Greetings, welcome to the Endeavour Mining's first quarter 2018 webcast. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Sébastien de Montessus, CEO of Endeavour Mining Corporation. Thank you, Mr. de Montessus. You may begin.
Thank you, operator. Good morning and afternoon to everyone. Thank you for joining Endeavour Mining's Q1 2018 results presentation. I'm Sébastien de Montessus, CEO of Endeavour Mining. It's a pleasure to be talking to you once again. Please note the usual legal statements. The same is here. Here with me today are Jeremy, Vincent, and Patrick. As usual, I will begin by taking you through the highlights of the quarter with the help of Jeremy and Patrick. Vincent will take you through our financials, followed by Jeremy, who can give more color on each individual mine and project. We will open the call for questions. As you can see on this slide, we've had a very strong first quarter on the three key areas we continuously track. First off, we're proud of our strong safety record, which stands below industry standard.
No job is so important it cannot be done safely. We are pleased also with the performance across the group, as each mine is on track to meet its full-year guidance. Both our group production and all-in sustaining costs are tracking very well against guidance, which were particularly strong in Q1 due to the mine sequencing at Houndé. I'll go into a bit more detail on these three items in the next slides. As always, I want first to reiterate that safety is an utmost priority for us. While we are pleased that our group-level safety record remained below the industry average in Q1, with levels at almost half the LTI rate experienced by the average for the industry, we will continue to work on reducing this number.
In terms of our construction track record, we previously completed Houndé and Agbaou with no lost time injuries at all. We are continuing that excellent track record right now at our Ity CIL project. As the excellent Q1 performance is due to Houndé, I've inserted a slide up front to provide a snapshot on how well the mine is performing against expectations. In my opinion, this is the most important slide of the deck, as it demonstrates that Houndé is now fully de-risked. As shown in this table, the mine is performing well across all our key metrics. We are currently mining and processing in excess of expected capacity. Recovery rates are above feasibility estimates. Mining and processing costs are currently below the life of mine average. The quick ramp-up experience and strong performance has allowed us to already generate an all-in margin of $107 million since November 2015.
With an upfront capital spend of about $340 million on this project, you can see how attractive this asset is. We expect, therefore, a very quick payback period and a return to exploration, which Patrick will speak about shortly. Looking across the group, the result from Houndé has lifted production from continuing operations by 39% versus Q1 of last year. In gray, you can see the previous production from Nzema, which was sold at the end of last year. After seeing the impact of Houndé, it is interesting to project ourselves to around this time next year. By this time, we will be close to starting production at the Ity CIL project, which will further increase the quality of our portfolio.
As you can see on this next slide, following on from the start-up of Houndé, we have seen our all-in sustaining drop down from roughly $900 an ounce to $774 an ounce for this quarter. We are well on target to achieve our 2018 full-year target of between $840 and $890 per ounce. To reiterate this trend, it is a very important metric to measure the success of our strategy of improving the quality of our portfolio, as laid out in our early 2016 strategic plan when I joined Endeavour. Next, you can see here the direct impact of greater production and lower cost on our all-in margin, which includes the discontinued operations. In Q1, we achieved a margin of $68 million, which is more than double what was achieved during the equivalent period last year.
Now, I will hand over to Jeremy to talk through the progress being made on the Ity CIL construction, which is now our next large growth catalyst. Jeremy, if you can.
Thanks, Sébastien. Hello, everyone. Look, Ity is obviously one of the focus points for us as we progress through 2018. As can be seen from the photo, it's progressing very well, and we remain on time and on budget for our first gold pour mid-2019. I think some of the key achievements to date, when I go through this list in summary, the project's tracking in line with all the metrics on time and on budget. Importantly, we're now tracking at 1.8 million man-hours without an LTI. In fact, we're over 2 million now as I speak to you. 65% of total capital has been committed and $117 million out of bank to date. The CSF efforts are progressing very well, and the camp construction has seen the largest or the greatest portion of the expats move into their new rooms.
Earthworks excavation of the 90 kV transmission line, the overhead power line, is progressing well, and tower erection is underway. On the next slide, we thought we'd just throw some photos in here just to give you a bit of some visual representation of the process plant here. Going in a clockwise rotation, from the top left-hand side, you can see the process plant. For the people who've been on site before, there used to be a big hill behind the far radio towers there. That's gone. As I move across to the primary crusher, you can see it's well advanced. We're about six to eight meters out of the ground now, so that's progressing very well.
The real pleasing thing is if you have a look at the bottom right-hand photo, the hall bridge works, which is topographically in the lowest part of the asset, which joins PE26 to PR609 and the dark blue pit. That's progressing exceptionally well. For me, we are pretty well out of the ground before the wet season gets upon us, so pleasing to see. On to the project schedule, and we've provided a pretty high-level snapshot of the milestones for reference. In essence of time, I won't go into details on these, other than if you'd have a quick look at. Suffice to say, we're tracking well, on time and on budget at the present time. I'm now going to hand over to Patrick for a brief exploration review. Patrick, over to you.
Thanks, Jeremy. Hi, everybody. Just for the highlight of the first quarter exploration activity at Endeavour. The main focus, which started actually in December last year, was at Kalana, where we embark in a quite aggressive, intensive exploration program, targeting both the Kalana deposit and also the Kalanako deposit. We drilled 37,000 meters, and everything is on track. We have been finishing the program before March 15. We are expecting all the analysis to come on and still to publish a new updated resource by some time around mid-year. The other very strong activity we had was indeed in Houndé. After we announced the discovery of the Kari Pump area last year, we embark in very aggressive program to cover the whole Kari large golden soil anomaly in this area. We had some very good interesting news, and we are prepared to announce it in the next coming weeks.
At Ity, we have been also quite aggressively pursuing the Le Plaque discovery, which was announced last year, and out of which we announced just limited resource concerning the very central part earlier on in February. So we are expanding the trend, and so far so good. We are expanding the Le Plaque discovery. Also, as stated before, more and more will be turning also a little bit far away from our mine activity, and we are targeting also, we still have the target to develop internally, by our organic exploration, what could be the next project after Kalana. Some program are advancing quite well and we are going to pursue that all along 2018 to work on that. At Agbaou, the drilling started a little bit late in the quarter.
We have been drilling below some Agbaou pit, namely the northern pit. We are also going to drill a little bit more on the west pit. We are also doing some regional exploration around Agbaou. At Tabakoto, most effort concern the northern part of the Kofi tenement, where we are targeting new anomalies in the northern part of the block of the Kofi area. This is still initial result. We are going to pursue that all during 2018. At Karma, basically, we are concentrating on the last year discovery. We are doing some infield drilling and also trying to expand a little bit North Kao while also addressing additional target around Kao, including the southeast of it. As a whole, Q1 was extremely active. As you can see, we spent just a little bit less than half of the full year exploration budget.
Yes. This is due mostly because we had a very strong focus, first on Kalana, secondly on Houndé, and on Ity. We did that to have everything ready for the second part of the year, after the rainy season. That is for me. I give the work back to Seb or Vincent.
Yes. Thank you, Patrick. On slide 15, we'll start the section by looking at the production bridge between Q1 this year and last year. As highlighted previously, the addition of Houndé has enabled us to more than offset the sale of Nzema, and the lower production at Agbaou is in line with its life of mine plan, which now integrates harder rock. Tabakoto is declining compared to last year but is in line with our internal prediction for first quarter. Sequentially, Tabakoto has increased its production during the period with high open pit grade from Tabakoto North. The rest of the mines are performing as well, in line with or above expectation. This led to a total production for the quarter of 185,000 ounces. On the slide after, I will walk you through the main lines items from revenue to all-in margin.
On the top line, the top line is increasing, as I just explained. I want to just note a couple of other points. Gold price average is taking into account the streaming financing of Karma, as always. As you see in note three, the all-in sustaining margin increased by 111% due to the successful startup of Houndé, the higher realized gold prices and an all-in sustaining cost decrease at Ity, which more than offset the increase of production cost at Agbaou, Tabakoto, and Karma. At point four, the non-sustaining capital spending increased versus last year, which is mainly due to a $6 million increase at Agbaou for its waste capitalization activity. On point five, the non-sustaining exploration cost increased as we are well advanced in our drilling program, as just explained by Patrick before. Finally, this results in the all-in margin increasing 112% to $68 million for the quarter.
On the slide after, you will see a bit more of a breakdown of the movement in cash over the period compared with the prior year. As shown in point one, there is a significant movement in working capital this quarter. This is firstly due to the inventories increase for consumable at Tabakoto, Ity, and Karma, but also to an increase of the stockpiles before the rainy season. Secondly, it is also due to sustained supplier payments during the period, notably at Agbaou, which has released one important payment to its mining contractor. Overall, this working capital effect is a timing issue, which will progressively come back to normal over the coming quarters. As shown in point two, we paid interest this quarter on the RCF, whereas last year they were paid in Q2. This is merely a difference of timing.
No interest have been paid during the period on the convertible bond, which are payable semi-annually in February and August. As shown in point three, we spent $78 million in our growth projects, mainly consisting of work on the Ity CIL project. In total, we paid $117 million to date on that project. In total, we accounted $147 million in our balance sheet, which includes $30 million lease financing. The large number you see down on the bottom here are the result of the repayment of the old revolving credit facility for $280 million and the receipt for $330 million from the convertible bond. On the slide after, you can see how that leave us very well-positioned to fund the remainder of the capital expenditure required to complete Ity. We have $424 million in available liquidity, comprised of $94 million of cash and $330 million of undrawn revolving credit facility.
On top of this, we have the remaining proceed from the Nzema sale for about $20 million-$25 million, remaining equipment financing at Ity, and of course, the cash being generated by the operations. You will notice, in the small table on the right, that equipment financing has increased by $30 million since year-end after receiving the first equipment batch from Komatsu for the Ity CIL project. With the spendings linked with the Ity CIL, the net debt has increased from $232 million at the end of December 2017 to $336 million at the end of March. On the next slide, we quickly look at the cash variation from an IFRS standpoint, which of course match the previous view. We started the year with $123 million in cash.
Net cash flow from operating activities was $94 million before working capital changes, and $48 million when we include the negative $46 million working capital variation as previously mentioned. Investment activities amounted to $119 million, comprised of $78 million of growth projects and $41 million of operating capital expenditure, which include exploration. Financing activities amounted to $42 million, which include, as previously mentioned, the $330 million received from the issuance of convertible notes and the repayment of $280 million of the RCF. This leaves us with a current cash position of $94 million. On the slide after, page 20, we look at the net debt evolution. As expected, it has increased due to the Ity build, but it remains at a healthy position and is expected to soon start decreasing due to our quick project paybacks.
The trailing 12 months net debt to EBITDA ratio stands at 1.2 times, as the 12 months EBITDA only embeds five months out of 12 for Houndé. However, when looking at the same ratio using the Q1 analyzed EBITDA, this ratio decreased to 0.9 times. Due to the addition of Houndé cash flow, this metric might be a bit more representative of the group's financial health.
On the slide 21, you can see the strong operational performance, which led to a strong adjusted EPS increase, which was up 130% to $0.26 per share. As usual, in the table on the right, you can see the main lines item and adjustment made, which are mainly gain and loss on financial instruments and the deferred tax income. With this, I will hand it to Jeremy to walk you through the operational performance by mine. Jeremy?
Thanks very much, Vincent. Ladies and gentlemen, I'll move through the five operational assets, Houndé, Agbaou, Ity, Karma, and Tabakoto, pretty quickly, so we can open up the questions at the end. We've already talked about how pleased we are with the Houndé project, asset, and how it's performing compared to the feasibility study. Houndé is well on track to meet full year guidance of circa 250,000 to 260,000 ounces at an all-in cost of $580 to $630. For the moment, we're seeing the all-in cost low, a little bit lower than expected, but as the grades decline this year and the strip ratio increases, we may see that come up. We're working very hard to work around that. We've also started the settlement activities at Bouéré, which, just to remind you all, is a high-grade satellite deposit, quartz vein, free dig, for the most part.
We're on track to commence mining that later this year. At Agbaou, we previously mentioned that 2018 is a transition year with a focus on waste capitalization, moving to a harder rock blend, and giving us access to high-grade areas over the longer term. We started to see the impact of lower grade material in Q1 as production decreased and costs went up slightly. The good news is the waste capitalization effort has been sensational, actually. Overall, Agbaou is on track to meet full year 2018 guidance of 140,000 to 150,000 ounces and all-in sustaining cost range of $860 to $900 an ounce. Production is expected to increase in the upcoming quarters, while costs are expected to trend toward the guided range as the hard ore blend increases. Ity heap leach, interesting little asset.
When we talk about Ity CIL project, we forget that we actually have an operating heap leach mine as we speak right here and now. As expected, at Ity heap leach, the grade increased compared to the previous quarter, and we're able to get into the high-grade deposits. Open pit mining activities for the heap leach operation are expected to intensify in the upcoming weeks with the addition of a contractor. As we continue until early Q3, I think, this year, our aim is to create a stockpile sufficient to feed the stacking requirements for the second half of the year. The mining focus will shift towards the CIL project with the training of personnel, et cetera. Over to Karma, back in Burkina, look, Karma's performing well, on track to meet 2018 guidance. We are seeing the benefit now of the optimization work we did last year.
Stacking's increased following the commissioning of the new front and back ends of the plant. The construction of the new camp's finished as well, everyone's pretty happy there on site. The big thing is we've got a 5 million ton annualized run rate at Karma. To remind everybody, the nameplate of this asset is 4 million. We're up by 25% with stack capacity. As expected, mining activities in Q1 focused mainly on mining transitional ore from GG2, which would result in a slightly lower recovery rate from the heap. Q1 production was actually slightly above expectations due to higher than nameplate capacity, as I mentioned earlier. We stacked unbudgeted low-grade ore as well. Overall, this resulted in slightly more than expected production, albeit, I guess at slightly higher than expected all-in sustaining costs, but ultimately resulting in free cash flow. Cash is king.
In line with guidance, production is expected to increase and all-in sustaining costs are expected to decrease in the second half of the year as mining activities transition to the oxide ore from Kao. It's got a high recovery rate and low unit cost generally. Last but not least, Tabakoto. We've taken a number of steps in Q1, which saw us increase production and decrease costs in the first quarter compared to the prior period. Team on site is doing a fantastic job. Tabakoto's, with all the other mines, is on track to meet full year guidance for this year. We're currently looking at a number of actions to reduce costs even further, strategic asset assessment is being made towards the latter part of this year. I'll hand back to Sébastien. Seb, over to you, mate.
Thank you, Jeremy. To conclude, this was a strong quarter for Endeavour, and we expect to be able to build on these foundations for the remainder of the year and over the long term. You've heard how the inclusion of Houndé has resulted in improved guidance on our key production and all-in sustaining metrics, which will in turn have the effect of increasing our immediate cash flow. Our near-term growth prospects remain strong with Ity CIL construction on track and work being done at Kalana, our next project after Ity CIL. Longer term, our focus on exploration gives us confidence of significant future upside, and we are continuing to track well to meet our 5-year strategy and objectives on exploration discovery.
All this means that we are already on target to meet our 2019 objective with a portfolio of high-quality assets that is balanced with low cost and long life mines. Now the team and I would now be happy to take any burning questions. Operator, can we have the first question, please?
Certainly, sir. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.
Again, press star one to ask a question. We will take our first question from Rahul Paul from Canaccord Genuity. Please go ahead, sir. Your line is open.
Hi, everyone. Congratulations on a strong Q1. At Ity, you indicated that you stacked some higher grade material from Bakatouo during the quarter. Previously, the plan, I believe, was to keep that for when the CIL comes online because of the soluble copper. I know you did some additional test work. Has that changed your overall plan for Bakatouo, or is this just temporary? Also, does that explain the greater reagent consumption that you also spoke about?
Yeah. Good morning again.
Jeremy?
Thanks, Rahul. Here you go. I've got it, Seb. Look, Rahul, I guess first things first, the material we're taking from Bakatouo is near service, oxide-type material. We do have a much better handle on the metallurgy going through the process plant now, and the cyanide addition, water addition, and also, we're in the dry season at the moment. We have a much better handle on Bakatouo and processing it. The soluble copper isn't an issue actually, because, if you can control your addition through the front end of the plant, it makes it so much easier to extract. We are seeing a little bit of an increase in cyanide consumption to boot. The returns at the moment and the availability of the process plant is fantastic. Yeah, we're very happy with ore coming out of Bakatouo at the moment.
Okay, thanks.
Yeah, Rahul, it's probably fair to add, yeah, sorry, Rahul. To add probably to your question, probably fair to say that, last year, when we planned initially to stack ore from Bakatouo, we were in the middle of the rainy season. Given the copper presence, we thought that it was probably better to defer that. This is why we took the decision last year to defer Bakatouo. This year, given the good results that we have and the accessibility, I mean, to that ore, we thought that some of it could be used. Although it's a very limited quantity and does not affect at all the Ity CIL project.
Okay. Thanks, Seb. One more question on Ity again. We did see an increase in unit mining cost to about $5 a ton. You mentioned longer haul distances, more fleet maintenance, the addition of a contractor. I know your long-term plan is based on low owner mining. How much of the increase is due to the use of contract mining, and are you using the contractor mostly to mine waste, or are you using them to mine ore?
Thanks, Rahul. The contract has just started actually, and they will be on ore and waste, as we try to get as much to the raw material, I guess, to the stockpiles for Q3, Q4. The mining costs did go up slightly during Q1. They were due to mechanical availability, which was a little bit low. This fleet, let's not confuse this fleet with the CIL fleet. They're two different fleets. The heap leach fleet generally consists of ADTs, articulated dump trucks. Whereas the CIL fleet is 90-ton Komatsu haul trucks. Yeah, we did have a little bit of a kick with mechanical availability. We did have increased hauls as well. We had to construct a couple of roads to weather protect us from the wet season. It's providing us pretty good access actually at the moment.
Yeah, that's why we mainly did see that increase.
Okay, perfect. That's helpful. Thanks, Jeremy. That's all that I had.
We will take our next question from Nana Sangmuah from Clarus Securities. Your line is open. Please go ahead.
Thanks, operator. Congratulations, guys, what a great quarter. A couple of questions at Houndé. It's still significantly below the feasibility study level. Jeremy, could you comment what's driving the variance? Should we be assuming this low level for the life of mine, or we should see that trend up?
Yeah. Good morning, Nana. Look, that's a good question. I think we're still pretty early on in the piece, eh? As you know, the life of mine costs in the feasibility study are just that. What have we got now? We've got five months of operating data under our belt. We're certainly mining very efficiently, the team on site are doing a fantastic job. We're close to the pit, in Vindoulou, sorry, close to the plant in the ROM. Everything's quite close. Yeah, we will see costs increase, obviously, as the strip increases a little bit. We have to go out to Bouéré to bring ore back from there in the latter part of this year as well. I think we need to just have a look at it mid-year.
We are spending a lot of time and effort on managing or tracking all the costs as they fall into the operational, I guess, expenditure.
Great. On the strip, could you provide some guidance of where it could go to? It's currently at 6.5. Should we expect it to trend upwards to 10 toward the end of the year? Or that's way too aggressive.
Look, the strip will go up, because we've got a fair bit of pre-strip out of Bouéré. If we're considering Vindaloo and the Bouéré assets together, the strip overall will go up. We will see that go up towards really the DFS number or the FS number, if you like. So, yeah, I would expect to see that increase in Q3.
Great. My last question, are we still on track to divest Tabakoto? Is that still on the radar, or is good grades coming in at Tabakoto not changing the focus? What is the progress that's currently been made in replacing those ounces by another organically generated asset from exploration internally?
A lot of questions, Nana. I think we said that we haven't changed our focus. The objective is to take a decision on Tabakoto by the end of Q2. When you refer back to the chart and the magic box, clearly, Tabakoto is not yet into this magic box. Therefore, depending on the results of one or two strategic analyses that we are conducting right now, Tabakoto with potential contractors and others, we'll take a decision on the future of Tabakoto before end of July.
Thanks, guys. I'll pass it on to the next question. Congratulations on a good quarter.
Thanks, Nana.
We will take our next question from Chris Thompson from PI Financial. Your line is open, sir. Please go ahead. Hello, caller. Your line is open.
Sorry guys, I was on mute. Congratulations on a really good quarter. I think Nana asked some pretty good questions there, so he's stolen a bit of my thunder. One question that I do have on Karma. You do mention that you're going to be winding down GG1 and then winding up, I guess, Kao later on this year. Can you give us a bit of a sense of what the grade profile is going to look like to stacked grade?
Good morning, Chris. How are you? We're pretty much out of GG1 now, in earnest, and a little bit of stuff in GG2 to go. The Kao asset, we're still doing grade control there, and we're ahead of the game. For us to get a real feel for it, we need a little bit more data. We've only been into Kao now for two and a half months. That'll materialize as we go through Q2. Mid-year, I'll be able to give you a much better feel for that, and you'll see it in the results actually. We're very confident with the material coming back from Kao. In fact, it's a little bit less abrasive, and its wear characteristics on the process plant are a little bit lower. Yeah, I'm very positive about getting that all through the plant as quick as we can.
Okay, guys. All right. Thanks a lot. Congrats.
We will take our next question.
Thanks, Chris.
from Dan Rollins from RBC Capital Markets. Your line is open. Please go ahead, sir.
Yep. Thanks very much. Jeremy, I was wondering if we could spend just a little bit of time on Houndé. Obviously, the mill has ramped up quite nicely. Now that you're transitioning more to harder material, do you think you can continue to run at this 20% of nameplate? Should we expect maybe something more in the 10% range for the near term is more doable until you really can get in there and optimize that circuit further beyond five months of operations?
Jeremy, are you there?
I do apologize.
We lost Jeremy, Chris.
He has disconnected from the call.
Okay. Chris, do you mind repeating your question? Dan, sorry.
Yeah, no. I was just asking about how sustainable the current run rate at Houndé is, and when you get into harder material, can you continue to run at that 20% of name plate? I can take it offline. Beyond that, maybe just one for Vincent.
Yeah. I think the point is on, we've been milling since January, hard rock material. The results you see in Q1 is already a good signal on how the mill is reacting on hard material. I'm not going to say that 20% above nameplate is where we should be. If you look at the performance of Agbaou, for example, historically, we always said that we had a bit of room above nameplate capacity. I think that Houndé is showing right from the beginning, this ability to maintain a rate at nameplate capacity or slightly above.
Okay. Then I guess following on that, the improvement on the milling cost per ton relative to the feasibility study, is that majority due to the greater economies of scale you're getting from the throughput, or is there some other elements such as consumable costs that have trended better than expected?
In fact, it's a combination of both. The plant capacity, obviously, running at a higher rate allows us to reduce the cost. Secondly, we have for the time being some lower consumption on the cyanide cost.
Okay, perfect. Just to confirm, Vincent, is Houndé now fully cash taxable? Is there any shield left to help reduce the cash taxes, or should we assume full taxation going forward?
No, you can assume full taxation on Houndé.
Okay, perfect.
It's-
Appreciate it. Thanks very much for now
Thanks, Dan.
As a reminder.
Sorry, Dan. I'm back, mate. Sorry.
If you'd like to ask a question, please press star one. We will take our next question from Geordie Mark from Haywood Securities. Please go ahead. Your line is open.
Good day, everyone. Stellar quarter there. Well done. Looks like we got lucky there with Jeremy back online. If I can, and probably focus a little bit on Houndé. On the throughput there, obviously exceeding nameplate. Just wondering about your guidance ultimately for the year. Does that sort of consider north of nameplate or north of 3.3, or you're still pretty happy with what you've got now? With maybe more focusing on the back end of the plant and the tails and residence capacity at the back end, do you have additional capacity there to go further than 3.6, or what are your thoughts?
Yeah, thanks for the question, Geordie. The plant's tracking at the moment above nameplate. It's not in the proper 88 12 blend yet, 88 fresh, 12 oxide. We may see it even slow down a little bit as we move through the year. The back end of the plant isn't bottlenecking the ore body. In fact, we will get locked up through the crusher, if anything. The milling circuit and the CIL train and moving through the reagents and into the gold room, that's got a fair bit of headroom in it still. The guys and girls on site are working hard on working through the commission circuit now. Like I said to Nana before, we're five months in, effectively. We're reluctant to make too bold a prediction and just let the asset do what we know it can do.
Okay, great. Maybe on moving over to Karma, you're talking about greater stacking rates. How's your flow rate through the ADR? Just trying to get an idea of your evolving sort of rock-fluid ratio on a per day basis there, and whether it affects your recovery at all.
I can get that number to you, Geordie. I haven't got it in front of me, the new back end of the plant is probably the star of the show. We are bottlenecking now pretty much at the stacker, if you like, which wasn't upgraded. The new crushing circuitry, i.e. both the sizes, and as we move out to the tripper conveyor, is performing exceptionally well. The back end with the cascade type absorption circuit. The absorption circuit is performing very well. We didn't even see a step change as we swung over and did a hot commission last year. As much as we can stack, I think we can get through the back end of the plant. Proof in the pudding with this one too, Geordie, is the elution circuit on this asset's bigger than the elution circuit at Houndé.
Yeah. Okay. Righty-o. Okay, that's good. With Agbaou, it's the last question, sorry. Grade, maybe I missed it, sort of you're expecting grades to increase, I guess coming in the back end. Is that what we should expect? Any changes in unit costs coming with that at all? I'll leave it there. Thanks.
Yeah. No worries. Yeah, we are expecting to see a little bit of grade come forward. We were trying to get into West Pit Satellite in Q1 this year, we had a couple of rain events actually. That's kind of pushed into Q2 and the early part of Q3. I'm just having a look at some stuff while I'm talking to you here now. Yeah, we will see the grade come forward a little bit in the latter part of this year. For us, it's all about getting our mining and optimizing that a little bit more now. Getting our blasting regime sorted out and working through that as we move through the wet season, pulling stockpiles down a little bit. I think by and large, we've prepared well at all the assets for the wet season that's coming up.
Okay. Thank you very much.
We will take our final question from David Haughton from Scotiabank. Please go ahead. Your line is open.
Hi, good morning, guys. A lot of my questions have been answered, just one on Kalana. In terms of the drilling that you're doing right now and coming out with a resource update, I guess mid-year, are you getting any new surprises? Is it coming on as planned?
Well, Patrick,
Well, I think it's too early, I think, to get this. Right now, the guys finished the 60,000 meter drilling program end of March, beginning of April. They're now waiting for all the results before compiling that into the resource model. I think we already indicated that our anticipation was that, as we're going to take a more cautious approach on the resources, is that compared to the existing resource level, we were expecting to probably decrease by 5%-10% the existing resources on the existing areas. At the same time, to increase by at least the same amount or more through the new exploration drillings that were done, step outs of the existing pits that were drilled initially by the previous owner.
Okay, perfect. Just again, moving to Houndé, in terms of the drilling that you guys have been doing at the Kari Pump area, and expected to come out with some results shortly, I believe. In those terms, are we going to look at results coming out from the Kari Pump area only, or is there any other targets around Houndé that you guys are looking at releasing some results as well?
On this one, Patrick?
Yeah, no, actually, we've been very active on the Kari area. The first target was to delineating the first Kari Pump extension discovery last year, and we have been also aggressively drilling the entire part of the whole Kari anomaly. Basically, that was our main focus, but our target is still to address before the end of the year other targets like where we had some positive intercept recently. Again, we are targeting to make a press release very quickly on the result of our fourth quarter exploration in Houndé. Obviously, there should be some update toward the end of the year if we have enough data to account for the resource. So far, the priority for us was to work and to develop all the Kari area.
Perfect, Patrick. Thanks so much. That's it for me. Thanks for taking my questions.
It appears there are no further questions, I'd like to hand the call back over to our speakers for any additional or closing remarks.
Thank you very much. I'd just like to thank you again for attending this webcast. I'd like to thank also my team for this very good Q1 and looking forward to further answer any questions you have through our team. Thank you very much and have a good day.
Thank you, ladies and gentlemen. This concludes today's Endeavour Mining Quarter One webcast results. You may now disconnect.