Hey, ladies and gentlemen, and welcome to the Dundee Precious Metals Third 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 conference is being recorded. I would now like to introduce your host for today's conference, Janet Reid.
Ma'am, you may begin.
To Relations and welcome to Dundee Precious Metals Third Quarter Conference Call. With me today are Rick Howes, President and CEO and Hume Kyle, Chief Financial Officer, who will each comment on the quarter, as well as David Ray, Chief Operating Officer Nicola Krista, SVP of Sustainable Development and John Lindsey, SVP of Projects. They are here today to assist with answering any questions following our formal remarks. After close of business yesterday, we released our 3rd quarter results and hope you have had an opportunity to review the 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 or as a substitute for measures prepared in accordance with IFRS. 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 has generally been rounded and any references to 2017, retained to the comparable period in 2017. On this morning's call, Chris will comment on our third quarter year to date operating results, as well as the progress being made on our capital projects and exploration programs for the quarter. June will then provide an overview of our third quarter year to date financial results as well as our updated guidance for
hello, everyone, and thanks for joining us today for our third quarter of 2018 conference call. I'm pleased to provide you with an update on 3rd quarter results progress on our key projects and initiatives. Overall, financial results in the third quarter were strong with earnings per share of $0.11, reflecting the steady progress being made by our operating teams to advance our operational excellence and optimization programs designed to improve the performance of our operations. We had strong metal production and sales from Chelopech and record smelter concentrate throughput at Tsumeb. In addition, we continue to advance construction and commissioning of our Krumovgrad project, which is 82% complete to the end of the third quarter, with 1st concentrate now expected in Q1 2019.
Our balance sheet remains strong with total liquidity of $250,000,000, including our cash and undrawn revolving credit facility. Debt stands at only $39,000,000 as most of the funding for the crew of debt project has been coming from our free cash flow generation. Which was $25,000,000 in the quarter $58,000,000 year to date. We saw some weakness in gold price in the third quarter with an average realized gold rates of $1209, down 7.5 percent from the previous quarter, reflecting the strong U. S.
Dollar, rising interest rates and concerns about global trade tensions between China and the U. S. Copper also saw price weakness with the price off more than 14 dollars since the middle of June. Realized price for copper in Q3 was $2.77 per pound. I would also like to mention that all three of our active facilities achieved major safety milestone records this year so far.
Both of Krumovgrad project and the Tsumeb operation achieved $2,000,000 lost time injury free work hours and our Telepizza operation achieved $1,000,000 lost time injury free work ours. These are outstanding results and are a testament to the effort and commitment of our entire workforce to work safely. Salopech produced 49,644 ounces of gold and £10,300,000 of copper in the quarter, at an all in sustaining cost of $6.20 per ounce, which is putting us on track to be in the upper end of gold production guidance and lower end of all in sustaining costs, guidance for the year. We've produced record gold production for the 1st 3 quarters of 155,247,247 ounces at an all in sustaining cost of $607 an ounce. We are seeing slightly higher grades and recoveries when compared to 2017.
We expect copper grades to remain about the same for the rest of the year. However, we expect gold rates to decline somewhat in fourth quarter compared to
the 1st 9 months of
the year. We expect to be at the upper end of guidance by year end and close to the record gold production we achieved last year, which was 197,000 ounces. The euro has strengthened 7% over the 1st 9 months of 2017, increasing our cost per tonne by 6% year over year. We have a number of improvement projects underway that will enhance revenues and decrease costs, including drill and blast optimization, mill optimization and move to integrated dynamic, planning and execution and the introduction of our digital smart center for improved decision making. In our in mine exploration, the total of 6392 meters of resource development diamond drilling was completed, which comprised 2282 Meters grade control drilling aimed to better define the shape and volume of existing ore bodies and 4 110 meters of extensional drilling.
Designed to explore for new mineralization along model trends. We continue to identify extensions to existing ore bodies and new zones. We are focused on reserve conversion of some of these new discovered resources, particularly in the inactive upper levels of the old Sublevel cave mining area. Positive results were recorded for extensions of 150five-twenty 5 targets 700. We continue drilling on 2 fifty meters spacing in the Southeast Precious Heights zone, 6 underground diamond drill holes, totaling 19 sixty seven meters were completed in the quarter.
Several new 10 to 20 meter wide zones of typical Chelope at sulfide mineralized altered dretches were identified. Diamond drilling up the class to target approximately 2 kilometers north northwest of the main Chelopech ore bodies continued in the third quarter. 4 diamond drill holes totaling 10.91 meters were completed. 10 holes have been completed and have outlined a new zone, a shallow copper gold mineralization over a strengthening of about 300 meters between 100 and 300 meters from surface. Mineralization is open in all directions and permits for follow-up drilling are expected to be issued in the middle of next year.
In Q4, we plan to continue drilling the traffic target and Southeast Breches Piped Zone and conduct and conduct a drone magnetic survey and test several new targets on the BRAVIN license. Chelopech resources and reserves will be updated in the annual Mason Form in March. The smelter performance in Q3 continued to trend to more reliable and consistent operating performance. We smelted a record 68,431 tons of complex copper concentrate, which is 12% higher than our previous record in Q4 2016. This is due primarily to the increased availability of all plant and increased process stability, including the high pressure oxygen plant, the performance of which has been optimized over the course of 2018.
Performance was also enhanced by the introduction of converter and Osmell furnace improvements. Including increased oxygen and enrichment at the Ausmelt furnace, which helped to mitigate the impact of the converter relines on the Ausmelt throughput. Process Optimization will continue through the 3rd fourth quarter. 2018 complex concentrate smelters has been updated to reflect the strong performance year to date and continued strong forecast 4th quarter performance. Cash cost per ton of concentrate processed in the quarter was the best ever $3.62 per ton.
Benefiting from the higher throughput as well as cost reduction efforts largely through reduction of outside services and labor productivity improvements. Continue to make progress reducing the secondary copper inventories that accumulated during the construction and commissioning of the new acid plant in copper converters. This reduction will continue through the rest of 2018 2019 and will result in a reduction in stockpile interest and allow higher throughput capacity for Freshstone. Rates. We continue to advance the smelter expansion project to increase the throughput of complex copper concentrate to as much as 370,000 tons per annum.
The feasibility study was completed in the fourth quarter of 2016 and confirmed a robust project economic with an estimated completion capital cost of approximately $52,000,000. The scope of the project includes the rotary holding furnace, additional cooling and other upgrades to the all snow furnace as well as upgrades to the slag and mill area. Work is progressing on securing the necessary permits, to support this land increase and discussions are underway to secure sufficient complex concentrate fee to fill the expanded capacity. A decision on this project is production projects is in Q1 twenty nineteen. The scheduled slippage is a result of delays caused by the concrete contractor delivery issues.
Concrete contractor has been replaced, but we have been unable to mobilize sufficient quality crews to catch up on the rest of the schedule. Spending of $126,000,000 has been incurred to date with an additional $38,000,000 to $42,000,000 forecasted 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 A number of key milestones were achieved in Q3. All permits required for construction have now been received. Final construction permit for the discharge waterline was issued in October.
The construction for the main power line of the site was completed The water reservoirs were lined and ready for filling. The thickener area construction was completed in cold condition. The integrated mine waste facility platforms were completed and we now have started construction of the first waste rock berm cells to store the tailings. We have mined 93,000 tons of ore 105,000 tons of waste from the open pit. Planned grade control drilling for the 1st phase of the pit was completed and the new information is being used create the grade control model and refine the ore reserve model.
The major mill structural mechanical and piping installations are progressing well. As is the electrical instrumentation work. Pre commissioning activities have begun and hot commissioning will start later in the fourth quarter. The operating team is on track Exploration has identified a number of satellite deposits within a few kilometers of Krumovgrad. We began phase 2 drilling in the Cernak satellite posit located at 4 kilometers to the west of Krumovgrad, public Krumovgradover pit in Q3.
We drilled 2600 meters in twenty holes with assays pending. This program will be completed in Q4 and a maiden mineral resource estimate will be completed in Q1 2019. 4 drill holes were completed in the Illovo license with Assi's pending. Drilling will also begin on 2 other nearby licenses in early 2019. A drone magnetic survey will be flown over these areas in Q4.
On September 24, we announced the results of the updated Mineral Resource for the Timok Gold Project in Serbia. We reported total indicated mineral resources of 47,000,000 tons at 1.32 grams per ton gold. For 2,000,000 ounces of resource, including oxide indicated mineral resources of 22,000,000 tons at 1.06 grams or 745,000 tons and transitional indicated mineral resources of 9,200,000 tons at 1.1 grams per tonne gold for 338,000 ounces. The net change compared to the 2017 Mineral Resource estimate shows an increase of 35% in tonnes and 16% increase in ounces. Based on the updated mental resource estimate, we have initiated scoping study for Tmaw.
And depending on the results of the scoping we expect to release a preliminary economic assessment in the first quarter of 2019. These studies will focus on the initial economics of the oxide and transitional material to be constrained in a separate open pit shell as well as the high level potential or subsequent development of the sulfide resource. Development of a permitting approvals plan, incorporating the ESIA process and approvals, as well as all additional permits and approvals we'll be initiating will be initiated as part of this study. Exploration plans for 2019 are being developed to identify additional high quality tar targets to expand the near surface oxide resources. Exploration drilling with a focus on shallow targets continued during the third quarter.
Of 2018 and totaled 7000 Meters in 42 holes. An additional 2380 meters trenching and channeling and 52 line kilometers of IPGEO business were completed. Exploration plans for the fourth quarter of 2018 include further diamond drilling, in field soil sampling, geological mapping, trench and channel sampling and high resolution drone based, magnetic surveys. And some logic joint ventures, project in Quebec during the third quarter, project until settlement sampling was completed. Exploration plans for the fourth quarter of 2018 include soil sampling to follow-up on anomalous steel sediments and a high resolution aeromagnetic survey along the Marbonate.
And Northernite Shear zones within the Malartic group. In summary, the strong results for the quarter reflects the exceptional progress our team has made to improve the performance of our operations and advance our growth projects. Tsumeb is starting to show the true potential of smelter has contribute significantly to the earnings of free cash flow of our business. Given our significant near term growth and free cash flow from our Krumovgrad project, and solid earnings and free cash flow from our 2 existing operating assets, we expect attractive we represent an attractive an opportunity for value and growth investors. Thank you.
I'll now turn the call over to Hume, who will review the financial results 2018 guidance following which we will open the floor to
questions. Good
morning. Thank you, Rick. For the third quarter of 2018, we reported adjusted net earnings of $0.10 per share compared to $0.04 per share in 2017. And adjusted EBITDA of $36,000,000 compared to $26,000,000 in 2017. These increases were primarily driven by record operating and financial results as Tsumeb as well as continued strong performance from Chelopech.
For the 1st 9 months of 2018, we reported adjusted net earnings of $0.18 share compared to $0.07 and adjusted EBITDA of $87,000,000 compared to $70,000,000 in 20 17. These increases were primarily driven by higher realized metal prices and higher volumes of metal sold at Chelopech, reflecting higher grades and recoveries. Higher volumes of complex concentrate smelted and higher estimated metal recoveries at Tsumeb, reflecting Tsumeb's continued success of optimizing performance, and reducing of funds from operations during the third quarter 1st 9 months of the year were $34,000,000 $81,000,000, respectively, compared to $27,000,000 $70,000,000 in 20 17. Free cash flow, which we define as funds from operation less cash outlays is or sustaining capital and mandatory debt service obligations was $25,000,000 $58,000,000 in the third quarter 1st 9 months, respectively compared to $18,000,000 $32,000,000 in 20 17. These increases reflect high funds from operations as a result of the improved operations at both Chelopech and Tsumeb and $16,000,000 of term loan repayments that occurred in the 1st 9 months of 2017.
Turning to cost measures, cash cost per tonne of ore processed was $34 for the 3rd quarter, of 2018, down 5% in 2017 due primarily to higher mine throughput and the timing of maintenance activities. Cash cost per tonne of ore processed for the 1st 9 months was up was sorry, $35, up 6% from 2017 due primarily to a stronger euro. All in sustaining cost per ounce was $6.20 $607 for the 3rd quarter 1st 9 months of 2018, down $65 93 from 2017 due primarily to higher volume product credits as a result of higher realized copper prices and volumes of copper sold and lower cash outlays for sustaining capital expenditures. At Tsumeb, cash cost per ton in the third quarter and for the 1st 9 months was $3.62 $4.70 per ton down $122.19 from 2017 levels. The 3rd quarter increase was primarily due to higher volumes complex concentrate smelted and Student's cost reduction program, partially offset by higher labor and electricity rates The year to date decrease was primarily due to higher volumes of concentrate smelted, higher asset byproduct credits, and Tsumeb's cost reduction programs partially offset a gain by higher labor and electricity rates and a strong result relative to the U.
S. Dollar. From a capital spending standpoint, sustaining growth capital expenditures for the third quarter of 2018 were $7,000,000 $20,000,000 respectively, for an aggregate spend of $27,000,000, up slightly from the $25,000,000 we spent in 2017. Sustaining and growth capital expenditures for the 1st 9 months were $18,000,000 $16,000,000, respectively, for an aggregate spend of $84,000,000 up from $67,000,000 in 2017, primarily due to Krumovgrad's construction activities. At September 30, we'd incurred approximately $126,000,000 in respect of the Krumovgrad project.
We remain on track with the costs coming in at approximately $164,000,000 to $168,000,000. 7% below the original estimate that we put out of $178,000,000. As Rick noted, our financial position at September 30 is strong, with approximately $265,000,000 of cash resources, including $232,000,000 under our long term credit facility. We also hold a 10% interest in Sabina and Valley did approximately $30,000,000. From a risk management perspective, during the quarter, we also initiated this establishment of a 2019 hedge position in respect to the South African Rand, which, as you know, is linked to the Namibian dollar.
This was done to reduce the exposure that we have with respect to foreign currency movements on Tsumeb's operating costs and locking a rate that supports free cash flow generation of Tsumeb. To date, we've hedged approximately 60% of Tsumeb's Namibian dollar exposure or operating costs using 0 cost option contracts that provide, for, on average, a minimum and maximum exchange rate between 14.215.66. For the balance of 20.18, our hedge position remains unchanged with approximately 90% Tsumeb to operating costs fully hedged at a weighted average rate of approximately 3.19. Turning to our guidance. Based on the year to date operating results that we've reported and our outlook for the balance of the year, we've updated our 2018 guidance for a second time to both narrow the range as previously provided and to reflect higher mine and smelter production as well as lower core unit operating costs and growth capital expenditures.
As a result, Shelpetch gold produced and sold is expected to be between 190,000 and 200,000 ounces 161,170 ounces, respectively, up approximately 8% from our original £5,000,000 to £38,000,000 essentially in line with our original guidance. While mine cash costs per ton is expected to be between $35.37 per ton, down approximately 7% and all in sustaining cost per ounce is expected to be between $6.40 $7.10 an ounce, down roughly 10% from our original guidance. Fumeb's complex concentrate smelted is expected to be between £230,000 250,000. This is a slightly narrower range than we've provided previous wage, which was 220,000 to 250,000 tons per year, so roughly up above 2% in the original guidance. And our cost guidance is now being lowered to $4.30 to $4.60 per done, which is down approximately 6% from the original guidance that we provided.
Growth capital guidance has also been reduced and is now expected to be between $82,000,000 $90,000,000 down from the $94,000,000 to $100,000,000 that we had originally put out. And this is primarily due to the delays that we've experienced with concrete insulation at Krumovgrad. While while we haven't provided any guidance with respect to MineRP, I can't say that we continue to make good progress executing the business plan and we remain confident in MineRP's growth potential and the value proposition that it offers both the mining industry and PPM. In closing, the first gold from our low cost Grumovgrad Gold Project project is expected to occur in the first quarter of 2019. And we are nearing a period of significantly higher gold production and free cash flow generation, which we firmly believe should support further increases in our share price both in the short initiatives and or return it to our shareholders.
With that, I'll turn it back to the operator.
Thank you. Our first question comes from Cosmos Chiu with CIBC.
Hi. Thanks Rick and Hume for the conference call here. My first question is on Krumovgrad. I just want to get a bit more color in terms of, you're almost there 81%. What are some of the critical path items now?
To make sure that the first concentrate gets shipped in Q1 2019?
Hi, yes, it's John Lindsay here. Yes. So the major items, sorry, going forward, we've completed the the piping works, the electrical, the instrumentation. Civil works essentially complete. The structural works essentially complete the mechanical installation for those parts complete.
So it's really just grinding through the balance of the piping and electrical work that that needs to be done to get finished. As Rick had noted, there were a few significant milestones achieved in the quarter. It particularly the power supply. So we now are connected to the grid. So we have power available for commissioning, so we can We can start the larger mill motors in the fourth quarter for commissioning as we have planned.
So it's in essence, it's just grinding through the balance of the work.
Great. That's good to hear. And then maybe switching gears a little bit. Certainly good to see that Umock, technical reporketing filed last night, giving us a bit more detail here. But I don't know if it's still too early at this point in time, but I'm just trying to get a sense in terms of timing.
Krumovgrad is shipping now in Q1 2019. Tamar could very well dovetail nicely. In terms of, project wise, in terms of production, in terms of growth. So I'm just wondering about number 1 timing. And number 2, looking at the details behind it, it looks like you've done a lot of column testing.
It looks like this is going to be designed as a heap leach going through the oxide and transitional material first. So how should we look at it? Is it going to be like kind of stage? Is that the alternative that you're looking at stage in terms of heat leach oxide transitional and then later I'll figure out what to do with the sulfides or how should we look at it?
Yes, John, Digi again. That's, yes, it's kind of early to sort of start to lay out sort of a timeline like that. As Rick noted, we've just commenced scoping study in the fourth quarter. And once we've completed that study, we'll have a better idea of what that development pipeline looks like, and particularly around the permitting and approvals pipeline, which is, as you know, these days is probably going to drive the development pipeline. And yeah, your comment about the stage project there, that's probably the way it's going to end up sort of a sensible way to go about that.
The sulfites are quite refractory, so there could be a tough amount of the crack. So be good to be generating some cash out of the oxide before we get into that sulfide part of it. So summary, yes, it's a bit early to give any sort of definitive buy minds at this stage.
Yes. And I didn't get into all the details in the report last night. But how does the recovery change from going to from oxides to the transitional material?
Yes, that's a good question. But like I said, the sulfide material is quite refractory and you're going to have spend some time looking at process options for that. It's going to be a tough nut to crack that one. But the The upside recovery is based on the work that we've done to date. I've been very, very encouraging.
Okay. And then maybe one last question here in terms of at Zoomed, it all great to see that, production and tons processed was a record. I'm just wondering about the market here for complex concentrate. I think there was a comment made in the press release saying that tolling charges have come down a bit in Q3. I'm just wondering about certainly it looks like you're going in the right direction in terms of getting capacity getting process and capacity up at Tsumeb.
But how about the demand for that product too?
So this is David Gray. We continue to talk to potential suppliers and current suppliers of concentrates. And we do think there's opportunity in the market. The question is when So at this point, what we're doing is we're working on these smelter capacity and getting the optimization ahead of when we're going to see these materials coming in. Now, of course, If you look at it from a variable cost point of view, there's more there's more open opportunity for concentrates going forward.
So it means that Longer term, what we're looking for, why it concentrates to what we have now, but there may be some short term opportunity where we continue to develop and demonstrate the capacity of smelter. I think this is why Rick is saying at this point, the extension consideration is really only going to be a second quarter 2019 decision.
For sure. And again, on the Tsumeb smelter here, good to see that cost per ton was quite good. In Q3 at about $3.50 per ton. If I were to I did, if I am to take your full year guidance here, lowered full year guidance and back out what has happened in the 1st 9 months. It looks like Q4 cost per ton could be about the same as Q3.
So I just want to make sure that the cost per ton at zoom at low was lowered quite a bit quarter over quarter in Q3. Just want to make sure that's sustainable.
Yes, we believe that the costs demonstrated in Q3 are sustainable. We have a number of different initiatives. It's not just processing rate. There's some very strong improvements been made in terms of our operating costs as well, particularly as Rick mentioned on contracted and outside services. So We'd see that continue.
There's still some potential for improvement, which are linked to the reduction and getting out of these inventories of materials that we've had accumulated after the capital spend. So there's still more opportunity there.
Great. Thanks a lot. Those are the questions I have.
Thank you. Our next question comes from Don McQueen with Paradigm Capital. Your line is now open.
Good morning, guys. And a nice beat on the earnings and the cash flow. 1, congrats on Tsumeb. Keep it up. I guess my questions are sort of just extensions of what Kosmos was talking about.
And you'd said, David, that the cost from Q3 should be sustainable going forward. Is that going forward indefinitely before expansion? And then maybe from the standpoint of the cash flow, if you look at the free cash flow in Q3 of $25,000,000, how much of that would have actually come from Tsumeb. I guess that's we'll start with that. A couple of questions.
I'm just, what would I don't have to spend.
EBIT dollars.
EBIT dollars, $16,000,000 and the sustaining capital would probably $1,000,000 in the quarter, so $12,000,000 of free cash flow from Tsumeb.
$12,000,000 of the $25,000,000 that was reported?
Yes.
That's I think that's a lot larger number than most of us are carrying speak for myself. And so from a sustainability of that, because this now brings into mind the contracts. Does that look like that can be carried on? And when's the next reline like quickly?
All right. I think that's an important point. So you're really asking what would be what can we expect going forward quarter by quarter? So in Q2 this year, we have the rebuild and that is a very significant spend for the year. So the cost of that quarter, of course, is going to be very different.
And free cash flow going to be for Egypt. But in terms of a full running quarter, the types of numbers we posted in Q3 are the type of results we would expect to see going forward as subject to the availability and the treatment centers on concentrates and the type of things. But generally, what you're now starting to see is the benefit of having continuity of operation, reduce rework, and recycling, which all come about when we operate the smelter operation gets to that last element of
continuity. Yes,
I think I'll just add to that as well, Don. Yeah, I mean, Q3 was a great quarter, and we're projecting another strong quarter in Q4. And mean, I think looking at next year, we have every reason to believe that we can sustain, the level of production or performance that we're seeing at Tsumeb. I think broadly speaking, what we've said before in terms of, EBITDA and free cash flow, I think it remains intact. We might beat that in future with the kind of performance that we're seeing, but the EBIT number, EBITDA numbers that we've said in the past, probably somewhere in the range of $20,000,000 to $30,000,000 top line of EBITDA.
And then sort of some sustaining CapEx let's say somewhere in the area of $15,000,000 just provides us comfort from a market perspective that we're going to generate positive free cash flow. It could be low single digits or it could be somewhere 15,000,000 dollars, $20,000,000 to $25,000,000, even a free cash flow in a great year. But, I think Q3 was just a demonstration of what it could look like.
So just to clarify, human, that believe I heard that the free cash flow from Tsumeb in Q3 was $12,000,000 for the quarter. And what you're talking about is a a $5,000,000 to $15,000,000 free cash flow for the year going forward in sort of the numbers that you've put out there. To this point. So was that suggesting there's a lot more upside if you can maintain the kind of productivity and I guess, contracts that you have? And where, how should we be thinking about it within that?
That's a big bandwidth.
It is. I mean, I just from my standpoint, we just want to, be realistic, under promise, over deliver in terms of setting expectations. Q3 was in pretty quarter. No doubt about it. But I think for the year, we're still looking at probably generating EBITDA, pursuant, probably something close let's say, just annualized, let's say $30,000,000, our same capital is going to be somewhere a little bit north of $15,000,000.
So free cash flow this year will be kind of at the top end or higher end of the overall guidance that we've been providing coming into 2018. And really at this stage, no comment with respect to 2019. We'll issue that guidance, in Q1. Right.
Okay. Well, Q3 sets the bar nice and high for next year. That's for sure. And then, again, Cosmos taught touched on the new resource for TMAC. And I mean, that is, that's a tough refractory mineralization.
So I guess the question is 1,000,000 ounces of bauxite and transition. Is that enough, conceptually for DPM to take seriously and how should we be thinking about this project? Is this a project that, the company is going to pursue rigorously and has some pretty positive feelings about given that Krumovgrad will be winding down about the time that you're trying to make some kind of decision on, on TMAC?
Yes, Don, that really an answer is that it does look encouraging and we do It's encouraging and that's why we kicked off our scoping studies. So we'll have a look at the economics of lining that 1,000,000,000 ounces of oxide and see what that looks like. So next quarter, we'll have a bit more bit more news to or a bit more definition to be able to update you with, but it's it's a bit early to say anything so definitive on that yet, but we we're encouraged.
John, I'm just trying to remember from visiting the site a few years ago, it's not really so much mountainous in the vicinity as Rolling Hills. Can you use that to your advantage for like a valley field type of heap leach?
Again, those are some of the things we'll be looking at in this quarter when we put over the scoping studies. So, yeah, that's it's possible, but certainly that's part of what we're looking at now is to try and figure some of that out.
Yes. I mean, we're used to your terrain and your topography can be a real asset or it can be a real disadvantage. It seemed to me that there potential for an advantage in this case?
It might be. And like I said, those are some of the sort of conceptual things that will sort of flesh out a bit in the next couple of months.
Okay. And then the $1,000,000 question.
What are
you going to do with all your free cash flow?
Excuse me. I think what we were trying to say or I tried to say on the call is that, there's 2 two basic alternatives. We 1st and foremost, we want to grow the business. And we have opportunities to grow the business, organically. That we've talked about on the call and in our disclosure documents.
And there's also the opportunity to grow the business beyond our existing asset base. And, certainly, we're better positioned in today's environment that we were with a stronger share price and significant free cash flow over the next 5 years, which roughly speaking that today's prices is going to be somewhere in the $100,000,000 to $150,000,000 range over 5 years and, averaging something certainly in the mid to higher end of that range. So we've got a lot of opportunity to deploy capital but we're going to do it in a disciplined way, in an accretive way. So to the extent that we see upper opportunities to grow and do it in a brief way. We'll deploy that capital that way, but we'll also consider, returning it to shareholders.
And either in either in the form of a dividend or to the extent that our share price is significantly undervalued, then we would definitely consider to doing a buyback And they're not mutually exclusive. I mean, we would consider doing any one of those just depending upon the circumstances that we see.
All right. Well, encourage you to do that return to the shareholders is something that we've seen too little of in the North American industry, for sure. Anyways, congrats again on a fine quarter.
Our next question comes from Trevor Turnbull with Scotiabank. Your line is now open.
Yes, thank you. I know you touched on the concentrate a production from Krumovgrad. And I may have missed it. Was it starting in Q1, Do you expect to start to see sales of concentrates in the same period? And I'm just kind of wondering, not thinking of commercial production necessarily, but simply revenue coming in from sales.
Is there going to be a bit of a lag because it's a concentrate? Or is it likely that you'll pretty much realize whatever you produce in terms of sales in the same period?
Yes. Well, we, I mean, we do anticipate, hitting commercial production, possibly in the first quarter, at the end of the first quarter, could be tight, or at the latest, early in the second quarter. So I mean, I think our from an internal perspective, we're looking at hitting 60% of design capacity. For how many days? 30 consecutive days.
So I think that, it's realistic to anticipate that. Yes.
The other thing is we likely will see the concentrates being shipped by truck. Over land. So they're not constrained by building up large inventories and then shipping them on water. So that will tend to have the the flow of revenues coming more continuously.
Right. So it's more of a continuous shipping schedule as as opposed to like you say building up a Tidewater situation. So therefore, they must be staying in Europe, I assume? Yes. Yes, I wasn't actually also asking so much about the commercial production, but just well, I guess you've answered it.
Was going to say whether or not any sales of concentrate take place, it'll be happening fairly. Yes. Okay. And then fairly continuous basis. All right.
Great. Thank you very much.
Thanks, Travis.
Thank you. This concludes today's Q And A session. I would now like to turn the call back over to Rick House for closing remarks.
Yes, just want to say thank you for attending the call today and, wish everybody a great, Friday weekend. Thank you.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. You may all disconnect. Everyone have a great day.