Eldorado Gold Corporation (EGO) Q3 2020 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Corporation Third Quarter 2020 Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Peter Lekich, Manager, Investor Relations. Please go ahead, Mr. Lekich.

Thank you, operator, and thank you ladies and gentlemen for taking the time to dial into our conference call today. On the line today are George Burns, President and CEO; Phil Yee, Executive Vice President and CFO; Joe Dick, Executive Vice President and COO; and Jason Cho, Executive Vice President and Chief Strategy Officer. Our release yesterday details our 2020 third quarter financial and operating results. This should be read in conjunction with our third quarter financial statements and management’s discussion and analysis, both of which are available on our website. They have also been filed on SEDAR and EDGAR. All dollar figures discussed today are in U.S. dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. Before we begin, I would like to remind you that any projections included in our discussion today are likely to involve risks, which are detailed in our 2019 AIF and in the cautionary note on slide 1. I will now turn the call over to George.

Thanks, Peter, and good morning, everyone. Before I get started, I’d like to give you a brief update on the earthquake that hit Western Turkey just a few hours ago. Our operations are un-impacted at this point and our employees at the sites are safe. The early indications, there’s been some significant damage to buildings in the Turkey’s province of Izmir. And so, we’ll continue to monitor situation. Here’s the outline for today’s call. I’ll give an overview of Q3 along with some comments. Then, I’ll pass it to Phil to go through the financials. Joe will follow by reviewing operational performance. And then, we’ll open it up for questions. I’m excited to be reporting another outstanding quarter. We delivered across all metrics, both operationally and financially. Production increased by 35% year-over-year, and we had another significant quarter of free cash flow. I’m also pleased to report, we completed $58.6 million in debt reduction announced in Q2 and our balance sheet is in great shape with over $500 million in cash and equivalence. We continue to make progress in delivering value for our shareholders across our portfolio. Joe will speak more to Kisladag, including HPGR and Lamaque. So, I won’t get into detail here. But, I want to highlight a few key developments in Greece during the quarter that demonstrate the progress of ongoing engagement with the government. We see these incremental steps as positive indication that the sentiment in Greece is becoming more supportive of our projects. At Skouries, work advanced on relocation of an ancient mining furnace from the open pit area, as you can see in the picture. We intend on moving this artifact to a prominent area near our site office, where it can be displayed for visitors to see. This is a great reminder that Halkidiki is an historic mining area that has supported mining activity all the way back to the era of Alexander the Great. Also during the quarter, we received renewal of the operating permit for Olympias with an annual production limit raised to 470,000 tons per year. I’m also happy to report, we received surface drilling permits at Stratoni in the quarter. These will allow us to complete step-out drilling and potentially expand the Mavres Petres orebody. Before I hand it over to Phil, perhaps a few words on how things are advancing in Greece. The transfer agreement negotiations are progressing and support from senior government officials was evident during the quarter with the Minister of Energy and Environment visiting our Skouries site. Greece continues to represent a fantastic growth opportunity for Eldorado. We believe it’s not currently reflected in our evaluation. Skouries and Perama Hill are world-class assets that will add significant value for our investors, local communities and the Greek state. I’ll stop there. Over to you, Phil.

Thank you, George. Good morning, everyone. Starting on slide four, we provide an overview of Eldorado’s financial results for the third quarter of 2020. Once again, we had a very strong quarter. We delivered on our key metrics, and the headline is strong free cash flow generation of $117.2 million in the quarter, a significant increase from $16.7 million in Q3 of 2019. Year-to-date free cash flow totaled $187.7 million in the first nine months of 2020. Eldorado generated $287.6 million in total metal revenues in the quarter. This includes $264.3 million in gold revenue, an increase of 76% over the comparative quarter in 2019. The increase was a result of higher gold sales volumes of 137,704 ounces in Q3 2020, compared to 99,241 ounces in the third quarter of the prior year. The increase in revenue also reflected a higher average realized gold price of $1,919 an ounce in the third quarter of 2020 compared to 1,513 an ounce in the comparative quarter in 2019. The Company reported net earnings to shareholders in the third quarter of $41 million or $0.24 earnings per share. After adjustments to remove foreign exchange losses, finance costs related to the redemption of senior notes, and the gain on the sale of Vila Nova in the quarter, adjusted net earnings for the third quarter amounted to $56.7 million or $0.33 earnings per share. This was a significant improvement over both, the third quarter of 2019, which reported adjusted net earnings of $7.6 million or $0.05 earnings per share, and the second quarter of 2020, which reported adjusted net earnings of $43.8 million or $0.26 earnings per share. The increased adjusted net earnings and net earnings per share in Q3 2020 reflect higher gold prices and higher gold sales relative to previous quarters. EBITDA for the quarter was $162.5 million, and after removing certain non-cash items, adjusted EBITDA amounted to $163.9 million. This was a material increase over EBITDA of $73.2 million and adjusted EBITDA of $75.9 million in the third quarter of 2019. Depreciation and amortization charges increased to $65.5 million in third quarter of 2020 and increased from $40 million in the comparative quarter in 2019, reflecting higher production and higher sales volumes. A significant portion of our property, plant and equipment depreciates over the mine life of our producing assets, on a unit of production basis, calculated based on mineral reserves. This results in higher depreciation charges as production increases. Finance costs were $19.9 million in the third quarter of 2020 compared to $13.2 million for the comparative quarter in 2019. The increase was due to the premium paid on the partial redemption of our senior secured notes combined with deferred transaction costs. Income tax for Q3 2020 amounted to $38.7 million for the quarter, compared to $15.9 million in the comparative period of 2019. The increase was primarily the result of significantly higher net income before taxes in Q3 of 2020, as a result of higher sales and a higher gold price. We finished the quarter with $504 million in cash, cash equivalents and term deposits and approximately $32 million available under the revolving credit facility. Our liquidity remains very strong and provides optionality to support development of growth opportunities in our portfolio. Eldorado continues to reduce debt and completed the $58.6 million equity clawback redemption on the senior notes in August. Senior notes outstanding are now at $241.4 million as of September 30th and will be reduced the further $7.5 million in December. Net debt is at 0.15 times EBITDA at the end of Q3 2020. This is a significant reduction from net debt at 2.2 times EBITDA at the end of Q3 2019 and reflects a much stronger balance sheet, compared to a year ago. The Company also expects to be in a net cash position by the end of the year, as we continue to generate strong cash flow and reduce debt. We also expect Q4 free cash flow generation to be impacted by the timing of capital spending, as we look to complete our capital projects for the year. Moving on to slide 5. Eldorado continues to show solid improving performance quarter-over-quarter and continued delivery of strong financial results. These graphs demonstrate the impressive turnaround in financial performance over the past 18 months. Adjusted EBITDA and adjusted earnings have increased significantly in each of the past two quarters, and cash generated from operating activities and free cash flow have established significant highs of $165.4 million and $117.2 million, respectively, in Q3 of 2020. Overall, at the end of Q3 2020, the Company’s balance sheet is solid with a strong cash position, debt reduction is a demonstrated priority, free cash flow generation is sustained, and the Company is reporting higher earnings. I’ll conclude on that positive note and will now turn it over to Joe to go through the operational highlights.

Thanks, Phil, and good morning, everyone. Q3 was consistent with Q2 from an operational standpoint as well as with our expectations. We produced 136,922 ounces of gold in the quarter at cash operating costs of $537 per ounce sold and all-in sustaining costs of $918 per ounce sold. It’s worth noting that Lamaque had a record quarter as the ramp development reached the top of the higher grade C4 zone. Looking forward, we are maintaining our 2020 guidance, but expect to be at the lower end of the production range, a significant accomplishment given the 2020 operating environment. We continue to operate efficiently with strict health and safety protocols and tracking systems in place in order to manage the risk for COVID-19. We have activated our COVID protocols at site, including the management of a positive case at Olympias in September. These protocols worked as expected and were able to resume normal operations in short order. I’m proud of the agility of our teams as they continue to effectively adapt as we form our new operating normal. Here on slide 7 we have some further color on developments at our operations during the quarter. The flotation columns were installed at Efemcukuru and commissioning is underway. As a reminder, this will increase the quality of our gold concentrates, reducing shipping costs. We expect to begin realizing value during Q4 as commissioning concludes, and circuit optimization begins. At the Lamaque underground development has reached the top of C4 zone, a high-grade zone that as you can see from the picture is larger than C1 and C2. We’ll take our first look in C4 in the fourth quarter. This production comes a bit [Technical Difficulty] planned and thus includes the production gap created by the mandatory provincial COVID suspensions during Q2. Our underground crews are currently enhancing the decline from Triangle towards the Sigma Mill. We have completed 260 meters through the end of September. Additionally, the contractor has mobilized and completed the necessary prep work at surface and started advancing from Sigma Mill toward the Triangle deposit as of this week. Over to Olympias where we recently renewed our operating permit, allowing production levels of up to 470,000 tons per annum. Underground development along with continued operational efficiency improvements remain the focus at Olympias as we continue to ramp up the mine. [Technical Difficulty] I would like to mention that we are in the process of updating our technical report for Perama Hill. And at Lamaque, the engineering work will complete this year and will be available to us as we work the updated capital numbers to our investment framework in concert with the 2021 business planning process. At Kisladag, production was consistent with Q2, gold recoveries continued to be as expected. [Technical Difficulty] solution volumes and add inventories remained higher than anticipated. Before we start [ph] talking about what we are doing at Kisladag, I’ll give a quick recap of 2020 to-date. During Q1, we experienced higher-than-normal precipitation, impacting our ability to place [Technical Difficulty] on the pad. During Q2, we began to recover the [Technical Difficulty] deficit, but we [Technical Difficulty] pad maintenance and operations due to reduced staffing, resulting from early stage COVID actions. During Q3, we [Technical Difficulty] and started to return to normal pad operations. We also began to advance the work we had planned as we adopted the new mine plan early this year. I will provide a bit of background on [Technical Difficulty] projects that we have underway. [Technical Difficulty] solution, eliminating the need to re-circulate solution as has been a standard practice this year. The project will be completed by year end. [Technical Difficulty] we have installation ongoing for two additional CIC [Technical Difficulty] increasing our solution processing capacity by 40%. This project will be completed during Q1 of 2021. We’re also replacing the New Carbon Regeneration Kiln to increase volume, and as a result our activated carbon capacity. This project is scheduled for completion during Q2 2021. Timing of all these projects complements HPGR project, which is scheduled to come on line in Q3 of 2021. Before the wrap up, I would also like to add that our ongoing composite sampling and [Technical Difficulty] as per our mine plan. With that, I’ll turn it over to George for closing remarks.

Thanks, Joe. Before wrapping up, I want to thank Mike Price, who stepped down from our Board of Directors at the end of September. Mike served on the Board for 10 years, and we wish him well in his future endeavors. As a reminder, we welcome Judith Mosely to our Board, effective September 1st. Judith’s appointment brings gender parity to our Board, and exceeds our goal of having 30% representation of women by 2022. I’m also very-pleased to add that Lisa Ower has been promoted to Executive Vice President, People and External Affairs. This is a testament to the great work that Lisa has done in strengthening our corporate culture, people practices over the past two years. In conclusion, I want to emphasize the continued positive results we gain delivered this quarter. The groundwork laid throughout 2019 continues to pay off and is reflected in the upward trajectory of our share price, which we expect to continue as we unlock value in our Greek assets. Our solid operating performance combined with the balance sheet that supports near term growth, and our energy and drive to execute positions as well for sustained value creation. When combined with record gold prices, and several potential catalysts, in Greece Quebec, Eldorado offers a compelling value proposition. Thank you, everyone. I’ll now turn it over to the operator for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Mike Parkin with National Bank. Please go ahead.

Hi, guys. Thanks for taking my questions. Congrats on a good quarter. First on reserves and resources. We should be getting that update in a couple of weeks, correct?

Yes. We do our reserve and resource update in the fourth quarter. And last year we put it up in November, expect to do it again this year.

On that, is there anything you can share with us, like Lamaque, obviously you’ve been having some really good exploration success. Can you just give us a bit of a recap? You’re doing some info work on some of the deeper lenses. So, we should expect more than reserve replacement I think is a fair assumption to assume Lamaque for this update?

Yes. At Lamaque specifically, we had a good year of exploration, really two focal points, infill drilling to convert inferred resources to reserves in the top five veins of deposit, so expecting some good results there, and as you stated, expecting to replace reserves and grow some. And then, in the deeper part of Triangle, continuing to drill to expand those inferred resources, and again expecting to have some good results in our release next month.

What about Ormaque? Is there -- I guess, that’s a bit early. Obviously the discovery holes are encouraging. But, are you looking to get into better position to drill it off with the ramp that you’re putting in or are you doing -- looking to do a target like a bigger resource from surface drill.

So, this year, our focus has been -- on Ormaque has been the continued drilling from surface to determine the full potential of that new discovery. And so, we’ve had success. We’ll be updating the market with drill in the fourth quarter. And our geologists and engineers continue to assess that new discovery, and we’ll look to update the markets in that regard as well.

And then, switching over to -- oh sorry.

I was just going to additional to your point about the decline. One of the side benefits of the decline is the ability to drill some of the satellite deposits outside of Triangle, and definitely Ormaque is well positioned for drilling once that decline’s in the position or we’ve got drill positions.

Super. Switching over to the non-core asset sales, great update there on Vila Nova being sold, you mentioned that there’s some form of process taking place at Toca and Certej. Can you give us a bit of color there? Is that -- are you getting inbound interest more just initiating the process with advisors and testing the water for interests? [Ph] Any color would be appreciated.

Sure. Michael, it’s Jason. So, what we’re doing is evaluating, is probably the way to characterize it, like evaluating strategic alternatives as it relates to those assets. What we’re seeing, obviously, is a more supportive and constructive environment for gold and market just generally speaking. So, it’s just an initiation of evaluating the different alternatives for TZ and Certej is the way I would characterize it.

The next question is from Tanya Jakusconek with Scotiabank. Please go ahead.

I’m sorry. I have a bit of -- the voice quality is a bit low for me. So, I may have missed some of the information that you mentioned. But, I wanted to just circle back on a couple of technical things. The first one is just on the reserves that Mike was talking about in terms of upside of Lamaque. Do we -- how do we see Kisladag and just the rest of the assets looking because we were impacted with COVID over there in terms of people on site and stuff for drilling?

Well in terms of Kisladag, there’s been no drilling, at Kisladag. We drilled that deposit out, at least the open pit potential of the deposit. So, there’s no drill result. As always, we’ll be updating engineering analysis, metallurgical work and checking optimization of the pit. So, that’s underway. Efemcukuru, we’ve been fairly successful at extending mine life through this inferred resource conversion. So, that’s continuing to be a focus. So, there’ll be an update there. In Greece, we’ve got multi-decade mine lives in those assets. So, nothing significant there, with the exception of Mavres Petres. There, we’ve done some drilling from underground that helped us design the surface drilling that we’re embarking on, as we speak. So, I’d say, the highlight definitely will be Lamaque again where we’ve got great potential to extend mine life there, and it’s a significant part of our expiration budget and an update on Kisladag as well.

Just to make sure, will you be using the same reserve and resource pricing as you used last year?

Yes. We’re using $1,300 gold price for remaining -- for reserves. Yes.

And if I could ask, Joe, just on the Kisladag and Lamaque specifically, just on Kisladag, and I know you talked a little bit about it and I had a clarity issue with my phone. I guess, I wanted to understand the -- you have more than -- you have more golden solution than you expected. My understanding is that, you really -- January, you didn’t have time to put ore on the pad. You got there -- you put it in -- in Q1, you put it in on the pad in Q2. And so, are you saying that just Q2 and Q3, which is 60 days of leaching just wasn’t enough to get it out, and we’re expecting a bigger bump up in Q4 for production?

Well, I think, you’ve got it generally correct. So in Q1, it was the heavy rains that kept us from stacking everything to plan on pad. We began to close that gap in Q2 and then kind of got there in Q3, but were complicated a bit in Q2 with COVID and lower manpower. So, we got a bit behind pad maintenance, routine schedule and [Technical Difficulty] all of that. So, as we catch that up, we will be looking to get a little bit higher solution flow rate during Q4 and looking to get more meters under irrigation. But, I expect us to be relatively consistent with last couple of quarters.

Okay. And so that’s why we’re going to be towards the lower end of the guidance is really because of Kisladag?

That’s correct.

Okay. And then, if we can move to Lamaque, you talked in your release about the Minrail and some of the complications you are having there with that equipment. Can you walk us through what exactly is happening there?

So, we have the Minrail equipment in a test scope and we have been monitoring that or working to get it into a productive mode over most of -- towards the tail end of Q2 and to Q3. And I would say that the results are mixed. We are finding that method -- the method shows promise, and we’re working through issues to kind of getting the equipment adapted to Lamaque. And I think, probably our biggest focus is determining kind of how much inventory is adaptable to the method and just to determine how much continued energy we wish to put in. So, we’re still in process.

And when you say the equipment to get adapted to Lamaque, what is exactly are you -- what the adaptation, what seems to be the issue if not adapted…

Well, I think, as we put the equipment into the mine, [Technical Difficulty] metals around mining device. So, that’s given us a little bit of fallout. We’re trying to make sure that we keep the availability up around drilling equipment, just generally, kind of commission and working the bugs out of what is really a pilot or an R&D. So, and we’ve made progress there. But, we haven’t achieved the kind of ability yet that [Technical Difficulty] consistent production levels, but we’re making progress.

Okay. I guess, we’ll continue to monitor it quarter-over-quarter. And then, maybe if I could, George, kind of circle back with you on Greece, and congrats on the progress you made there. And you mentioned the Minister of Mines and Environment was over to Skouries. Are there plans for the person to go to Perama Hill and Olympias, or is that it? Are they doing due diligence on these assets? I’m just trying to understand how -- the site visits, are they just part of the plan of moving this into the framework, just trying to understand what -- how you are progressing there.

Sure. I mean, the reason for the ministerial visit to Skouries is that’s really, we believe, the first catalyst in the pipeline, for a couple of reasons. It’s -- on our schedule, our anticipated schedule, Skouries, we believe will be delivered faster than Olympias or Perama.

Okay. So, is it safe to assume they’re going asset-by-asset that -- so we’re -- we’ve done Skouries, and now we’re working on the framework there, once we get [Technical Difficulty] second and third site visits and other, is that a good way to think about it?

Yes. I mean, essentially, I’d say, the permitting requirements and timelines are driving the fact the Minister went to Skouries first. So, for Skouries, we have an EIA that needs to be modified to deal with dry stack tailings that as you know is a massive improvement in risk mitigation. It also reduces the footprint of the site, increases water recycle. So, it’s a really good improvement to the design of the operation. So, it’s a simpler permitting process to get that EIA modified. In the case of Olympias, we plan to expand the throughput to that plant by about 50%. And as such, we’ll be moving more out of the underground more ways, we’ll be processing more, we’ll increase our rates of disposal in our state-of-the-art Kokkinolakkas line tailings disposal facility. And so, all that requires the appropriate regulatory reviews in terms of impacts on air, noise, water. And our designs are sound. Again, this is a dry stack, cemented paste backfill disposal system. And the filter dry stack tailings is going into a state-of-the-art line facility. So, I’m very confident we will get the permit, but it takes time to work through that process. And that process will require a public consultation at Olympias, because there are environmental impacts that have to be considered. And then, Perama, we don’t currently have an EIA. So, we’re in the process of re-optimizing the project with current European and Greek regulatory requirements. And so, that EIA will need to go through public consultation. And it’s a bit further behind Skouries and probably Olympias. So, the reason for the attention to Skouries from the Minister is that that one is likely going to move faster. And we were happy to have the Minister at site. And again, we’re making progress. And I remain confident that we’re going to deliver value in these assets. And I think that positions Eldorado very well against our peers.

Yes. No, I appreciate -- I didn’t appreciate, George, that -- the Olympias thought. I just thought it would be an amendment to your current permit to increase your throughput. I didn’t realize that with the amendment came public consultation. So, I didn’t realize that. And maybe just one the framework, how are we progressing on the financial aspects of the framework?

We’re progressing well there. I’d say, we lost some momentum during the COVID crisis. So, both Eldorado and the Greek state did what we needed to. We focused on safety and health of our people. And so, we didn’t have a lot of progress in discussions. But that’s changed. I mean, both, the government and Eldorado are committed to negotiating a fair deal to get these investments into production and deliver value for the Greek state, for the local communities and for Eldorado and our shareholders. And I’d say, the most important factor for Eldorado, in these discussions is that we have a bankable deal that takes into account [Technical Difficulty] that we have decent confidence that we’ll deliver that.

And do you feel you’ve moved up in priority in their roster in terms of their priorities?

Well, I mean, Prime Minister, Mitsotakis, in his campaign cited the Eldorado investments is one of the top two priorities for Greece. And so, we remain at the top of that list. And again, I’m confident we’ll be successful.

Okay. Thank you so much.

Thank you.

The next question comes from Carey MacRury with Canaccord Genuity. Please go ahead.

Hi. Good morning. Maybe just another question on Greece, I mean, presumably, to get the green light there. Can you just talk a little bit about your thinking on how the project moves forward from here at Skouries specifically?

Sure. I mean, I believe, there’s really three catalysts that we need to deliver an order for the executive and the Board to approve restart Skouries construction. The first is this bankable agreements that we’re negotiating. The second is the modification for dry stack tailings. And both of those are advancing well. When we have both of those in hand, it sets up well the financing we’ll need to put in place to move forward with the construction. So, once we have those, then we’re in a position as an executive team and Board to approve restart a construction. And just a reminder, we spent nearly $0.5 billion in construction. The operation is roughly 50% constructed. We have about $700 million in capital remaining. A lot of work to be done on the underground in terms of development and test stoping. The tailings area will have an erosion control dam downstream, and that needs to be constructed. The primary crusher needs to be constructed. The main body of the plant is pretty well in place. So, there’s lots of piping and electrical work. And, we think, it’s about two, two and a half year construction period. So, again, my view is, these catalysts are moving well. We’ll be in a position next year to restart construction is my belief.

And maybe just two more questions. Is the plan still to bring in a partner at Skouries or would you go with a loan? And then secondly, how’s the relationship at the community level?

So, on the first question, our primary strategy still remains to enter into a joint venture structure, likely at the highest level. We think that is the optimum solution. But to be candid, once these catalysts are delivered, we’ll be able to further the discussions with the current interested parties. I think there’s -- well, I don’t think, there has been increased interest in the opportunity with the uptick in gold price. And as we’re moving forward with the opportunity in Greece, so we’ll be looking at every alternative. But, at this point, management and the Board think joint structure is likely preferred outcome. On the second question, local communities, I think, there’s a perception -- a wrong perception that we don’t have strong community support. The villages around our operations in Halkidiki are historic mining communities. And we have strong support out of those villages. Like everywhere around the world, there are individuals and groups that are concerned about the impacts from mining. I firmly believe being a veteran in this industry for multi-decades that our operation designs in Greece are best in class for deploying dry stack tailings. We’ve got monitoring systems that are publicly available 24/7. We’re very transparent in how we operate and we’re meeting all regulatory requirements in Europe and Greece. So, we’ve got strong local support and confidence that we’re going to get the permits we need and the agreement we need to be able to move forward.

The next question comes from Cosmos Chiu from CIBC. Please go ahead.

Maybe my first question is on Turkey here. Clearly, the Turkish lira has been depreciating. I guess, from that perspective, as you talked about in your MD&A, it’s actually been positive in terms of the cost impact; your cost has come down for USD. However, I guess, my question is number one, how much of your costs in Turkey actually denominated in the lira? And number two, any comments on are you concerned of any kind of risk that could be brought about by the depreciating Turkish lira?

I’ll maybe answer at a high level and Phil can supplement. So, I mean, for sure, we’ve seen a positive impact on our costs given the impact of the lira exchange rate. I would say that to be fair though, historically, when this has happened in the past, and I expect it’ll happen again, this time as inflation kicks in, to your question, roughly half of our costs are Turkish denominated, and largely that’s labor, labor and our workforce and contractors. And so, we will see an inflationary impact on our costs that will erode at least some of that Turkish benefits. So, moving forward, you can’t bake in the benefits. We will see an impact -- an inflationary impact on our cost structure. Phil, anything you’d add to that?

Sure, George. Hi, Cosmos. So, I think, overall to answer your question, we’re well aware of the escalating headlines in Turkey and the currency risk. They just went through a bit of a currency crisis with depleting their currency reserves. From an Eldorado perspective, I mean, we’re taking appropriate measures to ensure that our currencies are not significantly at risk in terms of being in country. We manage our funds day-to-day. And any funds that we deem to be surplus, not required for payroll or paying taxes or our operating costs, any surplus funds, we move those funds offshore. And so, I think, from that perspective, that’s -- I think, that’s pretty consistent with other companies that are operating in Turkey as well. We keep in regular communication, and we talk about the -- any developments that are happening within country. But, I think, at this point, just from talking to the teams that are on the ground in Turkey, those appear at this point to be adequate. We do have -- in terms of managing our currency requirements, we do have two different operations and one traditionally provides proceeds, sales proceeds in lira, and one traditionally provides sales proceeds in U.S. dollars. So, we can effectively manage the balance. And that definitely -- we don’t have to do any unnecessary currency transactions. So, I think, from that perspective, I think, we’re in a pretty good spot.

Of course. And as a follow-up then, with the HPGR at Kisladag, I guess, number one, how are you managing that currency? Is there any kind of currency risk versus USD? And then number two, as you talked about, I think Joe, I caught you, and you said, it’s scheduled to be completed sometimes Q3 2021. Have you factored in any allowances for COVID-19, as you’ve seen any -- have you seen any delays in terms of -- potential delays based on COVID-19 and any risk in terms of delivery on that HPGR?

So, maybe I can address the currency risk question first and then Joe can talk about HPGR. So, in terms of the cost of the equipment and so forth, if the contracts are in USD, we do have sufficient USD within our holdings. And as I mentioned earlier, Cosmos, we do have lira generated as well. So, we can manage that quite effectively. So, there’s really not much currency risk, when it comes to the project. Joe?

We’re still on schedule for equipment delivery. It was targeted at about 11 [Technical Difficulty] still remains the schedule. We did have some issues early on through engineering and information back and forth between them and us. I think, that’s largely in hand now. We are still scheduling to get concrete [Technical Difficulty] this year. So, I think we’re sitting reasonably good. We don’t have -- we haven’t put a lot of contingency in scheduled for COVID. Although a bit -- so, we’re attempting to manage schedule on an ongoing basis as we look forward in kind of quarterly chunks, based on what’s going on. So, the risk is there, but it’s pretty hard to quantify. It’s a moving target. And we’ve kept ourselves from adding a bunch of contingency. We pushed the project along per schedule and deal with the adjustments as necessary. We are in constant communication with [Technical Difficulty] on deliver and actually look get a representative into the Amsterdam facility to see progress for the same.

And maybe one last question on Lamaque here. Of course, good to see that you now have received a permit for 2,650 ton per day. That’s been a while back. But, my question is on throughput here. If I devise your quarterly tonnage by the 90-days or plus or minus, I get to about 1,921 tons per day. Can you remind me in terms of your throughput, and how are you expecting it to ramp up to 2,650, and when is that going to happen?

We’re still in the business planning process. But generally, we’re a couple years into really late 2022 and early 2023, where we’re hitting that 2,500 range, roughly.

Okay. So, is it kind of like a straight line, or is it more so stick around the 2,000 ton per day level for now, and then there’s a quantum leap? How should we model…

It’s a bit of a ramp-up. So, pretty close to straight line.

The next question comes from Kerry Smith with Haywood Securities. Please go ahead.

I don’t know, maybe Joe or George can answer this. What is the timing to release that project review that you’re doing for Perama?

Yes. I mean, Mike, we’re working on it, as we speak. So, the Perama timeline really factors around a strategic investment law that was passed in Greece the fourth quarter of last year. And our anticipation for is second half of next year. So, we’re working on the technical documents to support that EIA. And I don’t have a definitive time for you, but it’s obviously well ahead of getting approval in the second half. So, I guess, I’d characterize that you can expect an update on that -- some update, perhaps with the mineral reserve update this quarter, and then further updates in the New Year?

Okay. So, just be clear, you’re expecting to file the EIA in the second half of next year. Is that correct, George?

No. We’re expecting to be able to get an approval on the strategic EIA in the second half of next year.

What does that mean, exactly?

That means we’ll be submitting it either fourth quarter or first quarter of next year, probably first quarter of next year.

Okay. Got you. Okay. And, Phil, can you quantify in dollars per month -- per quarter or dollars per year, what it is costing all of your COVID costs, whether it’s testing and PPE, et cetera, et cetera? Like, just trying to -- most people or most companies are giving that number. I’m just curious what your number is.

Hi, Kerry. I don’t really have a definitive number to give you at this point. But, I can tell you, it’s not a significant cost. We’ve introduced some new programs and put in some -- we got a new tracking system, for example, that tracks our employees on site, which has been very effective. We’ve got other programs we put in place to ensure proper protocols for COVID. But overall, it’s -- I wouldn’t say, it’s a significant number. But, I can take a look and get back to you, Kerry, with an estimate. But I don’t have anything ready.

Yes. I might just supplement that answer. I mean, if you really look at the impacts we’ve had so far, whether you talk PPE or some of the systems we’ve developed, they’re non-material. I think, if you want to talk about the most significant impact, it was really when we reduced our total manpower by about 25% in the early days of COVID. And if you recall, we did that when we made the decision to protect our people and then our business. So, any of our employees or any of our employees that had family members that were in the high risk category for COVID, we asked to stay home, and that reduced manpower by about 25%. Obviously, those people weren’t at work getting work done, and we paid them. So, that’s been really only significant impact. And I don’t have a number for you, but Phil can give that.

All right. Okay, great. And then, maybe just one last question. You talked both about adding the new lines of carbon columns at Kisladag, which is going to improve your capacity by 40%. Does that mean that the extra gold in inventory that you’ve got is going to come out in Q1 when you bring those online or will you’ve been able to draw down that inventory between now and then, and it really won’t have a material impact on your gold production over and above what you normally would have produced in Q1?

Joe, maybe I’ll take that question. I know, your line seems to be breaking up a bit for technical reason. If I miss anything you can jump in. So, yes, I mean, maybe Kisladag in general, the way I would look at it at a high level, we were a little bit slower placing the tons and recoverable ounces on the year. But as Joe stated, we -- and that was due to the wet Q1, and we’ve made that up in Q2 and Q3. So, first point is, the ounces are on the pad. The second point Joe made is that all of our ongoing tests work on the actual material place continues to indicate our recovery assumptions are solid and valid. So, that’s an important point. We have made the statement that Kisladag is trending low on the production relative to our expectations for the year. And it’s really all about rinsing those ounces out of the pads. And so, the impact from COVID, when we had that lower manpower number, we didn’t have -- we had to decide what wasn’t going to get done. And one of the things that slept was our ability to rip and refresh the emitters that deliver the solution to the top of the pad. And as a result, we haven’t got some volumes of water through the crushed material. And as a result, we’re a little slower pouring the gold than we expected. But, the ounces are there. And our manpower levels are back to normal. The crews are catching up, and it’s just a matter of time to get those ounces through. So, that’s kind of a summary of the year again. Now, to your question on the ADR plant expansion, we processed about 78,000 cubic meters of water a day through that existing ADR plant. And as Joe said, we’re going to expand that by about 40%. And the reason is that we have roughly that 40% solution is coming out of the bottom of the pad, and we can’t process it all. So, the 78,000 cubes go through the plant, but the balance, up to about 92,000 cubes has been re-circulated. I think, the tail is on the plants are on a 0.04 grams per ton and the solution we pump back to the pad is like 08. [Ph] So, I think that by itself tells not only did we have higher volumes in the pond from a wet winter that largely back into Q2 and early Q3, that solution inventory dropped. But, we have this re-circulating load of gold going back to the pad because we can’t process at all. So, once we get that ADR plant expanded, we should be able to process all the water that comes out of the pad and produce the gold for timely basis, particularly during the wetter season. So, I think this is a really good move. I think, the other point is, we did expand -- or we’re in the process of expanding our pond capacity levels, and that I think is also supportive to managing this inventory better going forward.

Okay. Yes. That’s helpful. Thanks, George.

George, the only thing I would add is, just remember, it’s a long leach cycle at Kisladag, 250-day leach cycle. So, things take time to react.

Yes. Good point.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. George Burns for any closing remarks.

Thank you operator and thank you everybody for tuning into our Q3 results. Look forward to further updates as we continue to add value and deliver value to our shareholders. Have a great weekend.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.