Centerra Gold Inc. (CGAU) Q2 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to the Centerra Gold Second Quarter 2022 Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded, Wednesday, August 10, 2022. I would now like to turn the conference over to Tobey Caron, Treasurer and Director of Investor Relations. Please go ahead.

Thank you, Carlos. Welcome to Centerra Gold's second quarter 2022 results conference call. Please note that presentation slides are available on Centerra Gold's website to accompany each speaker's remarks. Today's call is open to all members of the investment community and media in listen-only mode. Following the formal remarks, the operator will give instructions for each for asking a question and then we will open the phone lines to questions. Please note that all figures are in U.S. dollars unless otherwise noted. Joining me on the call today are Scott Perry, President and Chief Executive Officer; and Darren Millman, Chief Financial Officer. I would like to caution everyone that certain statements made today may be forward-looking statements and as such are subject to known and unknown risks, which may cause our actual results to differ from those expressed or implied. Also, certain of the measures we will discuss today are non-GAAP measures, please refer to the description of non-GAAP measures in our news release and MD&A issued this morning. For more details, discussion - for more detailed discussion of the material assumptions, risks and uncertainties, please refer to our news release and MD&A along with the unaudited financial statements and notes and all of our other filings, which can be found on SEDAR, EDGAR and the company's website at centerragold.com. And now I'll turn the call over to Scott.

Thanks, Tobey and good day to everyone. As Tobey mentioned, I'm just referencing the accompanying webcast presentation deck. I'm just starting off from Slide 4. So first of all, I'd like to start by highlighting our announcement on July 29 that we have officially closed the global arrangement agreement with Kyrgyzaltyn and the Government of the Kyrgyz Republic. This is a clean separation and it has allowed us to significantly reduce our share count by approximately 77 million shares or 26%. With this closing, the company is positioned to move forward with the renewed focus on our core operations, the Mount Milligan mine the Oksut mine, our core goldfield development project in addition to our exploration and drilling investment programs at our greenfield and brownfield exploration projects. In the second quarter, the company continued to demonstrate that safety remains one of Centerra's top priorities. Notable milestones during the quarter was we commenced achieving three years without a lost-time injury and subsequent to quarter end, our Oksut mine surpassed 1 million hours without a lost-time injury. Moving over to Oksut, gold room operations at the Oksut mine's ADR plant remains suspended due to mercury that was detected. Retrofit in the gold room is expected to be complete in late 2022 with operations recommencing as soon as regulatory approvals are obtained. The company has completed engineering work and has ordered equipment to retrofit the ADR plant to safe operations within the gold room. The capital cost of this mercury abatement retrofit is expected to be approximately $5 million. You will note in today's release that at the Oksut mine, we had initiated suspension of stacking and leaching activities as of August 10. This is due to the company's inability to obtain approval from the regulators to use more activated carbon than what is currently allowed in the mines environmental impact assessment and permitting. This change in operating practices means that the company has had to revise its consolidated 2022 outlook to reflect the suspension of stacking and leaching activities at Oksut, the continued suspension of gold room operations in the ADR plant as well as the impact of an assumed decline in copper prices and the impact that has on our Mount Milligan operation. We will speak to each of these in more detail later on in this webcast. In terms of our development projects, the advancement of the goldfield development project continued in the second quarter. We have initiated a resource expansion and infill drilling program that targets some 65,000 meters of diamond drilling and reverse circulation drilling. Our plan here is to issue an updated resource estimate for the project in 2023 with the feasibility study shortly thereafter. With regards to the senior leadership, we are now in the final stages of recruiting a new Chief Operating Officer and we plan to provide the market with an announcement on that shortly. From a liquidity perspective, reflecting the strength of our balance sheet, the Board again approved a consecutive quarterly dividend of CAD0.07 per share. Lastly in respect to our Molybdenum business unit, evaluations to surfacing value - sorry - evaluations to surfacing value opportunities remain an ongoing work in progress item. Just moving to Slide 5, just in terms of our environmental, social governance highlights. There's a lot of exciting environmental social governance updates on this slide and I won't go through the more, but I do want to note that on August 4. Centerra published its 2021 ESG report. This report demonstrates the great strides that we are taking to continue to strengthen our environmental social governance performance and I feel it is reflected in several achievements noted throughout that report. Lastly, I just want to highlight the successful completion of our year two responsible gold Mining principles assurance work that the organization is on track to achieve conformance with the responsible gold mining principles before the end of 2022. Just moving to Slide 6, touching on Mount Milligan operating highlights now. I think it is important to note that our 2022 gold and copper production output from the mine has not changed. We are still on track to meet our gold production guidance of 190,000 to 210,000 ounces for the year and to meet our copper production guidance of 70 million to 80 million pounds for the year. During the second quarter, Mount Milligan continued to deliver strong results producing some 42,728 ounces of gold and some 17.4 million pounds of copper. In terms of the corresponding all-in-sustaining costs on a by-product basis at Mount Milligan. The result came in that $1,245 per ounce for the quarter, that was $641 per ounce for the first half of this year. The company's second quarter all-in-sustaining cost result was impacted by the meaningful decline in copper prices. Again remembering that copper is recognized as a byproduct credit. Second quarter copper credits were effectively reduced by some $560 per ounce in relation to a negative mark-to-market adjustments on our provisionally priced copper contracts that were open as at the end of the quarter. Darren, our Chief Financial Officer will speak to this in more depth in the financial highlights section of this presentation. The Mount Milligan mine posted a solid cash flow result in the second quarter. We generated - in terms of cash provided by mine operations, we generated some $81 million and in terms of free cash flow, the mine generated $58 million for the quarter. Mount Milligan's stage flotation reactors were commissioned in early May during the second quarter and we are expecting to see improved future gold and copper recoveries at the mine as a result. By way of example, the month of June, actually had the highest monthly copper recoveries that was seen in the mine's history. Lastly Mount Milligan's last mine planning work continues to progress with the focus on optimizing some meaningful life of mine extension opportunities relative to our go-forward equipment fleet capacity requirement, our tailings storage facility requirements, as well as some other identified opportunities in trade-offs. Just moving to Slide 7. At Oksut, as I already mentioned, as of March 2022, a gold room operations remained suspended and the company has initiated suspension of stacking and leaching operations as of August 10. As a result of a lack of access to activated carbon, mining and crushing are currently ongoing and the company's evaluating whether these activities should continue while we pursue an amendment to our Environmental Impact Assessment Permit to align permitted limits with current operational plans as at June 30 Oksut had stored golden carbon inventory totaling some 58,469 ounces. The weighted average cost of this inventory on a per recoverable ounce basis was approximately $444 per ounce. The ADR mercury abatement retrofit is expected to be complete by the end of this calendar year and we do assume that current inventoried gold in carbon will be processed in 2023 assuming the ADR plant resumes full operations with regulatory approvals in place. Meanwhile we do continue to consider other alternatives to monetize the gold in carbon. Oksut is currently in the process of preparing a new environmental impact assessment application, which will clarify the heap leach testing capacity of the mine and the excellent amount of activated carbon required to usage in our operations. We expect to be submitting this new EIA application by the end of this month, and we'll be pursuing its approval as quickly as possible. Just moving on to Slide 8, just in terms of our guidance and our revised outlook. As I mentioned earlier, the company has revised its outlook for 2022 as a result of initiating the suspension of stacking and leaching activities at the Oksut mine in addition to the continued suspension of gold room operations. This is also in addition to the changes that we've made to our assumed spot copper price moving forward. With regards to copper prices, we have conservatively reduced the second-half forecast assumption from $4 per pound to $3.25 per pound. I would note that should copper prices stay at the current spot levels for the remainder of the year, the company's all-in sustaining costs as well as its cash flow outlook would see a positive impact versus this revised guidance. You will see we have access Oksut production at 55,000 ounces for the year and this really represents the actual Q1 production results. This is revised down from our original guidance of 210,000 to 240,000 ounces for 2022. In terms of the company's consolidated all-in-sustaining costs on a byproduct basis, our guidance has increased to $1,000 to $1,050 per ounce, which is an increase from previous guidance of $600 to $650 per ounce. And this primarily reflects the lower gold output contributions from Oksut as well as the reduced copper price assumptions at Mount Milligan. As already mentioned, guidance for gold and copper production at the Mount Milligan mine remain unchanged from the previous guidance. Likewise consolidated capital expenditures, costs relating to the Molybdenum business unit and corporate, administration costs also remain unchanged from previous guidance. Exploration guidance has been updated to $50 million to $65 million and this reflects the addition of $15 million to $20 million in spending in investments for the goldfield development project following the addition of this project to our portfolio in Q1 of this year. Just moving on to Slide 9. Here on Slide 9, it reflects the revised 2022 gold production guidance graphically on a quarter-by-quarter basis. The guidance is updated to include only year-to-date gold production at the Oksut mine of 55,000 ounces in addition to Mount Milligan full year gold production outlook. As noted previously, Mount Milligan gold production guidance remains unchanged from the original outlook of 190,000 to 210,000 ounces. The company assumes completion of the mercury abatement retrofit at the Oksut mine in late 2022 and this will then allow the restart of the gold room in 2023 subject to the relevant regulatory approvals being in hand. Just lastly on Slide 10. Just in terms of copper production, as previously noted, the Company's copper production guidance is unchanged from the original outlook of 70 million to 80 million pounds from the full year. With that I'm going to pass the presentation over to Darren Millman. Darren Millman, our Chief Financial Officer and Darren will walk through some of the key financial highlights.

Thanks Scott and good morning all. For those following on the slide deck, I'll be initially speaking to Slide 12. Centerra recorded $167 million in net revenue during the quarter. Consisting of the Mount Milligan mine, Molybdenum business unit, no revenue was recorded at the Oksut mine. At the Mount Milligan mine, gross gold sales and copper sales were 58 million and 71 million prior to the provisioning adjustment on the concentrate sales of a negative 32 million, which were made in the quarter. I will speak to this in more detailed legs later in the presentation. In the quarter, Mount Milligan sold 41,597 ounce of gold and 18.9 million ounce of copper. Due to the suspension of the ADR plant as noted earlier by Scott, the Oksut mine has no recorded sales or production in the quarter, however, stored gold-in-carbon inventory balance recognized 58,460 non-recoverable ounces at June 30. The costs associated with the Oksut stored gold-in-carbon inventory is approximately $444 per ounce, which has been capitalized as a current asset with no cost flowing through the earnings statement in the quarter. The total recordable costs as at June 30, 2022, is $26 million. The recorded cost will flow through the earnings statement on the process - upon the processing at the ADR plant for otherwise monetized for the third party facility. At the Molybdenum business unit, 32 - 3.2 million pounds of Molybdenum was sold generating revenues of $68.6 million. During the quarter, the Mount Milligan mine operations average gold price realized was $1,335 per ounce and $2.19 per pound of copper, this incorporates the existing streaming arrangements over the mine. It should be noted the 25% decrease in realized price from when comparing Q2 2022 to that of Q2 2021, cash used in operating activities was $3.5 million for the quarter. As noted in the MD&A, the Mount Milligan mine generated $81 million in positive operating cash flow, this favorable variance compared to prior years was a result of the one sales shipment recognized in Q1 2022 of approximately $42 million, the cash only being received in Q2. This was offset by a reduction in gold and copper prices realized within the quarter with 19% and 25% respectively decreasing in comparison to Q2 2022 and that of Q1 2021. Given no sales occurring at the Oksut mine in the quarter with operations continuing, $51 million was used from treasury. This also included income tax payments of approximately $22 million to Oksut tax authorities and 222 tax year - related to the 2021 tax year together with the annual royalty payment of $8 million relating again to the 2021 year. Free cash flow deficit from continuing operations for the quarter was $31 million, primarily driven by the $55.4 million from the Oksut mine currently current operational status, together with a $6.1 million deficit at the Molybdenum business unit. As inventory levels remained relatively high with working capital reductions expected in the second half of the year, the net loss from continuing operations was $2.6 million in the quarter with $36.2 million adjusted net loss for quarter. The earnings in the quarter attributable to operations were at minimal $2.7 million contributed from the Mount Milligan mine as a result of the mark-to-market adjustments from a historical recorded provisional copper and gold concentrate sales together with the reduced gold level sold and lower copper prices realized, this included the mark-to-market adjustments. Earnings also attributable to $1.5 million loss from the Oksut mine primarily from exploration costs and a $3.4 million loss from Molybdenum business unit. For the quarter, there were three adjusting items, they were reclamation provisions, recovery at sites, care and maintenance of $41.4 million primarily a result of change in underlying discount rates used, Kumtor related legal and other costs of $3.2 million and income and mining tax adjustments of $4.3 million. I'll now move to Slide 13. Given the significant movement in previous issued all-in-sustaining cost guidance compared to Q2 actual results. We reprised this high level slides in over three key items. The removal of the Oksut mine's planned production and sales in Q2 has resulted in a higher all in sustaining costs by $337 per ounce given the planned 2022 low cost profile of the mine. Secondly, the planned all release timing at the Mount Milligan Mine which remains unchanged of higher expected cost in the first half of the year compared to that of the second half of the year, specifically 90% of gold production planned in the second half of the year. This resulted in a higher cost profile in the first half of the year as noted in the slide of the $229 bearings. The company's fuel and Canadian dollar hedging programs has offset to date any inflationary pressures together with initial high inflation factored in as part of the 2021 budgeting process and included in the original guidance. The company treats copper - excuse me - the third point is the copper, the company treats copper revenue as a by-product by the Mount Milligan mine, in effect, a negative cost when calculating all in sustaining cost. Given this recent and dramatic movement in copper prices together with unsettled provisional sales contracts has resulted in an increase in all in sustaining cost of $468 in Q2 compared to the original guidance. I'm now moving to Slide 14. At a high level, the company has seven to eight unsettled copper contracts at the end of each quarter. The rising copper prices in 2020 and 2021 had seen company benefiting from the provisional pricing while this recent sharp decrease in copper prices has seen a reduction in revenue and cash receipts. As noted on this slide, the copper price at variability experience for accounting purposes was a high of $4.75 per pound at the end of Q1 2022 to a low of $3.71 per copper pound at the end of Q2 2022. The mark-to-market copper price adjustments made at the end of the quarter contributed to $560 ounce of negative impact all in sustaining cost of the Mount Milligan mine in Q2. The company's copper-hedging program to date is focused on the company's production and not on the quotational period or QP period with zero cost collars being preferred financial instrument. To date the collars pricing being within the range with $9 million were realized gain or loss. As we move into the second half of 2022, as these copper prices, the hedges are of a value. It should be noted the company currently has $52.8 million hedged copper pounds with the majority in the second half of 2022 and 2023. With average oil prices in 2022 at $3.65; in 2023 at a $4; and in 2024, also $4. Now finally in Slide 15. I've largely covered off a much bullets previous slides, so just highlight the company has exited Q2 with a cash balance of $723 million, a $1.1 being a liquidity. Liquidity does not factor in gold-in-carbon with the current market value of approximately $100 million as the company will continue to pursue these initiatives in Q3. Given our strong financial position, the Board declared a quarterly dividend of $0.07 per share. With that operator, that concludes our final remarks. We would like now to turn it over to Q&A for those on the call. Thank you.

[Operator Instructions] Our first question comes from the line of Fahad Tariq with Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking my question. A point of clarification on Oksut. If the gold room retrofit is completed by the end of the year and you're able to recycle the carbon - activated carbon again, does the permitting still become a constraint In 2023? Or is it no longer required?

So this is the kind of real-time as you would have seen here, we met with the Ministry of Environment effectively yesterday on August 9. And in terms of the solution here moving forward, they have recommended that we follow that new environmental impact assessment and that's what's going to align our operations without sort of required permitting moving forward. So assuming the ADR facility retrofit is all complete and we have the regulatory approvals in hand, that will allow us to continue regenerating carbon in 2023 or recycling the carbon and so that would put us in good order vis-a-vis what we expect to be permitted under our new EIA moving forward.

Okay. And just as a follow-up, the expectation now that in Q3 and Q4, there will be no additional inventory of gold-in-carbon. Is that the right way to think about it?

Yes. That's correct.

Our next question comes from the line of Trevor Turnbull with Scotiabank. Please go ahead.

Yes. Thank you. I just wanted to, if we could talk a little bit about the suspension of the 2023 guidance. I was just wondering what drove that and I assume some of it has to do with, maybe the permitting and the new EIA in general but I was also wondering if it was related to looking for those enlarged grazing permits that were going to allow access to higher grade because as I understood it, some of the higher-grades from those areas were part of the original 2023 plan.

Yes. Trevor, I would put forward, simply it's a combination of all those items you mentioned, and really what it comes down to is, right here, right now, we don't have visibility. We've hired with a high degree of confidence in terms of when those regulatory approvals will be enhanced. So say for example, the ADR facility, I think we're highly confident that that will be - that retrofit will be complete by the end of this year but then we are making - we have to make an assumption with regards to when the regulatory approvals for using that facility will be enhanced. Likewise in terms of the new EIA that we'll be submitting by the end of this month, we have to make assumptions in terms of when that EIA will be approved and right now, we just don't have a high degree of confidence that would allow us to provide an outlook for 2023.

Sure, I understand. And just as kind of a follow-up question on what's going on in Turkey, I know that when you first had the issue and started building up an inventory of gold-on- carbon, there is talk of having maybe a third party process that carbon for you, it seemed like a pretty straightforward plan at the time and obviously given the buildup in inventory that doesn't seemed to have been as simple as we thought. I just wondered, can you say anything about why that didn't turn out to be a very viable plan?

Look, Trevor, we continued to consider those alternatives in terms of looking to monetize the gold in carbon in a potentially off site but in terms of our discussions with the regulators and the agencies. I think what they've instructed us is their preferred approach is for us to remediate our facilities and to complete the retrofit of our ADR facility. In terms of our operating license, we were not permitted to transport or to export loading gold in carbon oxide that would require an amendment and the discussions today I think the preferred approach for the operation from the regulators point of view is for us to remediate our facilities, so that we can continue to produce dore on site. So we'll continue to engage in those discussions but right here, right now and as you are seeing in our guidance, we're assuming that we're going to have to complete the retrofit and that will be the avenue of the main for producing gold dore and moving forward.

Okay. Yes, I guess some of the permitting turns out to be a bit more rigid and narrow than we realized. Just one final question if I could, on Mount Milligan and that's just about the new mine plan, I saw that you had mentioned you wanted to assess the impact of capital and the tailings requirements and I was wondering if the capital - it would be related to stripping costs expanding the tailings or equipment and if there is any permitting hurdles with respect to tailings that we need to think about as well?

Well the Life of Mine work is quite advanced, and I think what we're seeing here is a meaningful opportunity to increase the sort of the conceptual reserve delineated asset life. So that's favorable if you will. But obviously that's resulting in a larger pit, which in the context of your question, it's more mining volume, there will be more capitalized stripping if you will, in terms of sustaining capital. Likewise, the life of mine processing volume is going to be considerably higher than what we had in the previous life of mine plan. And so, to your point that we will require a larger tailing storage facility. And yes, if we look at the required height of that tailing storage facility vis-a-vis what we're currently permitted to, we would require a permit amendment to build larger tailing storage facility. Generally speaking, I want to put forward that kind of routine. That's part of the course in terms of how we run our business but answering your question directly, yes, we would have to engage with the regulators, et cetera, to get a permit amendment for a larger tailings storage facility.

And sorry. Just one follow-up to that. When looking at an amendment for tailings, is that all in the hands of the province? Or do you have to also engage with First Nations on that one as well?

Yes. We have to engage with First Nations and other stakeholders but it's a provincial permit.

Next question from the line of Anita Soni with CIBC. Please go ahead.

Good morning and thanks for taking my questions. I'm going to start. The first question is how much - with respect to Oksut, you put some disclosure in there that you had stacked more than was permitted in 2019 to 2021. Can I ask for the volumes that you stocked more than was and what the permitted amount was?

Sorry, Anita. I don't have that in front of me. And there was discussions that took place yesterday. So, to be quite honest, we're still trying to clarify the regulator's position on this and we're trying to make sure that we've understood and interpret it correctly, but I don't have those numbers in front of me.

Okay. I guess what I was trying to drive that was with the suspension of operations, would that mitigate perhaps in their mind? But you're not stocking now for six months. So will that make up for?

I'm not sure. I can't speak on behalf of the regulator.

Okay. Sorry. To the second question, there was other additional disclosure that I just read in the MD&A about elevated mercury levels in nine of the employees, is that something that one that - is it something to be concerned about? I think - like how - what's the elevation level? And with respect to sort of what are the - what's allowable mercury level for elevation in someone if there is any? And would that have implications to this amended EIA?.

Yes. In terms of the employees and the contractors, the health and well-being of our employees is obviously paramount, back when we first identified mercury or high levels of mercury in the area of facilities, we had all of our employees and contractors that were working in that facility, we have them submit samples, just to ascertain whether or not they had elevated levels and then any employees that we did identify as potentially having elevated levels, we actually have them sent to a specialized hospital just for further evaluation and I'm pleased to report that since all of this - all of the employees and contractors are fine, health [technical difficulty] and well, so all good on that front, albeit it was pretty concerning at times given that our paramount focus on the health and well-being of our employees. In terms of, does it have an impact on the EIA? I don't believe so. I think what we're focusing on here again is the retrofit of the area of facility, that is a change in our business model if you will, in terms of the processing operations and again the regulators instructed us that the best thing for us to do is submit a new EIA to make sure that EIA is aligned with our sort of go forward operating profile.

Our next question comes from the line of Lawson Winder with Bank of America Securities. Please go ahead.

Hi, good morning and thank you for the year. I wanted to ask about Mount Milligan and the economics around that. Would it be fair to say that in the current inflationary environments and given the tailings capacity limitations that there are some questionable economics on doing a life of mine extension?

No. Look, again as I said, the report itself - it's in kind of its final stages. There was a number of opportunities, a number of tradeoffs that we're considering, but on a preliminary basis, what we're seeing in terms of the unitary cost profile, be it the productivity profile, I think it's quite similar to what you would have been seen in the prior life of mine profile. I think when you look at Mount Milligan's performance over the first half of this year, even 2021, I think you've seen a significant improvement in terms of productivities, unitary cost et cetera. Even our recovery efficiencies and I don't see any reason why that would be dissimilar to what would be in the new life of mine plan as and when we released it.

Okay. And then along those lines, what are you guys thinking in terms of number of years for the extension?

I can't disclose that as yet.

No problem. Maybe, could you disclose what you guys will be using for gold price assumption and hurdle rate for that study?

I'm just looking at Darren. For the reserve itself on the gold pricing, we run at 13, 15 and when we do release the life of mine, typically we provide a cash flow section and typically, we provide a sensitivity, so there are whole series of gold prices that cash flow will be run at. So we sensitize, we can pick the gold price that you want to assume moving forward.

And I think historically you guys have used sort of like a 15% after tax IRR for projects. Would that be a fair hurdle rate for this one?

Well. This is kind of different, when you ask that question, I think that more so in the context of what does that hurdle rate when it comes to making a construction decision on any sort of organic project, we may have in the organization or maybe put differently if we're looking at inorganic opportunities, that's typically when we'd be looking at that order of magnitude, sort of hurdle rate, but I think in terms of out our existing assets. Again, I think the life mine report I think we'll be providing ultimately an NPV from memory, it's like 5%, 8% and 10%. So I would say we leave it with the reader or the use of the report to self-select their desired discount rate.

Okay and then just one more if I could on - I haven't been through the entire - entirety of your release. Were you guys flagging any write down in the value of Oksut? Or is that still to be determined?

Yes. No. Given the high margin and temporary nature, there is no accounting or impairment adjustments in 30 June or expected in the future.

The next question comes from the line of Dalton Baretto with Canaccord. Please go ahead.

Thanks. Good morning, Scott and team. I'll start with Oksut as well. It sounds like the environmental regulators have been involved since May and that they've been looking at a much broader scope than just the ADR plant and I'm just wondering kind of what triggered a broader review of Oksut and is it realistic to assume that EIA will get approved by year end or even early 2023?

Yes. It doesn't. I can't speculate or talk on behalf of the regulators. So I'd prefer not to answer that question, but obviously you are aware of the challenges that we have had in our ADR facility and the retrofit that we're doing and as we mentioned earlier that does require regulatory approval before we can actually commission that mercury abatement system moving forward. In terms of the EIA, I mean we've been in a lot of discussions with the ministry and they have put forward these solution here is to submit new EIA that will then align operating sort of activities and profile with that EIA and what's permitted. So that is well underway. I think as we mentioned in our disclosure, we expected to be submitting the EIA at the end of this month. And it has been good engagement with the ministry. So I'm hopeful that it will be an expedited process moving forward, but I can't really currently provide any more clarity than that or any more visibility, that's just something we'll have to ascertain as we move forward here in the course of this year.

Okay. Thanks for that. And then just kind of as an extension to that question. If the EIA approval does get delayed a little bit, your operating permits expire in January, when your EIA is eventually approved, will that trigger an automatic approval of the operating permit? Or will you have to then go through another process?

No. It's definitely we would be expecting the extension of the operating license and that extension application is already in the system. We've already filed that.

Okay. Great. And then just switching gears, I think on the last call you had mentioned that you were going to wrap up some internal studies on the Moly business unit around this time. And I'm just wondering kind of what came up those? How are you thinking about that business going forward?

Yes. Look, I think, as I mentioned earlier that we think that there's some conceptual value surfacing opportunities, we've been that business unit. It's something that we continued to study and evaluate, but I'd really characterize it as work in progress, those studies are not completed yet. So it's really just a work in progress evaluation. So nothing I can really speak to in terms of any impact or any change in our outlook or our business model moving forward. It's really just a work in progress evaluation.

Okay. And then just one last one from me, if I may, just given where your balance sheet is and the fact that you've got a clean break with Kyrgyz right now, should we anticipate that some sort of a meaningful buyback or special dividend could be back on the table or just given what's happened with your portfolio is M&A a bigger focus now?

I think, in terms of the strength of the balance sheet and our liquidity profile, obviously, that's something that we do discuss with our Board of Directors and we will continue to have those discussions that I'm not really in a position to provide any guidance in terms of go-forward capital return initiatives. Really the only thing I can speak to you right now is for the quarterly dividend distribution but over and above that, we'll be having future discussions with the Board when it comes to any sort of incremental capital return initiatives and whether or not that's warranted.

We have no further questions on the phone line. I will turn it over back to you, Mr. Caron.

Okay. Look, with that, I'd like to thank everyone for joining us on our call today. Thank you everyone. Goodbye. We'll be available throughout the day if needed. So please feel free to reach out to myself, and I can answer any additional questions. Thank you. Bye, bye.

That concludes today's call. We thank you for your participation, and ask you to please disconnect your lines.