Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Corporation Q3 2021 Financial and Operational Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations. Please go ahead, Ms. Wilkinson.
Thank you, operator, and good morning, everyone. I'd like to welcome you to our third quarter 2021 conference call. Before we begin, I would like to remind you that we will be making forward-looking statements during the call. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. Joining me on the call today, we have George Burns, President and Chief Executive Officer, Phil Yee, Executive Vice President and Chief Financial Officer, Joe Dick, Executive Vice President and Chief Operating Officer, and Jason Cho, Executive Vice President and Chief Strategy Officer. Our release yesterday details our 2021 third quarter financial and operating results. They should be read in conjunction with our third quarter financial statements and management's discussion and analysis, both of which are available on our website.
They have also been filed on SEDAR and EDGAR. All dollar figures discussed today are US dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. After the prepared remarks, we will open the call for Q&A. At this time, we will invite analysts to queue for questions. I will now turn the call over to George.
Thanks, Lisa, and good day, everyone. Here's the outline for today's call. I'll provide a brief overview of Q3 results and highlights before passing it to Phil to go through the financials. Joe will follow by reviewing operational performance, and then we'll open it up for questions from analysts. I'm very pleased with our third quarter results. Production in Q3 was 8% higher than last quarter based on strong production at Kışladağ, and we have increased our full year 2021 production guidance by approximately 6% to 460,000-480,000 ounces, up from 430,000-460,000 ounces previously. We are working through our budgets right now, and we are comfortable with our 2022 production guidance range, which takes into account commissioning of the HPGR in Q4.
We will update the market on 2022 guidance in the new year. Joe will speak more about our operational performance later in the call. I'm very proud of the operational teams for working safely and effectively to achieve robust production in the first 9 months of the year. Specifically, I would like to congratulate Kışladağ team for delivering strong production year to date and successfully completing several operational improvements at the mine. During the quarter, we refinanced our senior secured notes. Phil will speak to this later in the call. Not only were we able to lower the cost of debt, but certain Eldorado subsidiaries in Greece were removed as guarantors, which will allow us to pursue a broader range of funding alternatives for the development of the Cassandra assets. We continue to see strong support in Greece for the Skouries project.
The support from the Greek government has allowed us to sign an amended investment agreement and obtain the approval for dry stack tailings permit early in the year. We're also seeing strong interest from Greek banks in EU COVID relief funds. This is very encouraging as we accelerate the process of finalizing and funding and financing for the world-class project. In October, we made the decision to suspend mining operations at our non-core Stratoni Mavres Petres mine in Greece and focus on exploration. The Mavres Petres mine currently lacks reserves to support sustained operations, and we expect to continue our exploration program in this highly prospective area, aiming at identifying and verifying new reserves. During this phase, the mine will be transitioned to care and maintenance. Operations could resume upon positive results for a future technical and economic review.
We will strive to either relocate employees to other Cassandra operations or offer training programs at a new technical training center under development at Stratoni. This was a difficult decision but necessary. A decision to ensure the viability of Cassandra assets and allow Eldorado to continue to invest in the region for the long term. We continue to monitor cost and CapEx inflation across our operations. In Turkey, inflationary pressures have been mostly offset by the weakening lira. In Canada, mining project activity has picked up in the Val-d'Or region, which is putting pressure on our contractor labor rates. COVID-19 has impacted the supply chain, causing minor shipment delays. Based on Q3 and year-to-date cost performance, we are not seeing any notable impact of inflation. At the end of October, we closed the previously announced sale of the Tocantinzinho project in Brazil to G Mining Ventures.
This sale provides Eldorado with immediate value for TZ and allows us to retain meaningful exposure to future value creation through our equity stake in G Mining. TZ will be a cornerstone asset for G Mining, a team with a strong track record of building mines on time and on budget. We believe that G Mining, which now includes our local Brazilian team, are the right group to responsibly advance the asset, and we look forward to following and supporting their success. Shifting over to ESG, I wanna update you on the Global Sustainable Integrated Management System that we launched in Q1. GSIMS integrates sustainability, responsibility, and accountability across Eldorado's core business functions at all levels of the organization.
This internal management system is a set of performance standards addressing occupational health and safety, environment, social, and security by which we will be able to better measure, track, and drive our ESG performance. In Q3, we completed GSIMS self-assessments at our operating sites with positive results. We are now focused on creating action plans that will support our commitment to continuous improvement. One of the key pillars of our SIMS sustainability framework is to engage collaboratively with stakeholders to build positive relations and uphold our social license to operate. For example, during the quarter, our team in Quebec announced a partnership with the Nation Anishnabe of Lac Simon to develop an adult education center in Val-d'Or to support skills and sustainable development of the community. We are also continuing discussions to work towards a long-term collaborative and sustainable development agreement with the Nation Anishnabe of Lac Simon.
In Q3, in Greece, we continued a comprehensive stakeholder engagement process in preparation for environmental social impact studies with the goal to build a mutual understanding and support of a positive shared future in the region. With that, I'll turn the call over to Phil to review our third quarter financial results.
Thank you, George. Good day, everyone. Starting with slide 4, we had another strong quarter of operational results. Production at Kışladağ was higher than planned, which led us to revise and increase our 2021 production guidance by 6%. Our costs remain in line with our 2021 annual guidance. Revenues were consistent with plan and expectations, supported by strong sales and an average realized gold price of $1,769 per ounce. Free cash flow was $29 million in the quarter, and we are forecasting continued free cash flow generation through to the remainder of the year. Eldorado reported net earnings attributable to shareholders from continuing operations in Q3 2021 of $8.5 million or $0.05 per share compared to net earnings attributable to shareholders of $46 million or $0.26 per share in the third quarter of 2020.
After adjusting for one-time non-recurring items, including $31 million of financing costs related to the debt refinancing in Q3, among other things, adjusted net earnings attributable to shareholders for Q3 2021 increased to $40 million or $0.22 per share, up from $29.3 million or $0.16 per share last quarter. Cash operating costs in Q3 2021 averaged $646 per ounce sold, an increase from $537 per ounce in Q3 2020. The increase is primarily due to lower grade ore mined and processed at Kışladağ and Lamaque, resulting in fewer ounces produced and sold compared to Q3 of 2020. These increases were partially offset by a modest reduction in cash operating costs per ounce sold at Olympias as a result of higher grades combined with higher silver and base metal sales, which reduced cash operating costs as a by-product credit.
All-in sustaining costs per ounce sold averaged $1,133 per ounce in Q3 2021, an increase from $918 per ounce in Q3 2020, primarily due to the increase in average cash operating costs per ounce sold and higher sustaining CapEx. Capital expenditures in Q3 2021 were $77 million, compared to $52 million in Q3 2020 and $72 million last quarter. This reflects a planned increase in growth capital spending at Kışladağ with the new HPGR project and at Lamaque with the underground decline project. Tax expense decreased to $5.6 million in Q3 2021 from $40 million in Q3 2020, mainly driven by the investment tax credit received in Turkey in Q3 2021 related to Kışladağ heap leach capital improvements, along with significantly lower FX and withholding taxes in the quarter.
Depreciation expense totaled $50 million in Q3 2021, compared to $57 million in Q3 2020. The decrease in depreciation this quarter reflects lower sales volumes. We continue to expect full-year 2021 depreciation expense to be in the range of $200 million-$215 million. Eldorado's Brazil segment has been presented as a discontinued operation in Q3 2021, following the sale of the Tocantinzinho project, which closed this week. Net loss from discontinued operations of $60 million in Q3 2021 reflects a reduction in fair value to the value of the upfront consideration only, less estimated cost of disposal. Deferred consideration of $60 million in cash is payable on the first anniversary of commercial production.
At the end of Q3, we voluntarily changed our accounting policy to reclassify cash paid for interest on the statement of cash flows, reclassified as a financing activity rather than as an operating activity. Following the refinancing of our debt in August of 2021, the policy change more accurately reflects the nature of these cash flows, resulting in more relevant information to the financial statement users. The consolidated statements of cash flows reflect the retrospective application of this change in accounting policy. Turning to slide 5, we continue to focus on maintaining a solid financial position, which provides increased flexibility to unlock value for our Kassandra assets in Greece. At quarter end, we had unrestricted cash and cash equivalents of $439 million.
On August 26, we completed an offering of $500 million senior notes with a coupon rate of 6.25% due September 1, 2029. Net proceeds from the senior notes were used in part to redeem the outstanding 9.5% senior secured second lien notes due 2024, and to repay the outstanding amounts under both the term loan facility and the revolving credit facility. On October 15, we executed a $250 million amended and restated senior secured credit facility that we are referring to as the Fourth ARCA. It provides an option to increase the available credit by $100 million through an accordion feature and has a maturity date of October 15, 2025.
Under the Fourth ARCA, the revolving credit facility bears interest at LIBOR, plus a margin of 2.125%-3.25%, depending on a net leverage ratio pricing grid. Both the senior notes issued in August and the Fourth ARCA removed certain Eldorado subsidiaries in Greece as guarantors, which will allow us to pursue a broader range of funding alternatives for the development of the Cassandra assets. Our net leverage ratio is at 0.16x as of September 30th, 2021, compared to 0.89x at the end of Q1 2020. This reflects a much improved credit profile for the company over the last year and a half. With that, I will now turn it over to Joe to go through the operational highlights.
Thanks, George, and good day, everyone. I'd like to start by highlighting an important health and safety milestone for our operations. In September, we achieved a triple zero month with no reportable incidents in three key areas, medical treatment, modified work, and lost time. This is the first time we have reported a triple zero month since 2012, and I'm extremely proud of the team for this accomplishment. We produced 125,459 ounces of gold in the third quarter, an 8% increase from Q2 production of 116,066 ounces.
Our third quarter operating performance continued to be strong, and as George mentioned, we have increased our 2021 production guidance range to between 460,000 and 480,000 ounces of gold, up from between 430,000 and 460,000 ounces of gold. This is driven by stronger than planned performance at Kışladağ. We remain focused on disciplined capital allocation across our operations. Specifically, we have been looking at the capital allocation more closely at our Cassandra mines in Greece as our transformation efforts continue to progress. As a result, we expect both sustaining and growth capital expenditures to be at the low end of guidance range for the year. Slide 7 looks at our operations in more detail.
Starting in Turkey with Kışladağ , our third quarter gold production totaled 51,040 ounces, a 16% increase over last quarter. Cash operating costs were $612 per ounce. We achieved increased throughput at Kışladağ in the third quarter related to several operational improvements that were implemented in the mine, leach pad, solution handling, and carbon regeneration earlier this year. The commissioning of the high-pressure grinding roll circuit is underway and nearing completion. We expect the HPGR to increase gold recovery by approximately 4% and enhance the already positive results achieved from the CIC trains and the new carbon regeneration kiln completed in the first half of the year. Our multi-year pre-stripping campaign continues to progress, and studies are actively underway to assess the potential for accelerating this work to bring forward value at Kışladağ . Work continues on the North Heap Leach Pad construction.
We continue to be on track for phase one completion and stacking to begin in mid-2022. Over to Efemçukuru. Third quarter gold production totaled 23,305 ounces at cash operating costs of $552 per ounce. At Efemçukuru, we have a strong track record of extending mine life through exploration success. In September, our exploration news release included drill results at Kokarpinar, focused on both the conversion drilling with inferred resources and testing of the previously undrilled northwest splay. The results of the resource drilling were encouraging and have the potential to significantly extend the current reserve base and mine life of the asset. Turning to our Canadian operations. Third quarter gold production at Lamaque totaled 37,369 ounces, a 5% increase over last quarter.
Cash operating costs were $646 per ounce. The decline between Triangle and the Sigma Mill is on schedule and will complete in the fourth quarter. The decline will replace the current route with a straight line haulage to the Sigma Mill, eliminating surface haulage costs. At the end of September, we published an exciting exploration update, which included recent results from Ormaque infill drilling. The results confirmed high-grade continuity within ore lenses of the maiden initial inferred resource and expanded several lenses laterally. Drill holes testing deeper levels identified new mineralized zones. These results showcased the high quality and strong growth potential at Ormaque. Preliminary mine planning studies are underway to assess the initial scope of the Ormaque resource within the Lamaque operation.
Once completed, the underground decline will enable the team to drift over to the deposit and gain additional information to integrate the promising new discovery in our future mine plans. Over to Greece. At Olympias, third quarter gold production totaled 13,745 ounces, a 6% increase over last quarter. Cash operating costs were $952 per ounce. Third quarter production at Olympias reflects some initiatives that were implemented in relation to the transformation efforts of the Cassandra assets. As we discussed on the 2Q conference call, we are implementing a wide-ranging, sustained effort to optimize the Greece operations that touches on every part of the business. I would like to end with a brief update on our technical studies. The updated feasibility study for Skouries remains on track for completion in the fourth quarter.
At this point, the study has not been complete, so we are not in position to disclose any details. The Lamaque PEA is expected to be completed in the first quarter of 2022, and an updated technical study at Perama Hill remains on track for completion in early 2022. With that, I'll turn it back to George for closing remarks.
Thanks, Phil and Joe. With continued strong operational results, a solid financial position, and numerous upcoming catalysts, Eldorado remains well-positioned to provide additional growth and value creation. Thank you for your time. I will now turn it over to the operator for questions.
Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause for a moment as callers join the queue. The first question comes from Cosmos Chiu with CIBC. Please go ahead.
Hi. Thanks, George, Phil, Joe, and team. Thanks for the call, and good to see that you've increased your production guidance for the year. Maybe my first question is on cost pressures in the industry and inflation. George, as you mentioned, you haven't really been impacted yet. However, clearly, you know, when I go to the grocery store, you know, costs are higher. You know, in that case, George, as you said, you're working through your budget for 2022 right now, and as Joe mentioned, you know, the feasibility study for Skouries is being finalized. Anything you can share with us in terms of how you're looking at it?
How are you factoring in, maybe not so much what has happened so far, but as you foresee, you know, next year, are you forecasting any kind of cost pressure, into your forecast, into your budget, into your Skouries technical report? Anything that you can share with us?
Yeah. Cosmos, thanks for the question. Yeah, at a detail level, you know, for sure there are some cost pressures that we're recognizing. Cost of steel is up, and when you look at our business, you know, we got grinding media. We have wear materials on all of our equipment that we have to replace periodically. If you looked at that particular item, you know, there's definitely some cost pressure, and we'll anticipate that as we will look at budgets in our, you know, longer term plans. When you talk about Skouries, you know, one of the nice things about the project is the main part body of the plant's constructed. You know, you have lots of wiring and a building to put up.
Much of the remaining construction materials from a steel perspective are on the ground. The exception would be the filter for dry stack tailings. We need to purchase the filters, we need to purchase the building materials, and there's definitely gonna be some cost pressure just due to the cost of steel. That's a specific example. The energy costs are up globally around the planet and we're seeing some pressure on our fuel costs. In the end, when we look at our overall cost structure, if you looked at mining and processing quarter-over-quarter this year, our spend is not up, which tells us we're finding other areas of improvement that are counteracting so far the impact from inflationary things like steel and fuel. You know, bottom line for us, that's a fact.
If you look at Q3, I think we've seen some comments about, yeah, production's up, but we haven't changed our guidance or our outlook on the year on our unit cost. A couple things I'd mention there. One, when you look at Lamaque's gonna have a stronger fourth quarter, and it has to do with grade. We're moving more tons through the plant as expected and out of the underground. But from a grade perspective, we're gonna have a stronger fourth quarter. Year to date, they're not, their year-to-date performance is below what we expect their annual performance to end up on a unit cost basis.
you know, when you talk about Kışladağ, the reason why we've been able to increase our guidance on Kışladağ largely has to do with we're moving more tons, you know. With the existing plant, we've been debottlenecking that plant and delivering increased ore through the plant, and that set us up for a better year. you see that in our guidance. But fact of the matter is, we still have to mine the ore, crush the ore, and so, you know, on that particular site, it's not free ounces. We had to do work to get them. It's gonna create similar margins at a higher volume and deliver additional cash to the corporation.
A way I would answer it, yeah, we're seeing some cost pressure, but we can't really talk to the fact it's impacted our year-to-date performance. As we work through our budgets in the fourth quarter and land on, you know, final decisions on budget, we will bake in, you know, any of these cost pressures. I've, you know, we remain pretty confident. We put out five-year guidance at the beginning of the year. We're still feeling good about next year's guidance, and we had a solid year, and we're gonna work really hard to be able to sustain higher throughput through Kışladağ, and I think that could have a meaningful impact on our five-year guidance over time.
I'm, you know, all I can tell you is we're doing everything we can to mitigate the inflationary reality that's hitting the planet, and so far so good for us.
Great. Thanks, George. Maybe you know diving deeper into the operations at Kışladağ. The HPGR is almost completed commissioning in November 2021. As you mentioned in the MD&A, the impact on production sounds like there's gonna be some down days in Q1 2022. Can you walk me through that? Is it you know the impact? Are we talking about days or weeks? And you know why is the impact in Q1? And then as Joe mentioned you know 4% increase in recovery. Is that 4% increase you know gonna come over time? How long is that gonna take in terms of improving on that recovery?
Maybe I'll speak high level to the impact of the HPGR, and Joe can talk a little bit about the commissioning detail that might bring some clarity here. Where I'd start is that when you look at the new Kışladağ, our leach cycle from historical, the first, say, decade and a half of operations, we had roughly a 90-day leach cycle, and we got roughly 60% recovery. Looking forward with the new Kışladağ, we're getting, with the HPGR, around 56% recovery, but we get that gold over a 1-year period. It's a much slower leach cycle in the bottom part of this deposit, and that's what all the drilling and work we did over the last couple of years led us to these conclusions in a robust mine plan.
This year, you know, our production's doing better than planned, largely driven by tonnage, but the recoveries are as expected, so this is good news for us. In terms of the detail, when you think about, all right, you know, we were at the beginning of the year expecting to be in commissioning in the third quarter, and that slipped a little bit to the fourth quarter. First thing I'd say is that's not too bad when you look at the impact COVID's had on the planet. We've delivered a number of projects across our portfolio and dominantly at Kışladağ on budget and on schedule. The HPGR is on budget. There was a slight slip in schedule due to delivery, but to me, that's not bad news.
The impact on production over 2021 and 2022, there is no impact. I mean, we put that into our plan. There's a slight shift quarter-over-quarter, but it's a one-year leach cycle. Yeah, I mean, the impact will begin late Q4 and into next year in terms of the downtime required to connect the HPGR and commission it. Overall, there's no negative impact here. We had a great year at Kışladağ so far. We're gonna finish strong. We're beating our guidance, and we're set up to deliver what we promised for 2022. High level, this is all positive and maybe Joe can give a little color around the commissioning detail.
Mm-hmm.
Thanks. Thanks, George. So, you know, the any impacts were due to commissioning were when we took the circuit offline to tie in or switch over to the HPGR, which started in early October and ended in later October, and that's when we weren't placing tons. It's the timing of when those tons we didn't place shows up is where we'll see impact in production. That, as George said, that's just a matter of the schedule moving, not a change. It goes a little later. As far as overall recoveries, we are as we-- we're in wet commissioning on the HPGR now, and we're running, you know, a series of metallurgical tests as we go.
We set up a portion on the South heap leach pad on clean plastic to test various size fractions, various potential agglomeration tests, other things to kind of dial in over the next couple of months as we bring the HPGR online. We want to do, you know, kind of a lot of, call it, metallurgical framing so that we see which recipes work the best. We transfer all of that knowledge when we go on to the North heap leach pad mid-year next year. This time period of placement now gives us the information of how we want to start that new pad. I don't think George didn't mention it in any way.
We're also separating the solutions from those two pads, so any of the, you know, kind of solution issues we talked about in the past of solution contamination or complex solutions, we start clean on the North leach pad with the best metallurgical data that we can gather over the next six months in early placement. And we'll be doing all of that in column proxies as well as pad as we go. Yeah, we're pretty optimistic, Cosmos, that we'll dial that recovery in over the first six months. As George said, we dial up the production from mine through the whole circuit, you know, highly likely that we'll see more tons placed in 2022 than 2021.
Mm-hmm. Great. Thanks, Joe. It's good that you brought up the North leach pad. You know, it sounds like it is on track, which is good as well. I would imagine, you know, as we talk about recovery at Kışladağ, part of the impact on recovery is the current leach pads are getting pretty high. Could you remind us, you know, how high are the current leach pads right now? And, to be honest, it's been a while since I've been to Kışladağ. It's been a while since I've been to anywhere, to be honest. Can you remind us at some point in time, you know, you're gonna start stacking at the North leach pad mid-2022.
Is there at some point where, you know, all the stacking will be at the North leach pad, or how's that gonna work?
Well, the vast majority of stacking will switch to the North leach pad middle of next year. There may be instances where we still use the South. As you recall, Cosmos, we put in inner lift liner on the South leach pad. So, I don't have the numbers right in front of me, but basically second lift off of the inner lift liner that was replaced or that was placed because we were so high. So we have the opportunity after we stop placing there to go, not only clean up the inventory above the inner lift, but also below. So, you know, we can pierce that liner. We can do lots of things to take any residual inventory from the South leach pad, you know, over time.
I didn't answer your question because I don't know, but I think it's two lifts above the inner lift at present across the whole pad.
Okay. Sounds good. Then maybe one last question for Phil. With the refinancing of the debt and also the kind of refinancing of the debt, it sounds like you're gonna have different alternatives that will be open to you as a result of some of the Greek assets now not connected to the new debt. You know, Phil, I guess two questions. Number one, could you maybe give us, I don't know if you can, or give us an example of like an alternative that wouldn't have been possible in the past?
Number two, you know, as we've heard, the Skouries feasibility study or the new technical reports coming out in Q4, in terms of timing for finding a partner or some, you know, looking at financing options, are we still looking at Q1-ish 2022 for to get a bit more clarity, to get a final agreement, or is that not the case?
Yeah. Hi, Cosmos.
Hi, Phil.
Good questions. I think the key here with the refinancing, you know, the timing-wise, it was part of the strategy really, you know, geared towards de-risking, you know, our strategy towards the Greek assets. I think overall, I mean, we continue to look at all different alternatives that are available to us. You know, we've talked in the past for financing Skouries. We've talked in the past about potential JV partners. You know, it's more of a strategic view on that. Having a partner alongside Eldorado, that would be, you know, potentially beneficial moving forward because it is a multi-decade project.
We've talked in the past potentially. For example, you know, an example of that would be the EBRD, which we've talked with for quite a while. There are other alternatives as well. I mean, you know, I think other alternatives that have come to light, you know, there's Greece has been approved for European Union COVID relief funding, for example. You know, some of the financial institutions in Europe and Greece are also interested as well. We're looking at all different avenues. We want to make sure that, you know, we've considered all of them, and then we'll make the
We'll make a choice as to which fits the strategy for the Cassandra assets going forward and which is the best solution for Eldorado and the shareholders.
I might supplement that, Cosmos Chiu, from my perspective. You've got, you know, on the one hand, as Phil said, we've solidified our balance sheet. We set up our debt and our revolver and relationship with a new bank syndicate in a way that we have lots more flexibility. Really, the last deliverable that we're completely in control of is getting that feasibility study out. That's on track to come out and be completed in November. That really sets the stage for us to pursue all these various alternatives and land on something. We're still aggressively targeting a solution in Q1, but you know, it's a negotiation, and we're trying to make the best decision for the corporation in terms of that financing.
Full speed ahead, we're on track with our objectives.
Cosmos, it's Jason. The other thing.
Hi, Jason.
Just to mention here. You were asking a question about what do the amendments or the refinancing allow us to do effectively that we couldn't do before. You know, the amendments to the covenants and to the credit agreement effectively allows us to carve out Greece and, you know, sell equity to potential partners and to consider credit-related alternatives to potential lenders. Project financing would be one. Again, the ability to sell equity to potential partners. Right. Without having to seek consent from either bondholders or the senior lenders to the company. That was all effectively done with the refinancing.
Great. Those are all the questions I have. Thanks, George and team. Have a good weekend. Happy Halloween. Not sure if you're gonna go trick-or-treating, George, but I'm sure you'll be dressed as usual as a gold CEO. That's better lucky than me. I'll be dressed as a gold analyst. Once again, thanks a lot.
Thanks, Cosmos.
The next question comes from Kerry Smith with Haywood Securities. Please go ahead.
Thanks, operator. Perhaps you could put a little bit more color around Stratoni just in terms of the holding cost now. I mean, you've got, I guess, 300-400 employees there, and you're gonna try and retrain some and rehire them into some of your other operations. But I presume at some point there will be redundancies there. I'm just trying to understand what the holding cost might be for that asset on an all-in basis, you know, per quarter or per year on a go-forward basis while you're pursuing this exploration strategy.
Hi, Kerry.
I can take that one.
Joe, you wanna start off with that?
Sure. Sure. Go ahead.
Well, certainly, Kerry, if we look at care and maintenance, you know, those numbers are in the $3.5 million-$4.5 million annual range. We're still preliminary on finalizing. That's after we've reached full care and maintenance, and we'll look to optimize those certainly beyond that. The transitional costs of from A to B, or from full operation to transition or to care and maintenance, still working on it, but we're generally in the $10 million range with some production offsets that we'll see between now and then.
Those numbers are still very preliminary, but that's the order of magnitude that we're moving to, is $3.5 million-$4.5 million care and maintenance with a transition cost.
Okay. Then that $10 million cost, Joe, would include all costs like retraining and severance, redundancy, whatever the numbers are, that's the fully loaded cost.
We're in that range.
Right. Okay, perfect. While I got you, Joe, maybe just one second question on HPGR. I mean, I know you're just starting to run it, but can you make any commentary at all about, you know, the size fractions that it's delivering? Is it delivering the product that you expected from that piece of equipment? Or, you know, is it still need some tinkering and tuning to get to where you'd like to be?
Well, we actually got wet commissioning started on Monday, and you know, things went pretty well, kind of the customary software glitches and things to get going. We got a couple of runs going as of Tuesday, Wednesday. Early on, size fraction looks good. Then, you know, we had some unfortunate news last night. One of our key commissioning people from Weir had a family member killed in a car accident and had to pull out. So we're kind of regrouping and waiting for Weir to get another commissioning person on site. Early indications are size fraction pretty good. You know, we haven't even really gotten to the point where we're seeing how to manage recirculating load, that kind of thing, but happy with the initial pass fracture, at least at this point.
It's probably too early to give you any kind of indication of how long it'll take us to dial that in at reasonable throughput rates. I would expect another week or so, we'll have pretty reasonable numbers on initial run report.
Are you thinking the wet commissioning will just only take another week or two? Then it's not gonna be that long?
That basically through the end of November, we'll ramp up, and then we'll continue ramping up from that point. It's pretty early on, you know, to start getting any analytical data as yet. I think by the end of the month, we'll have that, and we'll be at some level for turnover to operations, around that time, Kerry. I think what we wanted to make certain in this wet commissioning period, that we get reasonable operating parameters set and those early metallurgical guideposts established, so we don't run too fast to hand over. We hand over with metallurgical guidance and operating parameters.
Right. Okay, that's helpful. Thank you very much, Joe and George and Jason. Appreciate it.
The next question comes from Tanya Jakusconek with Scotiabank. Please go ahead.
Great. Good morning, everyone. Thank you for taking my questions. Two questions. The first one, I just wanna come back to something that you had in the MD&A, the changes to the concentrate sales terms that you did in October. Can you talk about what those changes are and sort of what impacts on the Efemçukuru and Olympias costs are you sort of projecting, you know, percentage-wise?
Hi, Tanya, it's Phil. I think what's being alluded there is really the way some of the concentrate sales are being structured. In the past, you know, the payability on the concentrate was separate from refining and transport costs, and now those costs are blended in as part of the effective rate. You're basically seeing the revenue side slightly lower because it's incorporating costs, and you see the costs. In the past, the costs have been reported separately, and now they're blended. I think that's the change that's being referred to.
Nothing structurally, it's just how you're allocating it.
Exactly. It's part of the negotiation of the new contracts. There's no real impact on the bottom line. It's just, you know, revenues would be slightly lower because it's incorporating costs, and costs would be lower because they're no longer reflected as part of the effective cost.
Perfect. Thank you. Then I just wanted to check with you on your reserves and resources. I know the program up to September is sort of what you're doing in terms of calculating your reserve and resources, and you'll be releasing those. I think it's usually early December. Can you talk about, number one, you know, the pricing? You know, we are seeing inflationary pressures. Number one, are you changing any price forecasting for your, you know, pits and, or other for reserve and resource assumptions? Number two, what are you looking at? Like, what mines can we expect additions and where are we struggling? Thank you.
You wanna take that, Joe?
I can take it, George. Thank you, Tanya. Where we're sitting right now is, we are working through final numbers for MRMR release. You're right, we'll have the numbers calculated, or ready for presentation or release November, early December. You know, the ups and downs are relatively modest. We are expecting, you know, some improvements in Lamaque and Ormaque. But our drilling cutoffs go back all the way to end of March for this release. The ups and downs are relatively modest across the board. We'll give you more information at the time of the release, but nothing major in either direction. But good news generally.
Okay. It sounds as though the reserve and resource base is, you know, generally not gonna change too much. Just wanna
Yeah.
That's correct. Yeah. Can I just confirm that you're not really changing how your parameters in terms of how you're calculating your reserves and resources? No change to cut-off grades then or other?
Not significantly, no. No major cost changes due to price changes and no major changes on commodity prices from our long-term views.
Okay. That's helpful. Great. Thank you so much.
Thanks, Tanya.
That is all the time we have for today, and this concludes the question- and- answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.