Good day, ladies and gentlemen, and welcome to the Dundee Precious Metals Fourth Quarter 2018 Analyst Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, this call will be recorded. I would now like to introduce your host for today's conference, Janet Reid.
Please go ahead.
Good morning, everyone. I'm Janet Reid's Manager of Investor Relations, and welcome to Dundee Precious Metals 4th quarter conference call. With me today are Rick Howe, President CEO and Hume Kyle, Chief Financial Officer, who will each comment on the quarter, as well as David Ray, Chief Operating Officer Nicole Akristoff, SVP Sustainable Development and John Lindsey, SBC Projects, who are here today to assist with answering any questions following our formal remarks. After close of business yesterday, we released our 4th quarter and annual results and hope you've had an opportunity to review our material. All forward looking information provided during this call is subject to the forward looking qualification, which is detailed in our news release and incorporated in full for purposes of today's call.
Certain financial measures referred to during this call are not measures recognized under IFRS and are referred to as non GAAP measures These measures have no standardized meanings under IFRS and may not be comparable to similar measures presented by other companies. The definitions established and calculations performed by DPM are based on management's reasonable judgment and are consistently applied. These measures are intended to provide additional information and should not be considered in isolation Please refer to the non GAAP financial measures section of our most recent MD and A for reconciliations of these non GAAP measures. Please note that unless otherwise stated, operational and financial information communicated during this call have generally been rounded and any references 2017 pertain to the comparable period in 2017. On this morning's call, Rick will comment on our 4th quarter and annual operating results as well as the progress being made on our capital projects and exploration programs for the quarter.
Hume will then provide an overview of our fourth quarter and annual financial results as well as our guidance for 2019. With that, I'll turn the call over to Rick.
Thanks, Janet, and hello, everyone, and thanks for joining us today for our fourth quarter annual 2018 conference call. Please provide you with an update on 4th quarter and annual results and progress on our key projects and initiatives. Overall, financial results for the year were strong and with unadjusted earnings per share of $0.21 and cash flow per share in excluding working capital changes of $0.55, reflecting the steady progress being made by operating teams to advance our operational excellence optimization and cost reduction programs. We had record annual gold production from Chelopech and record annual volumes at concentrate smelted Tsumeb. In addition, we continue to advance construction and commissioning of our thermostat project, which is 92% complete to the end of the 4th quarter with first concentrate still expected in Q1.
Our balance sheet remains strong with total liquidity of $255,000,000, including 17,000,000 cash and $238,000,000 in undrawn revolving credit facility. Debt stands at $29,000,000 as most funding for Krumovgrad project has been coming from our free cash flow, which was $6,000,000 in the quarter $52,000,000 for the full year. Metal prices remained relatively unchanged in the 4th quarter with an average realized gold price of $12.28 and copper price of $2.80. We have seen recent strengthening of the gold price above $1300 so far in 2019, which we are poised to benefit from with the expanded gold production expected from Krumovgrad starting soon. I would also like to mention that all three of our active facilities achieved major safety milestones this past year.
Both the Krumovgrad project and the Tsumeb operation achieved $2,000,000 lost time injury free work hours and Chelopech operation achieved 1,000,000 lost time injury free work hours. These are outstanding results and are a testament to the effort and commitment of our employees to work safely. Calopech achieved another record year in gold production and exceeded guidance producing 201,000 ounces of gold £36,700,000 of copper. We saw a 10% year over year improvement in our all in sustaining costs to $6.59 an ounce. Two main factors in the record gold production was the improved mill recoveries as a result of plant optimization efforts and the increased high rate concentrate production.
Chelopech's 4th quarter revenues were negatively impacted by the build up in copper concentrate inventory due to the timing of deliveries as well as by a 5% lower mill throughput in Q4 due to being capped at 2,200,000 tons per year by the government approved annual plan. We have a number of key improvement projects underway this year that will enhance revenues and decrease costs, including drill and blast optimization autonomous drone surveying, further mill optimization, move to integrated dynamic planning and execution and the introduction of digital smart center. For improved decision making. We continue with our investment in exploration in and around Chelopech to increase resources and reserves. 2018, a total of 21,618 Meters of in line extension drilling was completed to explore for new mineralization.
This program was very successful and produced many significant drill intersections that extend no new mineralization and identifying new zones particularly in the upper levels of the mine. This will be included in our annual update of mineral resources and reserves. In 2018, we also completed 18,000 meters drilling in our regional exploration program around Chelopech on several targets. We completed drilling 9700 Meters in the Southeast Breccia Pipe Zone, which was successful identifying 2 new mineralized zones within three hundred meters of existing mine development. This program will continue in 2019.
In addition, at the class to prospect, Approximately 2 Kilometers Northeast of Main Chelopech ore bodies, 4220 Meters of drilling outlined a new zone of shallow gold mineralization over strike length of three hundred meters between one hundred and thirty meters and four hundred meters below surface. This will be further tested in 2019 to determine the extent towards surface as a potential open pit resource. At Tsumeb, in 2018, we had record concentrate smelted of 232,000 tons, which was a 6% year over year increase. This is primarily due to increased availability of all plants, increased process stability, and oxygen enrichment in the Ausmelt furnace helped to mitigate the impact of the converter relines on the off melt throughput. The quantity smelted in Q4 was 63,000 tons, which below the record smelted of 68,000 tons in Q3, mainly due to off gas system restrictions.
These restrictions are being addressed to ensure higher smelting rate targets can be achieved consistently. The cash cost per tonne cost rate process for the full year was $4.45 per tonne, which was a 3% improvement from 2017 benefiting from the higher throughputs as well as cost reduction efforts largely to reduction and the use of contract or outside services. We continue to make progress reducing the secondary copper inventories that accumulated during the construction and commissioning of the new asset planning copper converters. This reduction will continue through 2019 and will result in a reduction in stockpile interest allow higher throughput capacity for fresh concentrates. We continue to advance the smelter expansion project to increase the throughput of complex concentrate smelted to as much as 370,000 tons per annum.
The feasibility was completed in the fourth quarter of 2016 and confirmed the robust project economics with an estimated implementation capital cost of $52,000,000. The scope of the project includes the rotary holding furnace additional cooling and other grades to the Ausmelt furnace as well as upgrades to the slag mill area. Work to secure the necessary permits to support this planned increase in production is ongoing. And ESIA is underway on the project. Public access to the draft ESIA was provided during the second quarter of 2017.
We are finalizing an update of certain technical studies as a result of the feedback received from the public consultation process. And are planning to submit an updated ESIA for approval during the first half of twenty nineteen. The Krumovgrad construction project is 92% complete versus the plan of 99% complete to the end of December. We still expect first cost trade production later this quarter. The scheduled slippage is a result of delays caused by the concrete contractor delivery issues.
Early on in the project. Additional construction personnel have been added to accelerate completion of the remaining end of December with an additional $25,000,000 to $29,000,000 forecast of spending in 2019 to complete The aggregate cost of the project is still expected to be between $164,000,000 $168,000,000 compared to the original estimate of $178,000,000. Number of key milestones were achieved in Q4. The final construction permit for the discharge waterline was issued in October Grip power to the site was completed. Dry commissioning of the jar crusher and Saginaw was completed.
2 main water reservoirs are lined and ready for use. The integrated waste facility will sell as constructed, lined and ready for thickened tailings. The thickener area construction was completed and commissioned We have mined the stockpile of 158,000 tons of ore and 186,000 tons of waste from the pit. Plan grade control drilling for the 1st phase of the pit was completed and grade control model has been completed. Outstanding items remaining are mainly the piping installations and the electrical and installation and instrumentation work in the mill.
We expect wet commissioning of the grinding section to begin shortly and full commissioning of the entire plant to start in March. The operating team is fully staffed, trained and ready for handover. Commercial production is still expected to be achieved in the 2nd quarter. Exploration has identified a number of satellite deposits within a few kilometers of Krumovgrad. We completed phase 2 drilling program for the Surnak satellite deposit located approximately 4 kilometers to the west of Krumovgrad open pit in Q4.
We drilled five thousand meters and thirty seven holes and the results are now being compiled into a major resource estimate. Metallurgical test work is also underway. Expect to complete this work and release the results in Q2. Drilling on the other satellite deposits will continue in 2019 to look to extend the life of the Krumovgrad project. On September 24, 2018, we announced the results of the updated mineral resource assessment for the Timok Gold Project in Serbia.
This included total mineral indicated mineral resources of 46,900,000 tons at 1.3 grams for a total of 1,996,000 ounces. Included oxide indicated mineral resources of 28,000,000 21,800,000 tons at 1.06 grams gold, or 742,000 ounces and transitional indicated mineral resources of 9,200,000 tons at 1.15 grams gold, or 338,000 ounces. Net changes to the 2017 Mineral Resource estimates show a 35% increase in tons and a 16% increased analysis. The increase in indicated Mineral Resources compared to the 2017 Mineral Resource is attributable to the updated interpretations of the oxide and transitional weathering domains and better recoveries indicated from the vertical column lease test processing oxide and transitional mineralization. The inclusion of oxide and transitional mineralization within the conceptual pit optimization study has lowered cutoffs, which in turn has increased constrained mineral resources.
Based on the updated mineral resource estimate, we have initiated scoping a scoping study for TMAC and depending on the results of the scoping study, we expect to release a preliminary economic assessment in the first half of twenty nineteen. These studies will focus on the initial economics of the oxide and transitional material to be constrained in separate open pit shells as well as the the ESIA process and approvals as well as additional permits and approvals was initiated in the fourth quarter of 2018. Following the positive result from our metallurgical test work program conducted on the TmOC oxide and for additional samples during the first quarter of 2018, further samples were collected from the various domains and submitted for metallurgical test work during the fourth quarter of 2018. Results from this test work program will be available during the first quarter of 2019 and included in the scoping study. Exploration plans for 2019 are being developed to identify additional high quality targets to expand near surface oxide resources.
At the Bigger Hill And Corgan deposit, results from near surface resource drilling during the second And Third quarters of 2018, indicated good potential for additional resources outside the new resource model. Results are pulled drilled to the west of Bigger Hill mineral resource intersected twenty eight meters at 3 grams per ton gold from eighty five meters downhole. On the northeast side of Bigger Hill, we intersected thirty five meters at two grams gold of two forty six meters downhole in oxidized and strongly brecciated cretaceous limestone. At Corgan deposit located 25 TO 50 Meters Northwest of the mineral resource, we intersected two intervals, including sixteen meters at one point 7 grams gold, in an oxides section from 65 between 65.81 Meters Downhole, followed by 21 Meters of 0.7 grams from 93 meters to 114 meters in a transitional section. These drill results will be followed up with the drill program in 2019.
In the fourth quarter of 2018, following up on a gold target at Northwest extent of Booz Orlouche Prospect One hole returned 34 meters of 2 grams gold over a depth of 23 meters downhole, which also be followed up in 2019. In 2018, we met our 1st year exploration expenditure commitments on the Malartic joint venture in Quebec with Versumet Resources. Promising results were achieved from the 1900 meters scope drilling program that was completed in the beginning of 2018 on various targets within the Blake River Group. These include all three, which hit 5.5 grams over two meters at ninety five meters from surface, located three hundred meters northwest from the historic using long strike for over 750 meters. OL 7 intersected 7.2 grams over 3.3 meters, 28 meters from surface, including a high grade intersection of 11.6 grams over 1 point 9 meters and a second intersection of 38 meters from surface of 2.3 grams over six meters.
Other exploration activities included in 2018 include the 1 1000 to 5000 scale mapping, 4.2 line kilometers, I mean, IP survey, project wide till sediment sampling, and also during the 4th quarter 1000 line kilometers of high resolution heliborne magnetics was pulled along the Marbonite and Carbonite shear zones. And B soil geochemistry program was conducted to follow-up on these anomalous Till settlements. Exploration plans for the first quarter of 20 seen include a 5 thousand meter drill program to follow-up on the holes on these first two holes and test other targets from the 2018 exploration program. We see great potential with our investment in MineRP, a unique new enterprise integration and digital platform designed for the mining industry. We ourselves are adopting MineRP as well as many other digital technologies to transform our business.
The intent we have with MineRP is to introduce new mine planning and and enable the intelligent use of data. Key benefits expected from this initiative are data unification to a single platform Rapid parametric life of mine planning and sequencing and real time monitoring of performance versus plan with faster response to interruptions and better decision making. MinRP is making good progress in introducing this unique platform that marries the science of mining to the business of mining to the industry. With good industry interest and uptake. 6 major international mining companies have already signed on to this new software platform and the company is in advanced discussions with at least another 12 other companies, currently.
Based on this rapid market penetration, we expect significant revenue The strong 2018 results reflect the exceptional progress our team has made to improve the performance our operation and advance our growth projects 2018 was a year in which we demonstrated the potential for Tsumeb to contribute to the free cash flow of our business with further upside possible by increasing throughput further and reducing and reducing costs, which will be the focus for 2019 and beyond. In 2019, with our significant near term growth in free cash flow beginning this quarter from our Krumovgrad project adding to our Star hard earnings and free cash flow from Chelopech we represent a real growth and value investment opportunity for investors. Thank you. I will now turn the call over to Hume who will review the financial results and the 2019 guidance, following which we'll open the floor to questions. Thanks, Rick.
As Rick noted, 2018 was a good year, both operationally and financially with DPM reporting adjusted net earnings of $6 per share, up from $0.09 per share in 2017 and adjusted EBITDA of $100,000,000, up from $92,000,000 in 2017. These increases reflected record operating financial results from Tsumeb and continued strong performance from Chelopech partially offset by weaker sales growth from MineRP and were primarily driven by the following factors. Increased complex concentrate smelted, higher realized copper prices and lower TCs, partially off set by lower volumes of payable gold and concentrates sold due primarily to the timing of copper concentrate deliveries that resulted in an increase in inventory in 2018 compared to an inventory drawdown in 2017 as well as lower grades. And lower third party toll rates that assume a weaker U. S.
Dollar. Relative to our annual guidance, Gold production of 201 ounces exceeded our original guidance, while payable gold sold of 164,000 ounces was at the high end of our range. Copper production of £37,000,000, copper sold of £30,000,000, a £34,000,000 and complex concentrate smelted of 232,000 tons were all in line with our guidance or in the upper end of the original guidance that we issued. For the fourth quarter of 2018, we reported adjusted net loss of $0.02 per share compared to an adjusted earnings of $0.02 per share in 2017 and adjusted EBITDA of 13,000,000 compared to $22,000,000 in 20 17. These decreases were largely in line with our 4th quarter forecast and our annual guidance and were driven entirely by lower copper concentrate deliveries as a result of there being 2 copper concentrate deliveries in the fourth quarter of 2018 as planned compared with 3 copper concentrate deliveries in the corresponding period in 2017.
From a cash flow perspective, funds from operation during the 4th quarter 12 months of 2018 were $6,087,000,000 respectively compared to $20,000,000 $90,000,000 in 20 17. Free cash flow during the fourth quarter of 2018 was negative $4,000,000 compared to $15,000,000 in 2017 and for the year was $54,000,000 compared with 40 $1,000,000 in 2017. These changes were driven primarily by the same factors affecting adjusted EBITDA as well as higher 20 eighteen's sustaining capital expenditures and lower 2018 debt service obligations. From a cost perspective, our cash cost per tonne the ore process was $39 in the 4th quarter, up 7% from 2017 due primarily to higher labor rates and the timing of maintenance activities. Cash cost per tonne for the year was $36, up 6% from 2017, due primarily to a stronger euro and higher labor and electricity rates.
All in sustaining cost per ounce was $8.64 in the 4th quarter, up $62 from 2017. Due primarily to lower gold grades and lower byproduct credits as a result of lower volumes of copper sold, partially offset by lower treatment charges. All in sustaining costs for the year was $6.59, down $70 from 2017 due primarily to higher byproduct credits and higher realized copper prices, lower treatment charges and lower cash outlays for sustaining capital expenditures, partially offset by lower gold grades and concentrate sold. At Tsumeb, our cash cost per tonne in the fourth quarter was $4.13, and for the year was $4.45, up 2% quarter over quarter and down 3% relative to 2017. Year over year, the decrease was primarily driven by higher throughput and human cost reduction program, partially offset by higher labor electricity rates, and a stronger SAR.
From a capital expenditure standpoint, sustaining capital expenditures and growth capital expenditures in the 4th quarter were $10,000,000 $14,000,000 respectively for an aggregate spend of $24,000,000, down from $29,000,000 in 20 17. Sustaining capital expenditures and growth capital expenditures for 2018 were $27,000,000 $80,000,000 respectively for an aggregate spend of $107,000,000, up from $96,000,000 in 2017 due primarily to the Krumovgrad construction activities. Relative to 2018 guidance, sustaining growth CapEx came in below the original guidance that we issued principally due to the timing of expenditures related to the Krumovgrad mine construction and Chelopech's TMF raise. At December 31, Our cash resources stood at $255,000,000, including $238,000,000 under our revolving credit facility and $17,000,000 of cash, as well as a 10.5 percent interest, and Sabina valued at approximately $30,000,000. From a risk management we had also entered into a series of hedges in the second half of twenty eighteen to reduce cumulative exposure to foreign currency movements and locked in a rate that supports free cash flow generation.
At December 31, we had a hedge approximately 83% of Tsumeb's 2019 Namibian operating exposures property costs as using a 0 cost option structure that provided for, on average, a minimum and maximum exchange rate of 1415.46. For 2019, DPM will continue to focus on increasing the profitability its business and optimizing its assets, including delivering the first goal out of Krumovgrad in the first quarter. This was all set out in the material release yesterday including our 2019 operational cost guidance, which I'll touch on now. For 2019, mine production at Chelopech's expected to be between 2,100,000 tons and 2,200,000 tons, consistent with 2018 and reflect annual production being limited 2,200,000 tons per year pending an increase in mineral reserves. The Krumovgrad mine production is expected to be between 440,590,000 tons reflecting 2019 as the start up year for the mine.
Gold production is expected to increase by as much as 30% based on a range of 210 to 2 2000 ounces, reflecting 55,000 to 75,000 ounces coming from Krumovgrad, which is expected to achieve 1st achieved commercial production in the second quarter as well as lower Chelopech gold grades, which are in line with the published grades contained in Chelopech as 40three-1 101. Payable gold sold is expected to be between 191,237,000 ounces. Copper production is expected to be between £33,000,000 £39,000,000 with copper sold expected to be between £32,000,000 £37,000,000. Largely in line with 2018. At Tsumeb throughput is expected to be between 225,250,000 tons representing an increase of up to 8% over 2018.
From a cost perspective, our all in sustaining costs goal is expected to be between $6.75 $8.20 compared with $6.59 in 20.18 due primarily to lower grades at Chelopech and higher sustaining capital expenditures, partially offset by the low cost gold coming from Krumovgrad. Cash cost per ton of complex concentrate smelted net of byproduct credits is expected to be between $3.80 $4.50 compared with $4.45 in 2018, due primarily to higher forecast throughput and a weaker SAAR partially offset by higher labor on electricity rate On the capital expenditure front, sustaining capital expenditures for 2019 are expected to be between $38,000,000 46,000,000 up from $27,000,000 in 20 18. This increase is due primarily to increased spending at Chelopech due to the raise of its tailing management facility to extend the life of the facility, the startup of Krumovgrad and ongoing capital costs associated with the tailings management facility, and several corporate digital initiatives. Growth expenditures for 2018 are expected to be between $29,000,000 $34,000,000 of which $25,000,000 to $29,000,000 relates to the capital associated with completing the Krumovgrad project, which we expect to come in between the 164,000,000 items that we had previously issued. The balance of approximately $45,000,000 relates to resource development, drilling and margin improvement projects at Chelopech Expiration for 2019 is expected to be between $12,000,000 $14,000,000 compared with $12,000,000 in 20.18, and will be directed at drilling activity at Chelopech, Krumovgrad on the TMAC Gold Project, Metalurgical test work for Surnak Prospect as well as Greenfield Projects in Bulgaria, Serbia and the Malartic project in Quebec.
Based on this guidance and our current market prices, we would expect to exit 2019 with no debt and a growing cash position. In closing, the first gold production from expected in the first quarter of 2019 and the achievement of commercial production expected in the second quarter. 2019 will mark the beginning of significantly higher gold production as well as free cash flow, which we firmly believe will continue to support further increases in our share price and provide the opportunity to prudently invest our free cash flow into high return growth opportunities and or return it to our shareholders based on a disciplined approach to capital allocation. With that, I'll turn the call back over to the operator.
You.
And our first question comes from Cosmos Chiu with CIBC. Your line is now open.
Hi, thanks Rick and Hugh for the presentation and the call today. My first question is on Tsumeb. Back in on the Q3 conference call, Hume, you were able to tell us that in Q3, it also generated over $12,000,000 in free cash flow. Just wondering if you can give us the same number for Q4. Clearly, it's likely lower than what happened last quarter, but that would give us a good sense as well.
And then on top of that, if you can give us some kind of guidance in terms of what we should be expecting in terms of free cash flow, for 2019 from Tsumeb?
Yes. So like we don't give, guidance on a quarter over quarter basis. And I think on the Q3 call, what we had said is you shouldn't expect Q3 EBITDA generation I'd assume that to be reflective of what would be sustainable on a go forward basis. And what we said is on an overall basis, what we would expect is Sumeb should be able to generate somewhere in the mid to low 20s of EBITDA. And we expected that it's sustaining CapEx would be somewhere in the $15,000,000, give or take.
And so for a year, both for 2018 and for 2019, that's what we're that's what we're guiding to. We had indicated that 2020 Q3 2018 in terms of that free cash flow generation was a little bit of an anomaly but not something that anybody should be forecasting going forward.
For sure.
So those numbers are assumed that those will be for the full year. So your kind of $20,000,000 EBITDA, that's for the full year and the $15,000,000 sort of sustaining CapEx. That's for the full year as well.
Yes. And that's like that's what we've said to people that are like on a go forward basis, we believe somewhere in the 'twenty and even the high 20s could be possible and around $15,000,000 of sustaining CapEx Now I recognize that 2018 2019 is a little bit higher than that. And that's in terms of the CapEx and that's really just catch up on some projects that we had backlogged in our sustaining capital pipeline backlog.
Of course. Maybe sticking with Tsumeb at this point in time. I know there's plans to switch from a 18 month sort of maintenance cycle to 24 months. Maybe more a question for David here, but there's going to be a shutdown or the maintenance shutdown is going the current 18 month cycle is going to end in Q4 2019. At that point in time, are you ready to switch over to a 24 month maintenance cycle?
So at this point, the difference between the old cycle, which was around 6 to 9 months and the current cycle of 2018 and the envisaged moved to 24 months. The big difference there is around stability of operation of the furnace. There's not a change in the engineering, the furnace, there's not a change in the refractory design. It's purely down to stability and control. So at this point, information is telling us that 18 months is definitely possible.
And what we're doing is continuing to focus on those areas of continuity, which will allow us to take that next step. At this point, we feel confident we can do that in the next slide But from Q4 this year, basically we will skip a year in 2020 on maintenance and carried out to you. We said that It's not to say that the Ausmark continues, right the way through without any maintenance. There are intervals where we would need to, for instance, replace the furnace roof. So at this point in time, let's say every 7 months and takes about 6 to 7 days.
And in fact, we've just replaced the furnace roof the start of this year.
Great. Maybe switching gears a little bit and taking a step back here in terms of the guidance that you've put out there for 2019, you've given us a range, 210,000 ounces to 262,000 ounces, including 53,000 to 72 for Krumovgrad. I'm just wondering what can drive you higher and reach that upper end for both Krumovgrad and also Chelopech? Is it throughput or is it grade or is it recovery or is it a combination of each?
Yeah, it's Rick here in Cosmos. Hi, Rick. Yeah, I would say mainly, from a crew member perspective, it's obviously a ramp up year. So how well that ramp up goes, will be a factor in that get to the higher end. If the ramp up goes as planned, I think we'd be in higher end.
We do have some flexibility on grade. I think with Krumovgrad this year just because we build a large stockpile in front of the mill and we have different grades in that stockpile, which we can blend in. So I think early on, it really the real is beginning to get it will be how well we come into that ramp up phase, how well we we're able to ramp up how quickly, etcetera, how quickly we get to a stabilized mill performance, those will be the biggest factors. No, Betsy, as you know, our, it's been very consistent, reliable. And historically, maybe I'll say, on the upside, normally, of our of our guidance range.
And so I think that trend is likely to continue. So with if that happens again this year, we're on the upside of the guidance range. For Chelopech, that would certainly put us at the upper end of the total guidance range. So that's another factor. Of course.
Thanks, Frank, for talking about the stock. That was my next question as well. You talk about in the MD and A flexibility during the ramp up of Krumovgrad given the various grades in terms of the current stockpiles. I'm just wondering how much stockpile have you built up so far ahead of the mill and ahead of the ramp up or the commissioning? And what kind of grade is that stockpile?
We've got about 156,000 tons at the end of the end of the fourth quarter stockpiled. And it's made up of 4 stockpiles. There's a super high grade, high grade, medium grade and low grade, So that's the range of that is sort of super high grade being north of 10 grams. So that's really the key one that allows us to drive that grade in the feed up quite a bit.
Thanks. And maybe one last question for me. This is more an accounting question once again. You came in adjusted earnings for Q4 at negative0.02 dollars. The Street was at positive.
$3. It was certainly the copper concentrate shipments or lack thereof in Q3, or Q4 didn't help and contributed to the let's call it like the lower earnings. But the other part to me is at least compared to my model would be the costs related to MineRP. Could you help me in terms of, I know it's $11,000,000 that was included in cost of sales back in 2018. I'm just trying to better model it for 2019 in terms of what's the cost that's going through cost of sales?
What's the cost that's going through G And A, any kind of associated costs as well?
You want us to provide you like going forward some guidance around the minority cost
of sales?
Yes, that would help. Well, we could just is it going to go up? Is it going to go down? Understanding that, you might not be able to give us that kind of detail?
Well, we haven't really provided any guidance on Minor P simply because, A, it's not material. And B, There probably is a reasonable range around the revenue growth that it could hit for the year. On a bottom line basis, I wouldn't expect it to generate probably in 2019 any more than call it $5,000,000 of EBITDA would be a realistic bottom line number to, project in terms of the cost of sales maybe I could come back to you with that and give you a range for your model.
Yes. Of course. That's great. And then maybe one follow-up, just a accounting question here, Hume. In terms of Krumovgrad, production is expected in Q1.
But I'm just wondering if there's a lag between production and shipment and eventual recording of revenue, when should we start recording modeling revenue from Krumovgrad? And then the other part is, what's your criteria for commercial production in Q2?
Well, 1st production, we're expecting at the end of the quarter. That and sometime in Q2, we'll reach commercial production. And when it won't be until we reach commercial production, that will actually are recognized in revenue. So any material that we sell before that time will just be credited towards the capital costs and project. At this stage, in terms of the guidance that we've issued, it's expecting that we'll hit that somewhere in the middle, I would say, of Q2.
Now that's what we're sort of guiding to in terms of commercial production, but there could be some slippage around that. And the commercial production criteria is basically getting to design capacity and a targeted level of recoveries.
Great. Thanks, Rick. Thanks, human team, and that's all I have. Thanks
a lot.
Thank you. And our next question comes from Trevor Turnbull with Scotiabank. Your line is now open.
Yes, thanks guys. Actually, a bunch of my questions are probably just follow ups to what Kosmos was asking. With respect to Krumovgrad, you've talked about commercial production And but I might have missed it. In terms of the lag between actually getting that your commercial concentrate production and actually starting to see the revenues come back. If you have commercial production in Q2, would we expect to see revenues recognized as early as Q2 or is that really most of the revenue going to be in Q3 and Q4 for next year, for this year?
Yeah, I would expect most of
the revenue for sure will be Q3 and Q4. It's possible that some revenue will come in Q2 But, yeah, I wouldn't put much in the model in terms of hitting the revenue line, in, in, in Q2.
Okay. And then, with respect to the guidance figure you provided, that's guidance for commercial production or is that just total production inclusive of the pre commercial?
Total production.
Okay.
And then with respect to Chelopech, just on the cost per ton, and I can't remember if you touched on this, Rick, But certainly, Q3 cost per ton at Chelopech was really good and then quite a bit higher this past quarter. And then we're looking at the guidance for this year seems a bit more it's a bit closer to what happened in Q4 a bit higher than than say you had in Q3. Kind of what's driving those higher cost per ton at Chelopech?
So at Chelopech in Q4, keep in mind that the tonnage is limited by, an agreed maximum that we can produce. So what happens is we do It's not a very large amount, but it is a difference between Q4 and Q3. There's obviously upside pressures to costs and we are capped in terms of tonnage So we're grateful as we are susceptible to that in the year asking dollars per ton. So we obviously have labor increases. We've got other cost increase is the mitigations to those.
We're doing some things, which I don't know that we've fully factored in yet around the operating center. Around, drilling and blasting in particular where there's potential to make some material differences to those costs. So as you've seen in the last number of years, we've been very successful in capping and reducing those costs. We are continuing to do that. We're just recognizing that there are some upside pressures in 2019.
So our efforts are obviously to reduce that and to actually hold these numbers back towards the yearly average rather than Q4.
Okay. Thank you, David. And then my last question, I guess, maybe circling back one more time on the MineRP. I realize, Hoomi, you did give Kosmos a bit of guidance with respect to EBITDA. When it I guess it isn't material to you guys, but at the same time, as was noted, It does contribute, I think, to the company, not always hitting the consensus guidance And because of that, it certainly can be a drag on your earnings.
Do you have a sense of when these contracts that are being taken up, when MineRP might turn profitable, is that a realistic expectation for this year or is that still a bit further out?
Yes, it's Rick here, Trevor. This is the year that that the penetration of this new platform we expect to start happening. And signs are already there and new contracts or new agreements with and I mentioned 6 companies. So these are all fairly recent. They have a bit of a lag timing to from signing these deals to actually getting the revenue growth that comes from those deals.
They're They tend to be fairly large deals in terms of dollars. So conservatively, if just the 6 new customers or 6 customers that are signed on to the new platform, revenues come in. We still expect that the number that Hume mentioned maybe 3,000,000 dollars, $4,000,000 or $5,000,000 EBITDA in 2019. And that's just on sort of the existing contractual agreements with the customers. But the upside to that is that they add even more new customers this year.
Again, some lag effect to the signing dates of the deals to receiving revenues. But if you just look at the big picture, they seem to be on a fast track to revenue growth now. The 1st few years have been marketing and trying to get attention paid to their product. And now they seem to have gotten that and now I think the benefits are starting to come in. So it's not material today, but argue that if they keep on this trend in 2019 and beyond and the growth is fast, it'll have a significant EBITDA contribution to the to our bottom line.
Okay. I appreciate that. Thanks, Rick. That's all I had.
Thank you. And our next question comes from Don MacLean with Paradigm Capital. Your line is now open.
Good morning
guys. I'm just following up from Casals and Trevor's comments on the Crum of Grant. I know it's really early days, Rick, but can you give us any color as to how the grade and the tons coming out of the pit are reconciling to the reserve model?
I'll let David answer that. He's closer to it a little bit.
So I think what the answer was not given as to what the grade was in the overall we referred to just the high grade. I think we're at the numbers that we expected. Just one thing to keep in mind is that from the point of view of what we can expect going forward on reconciliation. We need to run material through the mill first in order to fully understand that. At the moment, everything is based on drilling and course ore sampling and this type of thing.
So to this point, everything looks fine, but in terms of a reconciliation, it's only going to be after we've run the mill. And we've been able to confirm the information on a mill process point of view. That will be more precise. So at this point, no evidence of any concerns.
Great, great. And then so the 92% versus 99%, what is it that's, that's left and what was lagging and what's left to be done?
Yes, good morning. It's John Lindsey here. Yes, basically what's left to be done as Rick said, is mainly sort of electrical instrumentation. As it always is on these projects, electrical instrumentation comes at the end. So that works ongoing.
And then we're sort of going starting to go through the commissioning process, a lot of the plant has been cold commissioned. And we should be able to start putting some material through the grinding circuit in the next next week or so. And once we get that bedding down, then sort of second half, first half of March, we'll bring in the flotation circuit, and that's when we'll start to generate some concentrate. So the short answer to your question, it's it's the old story. It's electrical and instrumentation work that is ongoing.
Right. And you have a relatively quick ramp up in Q2. Can you give us a little color as to where you see the risks and, maybe why it's that's a good quick ramp up considering we're 92% at the end of 2018.
Yes, I think, at this point, we're just starting up the major equipment. So it's going to be down to, is there anything the ordinary around the milling and flotation circuits, you know, often you can have some very practical issues that you need to consent with As Rick has mentioned and what was alluded to is we do have the opportunity to ramp quickly if everything runs well. Into higher grades and see those through quickly. Alternatively, we can continue to run lower grades while we're resolving any situations and then run the higher grades later once we release those constraints. So I would say primarily it's around the mill flotation.
And probably the, combined storage facility, the waste storage facility. We're not anticipating any particular problems, but if there likely to be anywhere, it's in those areas. The mining we've been operating now for 7 months. So we have no concerns there.
Right. And just on the mine costs, how are they compared to what you would have expected sort of on a productivity basis?
Well, I think, as you'll understand, we've started up with basically set the start up the plant later than expected the consequence, we haven't had a clean run on the mining to really see that going on. So at this point, everything looks to be fine in terms of what we anticipated. We're not recognizing that there's anything that's missed in terms of our cost estimates. Productivities, great control. These types of things have all shown to be good.
And we brought in some new technologies we hadn't originally envisaged to help take opportunity on things like grade optimization. So to this point, no particular issues on costs. I think our guidance we're confident in that at this point.
Great. That's good to hear. You have that flexibility that you were talking about earlier.
You.
And it is at this time. I'm not showing any questions on the phone line. I would now like to turn the call back to Rick Hoge for any further remarks.
Okay. Thank you very much. Thank you for joining us today on our conference call. I wish everybody a good rest of the week.
And gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.