VGCX.TOVGCX.TOTSX
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Lenora Hobbis: Hello, and welcome to the Victoria Gold Video Conference Call to discuss the Second Quarter 2022 results. Please note that listeners and viewers will be muted while management provides a short review of the results. After the review, there will be an opportunity to ask questions. [Operator Instructions]. Also note that the video call is being recorded and will be available for playback on the company website. We'll be making forward-looking statements, and I encourage participants to see our disclosure documents, including our corporate presentation, AIF and MD&A and the cautionary notes within, which can be found on SEDAR and the company website. I will now turn this meeting over to John McConnell, Director and CEO, to discuss the financial results. John?
John McConnell: Good morning, everyone, and welcome to the call. It's a pleasure to have so many people joining on the summer -- in the summer here. I'm joined this morning by our COO, Mark Ayranto; and our CFO, Marty Rendall. And we'll start off with Mark giving a quick summary of our production results for Q2, then we'll move to Marty to summarize the financial results, and then we'll open it up for questions. Over to you, Mark.
Mark Ayranto: Great. Thanks, John, and good morning, everybody. Very quickly, some of the highlights for -- production highlights for Q2, we had a total of ore mined 2.2 million tonnes. Total material mined was 4.3 million tonnes and ore stack to the heap leach pad was 2.3 million tonnes at a grade of 0.85 grams per tonne and gold production of 32,055 ounces. Some of the notable highlights on mining side. Total tonnes mined are down 23% compared to this period last year, and that's really just following our mine plan. So really fewer tonnes are required to be removed in this period. So that's the change there. Beyond that, certainly, on the ore tonnes and grade, we were very similar to last year as well as gold production, very similar to this time last year. John, that's the tip to the cloud, and pass it over to Marty.
Marty Rendall: Thank you, Mark. Just looking at some of the dollar numbers. When I speak dollars, it will be Canadian dollars unless I specifically mentioned that it's U.S. We sold 28,580 ounces of gold during the quarter at an average price of C$2,427. The U.S. equivalent is $1,900. Those gold sales produced revenue of $69.4 million and operating earnings of $20.5 million. Our net income during the quarter was $17.1 million, and that equates to $0.27 per share. Our cash costs during the quarter were C$1,057 per ounce and again, the U.S. equivalent for cash operating cost was $828 per ounce. Our all-in sustaining costs were higher due to significant capital spending during the quarter. All-in sustaining costs in Canadian dollars were C$1,750 and in U.S. dollars were $1,371. I did mention the capital during the quarter. Sustaining capital was about $17 million during the quarter. And that included work on mobile equipment to rebuilds, expansion of the heap leach pad as well as the water treatment facility. Earnings before interest, tax, depreciation and amortization, or EBITDA, were $44.2 million during the quarter. And free cash flow saw a small deficiency again due to those capital costs of C$1.2 million. Cash and cash equivalents at the end of the quarter was C$29 million at June 30, '22. Back over to you, John.
John McConnell: All right. Thanks, Mark and Marty. We'll now open the floor to questions.
A - Lenora Hobbis: [Operator Instructions] Okay. Mohammed [ph] has a question. Go ahead, Mohammed. Sorry, Mohammed, we can't hear you. I'm sorry, Mohammed, if you would like to put it in the chat, that would be the place to put it because we cannot hear you. I'm sorry about that. [Operator Instructions]. Okay. John, it doesn't look like there's any questions.
John McConnell: Let's give Mo a chance to sign back in and see if we can address his question. Otherwise, we can -- I can reach out to him.
Lenora Hobbis: Okay.
John McConnell: Those who don't know, Mohammed is the analyst at CIBC.
Lenora Hobbis: He's back.
Mark Ayranto: So Mo, if you wanted to try again and see if we can get you to…
Unidentified Analyst : That's perfect. Thanks team for taking my question. I just had a question regarding the growth CapEx deferral to 2023 for the ore scalping screens. Could you give us a little bit more color on that? And how do you -- when do you expect the screens to be coming in, in 2023? And do you expect that to have any impact on our Project 250?
John McConnell: Yes. It's John, Mo. We've delayed the screen installation. We saw the capital costs increasing significantly, as well it's very difficult to find construction crews. And the third reason, we had another look with the vendor Metso at what we were planning to do. And they've come up with an alternative that will cost less and looks to be more efficient. So we're doing the engineering right now on scalping off the fines immediately following the secondary crushing rather than putting in a second screening plant between the secondary crusher and the tertiary crushers. So I guess what I'm saying is stay tuned. We're doing the engineering now, and hope to make some announcements later in the year. But also, you'll recall that a significant portion of going to 250,000 ounces per year is getting to year-round stacking. And we're still confident that we'll achieve that and have a minimal maintenance shutdown this winter of somewhere closer to 4 weeks as opposed to 6 weeks.
Unidentified Analyst : Sounds good. And then for the update on that, the scalping screens that you're hoping sometime late 2022 or early 2023 for that? When should we expect that?
John McConnell: 2023.
Unidentified Analyst : Okay. Sounds good. That's perfect. And then my second question was just on the waste stripping CapEx decrease from $21 million to $15 million. Do you expect to catch up in waste stripping into next year? Or is that -- what's your thinking around that?
John McConnell: Mark, do you want to comment on that?
Mark Ayranto: Yes. Mo, really, what we're doing right now is following the mine plan. Last year, we had a little bit more waste than we had to move just sequentially. So that was really a key driver for the change. Right now, we are mining in Phase 2 and Phase 3 of the pit. Phase 2 has a lot of ore in front of it, roughly 25 million tonnes. And then Phase 3 is really kind of a layback for final pit walls. We've got some time to work on that. We are currently just buttressing a lower lift on our waste dump. That should be completed fairly soon. And when it is, we can significantly shorten our hauls, our waste hauls -- the waste dump, which have good cost and performance improvements. So that's really the reason for not pushing waste really hard right now. And later in the year, we'll have shorter hauls, more efficient hauls, and we got lots of time to get that Phase 3 development.
Unidentified Analyst: That’s perfect. Thanks for taking my question. I’ll get back in the queue, if I have anymore.
John McConnell: Ranjan, you have a question?
Unidentified Analyst : Yes. Hi, John. Can -- 2, 3 questions that I have. One is the 250,000 ounces. Is that a '23 target or a '24 target? Second question was your grade went up but your cost also went up. And third question was on cash availability. Your cash has come down, your payables have gone up. Do you -- what is your cash budgeting situation, how is this going to play out? Do you need to do a rights issue? Do you need additional cash? What is going to happen? So first 3 questions.
John McConnell: I'll start with the first question on getting to 250,000 ounces per year. We hope to achieve that through 2023. But the first step is to get to steady state 200,000 ounces per year. So we're going to learn to walk before we run, so to speak. Then on the financial questions, I'll turn it over to Marty.
Marty Rendall: Sure. Ranjan, you mentioned that grade was up as well as cost. As Mark said, the grade is really following the mine plan. So we did see a little higher grade in Q2, which was nice. But on the cost side, it's really inflationary. And when you compare to last year, our costs are up very significantly, primarily due to fuel, but fuel seems to affect everything. And so we are seeing the effects of the higher inflation on our costs for Q2, and that will continue for the rest of the year. On our cash side, one thing you may have noticed in our financial statements is we did expand our revolving credit facility. It did have a limit of $100 million. And just our balance sheet allowed for it and the banks were happy to extend that a little bit to give us more flexibility really. Our hope is that gold prices will stay high and production comes in as expected and we won't need that extra flexibility of the revolver. But that's an extra $25 million that is available. So that revolver is now up to $125 million maximum. The other side on the debt is our $100 million term loan facility, and that's 12 payments over 3 years, so 12 quarterly payments. We've paid off half of that facility now. So we now owe $50 million, and we'll continue paying that off for the remainder of this year and be done at the end of next year, which will certainly open up even further flexibility if needed, whether it's revolver or otherwise. Right now, certainly, we're not looking at any equity issues.
Unidentified Analyst : Okay. To follow up, John, on your statement. So would it be fair to assume production level of 200,000 for this year 2022 and closer to 250,000 for '23?
John McConnell: It will be probably a step up in 2023 and then achieving a run rate of closer to 250,000 by the end of the year.
Unidentified Analyst : By the end of '23, is what you're saying?
John McConnell: Yes. We haven't provided any guidance yet for 2023. So I can't really give you a number. But it will be a slow step up. And again, as I said, the biggest part of that is getting to closer to year-round stacking. So we're reducing the non-stacking period down to 4 weeks in 2023.
Unidentified Analyst : And a cost of, say, $1,400, somewhere between $1,200 to $1,400, closer to the high end as to -- Marty said?
John McConnell: Again, we haven't provided guidance for 2023, but if fuel prices take another big jump up, not -- uncertain where we'll be, but your number is probably pretty good.
Unidentified Analyst : Thank you.
John McConnell: Any other questions, Lenora? Lenora, is that it for questions?
Lenora Hobbis: Sorry, I was muted. No. There's no further questions, John.
John McConnell: All right. Well, thanks, everyone. Go back to enjoying summer. I know post this call, I'm actually on vacation for a few days. So I hope everybody else is having a great summer as well.
Lenora Hobbis: Thank you, everyone.
Marty Rendall: Thank you.
Mark Ayranto: Thanks, everyone.