Mount Milligan Mine Rescue Team for placing first in the extrication event at the BC Provincial Mine Rescue Competition. On slide eight is an operations update for Öksüt. Following the receipt of the updated EIA at the end of May, crushing, stacking, and ADR activities resumed in early June. Second quarter production was just over 20,000 ounces.
At the end of June, there was approximately 80,000 recoverable ounces in the stored gold in carbon inventory and approximately 200,000 recoverable ounces of gold in the ore stockpiles and on the heap leach pad. Full year 2023 production guidance at Öksüt is 180,000-190,000 ounces of gold, as production levels are expected to continue to ramp up in the second half of the year, with gold production approximately split 45% and 55% in the 3rd and 4th quarters, respectively. Gold production costs were $404 per ounce in the 2nd quarter, and all-in sustaining costs on a byproduct basis were $1,143 per ounce.
The all-in sustaining costs in the second quarter reflects only a partial month of production, lower sales ounces, standby costs, and a full quarter of sustaining capital expenditures. As we ramp up production and achieve a more uniform spend on sustaining capital expenditures, we expect costs at Öksüt to decrease in the second half of the year. A result, our full year 2023 all-in sustaining cost guidance at Öksüt is $650-$700 per ounce. To wrap up, I'd like to commend the Öksüt team for achieving 1 million work hours without a lost time injury. This is a true testament to the safety, leadership, and culture at our operations in Turkey. Now I'll pass on to Darren to walk through our financial highlights for the quarter.
Thanks, Paul. Slide 10 details our second quarter financial results. Net loss from continuing operations was $40 million, or a loss of $0.18 per share. There were two adjusting items in the second quarter. First, $8 million of reclamation provision revaluation recovery at sites on care and maintenance, primarily attributable to a decrease in the risk-free interest rate applied to discounts, the estimated future reclamation cash flows.
Second, $6 million of deferred income tax resulting from the effects of foreign exchange rates on monetary assets and liabilities in this determination of taxable income related to the Öksüt and Mount Milligan mines. As a result of these two items, adjusting net loss from continuing operations was $42 million, or a loss of $0.20 per share. Centerra recorded $185 million in net revenue during this quarter, with contributions from our two operating mines, Mount Milligan and Öksüt, as well as our Molybdenum Business Unit. In the second quarter, sales were 48,155 ounces of gold and 12.8 million pounds of copper. Gold sales were lower than production in the quarter by 22%, mainly due to Turkish national holidays that delayed gold sales at the end of June.
The average realized price was $1,532 per ounce of gold and $2.56 per pound of copper, which incorporates the existing streaming arrangements at the Mount Milligan mine. At the Molybdenum Business Unit, in the second quarter, approximately 3 million pounds of moly was sold, generating revenue of $76 million, with an average market price of $21.23 per pound. Consolidated all-in sustaining costs on a byproduct basis for the quarter were $1,711 per ounce. Consolidated all-in sustaining guidance for the full year is expected to be in the range of $1,000-$1,050 per ounce. As noted by Paul Chawrun earlier, our gold inventory levels remain elevated at Öksüt, with processing of gold in carbon currently underway.
I would like to highlight that while our full-year all-in sustaining costs guidance at Öksüt is between $650-$700 per ounce, the remaining cash processing cost associated with the gold in carbon is expected to be less than $50 per ounce, and the remaining cash processing costs associated with the 200,000 ounces of gold in ore stockpiles and on the heap leach pad are expected to be less than $225 and $100 per ounce, respectively. Capital expenditure in the second quarter were at $23 million, up from $5 million in the first quarter, mainly driven by timing of the spend. We are lowering our Mount Milligan capital guidance to be $50 million-$60 million due to lower capital costs at the TSF and deferring some of our projects to next year.
Consolidated capital guidance for the full year is expected to be between $90 million and $115 million, which includes $35 million-$45 million at Öksüt. On July 15th, the Turkish government increased the corporate income tax rate from 20%-25%. This is a retroactive earnings starting at January 1, 2023, and subsequent tax periods. We estimate this change will result in incremental $0.9 million in cash taxes to be paid with respect to the income earned in the first half of 2023 at Öksüt. Slide 11 lists our financial results for the quarter. Cash provided by operating activities was $33 million in the second quarter, and free cash flow was $11 million. At the Molybdenum Business Unit, approximately $35 million of the investment in working capital from the first quarter was released during the second quarter.
It is expected the additional releases from working capital will occur during the remaining 6 months of 2023, provided molybdenum prices and inventory levels remain at their current levels. The Molybdenum Business Unit generated $31 million in cash in the second quarter. At Mount Milligan, cash provided by mine operations and free cash flow were $22 million and $9 million, respectively, in the second quarter. At Öksüt, with the partial month of operation in the second quarter, the mine generated $18 million in cash from operations and $0.4 million in free cash flow. In the second quarter, to manage gold price risk associated with the expected high sales at Öksüt in the short term, we entered into gold hedges. We purchased gold put option contracts for 75,000 ounces at an average strike price of $1,942 per ounce.
The options allow full participation to the upside gold price movements while protecting against for a selection of gold sales in the period from July to October 2023. We don't plan on increasing this gold hedging position in the near term. Under Centerra's normal course issuer bid in the second quarter, the company purchased and canceled 1.27 million common shares for a total consideration of $7.3 million. We continued to make purchases via an automatic share purchase plan in July. Centerra ended the second quarter with a cash balance of $402 million and $398 million available under a corporate credit facility. This provides us with total liquidity of $800 million. Given our strong financial position, the board declared a quarterly dividend of $0.07 per share.
I'll now pass it back to Paul for closing remarks.
Thank you, Darren. After achieving several milestones in the second quarter, we're well positioned for strong performance in the second half of the year. In the meantime, we continue to work diligently on delivering safe and sustainable production and developing Centerra's strategic vision, which will clearly articulate our path to value realization for each asset in the portfolio. We look forward to updating the market in the coming months. With that operator, I'll stop and open the call for questions.
Thank you. We will now begin the question and answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request.
If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. We will pause for a moment as callers join the queue. Our first question comes from Fahad Tariq of Credit Suisse. Please go ahead.
Hi, good morning. Thanks for taking my question. In the press release, you mentioned, in the paragraph talking about evaluating all the assets, that, you're assessing opportunities for growth and gold production. Can you talk a little bit about, how you're thinking about organic versus inorganic growth? And if it's organic growth, you know, specifically, what type of opportunities may exist at Öksüt, Mount Milligan, Goldfield? Thanks.
Yeah, thanks, Fahad. Our overall strategy right now is focused on looking at our current assets. What is the value that we think is in, is in those assets? As you've seen, we're repositioning the way we look at Goldfield as an example. At Milligan, we continue to drive the technical and operating improvements, and most importantly, we think that there's value in the Molybdenum Business Unit, which will be daylighting over the course of the coming months. In terms of your specific question on growth in gold production, we will, from time to time, as opportunities become available, assess potential bolt-on type acquisitions, things that make sense given our, our skill set and, and where we think we can add value. That's something we do as a normal part of business, is assessing external opportunities.
Given that it's an M&A point, I won't speculate much further on it, but it's just a general statement that we are open to M&A where it makes sense.
Okay, that makes sense. Then just switching gears to Mount Milligan on the cost side, it, it sounds like the majority of the cost increase in the quarter was really the sequencing and the transition kind of material. Can, can you talk a little bit about the inflationary pressures? Are they as expected? Am I understanding that correctly, that it's really the, it's really the grade in the quarter that drove the cost higher?
Yeah, I'll make a general comment on inflation and then hand it over to Paul on the specifics. Mount Milligan saw significant inflation through 2021, 2021, and the first, call it three, four, sorry, three, three quarters of 2022. That inflation has abated and it is now more what, what I would call normal inflation, but it, it experienced significant inflation in 2021 and 2022. To comment specifically on this year, this quarter, Paul will talk about that.
Yeah. On the costs, we're I mean, we are seeing some increases, pretty much comparable in benchmarking with the other operators in the industry. We do have a little bit of pressure with the competitive labor market in BC. As you mentioned, the main reason for the increase in guidance on the all-in sustaining costs is the denominator. We are guiding towards the low end of guidance on our gold production, and that's really what is affecting the increase in AISC. The main reason for that is the recovery, and, so we did intercept some, a little bit more oxide than we had planned, and then the replacement for that was the stockpile.
Then as a result, we did get an impact on our gold recovery, and that's the main reason.
Okay, great. Thank you.
Our next question comes from Dalton Baretto of Canaccord. Please go ahead.
Yeah, thank you. I want to start by wishing you, Paul, all the best in this new role.
Thank you.
I also want to continue in this kind of vein of strategy, I want to ask you at a higher level than some of the tactical things you've alluded to in your prepared comments. You know, from what I said, I mean, arguably, your portfolio has too many non-producing assets. It's, it's too base metal-heavy. You've got this owner stream at Milligan. Your cash balance is down 58% since the end of 2021. I, I guess three questions from me. Number one, do you still want to be a gold company? If so, how much at a base metal value are you willing to tolerate in the portfolio? Secondly, how are you thinking about restructuring the portfolio at a pretty high level?
Third, what are some of the more immediate strategic milestones we can look forward to? Thank you.
Yeah, there's a lot in there, and I think you've identified some of the attributes that we're dealing with here at Centerra. Your first question on gold. Yeah, we are Centerra Gold Inc., and we intend to remain a primarily gold producer. We do like the angle on base metals, the strong copper production and reserve at Mount Milligan and even an openness to molybdenum here. But we will, we are and will remain principally a gold mining company. My first three months, I've... As I said in my prepared remarks, I've been out to all the sites, and it was, there's really no substitute for seeing and meeting and getting a sense for the attributes of each asset in the portfolio.
Centerra will, will look at each asset, and that, that's the focus right now, is, as you said, more tactical. One, the most concrete example I can refer to right now is, is Goldfield. I think previously there was a, a plan to develop Goldfield sooner rather than later, but we think that there's an opportunity for a higher return project here, taking more time on exploration and looking at a different potential flow sheet. In the case of Kemess, as another potential example, there is the, the resource in the ground there, but we also acknowledge we have a, a strategic location in that part of British Columbia, and perhaps that lends itself to opportunities. Of course, molybdenum is the biggest one. We think that there's a lot of unrealized potential in the Molybdenum Business Unit.
We have to walk that forward carefully, given that we are Centerra Gold. We do believe that there is value to be realized in the molybdenum business, and we will be advancing the thinking on restarting Thompson Creek, and we'll be providing more detail in the third quarter on that. I've tried to touch on all your questions. I've been somewhat general, but if you wanna go more specific on any of them, let me know.
No, I think that's helpful. Then, just immediately speaking, outside from the, the potential restart of Thompson Creek, you know, are, are you planning to update us with, you know, an overall strategic plan, or is it gonna continue to be more tactical at each of the assets until you can execute on some of these higher level things?
Yeah, I think that, in the third quarter, we'll probably we'll, we'll paint a broader picture on strategy, meaning where do we wanna be? Where do we see value? What, what are our strengths? How do we look at capital allocation? Of course, the main components of that will be tactical plans at each of the assets, principally, like I said, Molybdenum and Goldfield, and, and to a lesser extent, the other ones. It, it will be a, a more overarching view on what we wanna be as we look forward two, three, four years.
That's helpful. Thank you, Paul.
Thank you.
Our next question comes from Ovais Habib of Scotiabank. Please go ahead.
Hi, Paul and Centerra team. Just a couple of questions that have already been answered, so just two questions from me. starting off with the Goldfields, you know, in regards to the resource estimate, or update, I'm guessing you're seeing a lot more potential to add additional mineralization, and that's why you've kind of increased exploration budget. Can you kind of just walk us through where you see upside? You talked a little bit about the flow sheet as well, so maybe a little bit color there as well.
Yeah. Thanks, Ovais. Just a quick highlight on what Goldfield is. It's principally two deposits. There are other smaller ones, but it's principally got two deposits, one, which is a sulfide, potential sulfide resource, and the other one is a potential oxide resource. At this stage, we don't think that the sulfide resource is a sufficient scale to pursue, and that has the beneficial corollary of greatly simplifying the flow sheet. Rather than requiring a much finer grind to achieve the recoveries, we're gonna look at whether we can tackle the oxide material through a run-of-mine or, or a simplified crushing circuit. That would greatly simplify the flow sheet, reduce the capital, and target higher returns. To your question, are we seeing exploration potential? The answer is yes.
As you can see, we, we've ramped up our spending or our planned spending and exploration, and we are focused on oxide targets. We, we, we are delaying what had previously been communicated, the timing for a resource estimate, but that's principally associated with our shift in strategy to focus on oxides and transitional material, that will be associated with a much leaner capital profile. What, what we're gonna be doing in the near term is more focused metallurgical test work on oxides only or, and transition material, and specifically targeting oxide material, to add to the potential resource.
Okay, thanks. Thanks for the color on that. Just switching gears to the Moly business, I think Dalton touched upon it a little bit with you as well. I mean, with the study in progress, expected in Q3, are you kind of-
How are you leaning? Like, I mean, are you leaning more towards selling the moly business, or how should we look at the restart of Thompson Creek Mine?
Yeah, that, that's, that's a great question, and it will underpin the way we talk about this in the coming quarters, but let me give you a high level view on it. Right now, the fundamentals for molybdenum are very strong. The, the market is very constructive, both on the supply and the demand side. Part of what's driving strong demand in molybdenum is, in part, energy transition, and molybdenum is used for stainless steel production, and its applications are significant in things like offshore wind, the retooling of Europe's gas infrastructure, but also things like hydrogen. It, it has very strong properties in alloying steel for corrosion resistance in, in hydrogen applications. That's a note on what we believe to be very strong fundamentals in the market, and we're confident in those fundamentals to be advancing this.
Our our principal initial phase of work on molybdenum is to demonstrate value, to show the markets, to show our shareholders, and other participants that there's significant value in this business. That's what we intend to do as a first phase of activity, is to demonstrate value. There will be some early work spending as we advance this project over the coming months and quarters, but that will be relatively modest in advance of what would be a more, a, a bigger notice to proceed on the asset. Are we open to M&A on this front? The answer is yes. I mean, we always have to look at what surfaces the greatest amount of value for our shareholders. A first step prior to that is demonstration of value and a, and a well-articulated and thoughtful strategy and a, an execution plan for that molybdenum business.
Okay. Thanks. Thanks for the color, Paul. That's it for me. Thanks for taking my questions.
Thank you.
Our next question comes from Michael Siperco of RBC Capital Markets. Please go ahead.
Yeah, thanks, very much...
... Flipping back to Öksüt, if we could for a second. I know you've provided some measures of cash costs already incurred to produce the ounces in inventory and the remaining cash operating costs. Is there a reconciliation that you can provide to the forward AISC guidance that reflects the actual cash outflow associated with the gold you expect to produce over the balance of the year?
Yeah, thanks, Michael. Yeah, we can provide that. We referred to, you know, what it's gonna cost from a cash perspective on processing the gold in carbon, which will be under $50 an ounce, cash cost. Similarly for the gold on the heap and in stockpiles, I think ranging between $100-$250. You know, we've historically guided that what was on the heap and what was on stockpiles, approximately $100 an ounce each site. That's the ballpark, but if you need more color or some more details, we can keep that on, offline.
Well, yeah. I mean, I guess I'm asking, you know, at a high level, even if you don't wanna provide the number, it's fair to say that if your AISC guidance for Öksüt over the rest of, or, or over 2023 is, $650-$700, only a subset of that will actually be incurred in cost, whether that's $500, $550...
Yeah.
whatever the number is. That's, that's the right way to look at it, correct?
That's right. We historically also referenced that the 100,000 ounces that was on our inventory was recorded all into same at approximately between $450-$500. That was what was already incurred, but put on our balance sheet.
Right. Okay. Okay, thank you. Then, maybe on the sequencing into 2024, as you work through the inventory, can, can you give some, some high-level guidance on how long we should be expecting elevated levels of production beyond the, the inventory answers you currently have out of the pit? As you presumably continue to mine and stack new ounces, is, is there some idea of when the volume starts to slow down as you catch up with that backlog?
Yeah, we expect to have elevated levels well into the first half, then as we move towards midpoint of next year, it'll start to transition into normal state.
You're expecting normal state in the second half, or is that a transition down to more?
That'll be a transition down-
Okay.
starting approximately mid-year.
Great. I guess, safe to assume you would reach normal state by 2025. Is that the way to think about it?
Yeah, I would say that's a reasonable, a reasonable estimate.
Okay. Then, and then last one, maybe, maybe for, maybe on strategy. Realizing you're, you're doing this, portfolio review, looking forward to that. Can you talk in particular about how you view the buyback as a use of cash, and maybe how aggressive you, you think you'll be, over the rest of the year and, and what your thinking is around that?
Well, we certainly believe that, buying our shares is good value and has been over the last couple of months. Shareholder returns, whether through dividends or buybacks, remains a cornerstone of our capital allocation framework. Darren, you can provide some more detail on what we've been doing.
Yeah, so approximately, just under $8 million has been returned or repurchased to date. Our board continues to support the program. You know, as recently as yesterday, we had the board meeting. We were and we'll continue to be active in July. I don't see it abating in the short term.
Can you maybe talk... Is there a trigger you're looking at as to when you'd be active? Is it a function of your NAV versus the share price or anything along those lines?
We, we, we're not gonna put a number out there, but we see good value in our shares. Yeah.
Okay. Copy. Thanks very much.
Thank you.
Our next question comes from Anita Soni of CIBC World Markets. Please go ahead.
Hi, just to follow up with Mike's question there, about Öksüt. I, I guess when we're talking about elevated levels, basically, the Q4 run rate is kind of what we should be thinking about, going into Q1 and Q2 of next year, and then it starts to taper down?
Yeah, that's a reasonable estimate. I mean, we'll issue our guidance, and outline what we expect to do for production, because some of that's depending on how much success we have now and how much of the inventory we can run through, and we're still ramping up right now. But I think a reasonable estimate is elevated levels through to midyear. It'll start to taper down, and then by 2025, it'll be normal state.
On assets that, are not operating right now, I think one of the forgotten ones, which I guess I don't forget about because I actually covered Northgate about 20 years ago now, is Kemess. Given all the activity up in that region, could you talk about how you're thinking about that, that asset?
Yes. Thanks, Anita. It's a very prospective region of BC. There, there are a lot of deposits that are in that area, including ours. At this stage, we're not advancing our Kemess project, but we are looking at opportunities which might leverage our infrastructure. We, we have an asset up there, and the asset is as much in, in the ground as it is in the property, plant, and the equipment, the access to power and the water. We're looking at whether there are creative opportunities for some sort of value realization plan. It's early stage right now, but conceptually, you can use your imagination. There, there might be some interesting ideas there, but we're early in the game on that.
... Would you consider opening it up in toll milling, or would it be more like an outright sale?
Anything is on the table. Any of those could be options.
Okay, I'll leave it there. Thank you.
Thanks.
Once again, if you have a question, please press star, then One. Our next question comes from Mike Parkin of National Bank. Please go ahead.
Hi, guys. Thanks for taking my questions. A couple follow-ups. With Öksüt, are you stacking all on the same pad, or at any point over the course of the next year, would you be transitioning to a new pad?
We're stacking on a new pad right now, and then as, as time moves on, we'll be going on to new pads. We have a, approximately 50 meters, and it goes down a hill. As we start to fill up that space, we, we stack on new pads.
Okay. That certainly supports the stronger production, too, with kind of elevated, leach kinetics with the new pad. Is that fair to assume?
I, I would say similar leach kinetics as before on the new pad. Then what we're doing is we have an elevated grade on the PLS. Right now, we're processing the loaded carbon, and then once we're completed that, it'll be the elevated PLS, and then we'll slowly taper down into a normal state on the PLS grade. That'll be on the existing pads, and we're stacking on new pads now.
Okay. We heard from one of your peers in Turkey about significant rain, and it specifically impacted the, the pond concentration at their heap leach. Did you have a similar impact at Öksüt, or did those rains kind of miss you in, given maybe you're not close to where the rains came through?
We, we did have an elevated wet spring. The PLS grade wasn't impacted materially, but what we were concerned about for a period of time was that we would start to run out of pond space. We, we certainly had plenty of mitigation, but at some point that could have been an impact, but it's starting to dry up, and our overall water inventory on site is declining. We're going to be creating additional pond space going forward as, as is normal course.
Okay. With respect to your cost assumptions, can you just give us an idea, and I may have missed it in the release, but what's your assumption for the Turkish lira for the second half?
You got me there, Mike. It's, it should be-
It's about 28 right now.
Yeah.
Yeah.
Twenty-eight?
I think it's something around 28.
We can get back to you.
Yeah, we'll have to get back to you on that.
Okay, thanks. Then switching gears over to Goldfield. Can you just give me a recap on how big the land package is there? With respect to exploring for more oxides, where are you in that kind of process? Is it, you know, you have good target identified, and it's just mobilization of rigs, or you're, you know, needing to do more earlier stage studies to identify those targets?
I, I can't tell you exactly how big the land package is, but I can tell you it's big. In other words, there are enough, there are enough targets on the land package to justify elevated spending. I'll just reiterate what I said to Ovais's question, is that we're going to focus on oxides here. It's just a leaner CapEx flow sheet, higher returns. On the land package, we do have a number of oxide targets that we are currently drilling and where we are encountering gold. The strategy is, I'll just reiterate, focus on oxide material only, which lends itself to a much lower CapEx, much more simplified flow sheet, and we do see targets on that land package.
We have a combination of both established targets, ones that we are drilling, as well as targets at an earlier stage based on surface expressions or geochem, which we're going to work through the system as the months go by. The main reason to delay the resource estimate is twofold: We're not going to focus on the sulfides, and two, allow more time for oxides to come into that estimate, so that we can come up with a tighter scope of potential works. Mike, just going back to your earlier question, we're using $1 to 20 Turkish lira, so we're a bit conservative in our numbers.
Sorry, I did not catch that.
For the Turkish lira exchange rate, we've used for our going forward, guidance, it's $1 to 20 Turkish lira, so we're being a bit conservative.
Oh, okay. All right. That's it for me. Thank you.
Thanks, Mike.
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