Calibre Mining Q1 2024 Earnings Call Transcript

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Provided by Quartr
May 15, 2024

There are 6 speakers on the call.

Operator

Hello, and welcome to the Caliber Mining Corp. 2024 Quarter 1 Conference Call and Ballantyne Gold Mine Update. All participants will be in listen only mode. After today's presentation, As a reminder, this conference is being recorded. I would now like to hand the call to Ryan King.

Operator

Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and thank you for taking the time to join the call this morning. Before we commence, I'd like to direct everyone to the forward looking statements on Slide 2. Our remarks and answers to your questions today may contain forward looking information about the company's future performance. Although management believes that our forward looking statements are based on fair and reasonable assumptions, Actual results may turn out to be different from these forward looking statements.

Speaker 1

For a complete discussion of the risks, uncertainties and factors, which may lead to actual operating and financial results being different from the estimates contained in our forward looking statements, please refer to the Q1 2024 MD and A and consolidated financial statements available on our website as well as on SEDAR Plus. And finally, all figures are in U. S. Dollars unless otherwise stated. Present today with me on the call are Darren Hall, President and Chief Executive Officer David Splett, Senior Vice President and Chief Financial Officer and Tom Gallo, Senior Vice President of Growth.

Speaker 1

We will be providing comments on our Q1 2024 results and Valentine Gold Mine update following yesterday's news releases. We will discuss capital costs and project updates, after which we'll be happy to take questions. The slide deck we will be referencing is available on our website atcalibraminingdot com under the Events section. You can also click on the webcast to join the live presentation. With that, I'll turn the call over

Speaker 2

to Derek. Thanks, Ryan. Moving to slide 3. Good morning and thank you for taking the time to join us today. Firstly, I would like to thank Alcalibur employees and business partners for their continued efforts and focus during what has been a very busy quarter.

Speaker 2

First, I want to acknowledge and I'm proud to make particular mention of the Valentine team for their outstanding safety performance, which was recognized on Monday when the Canadian Institute of Mining, Metaling and Petroleum awarded the team with prestigious John T. Ryan National Safety Award, significant achievement and well done to the entire team. Moving to Q1. Consistent with H1 expectations, the company delivered 61,700 ounces of gold in the Q1. With higher tons mined and processed, costs were as anticipated higher than full year expectations.

Speaker 2

Additionally, with the team in Nicaragua making good progress in the open pits, we are 20% ahead on total material movement, which is a little double edged as it results in higher Q1 spend that derisked production in H2. As we have consistently foreshadowed, coal production is H2 weighted and I'm confident in reaffirming our full year guidance. Turning to slide 4. Our vision at Caliber has always been to establish a quality mid tier gold producer by generating strong operating cash flows to fund organic growth while seeking accretive opportunities to diversify and grow. We have consistently delivered into this vision, never more so than now with the acquisition of the Valentine Gold Mine in Newfoundland and Labrador.

Speaker 2

With 1st gold scheduled in Q2 2025, Ballantyne will establish Caliva as a quality mid tier gold producer in the Americas, providing a compelling rerate opportunity for all shareholders. I'm pleased to report that construction of our fully funded Ballantyne Gold Mine is 64% complete and we have progressed detailed engineering to 98%. Additionally, the team has completed the tailings management facility started in, received engineer of record sign off and commenced liner placement, which is a significant milestone in the project development. Delivered critical path items, including mills and motors to Newfoundland. We recently enclosed the mill building.

Speaker 2

We've connected site to permanent hydroelectric power. We've awarded all major outstanding construction contracts, employed our experienced and highly motivated operations leadership team and awarded a contract for and advanced pre commissioning and commissioning activities. These project optimization and derisking efforts combined with accelerating operational and a portion of Phase 2 capital expansion, results in initial capital cost of CAD653 1,000,000 CAD145 1,000,000 increase over Marathon Gold's Q3 2023 update. With CAD279 1,000,000 in initial project capital remaining to be spent and CAD400 1,000,000 in cash and restricted cash, the build is fully funded. Moving to slide 5.

Speaker 2

The CAD145 1,000,000 is consistent with our pre acquisition due diligence and incorporates underestimated costs, inflationary impacts and capital advance by Caliber to derisk delivery and to support future operations. The increase versus Marathon's Q3 2023 estimate primarily consists of 3 components: schedule and cost estimation of approximately $70,000,000 which relates to improved quantity, cost and time estimates with engineering now at 98%, progressed from 60%, which was the basis of the Q3 2023 estimate. Secondly, dollars 40,000,000 attributable to Caliber's project optimization and derisking efforts, which focus on ensuring that the facility as designed delivers its full potential as we transition from construction to operations. This investment includes pre commissioning and commissioning planning and activities, mill and site modifications, access road upgrades and importantly advancing deployment of the operations team. Finally, Caliber is advancing operational and Phase 2 capital expansion of 35 Neo, which is more opportunistic in nature and includes investment in infrastructure that will positively impact operations.

Speaker 2

This includes commencing construction of permanent mobile equipment maintenance facilities, process plant equivalent, treatment plant and accommodation upgrades. A more strategic component of this investment advances a portion of the Phase 2 expansion capital. In the feasibility study, Phase 2 is the planned plant expansion in years 34, which increases throughput to 4,000,000 tons per year. We are in the early we are early in the analysis, but given the current SAG or circuit design, we believe there may be opportunity to increase throughput in advance of a plant expansion. A key component to enable any increased throughput would be to ensure CIL circuit and therefore we have included additional package as anticipated in the Phase 2 design.

Speaker 2

We've commenced a scoping study to review process plant expansion options focused on assessing comminution circuit alternatives. It's early in the analysis that I'm encouraged that there are a combination of secondary crushing and grinding options, which may present even higher return options than the feasibility study envisaged Phase 2, which is a good segue into exploration as having an appreciation of the potential scope of the district will influence scale when assessing processing expansion opportunities. The Valentine Gold Mine and surrounding property offers a robust resource base and discovery opportunities from an extremely prospective array of exploration targets with similar geology to the prolific Valvula and Timmins camps in the Abitibi gold belt. I'll now pass it to Tom to provide additional color on Ballantyne's exciting exploration potential.

Speaker 3

Thanks, Darren. Turning to Slide 6. The 250 kilometer square Valentine land package offers us a considerable resource base from which to grow. The discovery potential in our view is high with an underexplored orogenics setting. The 2024 exploration program will include resource expansion and discovery drilling backed by a robust geoscience initiative, similar to what we've employed in our other jurisdictions.

Speaker 3

And we'll focus on high definition property wide geophysics and lidar survey, enhanced prospecting and a comprehensive till sampling program. Several targets which have never been drilled, but are a high priority for Caliber include Eastern Arm, Northwest Contact, Western Peninsula and Marathon Northeast. In addition to the regional potential, it is important to highlight the recently completed ore control drilling at Leprechaun, which bolsters our confidence in model performance. The results substantiate the mineral reserve estimate

Speaker 2

in

Speaker 3

the first five benches, the drilling indicating an increase in ore tons of 15% and overall gold ounces of 12%. Additionally, high grade gold mineralization was discovered on the southwest edge of the pit, highlighting strong resource expansion potential given the limited drilling along the Valentine Lake Shear zone toward the Frank deposit. Phase 1 diamond drilling has now been completed. We are scheduled to follow-up along the Frank Leprechaun corridor with a more detailed program in the fall. Overall, early stage drill ready targets backed by surface anomalies, which have never been drilled, combined with near mine expansion potential, demonstrate the robust nature of this mineral system.

Speaker 3

The Valentine Lake Shear Zone and Northwest Contact Shear Zone combine for up to 64 kilometers of high potential opportunity with over 5,000,000 ounces of gold hosted. As we quickly increase our knowledge base throughout the field season and with incoming drill hole assays, I would anticipate this could lead to a much larger drill program in the future. With that, I'll turn it back over to Darren.

Speaker 2

Thanks, Tom. Moving to Slide 7. With construction at 64% and detailed engineering at 98%, Caliber is well positioned to responsibly deliver the fully funded Palatine gold Mine. With 1st oil scheduled in Q2 2025, the delivery of Ballantyne presents a paradigm shift to Caliber as we transition to a quality mid tier gold producer, which will unlock significant value for all stakeholders. With that, we're happy to take questions, and I'll pass it back to the operator.

Operator

Thank you very much. We will now begin the question and answer session. Today's first question comes from Ingrid Rico with Stifel. Please go ahead.

Speaker 4

Hi, good morning, Darren and team. Thank you for taking my questions. I'll probably start with just sort of on the capital. You gave us the update on a lot of the major contracts have been awarded. So Darren, what's sort of outstanding on the Yes.

Speaker 4

Hi, Ingrid. Good

Speaker 2

Yes. Hi, Ingrid. Good morning. And firstly, thanks for initiating coverage there in Q1. It is appreciated knowledge.

Speaker 2

Thanks. It's well done. In terms of outstanding major items, as we kind of mentioned, we're well progressed on the engineering. We're 3 quarters built. The mills, motors are on-site.

Speaker 2

In terms of major deliverables, it's probably to the conveyors, which come late in the summer. But again, there's plenty of time for those deliveries. So I don't see them as really critical part. The major contracts in terms of the SMPs, the structural mechanical and piping was being issued. Electrical and Instrumentation is with a letter of intent and we're in the final stages of issuing that contract.

Speaker 2

Bringing together those groups of people and scheduling that out through the summer to bolt things together is probably critical path. So it's not so much delivery of, it's more about assembling the Makano set, if you will. And that's where the team are focused on now is that it's now into truly the execution of bolting things together. The major civil works are done. We significantly derisked from a geotechnical perspective.

Speaker 2

The mill building is now enclosed. So now it's really that fine detail about bolting all the things together and the coordination of a significant number of people who will come together during the construction season here in the summer. So I think it's more around execution of those works, but it is a critical path in terms of delivery of bits and bobs.

Speaker 4

Excellent. And on the operation readiness, you've talked about having now the leadership team, but how is the sort of recruitment process going? What are sort of the targets over the next few months to get fully staffed for operations?

Speaker 2

Yes. Thanks, Ingrid. And I guess if I cycle back in time to when we closed the transaction, probably one of the concerns I have was assembling the leadership team. And we've had excellent take up over the last 3 months. And again, we had a good quarter of people to bolt on with Daniel and Mike at the site.

Speaker 2

But now if we think about the 10 most senior people in the operation, all of those positions have currently been employed. So if we think of mine managers, mill managers, process managers, construction managers into the operations space, business manager, health and safety, all of those positions are now filled. And we've done that over the last couple of months, which is unnervingly pleasing given the apparent shortage of labor in Canada. So I think that attracting people into the province has been easier than anticipated. And all of the top 10 or 9 of the top 10 are actually have actually or are relocating to Grand Falls of Windsor in Central Newfoundland as well.

Speaker 2

So they'll be living local and commuting in. So that's a great thing. We know we've got a significant resource base in Newfoundland to hire from in terms of operators and mill rights, mechanics and those sort of things. So hiring into that space, yes, there is a good talent there. And there's obviously a significant number of people who work turnarounds who are wanting to come back.

Speaker 2

So I think the challenge we'll probably have on a labor perspective is some disappointment that we won't be able to provide everyone with the job who wants it. So I'm feeling actually very confident in that space. I'll be back on-site here in another week for a couple of weeks as we assemble the team

Speaker 1

and do a little bit

Speaker 2

of Calibre 101, bring them all together and make sure they've got what they need to deliver into the expectations here in Q1. But we've seen great pickup with the projects team. And I think importantly having a group like RCC come in as well on the pre commissioning and commissioning to ensure that those 2 groups come together is a critical component as well. So a long winded answer to a pretty short question there, Ingrid, but I'm very pleased with the progress we've made on hiring. I'm very pleased with the quality of people we've got.

Speaker 2

And also very motivated in the fact that the relocation to Newfoundland and taking up the opportunity to live in a great place. So yes, I'm feeling more and more comfortable every day that goes forward.

Speaker 4

That's great to hear and thank you for all that sort of update. If I may ask just one last question on mining. I wanted to ask on Barry. I understand that the federal permit is still outstanding. Can you sort of tell us a little bit of what's the latest on that and when are you expecting to receive it?

Speaker 4

And I guess based on your sort of rebaseline schedule, when do you need to start mining Berry?

Speaker 2

Okay. Yes, good questions. And Berry, the original intent, I think, was that Barry was going to start mining either late this year or very early in 2025. We're confident in the permitting process. It's been through the provincial EA review and they've got early release.

Speaker 2

From memory, I think that was in October of 2023. And then came across to the federal piece. The federal group, which again, I'll see if I can get the acronym correct. I think it's IAAC, which is Impact Assessment Agency of Canada. They completed their public comment period here in end of March, which is a very good sign as well because it kind of foreshadows their intention to approve.

Speaker 2

So no, I think it's all kind of going as planned. I mean, we haven't seen any significant public comment from external parties as part of the federal review. I think the federal government are working through some issues with respect to process because I believe there was a comment made by the Supreme Court that they thought the process was overreaching, right, which is great. I mean, I'd rather be overreached by a regulator and make sure that we're doing the right things to ensure that our stakeholders are protected. But I don't anticipate that to materially slow down the approval process.

Speaker 2

So and this relates to all projects in Canada, right? It's not just us. So no, I'm still confident in. But now to say, well, there's always risk and kind of we're we tend to be a little conservative in approach, which is probably not a bad way to be. So when we did the rebaselining and as we've continued discussions with our senior debt folks as well is that let's just take it out of the discussion context and we'll push Berry out from a commencement until early Q3 of 2025.

Speaker 2

And then there's an opportunity to drag it forward if we see the opportunity and produce a little bit more metal a little early, which is never a bad thing. So, early, which is never a bad thing. So yes, I'm not concerned about it, but it absolutely is a focus to ensure that we're delivering to expectations. But we've derisked the schedule by taking it out of contention. So that way, it's a positive when it comes back in as opposed to pushing it out.

Speaker 4

Great. Thank you, Darren.

Speaker 2

Sorry, just actually just as a layer on that as I think out loud as being a kind of a more technical person as well in Brit is that we think about the 2025 production schedule and Berry was one component of the 3. And basically pushing the production producing Berry out derisks that production profile. But with Leprechaun and Marathon producing as planned, that's significantly I won't say derisks, but delivers into the expectations. And from memory and again, it's been a while since I've cut little shapes out of big shapes in mine sites, but I think we're looking at probably 2,000,000 to 2,500,000 tons of inventory in stockpile at the end of 2025. So given those sorts of things you're likely to see on startup, we've got more than adequate capacity to offset any of those bips and bobs that come up.

Speaker 4

I appreciate that. Thank you, Ryan for passing along that question. I was looking for some of that sort of color last night. Thank you.

Speaker 2

You bet. Appreciate it. Thanks, Ingrid. Appreciate your support.

Operator

Thank you. The next question is from Don DeMarco with National Bank Financial. Please go ahead.

Speaker 5

Thank you, operator. And, yes, good morning, Darren and team. Congratulations on all the derisking with this Valentine update. So first question, the by increasing the throughput to 3,000,000 tons per year, and I get it that this probably still has to be subject to its own de risking improving, but how would you expect that to change the production profile versus the feasibility study in the 1st few years?

Speaker 2

Yes. Don, 3,000,000 tons, that sounds like a good number. Again, that's part of what we're working through right now, right, is that the design work that was done initially with SAG Vault is very, very solid. It's good quality product, good work. As we go through some of the looking at the analysis for that grinding, crushing optimization in 2025, I think there will be potential to exceed what would be that 2,500,000 ton.

Speaker 2

When that happens, I can't necessarily say categorically right now, but I think there is good potential. And that's part of the reason why we advanced the Phase 2 capital into this construction build. It's not required to, but adding that 30% increase in tankage positions us well to be able to realize any potential that comes from increased throughput. So yes, no, we'll work it through as we get closer. And I think that an important part of what we're looking at now is that is for a set of eyes, if you will, looking at the Phase 2 expansion and what that really looks like.

Speaker 2

I think that as envisaged, it's solid and it's good. But I think that given the configuration of the crushing and the grinding circuit, there's going to be options to look at maybe it's a secondary stage crusher and tertiary stage milling or maybe it's a pebble crusher after the SAG and increased combination capacity and push those tons as well earlier. So we'll work it through. And as we have a higher degree of confidence, we'll start to talk more openly about it. But as I see it right now, I'm pretty confident in what we see.

Speaker 2

And anything we do talk will obviously improve the positioning of Ballantyne as we transition into production here in 2025.

Speaker 5

Okay. Okay. Well, good to see that upside there. And we'll look for more color as you get closer to that. So you got the contract with RCC for commissioning and pre commissioning and commissioning.

Speaker 5

Can you tell us a little bit about this? I mean, maybe the scope of work or your experience working with these guys or some of the other the work they've done in the past and so on?

Speaker 2

Yes, absolutely. It's not typical of companies outside of projects this size to have a group like RCC involved. There are quality output. We've got Tim McKay, and he's assembling a team or assemble the team to be able to support us. And the real focus here is to bridge what is the projects team who are focused on scope, schedule and budget on getting to the delivery room.

Speaker 2

And we've got an operations team who want to pick the child up once it's delivered and raise it into a responsible adult. Yet this group of people are really ensuring that that transition and handover happens well. And operators are greater operating plant, but putting in price the processes by which you're going to operate to ensure that realize the full potential of the asset is not always a strong point, particularly as they're hiring teams of people. So really as I see it, that's what the focus of this group is, is to help us. And it's a material cost.

Speaker 2

I mean, we're talking the pre commissioning, commissioning activities are in the order of in Canadian dollars probably around $9,000,000 to $10,000,000 I mean it's a significant commitment we're making, but it significantly derisks the medium and longer term. The last exposure I had with this group of people was actually at Boddington. They did the pre commissioning commission works at Boddington in Australia when we delivered that asset. So yes, it's a very experienced group of people. This is what they do for a living.

Speaker 2

They're not engineers. They don't do they're not a buying and do process optimization and those sort of things. It's not that sort of group. All they do is this. This is their bread and butter.

Speaker 2

So a good group of people, great to have them on board. And we've got a great projects team to deliver the asset. We've got a great operations team to be able to run the asset. And I think that adding this food link to the stool will make for a very stable chair.

Speaker 5

Okay. It's good to see there's that derisking there then. And maybe just a final question. Is this discovery along the southwest edge of the Leprechaun pit? We've seen some press release intercepts are looking encouraging.

Speaker 5

But does this have potential to be mined early in the mine life, if it continues to be proven out and it's converted to reserves and so on?

Speaker 2

Well, I think there's a couple of parts to this and I'll maybe throw it over to Tom if there's anything I missed. But some of what was identified in that Valentine's Day release is that will be mined as a consequence of because it's inside of the pit. It wasn't actually identified as well 2 parts. Some of it was identified as inferred, which we've improved the confidence to a measured indicator category. Some of it was never identified.

Speaker 2

So it's considered as waste. So that waste now becomes ore. So we don't actually process measured indicated in 2P. We process whatever ore presents out of the ground. So that means that will end up in as available, crisp for the mill as it were.

Speaker 2

But as it kind of bleeds off there to the Southwest towards Frank, I think that Tom and the exploration guys are very encouraged by what they see in terms of the ability to expand into. Tom, is there anything you'd like to add on this? Because actually Tom's not in the room here. He's actually in Nicaragua this week.

Speaker 3

Yes. No, I think you covered it. I mean, I think it is important to understand that we will have ounces sort of by default come into the mine plan because they were not captured previously. And so they'll do things like lower the strip ratio in places or just add bonus ounces and that's part of why we saw that increase in tonnage and subsequently overall ounces in that grade control because the tonnage actually comes from things that were not categorized. To the Southwest, once you get outside the bounds of the pit, there's still considerable work that needs to be done from a drilling perspective.

Speaker 3

Definitely encouraged with what we've seen visually, Don't have all the assays in to speak about yet from our first phase of diamond drilling that was completed in Q1. But of course, this is a very visual ore body, so we can see where the mineralization should be. We do have indications on surface as well of that same mineralization continuing fairly regularly down to Frank where we did that drilling. So again, there's some follow-up work to do there, but it's very consistent on from what has been what we've known and to be the let's call it marathon style QTP, quartz, termolyne, pyrite in the trondromide mineralization, right. And I followed the story as an analyst back since 2017.

Speaker 3

So it's very consistent what we've been familiar with.

Speaker 5

Okay. Well, thanks for that Tom and Darren. And that's all for me. Good luck with the rest of the build.

Speaker 2

Okay. Thanks, and appreciate your support and coverage.

Operator

Thank you very much. This concludes our question and answer session. I would now like to turn the call back over to President and CEO, Darren Hall for closing remarks.

Speaker 2

Thanks, MJ. I'd like to thank all of our shareholders for their continued support and in particular your participation and questions this morning. It is appreciated. Thank you for taking the time. I know it's a busy time of the year for everyone.

Speaker 2

As always, Ryan and I and the leadership team are available have any further questions. Take care. Have a safe and enjoyable day and back to you, MJ.

Operator

Thank you very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect and have a nice day.

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Key Takeaways

  • In Q1 2024 Caliber delivered 61,700 ounces of gold, with higher mining and processing costs from increased material movement, but reaffirmed full-year guidance due to H2-weighted production.
  • The Ballantyne Gold Mine is 64% complete in construction (98% detailed engineering) and fully funded with CAD400 million cash, targeting first gold in Q2 2025.
  • Initial project capital has increased by CAD145 million to CAD653 million, reflecting refined engineering estimates, derisking efforts and partial Phase 2 expansion, with CAD279 million remaining to spend.
  • Derisking milestones achieved include tailings facility liner placement, mill building enclosure, permanent hydro power connection, and awarding major contracts including RCC for pre-commissioning.
  • A 2024 exploration program across the 250 km² land package targets 64 km of high-potential shear zones, with Leprechaun drilling already boosting ore tonnage by 15% and gold ounces by 12%.
AI Generated. May Contain Errors.
Earnings Conference Call
Calibre Mining Q1 2024
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