Earnings Call: Q2 2021

Aug 17, 2021

Earnings release

Thank you for standing by. This is the conference operator. Welcome to the K92 Mining Second Quarter 2021 Conference Call. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference over to David Medelek, Vice President of Business Development and Investor Relations. Please go ahead. Thank you, operator, and thanks everyone for attending K92 Mining's 2nd Quarter 2021 Conference Call. We hope you and your families are doing well. In addition to myself, we have on the line John Lewins, Chief Executive Officer and Director and Justin Blanchard, Chief Financial Officer. I would also like to remind everyone that after the remarks from management, the call will be followed by a Q and A session. As we will be making forward looking statements during the call, please refer to the cautionary notes and risk disclosure in our MD and A and Slide 2 of the webcast presentation. Also, please bear in mind that all dollar amounts mentioned in the conference call are in United States dollars unless otherwise noted. Now, I'll turn it over to John to provide you with an overview. Thanks, David, and welcome, everyone. So I'm actually pleased to be joining you today from our K92 gold mine in Papua New Guinea. We're witnessing I think firsthand the impressive progress that we've made on-site over the last quarter, in The last 6 months in fact. And really, I think there's many exciting areas where we're progressing and that includes opening up another sublevel in Jad, ramping up the mine process plant, advancement of the twin inclines drilling at Kora, which now includes Kola South and moving into a new phase of drilling at the lake, where we're looking to drill some deeper holes targeting that potassium core. So the Q2, it saw Papua New Guinea and its resource sector facing some fairly major challenges with an unprecedented surge and COVID-nineteen cases, which really commenced in the Q1 of the year and increased significantly in the Q2. Now that resulted in the Australian government suspending all FIFO movements by the resource sectors of the entire resource sector in and out of PNG from late in the first quarter through until the second half of May. As an industry, we responded by enhancing our COVID-nineteen protocols mitigation measures, which included things like off-site testing, quarantining personnel, etcetera, etcetera. And as a result of that, an agreement was reached with the Australian government to restart our FIFO operations and really very, very supportive of the Australian government wanting to get things restarted as quickly as possible, but also obviously making sure that we were not bringing COVID into Australia. Having faced that challenge over, I'm also pleased to say that we operated continuously during that whole period and during the entire quarter and certainly delivered a strong second half performance where we produced over 16,000 ounces gold equivalent from mid May until the end of June. And that really reflects the efforts of our entire team on-site. Set us up not only Did we have that stronger second half of the quarter, but that really sets us up for the second half of the year where we expect it to be significantly stronger than the first half of the year. And in the case of the Q4, we're certainly looking at potentially a record quarter. Moving on and starting with Safety. In the Q2, pleased to report there was no lost time injuries, and we continue to operate with one of the best safety records, not only in PNG, but in the Australasia region. And that's really been since the start of operations. This is an area where we focus on, I think quite relentlessly, the whole occupational health and safety and that obviously includes COVID and we're continuously looking to improve our systems. Looking at production, we produced just over 25,000 ounces gold equivalent and the operation delivered a record mill throughput, 75,667 tonnes processed, a head grade of 10.3 grams Switzerland. Head grade was about 2% below budget despite the fact that we treated a significant amount of low grade stockpiles, certainly more than we anticipated and that really was due to the COVID surge and the impact that had on our mining rates. If we compare that to the year previously, the Q2 of 2020 mill throughput increased by 53%. If we look at the key operational physicals, process plant, as I mentioned, delivered record throughput. Underground development, total mine material, obviously, declined. All three metrics We're really impacted by that surge in COVID-nineteen during the first half of the quarter. And that in turn caused shortage of staff in most of our areas of operation and that was related to COVID-nineteen absenteeism, suspension of the FIFA flights, which I've mentioned for effectively 2 months increase in the quarantine durations that we're looking at some of our enhanced control measures as well. As I mentioned, second half of the quarter, we saw a fairly significant improvement, not just in the mill throughput, plant throughput, but also in those other metrics as well. In terms of COVID-nineteen, I'm pleased to report that we've significantly increased our operational resilience and our ability to deal with the ongoing impacts of this pandemic. From mid May, as I mentioned, the Australian government lifted the restrictions on movement of personnel and we now have a specific exemption, which exempts us from the restrictions that the Australian government put on movement of international people in and out of Australia. And this is not only for K92, but for the whole resource sector. And that's a recognition by the Australian government of the importance of the resource industry to PNG. We're over 30% of GDP and we're over 85% of all exports. I point out that these enhanced protocols over the past 3 months that we've instituted certainly appear to be working very well And operationally, we've gone, I think, from strength to strength since we instituted these and we've also obviously restarted team. In addition to that, our vaccination program is well underway. Almost all of our expatriates are now fully vaccinated and vaccinations are also underway for our PNG Nationals. And Vaccinations are also underway for our PNG Nationals. And to date, we've had a very solid uptake in that. That uptake in terms of vaccinations is also allowing us to look at relaxing some of those quarantine restrictions. For instance, I was in the 1st group, I came in on Thursday, 1st group It's been allowed to come in from Australia and not required to quarantine in PNG. Our normal is to have a week of quarantine. And in fact, for the first time, for anyone who is fully vaccinated, no quarantine required. So these things obviously can significantly improve our operations and our efficiency going forward. The mine site does, however, continue to operate as a COVID free bubble. And we believe now with that increased rate of vaccination and many of these controls that we've now established. Our resilience to the pandemic has increased. It's strong. It's improving. Now with that, I'll turn the call over to our Chief Financial Officer, Justin Marche, to discuss the financial results. Thank you, John, and hello, everyone. During the Q2, K92 had revenue of $35,500,000 Despite higher production in Q2, 2021 when compared to 2020, Our 26% decrease in revenue was due to a decrease in the feed grade of 10.3 grams per tonne compared to 17.6 grams per tonne last year. This was partially offset by an increase in the realized selling gold price of $17.54 per gold ounce compared to $16.31 per gold ounce in 2020. In addition, as of June 30, 2021, K92 had 5,456 gold ounces in concentrate inventory that was sold in July, an increase of 3,077 gold ounces when compared to March 31, due to timing of sales. In the Q2, cost of sales was $20,900,000 only 14% higher than Q2 2020 despite having increased operational activity as illustrated by the 91% increase in ore mined and a 53% increase ore processed. In addition, the company incurred costs related to the COVID-nineteen pandemic, including additional pay for employees and additional safety and medical related costs. Quarterly cash flow from operating activities before changes in working capital was $15,200,000 compared with $30,300,000 in Q2 2020. As at June 30, 2021, we had $56,200,000 in cash and cash equivalents, while spending $4,900,000 and expansion capital and nearly $8,500,000 in income tax installments for the quarter. The company fully repaid The outstanding loan from Trafigura in early 2021, leaving the company with no debt. As John mentioned, For the quarter, the K92 gold operations produced 22,153 ounces of gold, £1,098,370 of copper and 14,914 ounces of silver or 25,015 ounces of gold equivalent. We sold 18,939 ounces of gold, 862,407 pounds of copper and 12,472 ounces of silver. We incurred a cash cost of $7.36 and an all in sustaining cost of $10.57 per ounce, which was significantly below our realized gold selling price of 17 $54 per ounce. Our Q2 2021 cash cost per ounce increased to 7.36 from $560 in 20.20. The increase in cash cost was due to a lower feed grade Despite increased production due to the successful ramp up of the 400 ks expansion, allowing the company to achieve better economies of scale. In addition, the company incurred costs related to the COVID-nineteen pandemic. It is important to note that after commissioning the Stage 2 plant expansion in late 3rd quarter. We have seen a significant compression in our total unit cost per tonne processed, approaching $24 per tonne. We continue to see downward pressure on the costs via economies of scale as operations ramp up. I will now turn the call back to John. Thanks for that, Justin. So when we look at the Incline development that resumed second half of May following that 2 month hiatus after the COVID-nineteen restrictions imposed by the Australian government. Considerable progress really has been made in that area upon resuming that redevelopment. And as of July 30, the furthest of the two Inclines had advanced to approximately 5 30 meters and the other was about 10, 15 meters behind that. On the exploration front, During the quarter, drilling was underway at Kora, Kora South, JAD and also the Blue Lake offering. As previously noted, COVID restrictions did result in a number of personnel that were on-site for the majority of the quarter being significantly reduced. And that was in order to obviously reduce the potential of COVID issues on-site. In order to reduce The impact of that on the core resource drilling, the focus was maintained on manning the rigs underground. And when you Look at the results of that, what that meant was that processing of core was given a lower priority. As a result of that, by The end of June, end of the quarter, we had an excess of 50 drill holes that had not been processed. Now this has been reduced to currently around 40. And in late July, we announced the results of 43 of those holes and they consisted of both the infill and the step out drilling to the south for our updated resource, which is targeting late in Q4. The results delivered multiple high grade intersections, including 3 meters at over 70 grams per tonne gold equivalent in the K1 vein and 6.3 meters at 32 gram per tonne in K2. The hit rate, as I think everyone has come to expect, was again very strong. All holes intersected mineralization, 45 intersections above 5 grams per tonne, 20 intersections exceeding 10 grams per tonne and 9 intersections exceeding 20 grams per tonne. If we move on to JAD, we're ramping up both Development and Drilling Activities. As I think many of you are aware, JAD is very unexplored and it has been shown to have very similar geology to Kora with similar grades, thickness and a MAX strike length of over 2.5 kilometers running parallel, sub parallel to Kora and about 200 meters away. The focus that we've had to date is on what we call the J1 vein, although there are at least 4 known JAD veins. As an outcome of the positive development drilling and metallurgical results that we've seen at JUD to date, JUD has been integrated into our 2021 minutee plan targeting production stop production that is by 4th quarter or within the 4th quarter. That will provide a boost to our operational flexibility and with the grades we've seen, we'll also bring in some high grade. Development is already underway at the 2nd sublevel, the 1265 level, which is going in both north and south directions. The drive to the south will develop approximately 10 meters below JDD-six, which intersected 7.25 meters at 258 grams Vitam. To date, we've developed approximately 80 meters along the J1 vein on that 1265 level. Results have been consistent with our expectations and we'll be looking to provide an update on actual results in the near term. Drilling is also well underway, targeting both measured and indicated as well as inferred resources. Eliminating that backlog of holes from assaying, core logging, etcetera, at JUD and Kora is one of our top focuses currently. And we do expect to announce results in the near term from JAD and also obviously further from Kora. Additionally, when we're looking at JAD End of this quarter into the Q4, we do actually anticipate that a larger portion of our drill fleet underground will actually be targeting chart. Over the past weekend on-site, I've been able to go underground. And one of the opportunities I had obviously was and a priority quite frankly was to go in and have a look at the 1265 Chad development. Geology, as I think Some of you who are aware of the geology of Kora, the geology of JAD is actually very similar to that of Kora in terms of Thickness and Mineralization. And when you look at the twelve-thirty five level, we reported average thickness of 3.7 meters at 11.6 gram per tonne gold equivalent over almost 300 meters strike, best grades being towards the south and that included 3.7 meters at 15.4 grams per tonne gold equivalent over the last 175 meters of the strike reported. And certainly from what we're seeing in 1265, the geology looks Very similar to Kora. And I think geotechnically, we'd probably say it's better than we see at Kora. Moving on to Blue Lake, our copper gold porphyry target. That Phase 2 drilling that has been underway for some months has made significant progress. We've completed quite a number of shallow vector drilling and we've recently commenced some deep drilling targeting that potassium core, which We believe to be the obviously the higher grade zone. I'd say the performance capabilities of the drill rigs have been strong. And in whole, KDD 0020. We hit a record drilling depth of 1400 meters. The hole is pending co logging and assaying, point. Our exploration people are currently focused together with the mine geology people on catching up on our underground drilling from Cor and Jad. Currently, we've got 2 drill rigs drilling at Bulleit and we will be providing a more detailed update to the market in due course. I think both the vein field and the porphyry drilling are really at quite exciting times and they really highlight the significant to big system and near mine upside potential of K92. We're still sitting with something like only 20% of the vein field strike that's being drilled with the majority obviously still to be drilled and still very much open at depth. So With that operator, I think we'd like to commence the Q and A session. Thank you. We will now begin the question and answer session. We'll pause for a moment as callers join the The first question comes from Alex DiRanchu from Stifel GMP. Please go ahead. Hey, good morning guys or afternoon I guess. I'm not sure what time it is there in PNG for you John. Just my main question here, actually very simple one first. Justin, you mentioned something about $24 a tonne. I just missed what you were talking about. Can you reiterate that comment, please? Yes. That's our processing costs Per ton at the mine site. Okay. And is that your target, is that the number you guys want to get to or do you think there's room for improvement there? It's definitely moving in the right direction and it's a number that we're happy with right now. Okay. So my main question here is just on Judd, pardon me. Could you guys quantify for us a little bit The potential contribution for Q4 and I guess longer term 2022 in particular and just maybe give us a little bit of color on Any incremental cost to mine and add that ore to the mill? Thanks, Alex. It's 10:51 p. M. Here by the way. You're looking for the time, so it's a little dark outside. Look, Judd, we would anticipate somewhere between 20,000,025,000 tonnes will come from Judd in the 4th quarter. Grade wise, that will be somewhere around between 10 15, probably more of that 12 to 13, but there will be some higher grade portions of that overall. I was underground at Chad on Sunday. I got to say It looks the Phase 7 look very good. And as we mentioned, we'll put out some results on the development that we've done there. And then of course, we've also got quite a bit of drilling that we're in the process of catching up. In terms of contribution next year, I really can't give you that figure yet. That's something that we're actually still working on. Judd really It's very much a work in progress. Remember that we are actually going to be producing material from stopes Well, in fact, we haven't actually issued a resource yet on Judd. And there will be a resource coming out on Judd as part of our resource updates that we're putting Together, so we're putting up in the Q4, there'll be a resource coming out for an updated resource coming out Perkoa and there will be a first resource coming out for JUD. So it is still very early days and until we've got that and can Put that into our planning. I can't give you a figure for next year, but certainly I would anticipate it will provide a significant amount of what we produce next year, certainly a month or 2 months material. In terms of costs, really would see a similar cost to what we're getting from Kora. Geotechnically, it looks very similar to Kora, if anything better than Kora, in fact, geotechnically. And so we don't see any issues in that area. And of course, we're coming off the development that we've already got in place for Cora to get into JAD. So it's not that we're sort of developing out and It's not like developing a new ore body that you found and you have to go off and develop to open up. So cost wise, we don't think it's going to add anything to our cost. If anything, potentially, It can help drive the cost down slightly. Okay, that's great. Just one more quick question, if I may. Your guys target of 1100 tons per day, What's the bottleneck in that? With Judd opening up here, you're going to have additional mining phases available. Is that 1100 tonne a day mine constrained or is it more mill constrained? I mean, Yes, maybe any color on that would be helpful. Thank you. I think at this point in time, the 1100 tonnes a day It's about getting the mine to produce that consistently. The COVID issues that we had during the first half of the year in the first quarter and For the majority almost of the second quarter, one of the big issues really was that we our numbers on-site came down quite dramatically. And obviously, The mining side of things is significantly more labor intensive in terms of numbers than the plant. And so In a number of areas, there's no doubt that the guys got behind simply because We didn't have all the people. We didn't have our full complement of expanse able to come in, and they're quite key to upskilling all of our locals and what have you. Remember, we're trying to expand our labor at the current time. And then we get the constraints of COVID and all the rest of it. We've and when you think about it, every single person that comes to this site for a roster has to quarantine. Some of that is done on-site, some of it is done off-site because we've set up off-site Quarantine. We simply couldn't operate if it was all on time. So if you're bringing somebody in for 6 week roster and they have to do a week of quarantine, then you actually need obviously 15% more rooms. If it's a 4 week roster and our domestic guys are on shorter rosters, it's 25% more rooms. So you need a heck of a lot more rooms. And in fact, like all operations in PNG, quite a number of our rooms are shared rooms. And when you're doing quarantining and all the rest of it, of course, you can't do anything like that. So big focus, we're just bringing on an extra 100 rooms in the next week to 2 weeks that have been installed during the last 3 months, for instance. And we've got another 100 to 200 that will be done by the end of the year. So where we've got a huge focus on expanding the camp. But of course, in order to Expand the camp, that means that you need to be in contractors, you need to go through quarantine and then be on-site taking up some of the rooms that you actually want for your operations people. So it's been a real balancing act to get this and that's why for instance, we were behind on logging of coal because we focused on having the people on-site that could do the drilling with the limitations on accommodation, so that we kept the drilling up as much as possible. GOVAC and accepted that we have to do a catch up in terms of our logging. And as we've ramped up the numbers on-site, We've been able to do that. And in fact, our exploration people are actually right now focused on not surface logging, but actually logging of all the coal from underground so that we can catch up all of our Kora and Jad for our cutoff resource updates on Kora and the new resource, Richard. Sorry, it's long winded answer, but I was trying to give you a bit of flavor for that. No, it's great to put that into context. That's it for me. Thank you. The next question comes from Tom Gallo from Canaccord. Please go ahead. Thanks for taking my questions here folks. Just on the Blue Lake, switching gears a little bit to the regional drilling, Obviously, exciting to see, hole I think it was hole 20 down to that 1400 meter level. Just a couple of questions around what the program looks like. First of all, how deep are the holes planned? I mean, is 1400 meters that planned depth or was that hole terminated For some other reason and then maybe more on the spacing. Are you planning to step out from that hole and how far away are your step as planned. Thanks, Phil. Look, Blue Lake, 1400 meters was actually beyond where we were looking to take it and in part, It's just driven down by we were trying to see what the rig could actually achieve. We've got some other holes that are planned. I don't know if there are any holes right now that are planned as deep as 1400. But we do have some holes that are certainly going to go over 1,000 meters over the next few months. They are consistent with the fence lines that we've been doing currently, which have been The pen finds have been 200 meters apart. So they'll be basically obviously targeting a deeper potassium core that we've got vectors on from the drilling that we've done to date. As I said, unfortunately, we've had to make a call between some of our exploration holes and our Kora and Judd. And right now, Kora and Judd are taking priority from a logging perspective because we've got a cutoff in terms of getting a resource update completed. So right now, all of the guys are The focus on getting all of the backlog of core and jut out, that should be done Pretty much by the end of this quarter, we think we should have caught up all of those holes. So there will obviously be a lot more results coming out probably towards the end of the quarter, early next quarter on the quarter end. I think it'd be fair to say the dealers remain excited by Blue Lake and what and certainly what they're seeing at Blue Lake in terms of coal, etcetera, that's coming. We do have protocols in place, which actually limit our interaction as well with our exploration sites. So we support the exploration sites from site from K92. But if anyone actually goes on to the site, then of course, they got to quarantine before they can come back on-site. So I was around Today, actually, Tom, with Chris Muller, just going around the sites in the chopper. But we weren't actually landing and going into talk to the guys and have a look on the grounds Because we do that and now we have to come back and go into quarantine for a more limited 3 days because we're vaccinated, but nevertheless, we'd still have to go into a quarantine situation. Chris, for instance, does that every 2 weeks. Every 2 weeks, The actually gets up and goes around all the sites, spend some time there, comes back to site, has to do 3 days quarantine. So It does give you a few challenges, but I think what we've got in place is making that It's extremely manageable and certainly the meters that we're getting are fairly reasonable. I think that we're getting both at Blue Lake and at Coleridge out on the surface as well because we're also doing some drilling on Coleridge out at surface. Very good, John. Just to clarify, what are the number of rigs on-site, including the stuff underground, the surface drills and the Blue Lake drills, just to get a tally. We have 11, I think 10 are operating right now. So 4 on the surface and 6 underground. Great. That's it for me. Thanks very much. There are no more questions in the queue. Sorry, excuse me, we have a question from Geordie Mark from Haywood Securities. Please go ahead. Yes. Good evening, John. Just some follow-up questions there, mate. Just looking at the ramp up that You're hopping through the mill. Just wondering when you get to the nominal nameplate capacity, expect to evolve on a fixed cost basis? And what sort of proportion of costs are going to be on fixed and versus say consumables? I haven't got it off the top of my head, But I think it's around 60% is actually a fixed cost. As I'm sure you're aware from a plant perspective, people for instance say power is a variable cost. 90% of power for a plant is not a variable cost, it's a fixed cost. So our fixed costs are obviously our labor, our plant, assaying, those sort of things. And there are the majority of our certainly there as a majority of our costs are fixed as opposed to variable. Okay. Thanks, mate. When you're looking at a job markup for exploitation or I guess stoping. What sort of dimensions are you looking at for stoping? And are you looking at basically comparable costs Ultimately, carry across to JUD on a per ton basis relative to Look, it's still pretty early days, I'd have to say. But having said that in relation to the average width that we saw over the entire 300 meters strike length of the twelve-thirty five level was about 3.5 meters, which is consistent with what we see in both K1 and K2. Obviously, it does vary. It does get thicker and it does get a bit thinner, both in K1, K2 and in Judd. So actually very similar in that context. Geotechnically, as I said, the ground is very competent. So there may be potential to look at larger stopes, but of course, that might not necessarily be possible given that You're coming into Jada off the same systems as you're going into Cora. So you may actually be constrained by what you're doing there. But certainly, we'd anticipate that the cost should be Very, very similar. Where you potentially pick up obviously is that Your development costs, a lot of your development costs are already being carried effectively by Cora. So therefore, overall, your cost comes down because you're getting more tonnes out of the major development that you're doing along strike and vertically. Okay. Thanks, Sven. And in terms of looking at development costs, this integration of Operations Flexibility. At Judd, are you looking at capital costs On a sustained basis, are you looking at something that level staying the same and operating at Kora and Judd? Or are you looking at heightening total capital costs. And it's kind of the question of heightened capital costs or sort of Trade offs between where you allocate capital between the mining fronts. I think there's always that trade off where you allocate capital. It's certainly not a science. I'll have to be careful what I say on this one because my CFO will give me shit on it. But I mean, there's always that debate on where is your capital, where is your sustaining capital and what have you. Overall, Thiago should bring down your sustaining capital cost simply because You're able to get more tonnes out of those out of a lot of that capital development, not all of it, because obviously you've still got capital development coming off of your main Northside developments and what have you that come to the east for Jan and therefore you'll pick up some costs there. But overall, you have to say you expect that your capital component should come down Because really you've got a vein system 3.5 meters wide. It's like it's almost like a K3 that's 200 meters away from K1, but on the other side of Humane Northside Development. So that Northside Development, all of that vertical that you're putting in that vertical development you're putting in is also there and able to support JUD Same for your articulation and certainly quite a bit of your development for ventilation and those sort of things as well. Okay. Thanks. And maybe one last question there. Once you've completed, I guess, the quantum of drilling for infill at core required for the upcoming study. I mean, what can where within the plane of the Judd mineralization of Asoka, so it's underground drill rigs, given you're not going to initiate production. Sorry, I didn't quite understand the question there, Tore. So once you finished your infill drilling, I guess, on Kora, The surplus rigs that you're using for that underground drilling, what area are you going focus within Judd with those rigs. Within Judd. I think if you Look at the long section, you'll be focused on going from around 50 probably around 59200 to the south, So that's in northing. In terms of vertical, I would expect that we'll be We'll be targeting basically 1,000 meters RL up to basically surface. That will be our initial. And A lot of that basically already has all of it basically already has the drill cutties in place. It's basically in some cases going back into those drill cutties and Instead of drilling to the west, you're now drilling to the east, so you're turning the rigs around 180 degrees from what we've been doing in the past. So we don't have to go and open up or we don't have to go and develop new drill cutters or whatever else. The drill cutters are all there have already been previously developed for the drilling of Kora. I would make the point here with Kora drilling will continue to the south Primarily, there will be more infill drilling, I think being done as well. We don't at this point in time plan on trying to do any of the deeper drilling. We're really waiting for the twin incline to come through and start doing the deeper drilling off the Twin Incline. I mean, it's sort of 300 meters below Any level that we currently have operations on in the current mine. So between The twin incline is obviously going to give us the access that we want to extend at depth and keep pushing that resource down at depth and obviously be able to actually generate a whole lot of measured and indicated from sort of 1,000 meters down to 700 over that sort of window and over about 1,000 meters strike line. So you're effectively trying to duplicate what you've already done, which is centered around that 1200 RL level. The next question is from Ralph Profiti from 8 Capital. Please go ahead. Hey, John, thanks. I'll be quick with this one. You mentioned some incremental progress on lateral development rates on the twin inclines, right, both subsequent to quarter end and since May. I'm just wondering, do you have at your fingertips Your outlook on, say, a meters per month basis on those development rates. I'm just trying to get a sense of now versus the target rates in the PEA. And Are you where you need to be on the number of development jumbos operating? In terms of number of jumbos, we've got the numbers that we had planned That included getting a brand new one for the twin decline development. We've well, we haven't We haven't obviously submitted our capital yet to the Board, but there is 1 or 2 twin boom jumbos for the coming year as part of the capital. I think it's 2 twin boomers really as part of the capital. We're looking for around 200 meters a month as the meters that we're looking for right now from the Twin Incline. And we're getting back up to that having really had to stop the twin incline for the best part of 2 months again because of this COVID situation. Twin and clients themselves are looking very good. One of the areas that we are really focused on actually expanding our capacity, for instance, is on short reading because We use a lot of shock creating underground now refining that's really effective for us in terms of support and timing and everything else and obviously the whole of the 2 twin inclines are being shot created. That's a scenario I think we're actually looking to double our shot Creek capacity. We've put in a big cement facility late last year, early this year, one of these automated batch plants. So that We've actually got sufficient capacity. I think that we could we looking at the next phase of expansion. We've got enough capacity on-site to actually be producing our own concrete for the installation of the plant. So it's a big batch plant. But I think Eileen Heisey just signed a CER for a new agi sorry, agitator cement truck, people call them, we call them agis, while I've been here. So we'll have another one of those in the next 6 weeks, I believe. That's helpful, John. Thanks. Good. Sounds like good progress. Thanks. The next question comes from Varun Arora from Clarus Securities. Please go ahead. Hey, John. Well, most of my questions have already been asked. I was about to get to the TwinClion and Ralph also asked that. So Maybe if you can just talk about when do you expect the Twin and Klein to be completed? I guess that will be helpful. Thanks. I don't know. Is that okay? Yes, I understand. I don't know how long it's going to be. Look, right now, the development on the 1200 level or 12, just over 1200 level, call it 1200. The North South development on the 1200 level has actually gone outside of the mining lease, and we're developing into our exploration license. And so we're actually setting up next drill cut is actually it's outside of The mining lease, we're already drilling some of our holes and part of our resource will be outside of the mining lease. And as we've said in the past, We believe that there's something like a kilometer of a strike length still outside of the mining lease that we need to be drilling. So, we are looking to start drilling from the surface shortly in the next few weeks, quite literally. But the big focus is actually to drill that from underground and that's because the surface ounces actually don't come into a mine plan anytime soon. There's obviously underground ounces cans. And that's why I said, I don't know, because I'm not sure how long that twin incline is going to be. If you look at it in the context of What do we need for the next phase of expansion. Then we'll be getting to the areas that are giant or core. We'll be getting to those areas, I think, by the end of next year, beginning of the following year, probably into the following year. But then we still got another pool, almost 2,000 meters to get to the end of the mining lease. So it's going to continue developing for certainly the next 4 years Being continually pushed further and further to the South. Obviously, that is contingent upon getting additional mining lease to the SaaS, but that's certainly our plan at this point in time. All right. Thanks for the update, John. That helps. Thanks, This concludes the question and answer session. I'd like to turn the conference back over to John Lewin, CEO and Director, for any closing remarks. Thank you for that, Alfred. I appreciate everyone's time This morning in the main part, I suspect, it's from our perspective, it's a great opportunity To communicate with people, tell them what give them some idea about what's happening on-site and give an opportunity to ask questions. This is the time of year that in previous years we've looked to have analysts and I think several people asking questions may have had the opportunity to be an IT or possibly would have been IT here if not for COVID. So that ability to connect It's important I think for the company and we certainly appreciate the interest and we appreciate the questions. As I said, I'm on-site and I've got to say Coming on-site and seeing progress in so many areas is outstanding and for the people who Analysts who have been here in the past and hopefully will be here next year. I mean, you just won't be able to recognize the place. It's changed so much development underground, the whole areas have opened up underground, Quite stunning really the number of operating levels that we have, far larger team, fleet of equipment, Just so much going on in every single area, warehouse just up the road being tripled in size. So it's going through everything. It's the cans, So all of our infrastructure, everything underground, the mining fleet, the plant, and we've got A few ideas on the plant and actually looking at another incremental potential incremental expansion there on the plant, which we think is pretty exciting. So all of this is really made possible by The team of people that we've got on-site, we've made comment about what we think is a really low turnover of people, which Given the challenges of COVID, given the quarantining and all the rest of it is quite exceptional. And A team of people is what makes this company and what's made this mine. So I would like to make Milton recognize really the contribution of that team of people. Support of PNG Government has been quite outstanding over the last few years, actually, but especially during this COVID. So thanks all for your attention. I do hope to be able to catch up with many of you. After a weekend in Port Moresby, I'm heading over to Canada and be around Vancouver and I hope looking to get into Toronto as well. So I certainly appreciate the opportunity to catch up with people and give them a bit more detail and a bit more color as to what we've got going on. But thank you again. Thanks very much for your time today. This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.