B2Gold Corp. (BTG) Q1 2023 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the B2Gold First Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. Clive Johnson, President, CEO and director. Please go ahead.

Good morning and good afternoon, wherever we are everyone. And thanks for joining us. We are here today of course to talk about the B2Gold Q1 2023 operational and financial results, we had another strong quarter of operating performance which led to some very positive financial results. Mike Cinnamond, or CFO is going to walk you through that, and then Bill Lytle, our COO is going to update us on the Back River project the status of apps, and talk a bit about the Fekola Complex expansion projects looking on, and then Victor King, Senior VP of Exploration will talk to us a little bit about exploration plans for backward route just approves a large exploration budget. And we will also update the progress in terms of exploration in the Fekola Complex. And then we will open up for questions after that. So with that, I will hand it over to Mike Cinnamond.

Thanks Clive. So I will walk you through the operating results first and the cash flows. On the revenue side, we sold 4,000 ounces more than we budgeted so a total of 249,000 ounces from our operating mines. And good news is we had an average price of just over $1,900 for the Q. When we budgeted we had 1,700, so we are very happy to see that 200 bucks plus announced and obviously gold prices continue to increase as you know today. On a production site from all the operations including our share of Calibre 267,000 ounces, and from our three operating mines 251,000 ounces, both of which were 5,000 ounces over ahead of budget. And most of the 5,000 ounces just spread pretty evenly across the three operations. So Fekola had 166,000 ounces, production was higher we expected it to be higher because we had that favorable higher grade material coming from Phase 6 of what Fekola did and the grade was 2.47 grams per tonne, which is right on budget. Then Masbate, Masbate was pretty much as planned at the grade this year is lower than it was in the comparable quarter last year as we know is the peak grade was 0.95 grams per tonne. And then Otjikoto 38,000 ounces slightly ahead of budget. Again, we expect the, we were in some of the higher grade portions. We will check underground mine, but reminder to Fekola as we look to the bounce of the year, it is more weighted to the second half of the year, as we get into more high grade material and Phase 4 Otjikoto pit plus continued high grade from Wolfshag. But overall good results production pretty much on target like they had a budget. Cash costs, we actually did considerably better than budget. So from all on a consolidated basis from all operations total cash costs are $600 an ounce, which is $85 ahead of budget. And if we take our three operating mines $576 an ounce which was $88 lower than budget. And so looking at the individual operations Fekola. There were two main reasons why it was significantly it was $60 lower than budget. One was that we mine less materials in the period due to some of the tighter working conditions in Phase 6, including only having one ramp available for haulage which has now been resolved in April of this year. And then we also had lower fuel costs. The mining tonnage shortfall is expected to be caught up over the balance of 2023. Masbate again we were $176 an ounce below budgets that was a function of slightly higher than budgeted gold production and quite significantly lower than budgeted diesel and heavy fuel oil costs. We haven’t revisited any of the lower fuel costs for the balance of the year, we have assumed that it will stay where we budgeted for that. But certainly, current indicators are definitely the prices have dropped a bit. And while the forward curve is a forward curve in backwardation anymore for fuel, it is pretty flat. So we may see some benefit, as we roll through the balance of the year and the cost side. The all-in sustaining costs, total all in including our share Caliber $1,060, which is $146 lower than budget and same story from our three standalone operating mines and it is really a function of the lower cash operating costs, as I mentioned. And then timing of CapEx, we have seen CapEx for Q1 was below budgets, sustaining CapEx is both 10 million below what was budgeted just for the timing of things like the completion of the TSF rates at - and then some of the other fleet equipment rebuilds. And that is just timing, we expect to see all of that reverse as we go through the balance of the year. Few comments, maybe in the operations of buildings, I was going to talk to polar complex, generally, but we are continuing with the polar regional developments through the period. And as we have announced in our news release, we are now because we have done so much drilling on that for polar regional area, since we did the original Anaconda area. We sourced that we wanted to take those results and put them into a new resource for Anaconda. What so that results can take a bit longer to produce was a result of that for Cola, regional Phase 2 mill study is now expected in the fourth quarter of 2023. On the Otjikoto side, we continue to develop, we will check underground, we continue to need to explore there. Otjikoto pet itself is scheduled to ramp down in 2024, and wind up in 2025, based on our current plans that we have disclosed that. On the Gramalote Project, that as announced, we have we are undertaking a joint sales process with our partner Hga. That process is moving along, it seems to be good. And trust on Phase 1, we are still in Phase 1 of the process, we expect to wrap that part of what then probably next month or two-months, with a goal that will wrap up this whole process before year end. And on Sabine I think Bill is going to give an update, but we have some disclosures in there about the acquisition of the VA, and we haven’t put in the purchase price allocation yet. We will do that in Q2, when we publish the results that we are going to talk about, currently what we are doing there. But one thing I will mention is that subsequent to the completion of the transaction, we did revisit a fair amount of the financing obligations that the financing plan and Sabinas put in place. And so we bought out the off take agreement, well over 100% of it. So that is gone, we have also cancelled that that facility that they had, and the Gulf rebates that they set up. And in addition, as we were permitted to under the terms of the agreement, we bought out 1/3 of the streaming arrangement that was there with Wheaton precious metal. So that is total cost of 111 million cash, just that which you will see come through in Q2, but it does. Let us really focus on financing with the facilities and the financing capacity that we have available through our own cash flows on our debt facilities. And also allows us to benefit more from future upside which as we have mentioned many times when we discuss back wherever we see a lot of upside. On the earning side when you translate all those operating results such trivial earnings to shareholders just unraised six million are $0.08 per share. Adjusted earnings attributable to shareholders was $106 million or $0.10 per share. And a couple of comments on the cash flow. So cash flow, net cash flow from operating activity of $203 million, or $0.19 per share or as we have also disclosed in the news release, cash flow before working capital $223 million or $0.21 per share. So very solid cash flow quarter, of course, the gold price helped as well as some of those lower costs that I mentioned. On the financing side, we continue to pay dividend at the same rate $0.04 U.S. per share. It wasn’t annualized $170 plus million per year pre Sabina, but now with the additional Sabina shares that have been issued for Sabina an acquisition, you think we will see that jump up to somewhere around two times plus, $210 million. On the CapEx side, like $131 million spent in the Q. In total, we were about $42 million under, $10 million of that was lower sustaining capital as I mentioned already and then $32 million was just lower non-sustaining capital, which is all related to the timing of the underground development for Fekola Regional. Again, these are all timing, I think we think they are all going to reverse in the queue, also what they are in full-year. Another thing I would highlight there is that, as we disclosed, we are excited to get going on the exploration site, at Black River. So we have just approved an actual $20 million that wasn’t in the original exploration budget. That budget in total is now $84 million for the year with $20 million really focused on additional drilling that we plan to do at Black River. And I think Clive can give you an update on that in a second. Overall, we finished the period $673 million in the bank and not been drawn on the revolver and really minimal debt on the balance sheet other than a few leases. And I think - anything, if I may also touch on there. I think that is the highlights.

Yes. So thanks. Mike covered the operational stuff quite in-depth, so I’m not going to talk about any of that. But just quickly talking on the Anaconda Phase I study. So I think everyone is aware originally we talked about potentially putting out a PA in Q2 that is been moved to Q4. And it is based on some of the exploration success we have been seeing. But I would like to expand upon that a little bit. I don’t think it is just the exploration success. As you know, the Anaconda Phase 1 or Phase 2 Study is really about the oxides, but they are also having success on the sulfides. So what we are talking about doing now is, more of an integrated kind of regional complex, where we look at everything and we give you an update not only for what will be happening at the oxide plant, but also what will be happening as far as sulfides and where they would go. So all that has to come into play and we are talking about putting that out in Q4 this year. Related to what is currently going on there, the Phase 1, and our Phase I is a trucking study or trucking program, which basically takes us between 80,000 and 100,000 ounces a year, down to Fekola while we are finishing the study in building Phase 2, if that is what we so chose to do. That project remains on-track. So basically all of the roads are in now. We are just finishing up the final culverts. The infrastructure is being built. We have received our ESIA for the Phase 1 study. We are currently waiting for them to finalize their feasibility review and issue the exploitation license. And so what I can say is that, really I’m going to say right at the end of Q3 beginning of Q4, you are going to start seeing ounces come out of there. And what I will tell you is that always remember what we have said is just because that is what the study says, that is not necessarily what we are going to do, we are going to take me out to the highest grade ounce with the highest NPV ounces, and process those first. So what I can say is that right now there is about 18,000 ounces we are talking about in 2023, which would come out of the Anaconda Phase 1. Anything else on it?

Okay. So, Sabina, everyone is aware that Sabina closed, kind of in the third week of April. Since then, we have been extremely busy. Some of the questions that we got early on, when people were asking about the deal as we think that we could keep, that we could bring the B2Gold construction team back together to build this one. And I will say, with pleasure that almost to a person, everybody jumped at the opportunity to come back. So we do have all of the necessary people in place to include Karen Lofgren and Tom Carter, who’ve been with us really, for the last 20 years of building all of our projects in Far East, Russia, and Africa and Nicaragua. They are busy assembling the rest of the team. And I will say that we have had very few people turn us down, they want to come back. But on top of that, I think it is really important to highlight that the people that were at Sabina, the people that were running the site and kind of managing these contractors on site have also agreed to come across and work with our team together. So now what we have got is we have got a very good historical knowledge of the site. Certainly, the people that were in charge of logistics have been critical in both last year, and this year, they are with us. And we have got our build team to add on to that. So I feel very strongly that we have the right team that can certainly execute this project. And we are still calling for it to be on time. So we are still talking about a Q1 2025 commissioning. As far as the logistics, I think everyone’s where this is the logistics project even more than the mining project. The winter road this year was a success, that while they were saying that they needed, that they had 1,200 containers, they had 600, which were on the critical path. They brought in more than 800 containers this year. So we have all of the necessary equipment and supplies to do all the key things that need to be done in order to keep us on the schedule. So really the intent of this year is to get the camp up, which they are already doing. I can say with confidence. This morning, I talked to him, the kitchen is already up, and they are getting ready to rent power into the kitchen. So then the wings would come up next. And so we are seeing kind of a July one day for the opening up of the kitchen or of the first Phase of the camp. And then over the next couple of weeks after that they will finish it up and down into August. We have to pour concrete this year that is concrete for the warehouse, the mill building and potentially the powerhouse. All that concrete is on site. All the steel for those facilities are on site. And we are just currently scheduling in which order we want to do them. As far as orders for 2023, 2024 sea lift last winter road. That all remains on schedule, we have done a very good job of integrating the former Sabina team with the B2Gold construction team. They were in the office last week, finalizing orders. Everything has to be on the sea lift and heading up towards the marine lay down area in kind of August, September. So by July, everything has to be at the point where they consolidate. All of that remains on schedule at this point. And then we are actually shooting for an earlier opening date of the wind road next year. We have as many as 2,000 containers we want to drag up the road next year. So we are talking about an early February date and we have worked with the Sabina team, the former Sabina team to make that happen. And what we have done is we brought in more trucks, we brought in more equipment to operate to open up the road from two directions, actually three directions from the middle and from both ends. And we are hoping that that it will get open, as I said earlier, like the first week of February. What else can I say on that as far as the as far as additional logistics, we have extended the airstrip. So we are able to bring stuff on directly on the site with something as big as the 727. And overall, that project remains on schedule, I will tell you that before the end of June, it is our intent to update the budget based on what we have put forth and come up with what our final class is going to be. So we continue, as far as things that are happening off site, we continue to maintain very good real relationships with the Inuit community that can tick me at Association and none of it. We just attended a conference up there. I don’t know if I wants to talk about a little bit more. But in general, because we have maintained all of the Sabina key personnel to include Matthew Picard and Andrew Moore. Those people have really continued to bridge that relationship and we maintain very strong relationships with Inuit community.

Sure, yes, I will just touch on we, we went to the symposium in Nunavut, the mining symposium, the time was really good, because we just close the Sabina deal. So we were able to introduce everyone there to be to gold and talk about the fact that, some of our experiences of the Russia days, as Bill mentioned in construction, for some of us, go back to that in terms of knowledge about knowledge about a logistical challenge in the north. So we that was very well received. And I also talked to them a bit of a personal homecoming for me having 20 some years-ago, but I like to claim season an expediter in the Yukon. So I’m sort of back to the north as well. But I think the most important message that we brought to them was continuity. As Bill mentioned, for some of the great work that we have been doing with philatelists Categoria group, continue on with some very good CSR projects that will be able to increase the budget on that speech and also financial strength. But the main message was that we were, as Bill said, maintaining the schedule, that is Sabina afford. That was a great relief to many people, because unfortunately, technically eagle to think over T Max, run the mind for a while, obey and then decided to shut it down, and come back to join. So I think they are very concerned whether another big company might come in bigger company might come in and do the same thing. When we did the acquisition, when we started looking at Sabina, I made it very clear to bill that it was up to him and his team to decide the schedule that we could live with. And I did say to bill, that if we thought we needed more time that is not our show. Some understand that to get it right. But the good news is with the quality of work done by Sabina very good work and Bruce McLeod and his entire team, we were able to, after lots of scrutiny and a tremendous amount of due diligence, conclude that we could in fact, maintain the schedule as Bill has said, so, Greta, supposing that we went to and, frankly, it is nice to nice to be investing in Canada. We are not a foreign investor on this one. And I think as long as we can do what we have done for a long time, deliver on the promises we made in the north, I think we will have a great success in relationships with the local communities, so it was very positive. Typically also talking potentially, with a nickel Eagle. Are there some things we can combine as two companies do the bid to do some sub projects together. Maybe be some CSR2 projects, et cetera. So I think it is a real positive view of our, from our perspective of going north and also of the community and the industry. We felt very welcome. The key is to deliver as always on the promises that we have made. I think with that, I will get Vic King to talk a bit about this new budget and maybe you can talk a little bit about the team that is not only inherited some great people and whether it be the indigenous relationships, but also in terms of construction, et cetera. But obviously, you can tell me what you think of us joining forces with the existing team approach to being on the exploration side.

Yes, absolutely. The quality of the work that is been done by the Sabina team is top class. And I’m very happy to say that, we have virtually retained almost the entire team. So we will be hitting the ground running for sure and supplemented by people from our existing B2Gold team as well. The budget has increased by - our global budget, as Mike mentioned, has increased by US$20 million. That is to put it into context, I think Sabina had in the order of around CAD$5 million, I think on average, as an exploration budget. So this US$20 million, CAD$27 million is a five times increase to be spent in six-months. It is a ten times increase. So we intend to hit the ground really hard. So bringing in additional rigs we plan to complete at least 25,000 meters of diamond drilling. The allocation of that drilling will be on the Goose project, which comprises a number of deposits, but a lot of that will be on the - deposit which is the highest grade and also the biggest contributor to the resource. Some of that drilling will be in full to improve the density of drilling to optimize the underground planning, underground mining planning. But also to extend what is clearly open-ended mineralization on each of the four deposits on the Goose project itself. That is going to be about $15 million of the budget. There is another $5 million that we intend to spend on what are clearly top class projects, gold opportunities in this standardized formation, hosted pathologies. George, which is about 50 kilometers to the Northwest of Goose is where there has been - there is a resource there already. And over 40 targets on that license alone on those claim blocks. Sabina had been drilling this year, completed drilling, I think 2 weeks ago, the current program. We will get back in there and drill it, George. And just to highlight, I’ve just mentioned two projects there. Within this 80 kilometer belt, this Gold district, we also have another three project areas Bolder, Dell and Boot that have had economic intersections of mineralization, which we will certainly be following up on as well overtime. That covers a Back River. Just to get back to Mali, Mali have the lion’s share of the budget this year, over $34.5 million. And that really is the record of Mali for sure. We have more rigs turning there more people busy in exploration than we have ever had. We have already completed over 100,000 meters of drilling in Mali. A lot of that, as Bill mentioned earlier, has been focused on infill drilling in the saprolite to moving more material into the indicated category to support the studies that are going into the face to mold options that we are looking at in the area. That is infill drilling is complete and we are back, we are currently updating the resource, I hope to complete that certainly before the end of this quarter, and it will feed into the timeline both Bill and Mike mentioned earlier. We haven’t only been doing info as you would have seen in the press release, earlier press release I think earlier this month. We have had some significant success in sulfide. On the Anaconda properties and Mamba we hit actually our highest, highest biggest intersection we have ever had across in West Mari, 8.6 grams over 46 meters. The supports another hit in the same zone, Mamba main zone of over eight grams of nearly 16 meters. So the south side potentially areas certainly not over yet for sure. And there are plenty of more intersections that would tend to support the potential for underground and certainly extension of the sulfide. A lot of depends into the sulfide sets that at the Anaconda project. Additionally, you recall that we acquired the Bakolobi license, which is essentially the piece of the jigsaw sitting between the Anaconda properties and Medinandi grow to further mine is located. We have extended the drilling on to the Bakolobi license, particularly one of the specs Cobra has shown to be exempt significant force over 2.5 kilometers of additional strike on the Bakolobi side of the fence that is within the other side, so that will certainly contribute as well. In the last press release we also named or indicated a new zone, which is further to the south, but slow on Bakolobi, which we call Taipan and we have had some pretty good intersections there as well. For instance 28 meters at 1.8, 23 at over 4 grams and that is really just getting started. So I think a lot more work plan for Mali keeping those rigs and those people busy. I guess those are the highlights.

I forgot something and I jumped back in. One of the things that we have been asked to do, as we have taken on this project, as you know B2 does things a little bit different than then the schedule that they are the way they were going to do it. So we have been asked to generate kind of a new capital schedule and a new offer operating costs profile, it is our intent to have those done in Q2. So internally by the end of this month, but I think by the end of Q2 we ready to talk about. That also includes, as Sabina was talking about, they were talking about bringing some ounces forward. From the underground, we are currently revisiting the underground, both the methodology and the schedule, and we will include that in our next update on how far we think we can push this thing as it comes up out of the ground.

One of the studies that will be Sabina started will pick up is the study of potential for wind power. Obviously, we are a leader in the industry and solar power, what we have done in Namibia and Mali, but we are having a hard luck, there is no assumptions for anything. Currently, we are waiting for a study to be done. But there especially for it in the north of Canada, that can be an interesting opportunity in terms of reducing emissions, but also can have a positive effect on non cost up there, as well. In terms of strategy going forward, we are very happy with the growth profile we have right now, in terms of looking at the two stages of expansion, difficult to complex. And also, of course, the exciting project. And a lot of that is because of our one of the reasons we did the acquisition, confident about our ability to accomplish these things subject to a study on this another second, we will call this of course, externally strong financial position. And if you look back at our history, the strategy really abused put it quite simply as that our strong operational and therefore financial performance for years, has fueled growth, by our ability to do creative acquisitions, to build mines ourselves, and also do a lot of exploration work. So I think that is one of the keys to our success. But we are also very focused group. So we have heard us talk about the sequencing of the expansion of the cohort if we go forward to the second bill, how that works within doing the first expansion, which is tricky, which is happening now. And for cohort, then Goose construction, and then potentially building the second mill. So we are not going to we are not going to build two mines at mills. At the same time, we have always said that. But also we are not going to be looking now as current at M&A, development, project M&A for that same reason we are going to stay very focused on the growth profile we have now in the company, we will continue to look at exploration opportunities, something we have been very good at. And that will include not only entry into, into deals with landowners are, but also smaller companies, we have started to invest in some junior companies with exciting projects like snow line up in the Yukon and Matador in Eastern Canada. So that is a pretty exciting strategy. We think also offering to these groups did take special teams offering if there is any assistance we can provide in terms of looking at their plan expiration plans, etc. So why don’t you, we should companies, unfortunately, they are struggling these days even with going higher. So for a lot of these companies, I think it is quite attractive to have a friendly shareholder, not trying to beg anybody but a friendly shareholder like beach ago. So we are going to be exploring those kinds of alternatives as well as we before. But the thing we are going to continue to do as we have done for many years, is be very focused on what we are now on the acquisition to be done on the opportunities we have to grow the company. Okay, well, I think with that, we will open it up for questions.

Thank you. [Operator Instructions]. Our first question comes from the line of Ovais Habib from Scotiabank.

Thanks, operator. Hi, Clive and the B2 team, again congrats on the beat and strong start of the year. And really great to see the development of Back River progressing well. Just a couple of questions for me. Just starting off with Anaconda Phase 2 study. It looks like based on explorations assess, especially on the sulfides. You have pushed out the study to Q4. Now maybe this is a question for Bill as well. Would you look to change the scope of the project with larger processing facility or any color you can provide as to guidance and scope of the project kind of looking going forward?

Yes. Sure, Ovais. Again, never enough to put a second mill on. Now it needs to be bigger and harder to master stronger. But what I would say is that, we are definitely not changing the scope of the second mill that we are looking at a 4 million ton per annum oxide mill. But as you know, as B2 often does, we did put in capacity to expand and or eventually add a sulfide circuit if necessary, that is all being looked at. But really what we are talking about is, remember, you are going to have this very interesting situation if you build the mill there, because it only takes oxides. The sulfides have to come south to Fekola. So instead of kind of cheating you and saying, okay, I’ve got this great oxide mill and then my sulfides, as you know, in the long-term our goal it will start to decrease. I will be able to tell you, listen my life of mine is extended because of sulfides, which means I’ve now got two options for oxides. Don’t forget we have got Dandoko, we have got - The whole concept is to roll this thing into a regional play and really show you what this complex can do.

Thanks, Bill. And just yes

Clive would probably want me to mention that as B2 is want to do from time-to-time. They get all of the decision makers in a room with the technical people and they beat these things about the head, Clive calls them swirls. Where we just had one yesterday. And it was an interesting swirl in the sense that all the options put on the table seemed very good. It is just a question of which way you want to go inside of a larger corporate strategy.

Right. Thanks, Will. And just any sort of color you can provide right now how things are moving along with the underground at Fekola or other component of Fekola?

Yes. I could talk about it a little bit and then I will turn it over to Dennis Stansbury, who was just there working with the regulators to get the permits. But I will tell you, remember, the exploration project or sorry the underground project is an exploration project at this time with the concept of the development and get down to the face so you can drill it off and put the resource into reserves. So we are basically - we have done it stepwise, where all the surface infrastructure had been approved already. And now we are up to really putting in the portal and all the supporting infrastructure for that. So Dennis maybe you do want to say a few words, so you were just over there?

Yes. We met with the regulators last week. Had a good session with them. They’ve come back with a very, very short list to questions. We are putting that together right now this week to submit. And with the tone of their letter, it sounds like we will have the permit to go full speed on that underground property next week. We have been - about that. So we hope that they are already in the pit. They are getting down to the final level. They prefer the face for the first blast. Access is quite good. It looks burn cuts did an excellent job there. The work looks very, very first class and so there. Hopefully, we will be kicking off the first rounds and have an underground very, very shortly.

And then maybe moving a little bit to, which go to I believe open pit mining is ending in 2024. Underground kind of ending around in 2026, do you right now see potentially increase extend that underground mine life or pretty much we are kind of wrapping up around in the next couple of years?

So the answer is, yes. I think we have always said that there is a resource down plunge, that has to be drilled off from underground, which we are getting down to that, will start to do that now. We have always caution that we are not going to extend the life, the overall life of mine, of course, you’ll extend the underground. But it is unlikely that we will find enough resource at that spot, to extend the life of mine. We are to something which has potential, which I think is a bit preliminary to talk about. But at the end of the day, the existing underground will not extend the life of mine, it might extend the house profile. But we are certainly digging around and we are on to something we think could do that somewhere else.

Low fix and exploration so he can talk about three kilometers south of the Otjikoto pit and what we call, hopefully, the Otjikoto feet structure. We have hit some interesting intersections. These are at definitely will have to be mined underground. The question here is whether we can actually get these to hang together over sufficient strike extend, to actually build up a resource that would warrant basically developing down to those levels. It is early stage as Bill said, it is still very encouraging.

Thanks for the color and Bill as well. Maybe I will stop there and jump back in the queue, but thanks for taking my questions.

Thanks Ovais.

Thank you. Our next question comes from the line of Ralph Profiti from Eight Capital.

Thanks operator, good afternoon everyone. Just a couple questions on sort of the success that we have seen on the logistic side. Is there an ability to take advantage of some of the sequencing on delivery of material, critical material between the ice road and the sea lift. Just wondering if that is being taken advantage of in order to sort of stay ahead of schedule? And then sort of a follow on question from that, if you are talking about an early opening in February, can you put that in context for me how the sort of the 2022 season figured out in terms of the timing and just sort of what is behind that more opportunistic approach? Has there actually been work done on the ice that is opening up that window a little bit more positively?

The answer is, yes. So the logistics question at the end of the day, as you know, basically what happens is you get 15,000 tonnes or 18,000 tonnes onto a vessel, they bring it up normally on the eastern route up past Ontario and then Quebec and then down into that area. That happens everything has to be in by July, or sorry, by September, October. There we have the marine laydown area where we do prioritize things to come up the winter road. So that is what actually happened in 2022. They listed things which were critical for the 2023 construction season and operational season, and those came up the road first. That is why, as I said they only got 800 out of 1200. But that still was enough surely to make sure that we were able to maintain the schedule. Related to the extension of the hauling season or the increased number of containers we want to bring down the answer is yes, they did kind of a deep dive after this year. And they looked at a couple of things one, last year, they only hair in 2022, they only had 28 trucks. We currently have, we have increased that to 40 trucks that will come up the road. And each truck basically do a load a day, so often back in a day. And then we have tried to increase the season. The season started out in March this year for a couple reasons. One, they changed the contracting group that did the ice road. So this was the first time that they’ve constructed this particular ice road. And they struggled a little bit, my understanding was with the with the sea ice, the sea ice has to be actually done last because it has to freeze up a little harder. So what they should have done is they should have what we were actually doing is they should have scheduled equipment kind of in the middle and worked out towards the sea ice and towards the site and from the site, where the where the sea ice is the last to go. So that is that is not planned for this year. And then additionally, there is always talk about kind of this bedding material, not creating a permanent road, but actually being able to build kind of a gravel sub base up, which will allow you to get the freeze in earlier and get loaded. They can actually this year even before the road opens up, just because it is within our license area within our operational area. They can put another six or seven kilometers of kind of permanent road in that would actually fit very well I think with some of the exploration activities that are happening up at that end, which were which we are looking at. So we see opportunities really to get these incremental gains. And of course, it is one of these things that each year you learn more, and you get you get more experienced that I would say I think two years-ago, I heard that they that they brought up not two years-ago. So they didn’t do anything two years-ago, but the last time before this last one they brought up at containers. So they didn’t have this experience of this, this full on ice road 2022. They have full on experience. And I think they’ve done a pretty good job. Looking at the laydown area unto itself, it is a very adequate facility complete with currently, what is it 50 - 10 million litres of fuel capacity, we are putting up an additional 15 this year. And that will put up more capacity on site. So we are going to have 50 million litres of fuel capacity at the end of this year. So overall, we are I think we are in really good shape for 2023 and 2024.

Yes, and maybe just a reminder, back in the day in the Sabina days, when we built tuple, we actually had to build 470 kilometers of ice roads every year, to get everything in where the road disappeared. So the individuals involved and a lot of the individuals involved in that are involved here. And there is always logistical challenges. But I don’t can’t think of a group more qualified to handle these types of things and working with the existing Sabina team. So we are, we are feeling pretty good about that they will mentioned by looking at the second thing of the second quarter to have more and more information on the capital costs as we see it and also the operating costs of center. So we are targeting to have that available for the ATM. So in our no agenda meeting, June 23rd. June 23rd we will have a lot more information to tell you about our view and why we are feeling so positive about this.

That is a great context. Very helpful.

Thank you. Our next question comes from the line of Justin Stevens from PI financial.

Hey, Clive and team. Congrats on a good quarter. Definitely beat what I was looking for. And a few more questions just in terms of the modeling for the rest of the year here. Obviously, the Fekola Phase 6 was a nice boost for the quarter, but should we expect a bit of a tail off in grades the coming quarter? Is that sort of works its way through the mine plan?

The answer is yes. We are in Q3, Q4 producing slightly fewer ounces, so the grade will be lower. Of course on grades.

And remember, unless we mentioned the Otjikoto production, is the other way so they can offset to large degree.

Yes, makes sense. And then just sticking with Fekola. Obviously, the Phase 7 strip is underway. Should that be pretty evenly throughout the year or is there going to be a bit of a bump in a particular quarter?

We are already stripping in Phase 7. So I would say it would continue to be throughout the rest of the year.

Got it. Just in terms of the modeling, for the Fekola Regional Phase 1 trucking, how should we be looking at the attributable production, obviously, there is the 10% free carry. There is truck - going to be 90% attributable to B2 or is that potentially still in flux?

I think you are asking what percentage were - I think you must assume estate is going to end up 20%.

80:20.

The same as we have for Fekola. Maybe under different mining group, depending how they settle out on the final code. Right, 2019 versus 2012, right now it is crediting flux, but either way you can expect they are going to have 20% I think.

Got it. And that would be subject to the same sort of independent valuation procedure that happened with the initial plan next to you, right?

That is correct.

Got it. Perfect. And then last one for me, for Goose, given the bulk of the required supplies, sort of meet the timeline, I’m assuming you are going to be coming in those 2023 - to make the 2024 ice road season. Do we expect a spike in terms of the capital spending sort of the middle of this year?

I think we are kind of even this year. I mean -.

I think we spread it out pretty evenly over the three quarters from Q2, Q3 and Q4.

Yes. Remember what is happening. So we have already ordered the stuff which is already - we have already paid for all the stuff that is getting on a boat right now to go up to the marine lay down area. And so that is already paid for. What you will see is the labor is kind of - I think I heard something a lot more than 90% of all the material that we need for site has already been purchased, or is under PO for sure.

So yes, if you have got the PO already then it should be fairly even. It will just be transportation then.

It is now just labor and how we schedule that.

But that should be - yes.

Q2, can give you a better idea of timing. But right now we scheduled it out pretty evenly through the three quarters.

Perfect. Sounds great. All right. That is it for me. Thanks.

Thank you. [Operator Instructions]. Our next question comes from the line of Don DeMarco from Nation Bank Financial.

Thank you, operator. Good morning. Congratulations, Clive and team. So continuing with the question on CapEx. So it is going to be evenly distributed, but what should we model for the magnitude as CapEx in 2023? I know that Bill had mentioned there is going to be more color in Q2, but can you give us any kind of order of magnitude right now for what to put in our model for this year on Goose?

Well, I think what is out there is what the Sabina model has? I don’t think at this point we are holding that in our budgets or in our estimates.

I think we have guided we think it is somewhere between 750, 850, so why so many 100 Canadian, by the way, in that range for total capitals had been it is between 100, 200, so why did you take 150? And so let the balance is left for us.

Yes. And remember, that includes supercharging, the underground, which we are currently placing on as well.

And we will, I think will expect that it will again, we haven’t guided this yet. So it is coming in Q2, but you can expect they are pretty evenly balanced between 2023 and 2024 with a goal and we get at least physical construction completed in Q1 2025.

And you mentioned you extended the airstrip, can you help fly directly to the project site from Vancouver or Edmonton?

From Edmonton, for sure. They are bringing in, I guess, Dash H right now with the rotations. So the answer is, yes.

To supplement that too, as well. We are going to be planning a site visit or the analysts up Back River in September. So obviously a good time of year to see the progress that we have made. Good to see the airstrip firsthand.

Okay great, look forward to that. And I noticed in the financials indicated that, that you incurred a 16 million right off of some mineral property interest. Then noncore, Greenfield targets. Not a big magnitude, but can you just give us a little more color on where this might have been?

I can comment on the majority of that. So Uzbekistan, we had three projects that properties we were working on. So we evaluated those and decided that we weren’t going to pursue those. But we are still interested. There is, there are other things of interest there for us. So we are currently in discussions with the state. I don’t Bill if you have anything to add to that.

The three projects that we had in the [indiscernible], which is near [indiscernible] really didn’t measure up. We have identified another area, closer to [indiscernible] that we are in discussions with the Minister of Mines.

Okay, so just in conclusion, and so for some of these Greenfield targets, I know you are kind of across the world over the last few years. So you Uzbekistan still there is still some interest there. What about Japan and Finland and is there any others that where there might be some early stage Greenfield interest still ongoing?

Finland is definitely up there as an area that we are spending quite a quite a bit of money and putting a lot of effort in and it is ongoing. Japan is through our interest in the metals. They are running that project. Elsewhere, we have upped our budget in Cote d’Ivoire. Obviously leveraging off our West African experience, the Geology is the same. It is a Francophone country. It is less volatile, I guess, you could say, in terms of the back fires in West Africa, and it has huge potential. So we picked up two licenses there in our own right on our own right. Work them up from basic absolute Greenfield from content through soil sampling, and we are basically doing over drilling next on 15 kilometers of strike of a nominalism. So that is going well. I think those are the main ones at this point. We have shared a few as well. Are the areas that we are consolidating, obviously, have intent now in Canada, as cloud said through placements and hopefully building those relationships with junior companies or making up our own ground in Canada.

Fair enough. Okay, well thanks for added color and that is all for me. So congratulations again on a strong start to the year.

Thanks Don.

Thank our. Our next question comes from the line of Stephen Green from TD Cowan.

Yes, thanks guys. Just a couple of quick follow ups. Bill, you talked about developing a plan for Fekola and then kind of giving us some guidance on that plan and Q2, would that include kind of your roadmap to the 800,000 ounces or will we have to wait until Q4 with your with your kind of meal plan for that?

Yes, what I said was that the original plan for Q2 was going to be in Q4, so you are not going to see anything at the end of Q2, which you are going to see is a comprehensive plan in Q4 for the whole complex reserves, with a new resource.

Okay. And will that include a new reserve as well?

New reserve for Fekola, retail complex, Q4, depends on the outcome of the study. That is what we are doing the study nearly certainly pushed them that they would be eligible to be reserves. And we will evaluate all of them as far as which specific pieces would come in, I think it is too early to comment on that.

But in really a kind of direct answer your question. That is one of the reasons we are doing this whole comprehensive study is to kind of show where all the pieces fit together for this 800,000 That that we have been putting out there.

Okay fair enough. And just a clarification on Otjikoto. I know, you have some lower grade stockpiles there. And there is been discussion, some of your later on that taking me out to 2030 and beyond. Is that still the case or is it is it dependent on keeping some of the grade up with the underground through those years?

No. So it is absolutely the case. As a matter of fact, some of the things that we are doing with power in locking in these, we are getting some off take agreements on some solar power. That absolutely is giving us a hedge against any potential increases in fuel price, that type of stuff to make it abundantly clear that this project is economic out for 2031 with a low risk stockpiles.

Okay. So that remains the base case?

Yes.

Great, fair enough. Thanks guys.

Thank you. Our next question comes from the line of [indiscernible] From CIBC World Markets, Inc.

Hi Clive, congrats on a good quarter. It is [indiscernible]. So most of my questions have been answered, but I just wanted to clarify on the Fekola, on the second area of study, which will be related to Q4 2023. Is the thinking to hit the ground running as soon as it is out, or would you delay the economic decision on the project for some time later? I’m basically thinking about the timeline of the 800,000 ounce coal as early as 2026 that fell behind.

Yes. So I would say that obviously got to wait till the study comes out to get the results. But as of right now, we see no reason that our current kind of projections don’t hold. I mean, obviously what we are doing is we are doing studies to prove it. But at the end of the day, as far as how the Phase 2 gets scheduled if we go, we see holding schedule on that, kind of if we do Phase 2, it will be a 2026 kind of into production.

That is perfect. Thanks for that color. And then just a final question, I think more on the modeling front really. Thinking about the Masbate unfold out it? how should we expect this to flow through in Q2 or maybe it will be sometime there during the year?

Was it - I heard something about Masbate in Q2, I thought.

Yes, exactly. Sorry. Just a question on the mass value unsold outage after the unsold outage from Q1, should we expect that to be sold in Q2 or would it be later during the year?

Yes. It is just a timing issue of getting it through customs to decal because it is on - doesn’t always work perfectly with the quarter end. So, yes, absolutely.

Okay. Perfect. Thank you. And that is everything on my end.

Thank you. [Operator Instructions]. Our next question comes from the line of Harmen Puri from Bank of America Securities.

Hi, thank you and thank you for the update. Today, most of my questions have actually been answered. I just have another sort of modeling question. Can you provide us with some color on sort of the grade profile at Fekola? In the results you noted that you had a favorable mine phasing sequence start to 2023. Could you sort of provide color on as to whether or not you are still going to be hitting that 2.2 gram per ton guided number for 2023?

Yes. I don’t think overall for the annual amount we are re-guiding. We say it is at least to that number. So whatever was 2.2 or 2.3 that is our annual number.

Yes. I mean, we were right on budget in Q1. We are great. Like we are right on budget.

Okay. Thank you.

Thank you. At this time, I would now like to turn the conference back over to Clive Johnson for closing remarks.

Okay. Well thanks everyone for taking the time to present Q1 results and talk about our plans going forward. So thank you all very much. Have a good day.

Thank you. This concludes today’s conference call. Thank you for participating. You may now disconnect.