Greetings and welcome to the Endeavour Mining's 1st Quarter 2019 Webcast. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr.
Sebastian De Montesou, CEO of Endeavor Mining Corporation. Thank you, Mr. De Montesou. You may begin.
Thank you, operator. Good morning and afternoon to everyone. Thank you for joining Endeavour Mining's Q1 twenty eighteen results presentation. Sebastian De Monteschi, CEO of Endeavour Mining, and it's a pleasure to be talking to you once again. Please note the usual legal statements and disclaimers 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 then take you through our financials. Followed by Journey who can give more color on each individual mine and project. We'll then open the call for questions. As you can see on the this slide, we've had a very strong first quarter on the 3 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 on 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 Hounde. 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 that almost have 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 Hounde and Agbaou with no lost time injuries at all. And are continuing that excellent track record right now at our Ity CIL project.
As the excellent Q1 performance is due to Hounde, I've inserted a slide upfront 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 Hounde is 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 and 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 $107,000,000 since November 2015, with an upfront capital spend of about $340,000,000 on this project. You can see how attractive this asset is. We expect therefore very quick payback period and on our turn to exploration, which Patrick will speak about shortly. Looking across the group, the results from Hounde has lifted production from continuing operations by 39% versus Q1 of last year. In gray, you can see the previous production from Enzema, which was sold at the end of last year.
After seeing the impact of Hounde, 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 Hounde, we have seen our all in sustaining dropdown from roughly $900 an ounce to $7.74 an ounce for this quarter. And we are well on target to achieve our 20 18 full year target of between $8.40 $1.90 per ounce. To reiterate this end, 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 20 seen a strategic plan when I joined Endeavour.
Next, you can see here the direct impact of greater production and lower cost on all our on our all in margin, which includes the discontinued operations, In Q1, we achieved a margin of $68,000,000, 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 ETCL construction, which is now our next large growth catalyst. Jim, you, Kim.
Thanks, Sebastian. Hello, everyone. Look, Edie is obviously one of the focus points for us as we progress through 2018. And as can be seen from the, from the photo, progressing very well. And we remain on time and on budget for our first gold pour mid 2019.
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 1,800,000 now hours, without an LTI. In fact, we're over 2,000,000 now as I speak to you. 65% of total capital is being committed. And $170,000,000 out of bank to date.
The CSF work is progressing very well, and the camp construction has seen the largest for the great support and the expats move into their new rooms. Earthworks excavation and 90 KB transmission line, the OV panel 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 a visual representation of the process plan here. I guess, going into clockwise rotations, from, from the top left hand side, you can see the process plan.
But the people have been on-site before, there used to be a big hill behind, behind the far radio towers there that's gone. And, and as I move across to the primary crusher, you can see it's well advanced We're about 6 to 8 meters out of the ground now. So, that's progressing very well. I guess the real pleasing thing is if you have a look at the bottom right hand photo, the Hallbridge works which is topographically in the lowest part of the asset, which joins P26 to PR609 and the DARPU pit, that's progressing exceptionally well. And for me, we are pretty well out of the ground before the wet season gets upon us, so pleasing to see.
On 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. And then if you'd have a quick look at, suffice to say, we're tracking well on time and on budget at present time. I'm now going to hand over to Patrick for a brief exploration review. Patrick, over to you.
So just for the highlight of the 1st quarter exploration activity at the Naval, the main focus, which started actually in December or last year was at Kalana where we embarked in quite aggressive, intensive exploration program targeting both the Kalana deposit and also the Kalana code 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 on, to publish a new update resource by sometime around media. The other very strong activity we had was indeed in Hounde after we announced the discovery of the Kari Pump area last year, we embarked in very aggressive program to cover the order, carry large gold in soil anomaly in this area.
We had some very good interesting news and we are prepared to and on sit in the next coming weeks. Aditi, we have been also quite aggressively pursuing the Le Plaque iscovery, which was announced last year and out of which we announced just limited resource concerning the very central earlier on in February. So, we are expanding the trend. And so far, so good, we are expanding the Black discovery. Also, as stated before, more and more will be turning or show 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 twenty 18 to work on that. At Agbaou, the drilling started a little bit late in the quarter, but we have been drilling below some Agbaou Pizza namely the northern pit, but we are also going to drill a little bit more on the west pit. And we are also doing some regional operation on Agbaou. At Tabakoto, most effort concern, the northern part of the fit in a month where we are targeting new anomalies in an orphan part of the block of the coffee area. This is still initial result.
We are going to pursue that all during 2018. And at Karma, basically we are concentrating on the last year, our year bones go discovery, we are doing some infield drilling and also trying to expand a little bit Northcao, while also addressing additional target around Cao, 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. This is due mostly because we had a very strong focus, 1st on Kalana secondly on Hounde and on Ity.
We did that to be, to have everything ready for the 2nd part of the year after the rainy season. So that's it for me. I give you the word back to Sabre or Vincent. Yes.
Thank you, Patrick. So on Slide 15, we'll out the section by looking at the production bridge between Q1 this year and last year. As highlighted previously, the addition of Hounde has enabled us more than offset the sale of Enzema 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 line items from revenue to all in margin. So on the top line, the top line is increasing, as I just explained, I wanted just to 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 3, the all in sustaining margin increased by 111% due to the successful startup of Hounde. The higher realized gold prices and an all in sustaining cost decrease at Ity, which more than offset the increase of production cost Agbaou, Tabakoto and Karma. At 0.4, the non sustaining capital spending increased versus last year, which is mainly due to a $6,000,000 increase at Agbaou for its capital for its waste capitalization activities. On point 5, the non sustaining exploration cost increase as we are well advanced in our drilling program has just explained by Patrick before. Finally, this results in the all in margin increasing 112 percent to $68,000,000 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 1, there is a significant movement in working capital this quarter. This is firstly due to the inventories increase for consumable Tavacoto, Ity and Karma, but also to an increase of the stockpiles before the rainy season. Secondly, it is also due to sustain supplier payments during the period, notably attack Bao, 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 2, we paid interest this quarter on the RCF whereas last year, they were paid in Q2. So this is merely a difference of timing. No interest have been paid during the period on the convertible bond, which are payable semiannually in February August. As shown in 0.3, we spent $78,000,000 in our growth projects, mainly consisting of work on the Ity CIL project, In total, we paid $117,000,000 to date on that project. In total, we accounted $147,000,000 in our balance sheet, which includes $30,000,000 lease financing.
The last number you see down on the bottom here are result of the repayment of the old revolving credit facility for $280,000,000 and the receipt for $330,000,000 from the convertible bond. On the slide after, you can see how that all that leave us very well positioned to fund the reminder of the capital expenditure required to complete ity. We have $424,000,000 in available liquidity comprised of $94,000,000 of cash and 3 $30,000,000 of undrawn revolving credit facility. On top of this, we have the remaining proceeds from the Nzema sale for about $25,000,000, remaining equipment financing at Hiti, 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 EUR 30,000,000 since year end.
After receiving the first equipment ECIL, the net debt has increased from $232,000,000 at the end of December 2017 to $336,000,000 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 $123,000,000 in cash, Net cash flow from operating activities, was $94,000,000 before working capital changes. And $48,000,000 when we include the negative $46,000,000 working capital variation, as previously mentioned.
Investment activities amounted to $119,000,000, comprised of $78,000,000 of growth projects and $41,000,000 of operating capital expenditure, which include exploration. Financing activities amounted to $42,000,000, which include mentioned, the EUR 330,000,000 received from the insurance of convertible notes and the repayment of EUR 280,000,000 of the RCF. This leader leaves us with a cash current cash position of 94,000,000. 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 5 months out of 12 for Hounde. However, when looking at the same ratio using the Q1 annualized EBITDA, This ratio decreased to 0.9 times. Due to the addition of Hounde cash flow, this metrics might be a bit more representative of the group's financial health. On the Slide 21, with you can see the strong operational performance which led to a strong adjusted EPS increase, which was up 130 percent 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, we'll move through the 5 operational assets, Hounde, Agbaou, ity, Karma and Tavakoto pretty quickly. So we can open up the questions at the end. I guess, so we've already talked about how pleased we have the Hounde project or asset and how it's performing compared to the feasibility study. You know, Hounde is well on track to meet full year guidance of, circa 250,260,000 ounces at an all in cost of 580, 630.
Know, for the moment, we're seeing all the same costs, 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, to work around it. We've also started the settlement activities of wary, which, just to remind you all, is, is a high grade satellite deposit court's name, treating for the most part. And, we're on track to commence morning that later this year. At Agbaou, we previously mentioned 18 to 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 low 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, I'd be out on track to meet full year 2018 guidance of, 140,000 to 150,000 ounces. And an all in sustaining cost range of $8.60 to $900 an ounce. Production is expected to increase in the upcoming quarters. Well, costs are expected to trend towards the guided range as the hard ore blend increases.
Ity heap leach, interesting little asset. When we talk about ETCIL project, we forget that we actually have an operating heap leach mine as we speak right here and now. And expected, you know, at IKE West the grade increase 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. And as we continue until early Q3, I think, this year.
Our aim is to create a stockpile sufficient to feed the stacking requirements, you know, for the second half of the year, and we will we will focus. So I guess the mining focus will shift towards the CIL project, you know, with the training of personnel, etcetera, etcetera. Over to Karma, back in Burkina and, look, Cam's performing well on track to meet 2018 guidance. We are seeing the benefit now of the optimization work we did last year. Stackings increased following the commissioning of the new front and back end of the plant.
The construction of the, new camps finished as well, and everyone's pretty happy there on-site. The big thing is we've got a 5,000,000 ton annualized run rate, Karma, And, to remind everybody, the nameplate of these assets, 4,000,000. So we're up by 25% with stat capacity. As expected, mining activity in Q1. Focused mainly on mining transition will also continue to, which resulted in slightly lower recovery rate from the heap.
Q1 production was actually slightly above expectations due to higher manpower capacity, as I mentioned earlier. Now we stacked on budgeted log grade ore as well. Overall, this resulted in slightly more than expected production, albeit, I guess, slightly higher than expected all in sustaining cost. But ultimately resulting in, free cash flow, cash is king. In, in line with guidance, production is expected to increase and, all in sustaining costs expect decrease in the second half of the year as mining activities transitions to the oxide ore from Cowal.
It's got a high recovery rate and low unit costs generally. And last but not least, Tabakoto, we have a we've taken a number of steps in Q1, which saw us increase production and decreased costs in the first quarter compared to the prior period team on-site is doing a fantastic job. Tabakoto is 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. And, strategic assessment is being made towards the latter part of this year.
I'll hand back to Sebastian. Sid, hello to you, mate.
Thank you, Jeremy. So to conclude, this was a from quarter 4 endeavor, 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 Hounde has resulted in proved 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 and to meet our 5 year strategy and objectives on exploration discovery.
Next, 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. And now the team and I would now be happy to take any burning questions. Operator, can we have the first question, please? Certainly sir.
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 ipi, You indicated that you've stacked some higher grade material from Bakatore during the quarter. Previously, the plan, I believe, was keep that when the CIL comes online because of the soluble copper has I know you did some additional network. Has that changed your overall plan for Bakkadu or is this just temporary?
And also does that explain the greater reagent consumption that you also spoke about?
Yeah, good morning. Thanks, Riel. Hey, good. I've got it set. Look, Ralph, I guess first things first, you know, the material we're taking from back into is near service, you know, 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, you know, we're in the dry season at the moment So we have a much better handle on, Baccatumum processing. The soluble copper isn't an issue, actually, because, you know, if you can control your your additions 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.
But, the returns at the moment and the availability of the process plant is fantastic. So, yeah, we're very happy with, with the ore coming out of back to it at the
moment. Yes,
sorry, I will add
probably to question, probably sad to say that, you know, last year, when we planned initially to, stack ore from Baccato, we are in the middle rainy season. And given the copper presence, we saw that it was probably better to defer that. This is why we took the decision last year to defer back at all. Now this year, given the good results that we have and the accessibility, I mean, to that door, we thought that some of it could be used. Also, it's a very limited quantity and does not affect at all the Ity CIL project.
Okay. Thanks. Thanks, Seb. And then, the one more question on ipi again. We did see an increase in unit mining costs to, to about $5 a ton.
Now you mentioned longer haul distances more fleet maintenance, the addition of a contractor. I know your long term plan is based on owner mining. So how much of the increase is due to 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, Roe. Look, the contract has just started actually, and, they will be on, OREM Waste. As we try to get, you know, as much to the raw more guests to the, to the stockpiles for, for Q3, Q4. You know, the mine cost did go up, you know, slightly during Q1. They were due to, you know, mechanical availability, which was a little bit low.
And, this fleet, let's not confuse this fleet with the CIO fleet. They're 2 different fleets, and the, the heap leach fleet generally consists of ADTs, articulated dump trucks. Whereas the, the CIO fleet is, not yet done come out to, haul trucks. So, yeah, we did have a little bit of a kick with mechanical availability We did have increased halls as well. And, you know, we had to construct a couple of roads to prevent us to weather protect us from the wet season It's providing us pretty good access actually at the moment.
So that's why we mainly did see the 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. We're a great quarter. A couple of questions at Hounde. I noticed that the mining unit cost went up, but it's still significantly below the feasibility study level.
Jeremy, could you comment what's driving the variance and should we be assuming the slow level for the life of mine? We should see that trend up.
Yes. Good morning, Ana. Look, that's a good question. I mean, I think we're still pretty early on in the P to, as you know, the life of mine costs in the feasibility study are just that. And, what have we got now?
We've got 5 months of operating data under our belt. We're certainly mining very efficiently, and the team on-site doing a fantastic job. We're close to pit in Vindaloo, sorry, close to the plant in the room. So everything's quite close. And, yeah, we will see cost increase, obviously, the strip increases a little bit.
And, you know, we have to go of wary to bring all back from, there in the latter part of this year as well. So, I think we need to just have a look at it mid year, and we are, you know, spending a lot of time and effort on, on managing or tracking all the costs as they fall into the, the operational, I guess, expenditure.
Great. And on the script, could you provide some guidance of where it could go to? Currently at 6.5. Should we expect it to trend upwards to 10 towards 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 wary. If we're considering, Vindaloo and the wary assets together, the strip overall will go up. And, you know, we, we will see that go up towards really the the DFS number or FS number, if you like. So, yeah, I would expect to see that increase in Q3.
Great. And my last question, are we still on track to divest Tabakoto? Is that still on the radar or as good grades coming in at Tabakoto not changing the focus and what is the progress that currently been made and replacing those ounces by another kind of collision rated 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 Tobacco by the end of Q2. And when you refer back, I mean, to the chart, and the magic box. Clearly, Tabakoto is not yet into this magic box.
And therefore, depending the results of 1 on 2 strategic analysis that we are conducting right now Tabakoto is in a potential contracted and others. Will take a decision on the future of Tabakoto before endofJuly.
Thanks guys. Pass it on to the next question. Congratulations on a good quarter.
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. So congratulations on a really good quarter. I think Donna asked some pretty good questions there. So he's you 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 DG1 and then winding I guess, Karl 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?
Look, we're pretty much out of GT1 now in earnest and a little bit of stuff in GT2 to go, but, you know, the Cal asset we're still doing great control there and we're, I guess, we're ahead of the game, but for us to get a real feel for it, we need a little bit more data. We've only been into Cowen now for two and a half months. And, that'll materialize as we go through too. So midyear, I'll be able to, give you a much better feel for that, and you'll see it in the results, actually. You know, we're we're very confident with with the material coming back from Cowal.
In fact, it's a little bit less abrasive and it's where characteristics on the process plant are a little bit slower. So, yeah, I'm very positive about getting that all through the plant, as quick as we can.
We will take our next question from Dan Roblin from RBC Capital Markets. Your line is open. Please go ahead, sir.
Yes, thanks very much. Jeremy, I was wondering if you could spend just a little bit of time on Hounde. Obviously, the mill has ramped
up quite
nicely. And now that you're transitioning more to harder material, do you think you can continue to run at this 20% of nameplate? Or should we expect maybe something more in the 10% range for the near term is more doable until you really can get in there in optimize that circuit further beyond 5 months of operations?
Jeremy, are you there? I do apologize. He
has disconnected from the call.
Okay. Chris, do you mind repeating your question? I'm sorry.
Yes. No, Dalton, I was just asking about how sustainable the current run rate at Hounde is. And when you get into harder material, can you continue to run at that 20% of nameplate, but I can take it offline. And beyond that. Maybe just one follow-up.
Yes, well, I think the, yes, I think the point, the point is on We've been, we've been milling since January hard work material. So the results you see in Q1 is already a good signal on how the mill is reacting on the 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. So I think that Hounde is showing from, right from the beginning disability to maintain rates at nameplate capacity or slightly above.
Okay. And 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 prompt capacity of see running at a higher rate, I mean, allows us to reduce the cost. And secondly, we have, for the time being some lower consumption on the side impact.
Okay, perfect. Just to confirm, Vincent, is the Is Hounde 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 Hounde.
Thanks, Ben.
We will take our next question from Georgie Mack from Haywood Securities. Please go ahead. Your line is open.
You know, it looks like you're lucky there with Jeremy back in line. Okay, if I can and probably focus a little bit on Hounde, So on the throughput there, obviously exceeding nameplate. I'm just wondering about your guidance ultimately with 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. And with maybe more focusing on the back end of the plant and the tails and residents capacity at the back end.
Do you have additional capacity there to go further than 3.6 or what are your thoughts?
Yes, thanks for the question, Jordy. Look, the plant's tracking at the moment on, above nameplate. It is in a, it's not in the proper 8812 blend yet, 88 Fresh12 oxide. So, we, may see it even slow down a little bit as we move through the year. But, the back end of the plant isn't bottlenecking the ore body.
In fact, we probably we will get locked up through the crusher, if anything. So the milling circuit and the CIO train and moving through the reagents and into the gold room, that's got a fair bit of headroom in it still. So, the guys and girls on-site are working hard on I'm working through the combination circuit now. And, like I said, to a banner before, we're 5 months in effectively. So we're reluctant to make you too bolder prediction and just let the asset do what we know it can do.
Okay, great. And maybe on, moving over to Karma, you're talking about greater stacking rates. How's your flow rate through the ADR and 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, Gordie. I haven't got in front of me, but, the new back end of the plant is probably the the star of the show. You know, the the we are we are bottlenecking now pretty much at the stacker, if you like, which wasn't upgraded. So the new crushing surgery, I.
E. Both sizes. And as we move out to the triple conveyer, is performing exceptionally well. Back end with the cascade type, absorption circuit, absorption circuit is performing very, very well. And we didn't even see a step change as we, as we swung over and did a hockey position over the last year.
So as much as we can stack, I think, we can get through the back end of the plant. Proof in proof in the pudding with this one too, Jordy, is the illusion circuit on this asset, bigger than the illusion circuit Hounde.
Yes, okay, right. Yeah.
Okay, that's good.
And with Agbaou, it's last question, sorry. Greg, maybe I missed it, sort of, you're expecting grades to increase. I guess, coming in the back end, is that, so which would we should expect any changes in unit costs coming with that at all. And I'll leave it there. Thanks.
Yes, no worries. 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, but we got we had a bit of couple of rain events actually. So that's kind of pushed into Q2 in the early part of Q3. I'm just having a look at some stuff while I'm talking to you here now.
And, yeah, we will see the grade come forward, you know, 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. And I think by and large, we've prepared well at all the assets for the wet season that's coming up.
We will take our final question from David Havi from Scotiabank. Please go ahead. Your line is open.
Hi, good morning guys. Just a lot of my questions have been answered, but just one on Kalana. In terms of the drilling that you're doing right now and coming up with a resource update, I guess midyear, Are you getting any new surprises? I mean, is it coming on as planned?
Well, I think it's too early, I think to get this right now. The guys finished the 1000 minute drilling program end of March beginning of April. So they're now waiting for all the results before compiling that into the resource model. But I think we already indicated that our anticipation that was that as we're going to take a more cautious approach on the resources is that compared to the existing ASOS level we were expecting to probably decrease by faster 10% the existing resources on the existing areas, but 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. And just again, they're moving to Hounde. 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 carry pump area only or is there any other target around Hounde that you guys are looking at releasing some results as well?
Patrick?
Yes. Actually, we've been very, very active on the carry area. The first target was to, delineating, you know, the first carry pump extension for Red Acura and we have been also aggressively drilling the entire part of the whole, carry anomaly So basically that was our main focus, but our target is still to address before the end of the year of our target like CS and Equity where we have some positive intercept recently. Again, we are targeting to make a prestigious very quickly on the result of our first quarter expiration in, in a, in a, in And obviously, there should be some updated toward the end of the year or if we have enough data to account for the risk But so far, the priority for us was to work and to develop all the carry area.
Perfect, Patrick. Thanks so much. And that's it for me. Thanks for taking my questions.
It appears there are no further questions. So I'd like to hand the call back over to our speakers for any additional or closing remarks.
Thank you very much. Well, 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 Ratin. You very much, and have a good day.
Thank you, ladies and gentlemen. This concludes today's endeavor mining quarter 1 webcast results. You may now