i-80 Gold Corp. (IAUX) Q2 2023 Earnings Report, Transcript and Summary

Good morning. My name is Zenith, and I will be the conference operator today. At this time, I'd like to welcome everyone to the i-80 Gold Corp. Second Quarter 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Mr. Gollat you may begin your conference.

Thank you and good morning everybody. Thanks for joining us on this warm Thursday in Thunder Bay, and I'm sure it's a nice day in Reno as well. On the call with me is Ryan Snow, Chief Financial Officer, Matt Gili, President and Chief Operating Officer. Unfortunately, Ewan Downie is having a travel delay, so we're going to go on ahead with the call without him. So, you'll get the presentation from the rest of us. Going on to Slide 3, I just want to highlight that we will be making forward-looking statements, so I encourage you to read this slide and understand that some of that forward-looking statements will be made. With that, I'm going to turn it over to Ryan Snow to talk about the financial results, and then we'll get into a brief presentation on the Company. Ryan?

Thanks, Matt, and good morning to the listeners from me. Yesterday, the Company reported our financial statements and MD&A for the second quarter and first six months of 2023. They can be found on SEDAR, EDGAR, and the Company's website. On Slide 4 of the presentation, we present a graph of our production and sales by quarter for the year. This production is from the residual leaching activities at both Ruby Hill and Lone Tree, and also includes the oxide material we've placed on the leach pad from Granite Creek. Second quarter production was 4,329 ounces, and year-to-date production was 6,678 ounces. The Company expects increased gold production in sales in the second half of 2023 when compared to the first half. Slide 5 of the presentation highlights our revenue of $11.3 million in Q2, bringing year-to-date revenue to $16.9 million. This revenue generated a mine operating loss of $3.6 million for the quarter and $7 million year-to-date. The mine operating losses in the quarter and year-to-date were primarily the result of write-downs of leach pad inventory at both Ruby Hill and Lone Tree totaling $4.5 million and $8.5 million, respectively. The Company reported a loss for the quarter of $16 million or $0.06 per share when adjusted for the impact of mark-to-market gains on the Company's convertible debt, outstanding warrants, gold prepay, and silver purchase and sale agreement. The loss was $13.1 million or $0.08 per share. For the year, the Company is in a lost position of $29.1 million or $0.11 per share, and when adjusted for the items previously mentioned, was in an adjusted lost position for the year of $39.5 million or $0.15 per share. I think it's important to highlight on this slide that the Company continues to invest in exploration, evaluation, and pre-development in 2023 with $11.1 million invested in the second quarter and $20.1 million so far in 2023. This investment has resulted in three new discoveries this year at Ruby Hill and many great assay results, the most recent of which was published yesterday, and we'll be discussed in further detail later in this presentation. On Slide 6, the Company's liquidity position shows that we ended the quarter with $19.4 million in cash and had an inventory balance of $18.8 million. Current assets were $49.8 million while accounts payable and accrued liabilities were $22.3 million and total current liabilities were for $64.1 million. This resulted in a current ratio for the Company of 0.8 to 1. [Audit Start] The Company took steps to bolster the balance sheet by closing the bought deal private placement on August 1, 2023, bringing $36.8 million Canadian dollars into the treasury. I also want to highlight the Company has set $47.6 million in restricted cash and ended the quarter with total net assets of $425.7 million. With that, I'd like to turn the call over to Matt Gollat.

All right, thanks, Ryan. So, we'll begin a brief presentation on the Company. So, looking at Slide 7. Now, what is i-80? i-80 is a U.S. focused gold explorer, developer and producer with all of our assets located in the wonderful state of Nevada. Our goal is to become the second-largest gold producer in the United States with a pretty aggressive growth plan. And we'll be developing what we believe to be a pretty significant resource base within the state. 6.465 million ounces of gold and over 104 million ounces of silver and measured indicated, and then further inferred resources of just over 8 million ounces of gold and just over 76 million ounces of silver. And with that, we've got a wonderful team working to build these assets, credited for multiple discoveries, a strong history of building mines within the state of Nevada, and very skilled at M&A as i-80’s founding business was Premier Gold Mines and we sold that business and we created i-80 Gold. Looking at Slide 8, we look at the -- where we are in the state. So, this area here in North Central Nevada represents one of the most productive gold districts in anywhere on the planet, really. So, it's the Carlin, Battle Mountain, and Getchell trends. In this [indiscernible], the home of Nevada Gold Mines, which is the joint venture of Newmont and Barrick in Nevada. We are the second largest holder of resources in this [indiscernible] as part of the state, and we have two processing facilities that'll help us process our gold and base metal or polymetallic mineralization as we grow our business. So, looking on Slide 9, we can talk a bit more about the processing facilities. We have, to the north, the Lone Tree Autoclave, situated in Highway 80 , and once retrofitted, it will allow us the ability to process refractory gold, which is a pretty major competitive advantage in the state as there are only five refractory processing facilities in the United States owned by three different companies, and i-80 is one of them. The second facility we have is the Ruby Hill facility. It's currently a vat leach plant, at the Ruby Hill site. And we are currently assessing retrofit plants to turn that into a flotation plant. We’re looking at the viability of that to process some of the very impressive polymetallic grades we are seeing being drilled at Ruby Hill. And while we are retrofitting the Lone Tree Autoclave , we also secured both oxide and sulfide processing arrangements to help us bring in cash flow as we develop our hub and spoke model of developing the three underground mines into the Company as we build the Lone Tree Autoclave. Going on to Slide 10, looking at our resources, we are the third largest resource holder in the state. And we are one of the largest holders of silver resources in the United States, with over 104 million ounces of silver in the indicated category and 76.5 million ounces in the inferred category. We are also undergoing a pretty extensive drill campaign as Ryan mentioned. We do anticipate releasing updated mineral resource estimates on all of our projects -- well, on all of our projects following the current drill campaign and we will include our initial polymetallic mineral resource estimate with the Blackjack, Hilltop, and FAD deposits following this drill campaign. By looking at the plan, what we are trying to do in the state? We have got the Lone Tree complex, which we talked about earlier. It's going to be the hub of our hub and spoke model, the goal would be to develop the Granite Creek, Ruby Hill, and Cove underground mines, to be truck to the Loan Tree complex. And once that's completed, we will look at, sort of Phase 2 part of the plan, which involve an open pit at Granite Creek. And then we are also looking at how do we process the interesting base metal and polymetallic mineralization we have at Ruby Hill and that would be done hopefully, via the flotation plant at Ruby Hill. So, with that, I'm going to pass it off to Matt Gili, again a bit more of the details on the assets, and we will start off with Granite Creek on Slide 12.

Thanks, Matt. Thanks, everyone on the call. First, let's review Granite Creek property. On Slide 13, we highlight the location of Granite Creek in Northern Nevada along the i-80 corridor and adjacent to the Twin Creeks processing plant. Granite Creek is the first mine that i-80 has brought into development. Current project status includes completion of mine rehabilitation, completion of Phase 1 mine design and proof-of-concept, installation of additional dewatering capacity with Well 6 located at the intersection of the Ogee and South Pacific zone. Both oxide and sulfide material is being trucked to processing facilities. A total of 6,651 tons of oxide material was sold for proceeds of $2.8 million in the quarter. The upcoming milestones include completion of current and ongoing drilling program at Granite Creek, representing both surface and underground drilling. This drill program is primarily intended to upgrade inferred mineralization for inclusion in the upcoming feasibility study. Second, commence our monthly deliveries to NGM of refractory mineralization for total process. On Slide 14, shows a long section of the underground gold deposits at Granite Creek looking to the Northwest. First thing I would like to point out is that, we have completed mining on two levels, the 4490, 4445 of the Ogee zone, the tons grade analysis from our muck pile samples are shown in the figure above. Second item I would like to highlight on this slide is the inferred ounce in the underground resource, representing 339,000 ounces of gold. This inferred resource is the material being targeted in the current infill program. Onto Ruby Hill. Slide 16 shows Ruby Hill's location in Central Nevada, South Carlin. Current activities at Ruby Hills are focused on two main activities; one, advancing exploration and delineation of our multiple discoveries, I will talk more about this on the next slide; and two, advancing the studies and permits for underground development from the Archimedes pit. We have all necessary permits in hand to begin surface construction at the site of the portals. Permitting for the underground development itself is fully underway. And we have also completed a scoping study for conversion and restart of the existing gold vat leach mill to a base metal processing facility. The upcoming milestones include: finalizing the permit for underground development, completing the PEA for the gold mineralization of Ruby Hill. Ongoing detailed metallurgical testing of the base metal resources and ongoing drilling for the base metal resource estimate. And not to be overlooked, the team at Ruby Hill produced and sold 1,629 ounces of gold during the quarter, 2,871 ounces year-to-date from the residual each program. [Audit Ends] The relative locations of all the deposits of Ruby Hill is shown here on Slide 17. Ruby Hill continues to demonstrate just how rich and diverse of a property it is with six primary deposits and now Tyche. During the second quarter of 2023, drilling at Ruby Hill was focused on advancing exploration and delineation of multiple CRD mineralized discoveries. Multiple holes were also drilled for infill in the Blackjack and FAD zones. The Tyche discovery was made while infill drilling at Blackjack. A total of 13,439 feet of core and 13,275 feet of reverse circulation drilling was completed at Ruby Hill during the quarter. Additionally, 3,070 feet of core and 7,260 feet of reverse circulation drilling was completed in the quarter at our adjacent FAD property. Slide 18, I suspect by now you've had a chance to review the press release we issued on August 2 regarding Tyche Zone. Over 45 grams per ton gold and over 50 grams per ton silver on a 17.5-meter interval. This discovery was made in a previously untested area along the contact of the graveyard flats intrusive. Data suggests a different phase of the intrusive and a different style of the mineralization being high in bismuth in tellurium, low in arsenic, and with visible gold. Note that we have received permitting approval for our exploration work program and we will be able to drill this target conventionally from pads further to the South. And onto Cove. Slide 20 shows the location of Cove immediately South of Battle Mountain. The Cove deposit is expected to be the core asset in the Company's hub and spoke business plan likely the highest grade of the three properties. Activities of Cove in the second quarter focus on completing the underground portal and exploration decline, including a second fault crossing that is all now complete, commencing underground infill delineation drilling of the Cove resource that's in progress, and advancing studies and permitting for all for full underground development. The upcoming milestones include completing the Definition Drilling program for a full feasibility study in 2024 and advancing the full mine permitting. Slide 21 shows how the results we're getting from our current drilling campaign. Those holes starting in iCHU23 is reinforces and enhances what was previously drilled by Premier Gold, those holes starting in PG. Underground delineation drilling continues during Q2 with 13,350 feet of core drilled, yielding extremely positive results including the previously released acid results for whole iCHU23-11, which indicated 15.7 grams gold over 22.5 meters and 18.9 grams per ton gold over 29.3 meters -- pardon me. To date, we have completed 22 of the planned 115 underground core holes as part of our delineation drilling program. And now our final property, Lone Tree. On Slide 23, the Company continues to advance the engineering studies and cost estimate for the recommissioning of the autoclave facility of Loan Tree, working in conjunction with our partners at Hatch. During the first half of 2023, the Company continued leaching the residual material on the pads as planned. The team here is doing a fantastic job, maximizing the residual leach ounces produced. Lone Tree produced and sold from its residual leach activities. 2,700 ounces of gold during the quarter and 3,363 ounces of gold year-to-date. ESG, Slide 24. The i-80 gold team continues to engage in community outreach efforts to earn us goodwill in the community and retain our social license operate. Each of our operations are in a different stage of permitting, and it is imperative that we continue to interact with our stakeholders, including our employees, legislators, business partners, and community members to build trust, align our mission, and communicate our plans. Earlier this year, we published the inaugural environmental social and governance, our ESG report titled Driving the Future, which highlighted i-80 gold's ESG strategies, our policies, and commitments to deliver leading industry practices in Nevada. Over the past year and a half, i-80 gold has focused on the six pillars of our ESG commitments. We are building on these priorities to achieve our 2023 ESG goals. Our team is working with ERM to assist with data collection and building a long-term business strategy for continual improvements and our path to sustainability. Thank you. Back to you, Matt.

Thanks, Matt. That was great. So, I think we'll open it up to questions now given we've got some extra time here.

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Justin Chen with SCP Resource Finance. Please go ahead.

Hi, guys. Hopefully, I'm off mute and you can hear me. Thanks very much for hosting the conference. To start, I was wondering if we could perhaps get an update on what your thoughts are on Granite Creek for the second half, but from a production perspective. And then where's the ramp currently and where would you like to like it to get to? And your current development rates, are you on track with where you'd like to get to where you want at the end of the year?

All right. Thanks, Justin. So, where we're sitting, we're not putting out guidance, but I can tell you where we are sitting with the evolution of Granite Creek. During the first half of the year, we encountered oxide mineralization, that was unintended, unknown. And what we did is, we stockpiled that material until we could find the optimal processing plan. First, we tried some, doing some leaching at Lone Tree, and the leaching was fine just the kinetics are really slow. So, then we engaged with some of the other operators in Northern Nevada and have found an entity that is, we have engaged in an ore processing ore purchase agreement -- pardon me, Justin. So, they are actually buying this ore and they are treating it themselves. So, we started that in May of this year with the shipments to that partner. In the same time, we have been stockpiling the material to initiate the refractory processing at NGM, as part of our previously discussed, toll-milling agreement. We now have the quantities available for our first 10,000-ton test parcel, and we are initiating that work as well. So, what I'm trying to say in a long way there, Justin, is that we have a lot of materials kind of like it's called work or in stockpile that we are starting to roll into the system as well as continuing to produce from the levels at Granite Creek. So, anticipate -- without putting out guidance anticipating, continued to ramp up of production in the second half of Granite Creek. So, when we talk about where we are? We are exactly where we expected to be this time with the development at Granite Creek. We have four active levels in production. Those are those are sub-levels. So, each sublevel has three or four cuts, depending on which sublevel it is. So, we have four that are actively mining right now. We have completed the first two full levels on the Ogee side. We are at the intersection of the fifth level to Ogee, and this is also the approximate going -- it will turn out and start going on to the South Pacific zone, and we have put in a drill platform that we can drill the South Pacific from underground as well. So, we are on track. We are slowly ramping up. As I said, we have four levels that are currently in production. We are developing on the fifth level. And we are near the intersection with the access to the South Pacific zone.

Got you. And how many more meters are on the map before that turn off to SPZ?

It's less than 100.

Okay. Excellent. So, you have got plenty of time, between now and...

We are still on -- we have talked about this before. We still anticipate being, into South Pacific Zones in the first quarter next year.

Right, but it sounds like you are actually well ahead of that. Just based on...

Yes. I don't want to -- you know me? I'm a cautious man. But we are certainly -- I'm certainly pleased with the progress. I'll say the ground conditions in the decline have been a brilliant of some of the best ground I've worked in Nevada. So, with all the concern we had about ground conditions to have it materialized. Anyways, it's going well.

I'm glad to hear that. And just one, if I can ask you for ore mining rates because it's a bit hard to tell right now because as you said, there is a lot of ore being stockpiled and such. I'm just curious what you think your ore mining look like in Q3 and Q4.

[Audit Start] Okay. You asked a great question, Jess. I'm being very pensive here, so I don't want to put out the guidance. But I will tell you that, right now, we are mining just under 100 tons per day from each of our production levels. So, the key there is adding more production levels. And so, yes, we continue to add those. We will continue to have more production, as you would expect. Yes. So, I don't know if I answered your question or not, but I'm trying to be cautious and not talk about non-public information.

No, understood. I really appreciate that. So, roughly 100 tons a day and per level, and you've got four levels going.

More or less.

Okay. Thanks, Matt. I really appreciate that. And then just one last one, I'm not sure. Just on the [indiscernible] -- first to Graveyard Flats I mean, is that gold carried over from the contact or is that, do you think there's large bodies of sulfides in the Graveyard Flats area? I know it's the first discovery there, but I'm just curious what you see right now?

I mean, look, right now as I described it, that's about what we have right now and it's very exciting for us. It's very exciting for Nevada. This is the first time I've seen visible gold on one of my properties in Nevada. It's a high grade. We're just starting to understand that was discovered during infill drilling program at Blackjack. So, look, just another example of Ruby Hill, just the surprises you get and where'd this come from, and oh, my gosh, look at these grades. So, we're really just absorbing that Justin and I'm going to wait for Tyler to have a chance to really understand what's going on. He's got some other holes in there that he's analyzing right now and starting to get results back on for those as well. So, what, just anticipate further information as we understand that deposit better.

Yes, just maybe one last one on that. Sorry.

What kind of a host do they look at?

Sorry about that.

Matt, do you want to add to that?

I would just add to that. Yes, so it's the current contact, but what's really exciting about this hit, obviously the grade is very exciting. But it's been drilled in a brand-new rock unit in the camp, and it's a different type of mineralization that we see at Ruby Hills, a high-sulfidation mineralization, which leads to a greater conversation around what's the fertility of the camp and what's the driving force behind it all. So, it's another ingredient to end potential, but what we see Ruby Hill to be, that'd be the best way to put it.

And what kind of a host rock are you sitting in, is this like a bleached vuggy, silica or something?

It's the graveyard stock. Matt, do you know how to describe this stock?

Yes. Tyler described it to me, it's vuggy. So, like it's been bleached and then re-deposited, I mean, I'm kind of testing all of my geologic knowledge right now. But I'm just going to let Tyler expand on that as we get more results back from that area.

Okay, great thank Matt appreciated. Thank you very much.

Thank you. Your next question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Thank you. Congratulations on all the great results. In terms of having the several projects, does it strain your management team to have success on so many fronts? And if we were to be in a little bit of a slower capital market, which projects would you prioritize to be the one or two first to get capital versus the ones that might be less emphasized?

That's a great question, John. And you're right, it's been a bit of a slow market as of late. Just to remind everybody on the call that we closed this financing this earlier this week. We do have a $100 million accordion with Orion that we're actively negotiating with them on to bring in more capital. I would say for the plan to work -- the current plan to work, we need to be forwarding all three of the underground mines in order to get the Lone Tree Autoclave p up and running. Granite Creek is essentially -- it'll be cash flow neutral, cash flow positive in the very near future where it's in the end of its development life. So, that's going on its own. At Cove, we are drilling off the deposit into measured indicated resources to be included into a feasibility study when it's done. And at Ruby Hill, we are working through studies and have the, and permitting to drive a ramp underground there. So, we really need all three of them to work in order to fill that autoclave. In the meantime, we're also able to bring in cash flow from these toll processing arrangements that we have with Nevada Gold mines. And if you're going to ask me on a -- so generally seeing we need all of them to work is the short, short answer. If you're asking me, which one is seeing a lot more attention in terms of expiration, Ruby Hill, obviously we're really getting a lot of very interesting results there, and I really think that's a camp that's a bit of a game changer. And maybe I could let Matt or somebody else speak to the complicatedness of having the different assets. We really see them all as one sort of mining camp. So, they're separate portals that would drive a central milling facility. Matt ran the gold rush mine, and they did very similar type of mining where they had several different underground mines, they were shipping or out bringing in. So, it's really not something that is very new to Nevada in terms of how things are operated. So, I would say we, what we're trying to build here is, even calls it a mini Nevada gold mines, and it's something that we certainly have the team to do, and I don't see it stretching us from a management perspective. But you're right there -- it's a capital-constrained environment, a good thing. We've got good partners like Orion to help us manage our way through that. Hopefully, that helped. That answers your question.

Is it an option to not restart the autoclave and have third-party processing or to chase the lead zinc zones that carry gold and silver at Ruby Hill and the FAD deposit? There's nothing wrong with cash flow probably even if it comes from lead and zinc. [Audit Ends]

You're absolutely right. I would say, the polymetallic mineralization is not as advanced as the gold right now, but at some point, that could be the case. I'm confident that we'll be able to finance our way to grow the business. What was the first question -- what was the second question there, John?

Is it an option to just not fool with the autoclave and chase the base metals or to go for third-party processing? Let's just say that, you're mining successfully at one of the underground mines, but not all three of them.

So, I would say, and I don't want to speak for Nevada Gold Mines, but they don't want to toll treat our ore forever, would be my thinking. They certainly are great partners and they want to see us succeed and get our autoclave up and running, but I don't think they want to be a third-party processor for another company in perpetuity would be the way I would answer that.

Is the Jerritt Canyon roaster good for any of your ores?

Well, it's a roaster, so it does, it will process refractory ore. It's further away from our projects than the Nevada Gold Mines refractory processing facilities and certainly further than our own. But yes, it is a roaster and it does have the ability to process refractory gold.

It's good to hear that there are lots of options.

Thanks, John. Thanks for the questions.

Thank you. There are no further questions at this time. You may proceed.

Well, thanks everybody for joining us. We really hope you have -- we got a lot of this call. And if you have any other questions, Matt, Ryan, and myself are available at your convenience to call and have follow-up discussions with. So, feel free to call any one of us. And we hope you have a great day. Thanks.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and asking to please disconnect your line.