Aya Gold & Silver (AYA) has announced in its Second Quarter 2024 Results Conference Call that it is on track with its expansion projects and drilling programs. CEO Benoit La Salle confirmed that the Zgounder mine is set to begin commercial production in Q4 2024. The company has surpassed its ore stockpiling goal, reaching 309,000 tonnes, and reported a production of 432,000 ounces of silver, generating $13.7 million in revenue.
With a solid cash position of $103 million and a fully drawn $100 million EBRD loan, Aya Gold & Silver is advancing its exploration efforts, having doubled the Zgounder drill program and secured 7 new permits. The company also highlighted its commitment to green energy, health, safety, and environmental initiatives.
Key Takeaways
- Aya Gold & Silver is on schedule for Q4 2024 commercial production at Zgounder mine.
- The company exceeded its ore stockpiling target with 309,000 tonnes.
- Q2 production reached 432,000 ounces with $13.7 million in revenue.
- Aya Gold & Silver has a strong cash position with $103 million in cash and cash equivalents.
- The EBRD loan of $100 million has been fully drawn.
- Exploration program shows positive results; drilling program at Zgounder doubled.
- 7 new permits acquired, with plans to control the entire Boumadine district.
- The company emphasizes the use of green energy and commitment to ESG principles.
Company Outlook
- CEO Benoit La Salle expressed optimism for the second half of the year.
- The company invites shareholders and analysts to the Morocco Mining Conference in December.
Bearish Highlights
- The company has acknowledged the need to manage its debt, with repayment plans depending on drilling demand and silver prices.
Bullish Highlights
- Aya Gold & Silver has maintained construction costs and contained inflation in Morocco.
- The company's exploration success in Morocco contributes to a positive outlook.
- The flexibility of the EBRD loan agreement supports the company's financial strategy.
Misses
- There were no specific misses mentioned in the earnings call summary provided.
Q&A Highlights
- La Salle discussed the timeline for Zgounder expansion, with completion expected in mid-2025.
- The company's debt reduction plans for the next year will be contingent on the value creation from drilling.
- The CEO highlighted the successful performance and cost-effectiveness of the contract miner for open-pit mining.
In summary, Aya Gold & Silver is progressing steadily with its mining and exploration projects in Morocco. The company's financial health remains stable, with a strong cash position and strategic use of debt financing. Aya Gold & Silver's focus on green energy and ESG initiatives, coupled with a favorable mining jurisdiction in Morocco, positions it well for future growth. The company's leadership is confident in its operational strategy and looks forward to sharing further developments in the upcoming Q3 earnings call.
Full transcript - None (AYASF) Q2 2024:
Operator: Good day, and thank you for standing by. Welcome to Aya Gold & Silver's Second Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the CEO's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the call over to Ruth Hanna, Manager, Investor Relations and Communications at Aya. Please go ahead.
Ruth Hanna: Thank you, operator. Good morning, everyone, and welcome to Aya's second quarter 2024 results conference call. My name is Ruth Hanna, and I'm dialing in with the Aya team from Montreal, on Marrakesh this morning. So on the call today, we have Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, CFO; Raphael Beaudoin, Vice President, Operations and David Lalonde, VP, Exploration. We will finish today's event with a Q&A session with the team. Please contact our IR team directly with any follow-up questions that are not addressed during the call. Before we begin, I'd like to remind listeners that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward looking statements are contained in our August 14 news release as well as on SEDAR+ and at www.ayagoldsilver.com. With that, I'd like to turn the conference over to Aya's President and CEO, Benoit La Salle. Benoit, please go ahead.
Benoit La Salle: Thank you, Ruth. Good morning, everyone. Welcome to the Q2 2024 conference call. I'm pleased to present to you a robust quarter in a milestone year. We continue to advance the Zgounder mine as per our plan. We are pleased say that we are on schedule and budget for commercial production in Q4 2024. An important element which is often missed is that we now have stockpile on the ROM pad of 309,000 tonne of ore at the end of this quarter. Our goal originally, we communicated to you that we are aiming with 260,000 tonnes, and we have reached almost 310,000 tonne to be ready for the ramp up in Q4. We've delivered more typical results that we see from Zgounder. Our production this quarter was 432,000 ounces due to an increase in fresh ore, mainly some coming from the open pit. We generated revenue of $13.7 million as a result of Q1 selling of silver concentrate that we had in inventory and also our production. There was no over of inventory from one quarter to the next as we saw in Q1. Our net income is $6.8 million for the quarter and our total cash cost is $17.85 and I will comment on that on the next page. We have a very strong balance sheet. We closed the quarter with $103 million in cash and cash equivalent, and importantly, we were able to draw down the last $15 million on our EBRD loan for now a total of $100 million. And why I say it's important because before we can draw down on the EBRD loan, we have to go through full DD with them, due diligence with them. They come to site, the team goes to site, we go through all their KPIs, all their ESG KPIs and then they authorize the drawdown. I'm pleased to say that as of today, we have drawn down the full amount, the $100 million. During the quarter, we still have and we continue to have ongoing positive results from our exploration program. We've confirmed high grade mineralization again at depth, and an important piece of news this morning, we've doubled the drill program at Zgounder main zone from the originally planned 15,000 meters up to 30,000 meters as we keep hitting, and we have now consumed all of the budget for this year at mid-year. We've extended the Zgounder main trend. You recall, we did the resource calculation on 4.2 kilometer. We are now drilled up to 5 kilometer at the end of the quarter. And during the quarter as well, we have acquired 7 new permits, which we are now up to 18 new permits since we made the discovery. We have identified multiple potential high conductor anomalies to the west and to the south of the Zgounder main zone. So it's a robust quarter. Again, the highlights of it, 95% completion of the construction, 432,000 ounces of production, it's a 42% increase from the previous quarter same period last year, $100 million in the bank and we've increased the Zgounder drill program by 100% or we've doubled it. That's taking us to Page 4 of the presentation, and we had that discussion in Q1, where this is as our plan. I mean we were mining according to our plan, we were processing according to our plan, so it's a steady state production at Zgounder and where we have a summary of the guidance and a summary of the results in Q2 and in H1. And we are confirming to you the guidance is staying intact and it is as part of our plan. So after two quarters, we are at almost 800,000 ounces of production and we knew that the big production or the more important production was coming in H2, Q3 and mainly in Q4 as we are going to be kicking in with the new plant. The cash cost was higher in Q1. It was $20. We told you it would come down in Q2 at $17 and we are maintaining our guidance for the end of the year, because we know that we are heading into better grade and better recoveries for the end of the year. So the average grade for Q2 was 196. You recall the average grade for Q1 was 173 and we said it at the time that Q1, Q2 would be below the expected grade for the year. We were mining in sequence. We are also mining differently. We have started also to backfill some of the galleries. Hence, we knew that we were heading towards higher grade galleries in Q3 and Q4. Mill recoveries were 81% or 82% in Q1. We are better at 84%, 85% in Q2 and we knew that as we were getting into better grade and deeper into the open-pit we would get better recoveries. Tonne process is excellent. We are at 80,000, we were at 80,000 as well in Q1 and it's just way above the design capacity of these two plants. So we are doing extremely well. The availability which doesn't show on the slide, but the availability of the plants in Q2 was around 96%, and you all know that that's extremely good for a plant and mining to be available 96% of the time. Taking us to Page 5 of the presentation, just a couple of bar charts on the top left side, the silver production with the two plants running at the historical plants we should be between 400,000 and 500,000 a month and that's exactly where we are. We're back up there, which is normal for Zgounder. The grade, we expected it to be lower in Q1, Q2, it is. We are expecting it to kick back up in Q3, Q4, it will. So that's what you are seeing on the left hand side at the bottom. The mill recoveries, again we have hit up to 87%. We're now at 84.7%. We know that with the new plant we will be above 90%. So that will kick in. I am not telling you we will be above 90% in Q4, but that will kick in when we are at steady state and the tonne process while we are there we are achieving records where we are 20% above design capacity, if not 25% above design capacity, which you are seeing on the right hand side at the bottom. Page 6, you have the cash flow. We had a strong quarter with $5 million of cash flow coming from Zgounder. The gross margin is at 4.9%. The cost of sale is, of course, a function of the production. So the cost of sale is up there. Let me just remove this. The cost of sale is at $8.8 million and the cash cost as we discussed when we reviewed guidance is $17.85. It's higher than the historical four years, but we also knew that the cost was going to be going up this year as we were preparing for the new capacity. Moving to Page 7, the construction. So, this is a major milestone. We know that in our industry that's very difficult to be on time and on budget. We have been putting out videos to show you where we are. Today, we can tell you that we are 95% complete. We're on-track to completion and on-track with our capital cost estimate. Underground development is on-track. We are 96% done on lateral development, 83% on vertical, but we have one vent that is completed. You have seen in some of the videos. We are progressing to plant on electrical work, instrumentation, piping, Merrill-Crowe, all of that you saw we have poured already a couple of silver bars. The underground workshop is spectacular. You can see that in the videos. The warehouse, the backfill station is up and running and the Silver Room building as well. So we have completed on time and on schedule all the civil work, structural work, equipment, silver room, electrical power line, and the LAM, all of that's been completed. We are pleased to say that as of now, we are operating on green energy. The power line was commissioned. It's extremely important because it's green. It's very rare in the world that you operate 100% on green energy. It's a PPA that we have signed with an independent power producer. We are getting it from the grid. We build it on time and on budget. It is a fantastic job. So we have we are now running on green energy. Going to Page 10, the drill program. So we've created value historically by drilling. The original budget for this year was 145,000 meters of drilling. We have about 15-16 drills starting at all time. So the original program at Zgounder was 15,000 meters. And as of now it is completed. So we have authorized an additional 15,000 meters. So the program has been expanded to 30,000 meters at Zgounder, the main zone, and that's following very, very good results. Boumadine is on-track. Boumadine has a 120,000 meter program. We are currently at 42,000, but we knew that. We knew that H1 would be a bit slower. It was Ramadan as well. So we knew that we would have a smaller production in H1, but looking to catch up in H2. You recall that on the 120,000 meters program, 60,000 meter is on the main zone, on the Boumadine zone, the 4.2 kilometer, which is now 5, which we want to increase because it's still open north, south, and at depth. And there is another 60,000 meters that will test new targets, new targets that have been identified. We have shared with you one of them to the west. There are more to come. We've completed the MobileMT regional survey, and that is giving us some geophysics target and we are waiting for additional data. On the Zgounder Regional, it's ongoing. We have a 10,000 meter program that's being worked on. David and the team are looking for similar mineralization as Zgounder. There's a lot of geological theory and targets that are being tested. We have also completed the geophysics on Tirzzit which is very close by to the mine. So we are expecting a very busy H2 at Zgounder and at Tirzzit. And Tirzzit is a small project that we have in which we have never focused a lot. We may start a small drill campaign there as it has a great gold potential. Taking us to Page 11 to talk about Zgounder, it's a big news event. We are doubling up that program from 15,000 to 30,000 meters. I know for us it's like when you're drilling 120,000 meters at Boumadine it seems small, but it is important because we're drilling that zone which is 1.4 kilometer long, has a depth of about 600 meter and the results keep coming in. We have been giving you results. There are more to come, but we're often hitting a 1,000 gram per tonne over like we have here, 13 meters, 2,000 gram per tonne over 8 meters and it is ongoing. One of the focus is where it touches the granite at the bottom of the structure and so far we've been pretty good at hitting mineralization. Going to Page 12 on Boumadine, Boumadine is a cornerstone asset of Aya. Through drilling, we've really shown a beautiful right now 5 kilometer structure. As I indicated, we are going to be drilling 120,000 meters there. But through field work, so we have done the drilling in this quarter, we have done 27,000 meters this quarter, 42 after two quarters. So by subtraction there is 80,000 meters to come in H2. We have seen results. We are going to be seeing more results soon. It is ongoing. I believe we have 9 drills there. It changes sometimes, but up to 9 drills at the moment turning and many results are coming. But through the field work we have been mapping and doing the perspective on the 18 new permits because our goal is to control the zone. We want to control the whole district, the Boumadine district. So we're still working on new permits, but we have 18. So we've completed the mapping, the hyper spectral. We're using all of the techniques that we know work. We've completed the MobileMT program, 13,000 lines that were flew over with the helicopter. It's an extremely large and important program. It's a new program in Morocco, and it's giving us extremely, extremely interesting results that we'll show you in a minute. So our field work is continuing, our drilling is continuing, and our consolidation is continuing. We have increased our land package by 198 square kilometers and our goal is to increase that considerably. A couple of results on Page 13 on Boumadine, those are silver equivalent, a 1,000 gram per tonne of silver equivalent on 13 meters. So we keep hitting, you recall that on Page 18, you recall that the resource that was put out in March and the final report was filed 45 days later in Q2 that we were showing 352 million ounces of silver equivalent or 4.1 million ounces in gold equivalent. So that is just the beginning. It's on 4.2 kilometer. We have now extended it to 5 and we are drilling it to extend that to the north and to the south. 41% of the resource was in pit, 59 was deemed underground. We are continuing the drilling. As I indicated, 60,000 meters is going on strike and 60,000 is going on the parallel zone. Why? Well, take a look at Page 15. If you take a look at Page 15, you see a portion of the geophysics. We did not give it all out. We are keeping a lot of information right now to ourselves. But you see on the right hand side the purple color, that's the main zone. That's what we have been drilling and that's up to now 5 kilometer, but the signature is longer than that. And look to the west or to the left hand side where you have that same purple color. So it's a very large potential conductive anomaly, which is 5 kilometer west of Boumadine. Similar orientation, stronger intensity than the Boumadine main zone, main conductor. It's a large system. It has conductors across east, west similar to what we're seeing at Boumadine. So obviously this is now a top priority. So we are waiting for the inversion of the data from the geophysics. We will be getting that in August. We will be reviewing this and as soon as we have the targets that we will be moving some of the drill rigs-off the main zone and as the program will be getting close to be completed, it will start drilling some additional targets to the west and hopefully towards the end of the year or early next year to the south. So going to Page 16 on our social values and on corporate social responsibility, very good quarter. No zero lost time injuries, 3,700 hours of health and safety training. So it's a 30% increase year-over-year on our training. We have received certification of emergency response team. You are following us on LinkedIn. You see often some videos on the new facilities that we have. It's a very dynamic process. Everybody has bought into the concept of health and safety, and it's coming along quite well. On the Cleantech fund, we've met the milestones. We had milestone 1, 2, and 3 to meet. We've met the milestone and in meeting the milestone our capital costs on our debt related to the TCFD is now move or CPF tranche is down now to 1% cost of capital. And that was something that came with EBRD. It was very important. It's a $10 million tranche that went from round number 10% down to 1%. And with the local communities, well, we're extremely involved as you know, education, we are helping with school supplies, equipment and all that. Environmental Day, we celebrated that. Women's Day, we celebrated that with them. And we have a health program where we have clinics that we have for the villages around and we have also livelihood projects which is gardens, vegetable and saffron because the area is very well known for the saffron culture. So as a summary of where we are and what we have is the drill program is ongoing at Boumadine. The increased drill program is ongoing at Zgounder 40,000 meters. Boumadine is 120,000 meters. So as a group, we're going to be at 160,000 meters of drilling, so very, very large program, completely funded. The 2,700 tonne per day plant, which is the first the two plants that we have plus the new plant is on time and on budget. We are in commissioning, and we expect commercial production in Q4 of 2024. And on the ESG front, well, again, as I said, we keep going through these EBRD due diligence that where we do extremely well. And we are happy to say that we are fully funded. So as a company, we have $100 million in the bank. The project is built. There is still some payables there. We still have some payables, but if everything goes according to plan and our budgets are built with low $20 silver, our minimum cash balance, we will always be around $40 million-$50 million. So we are fully funded for now and for the future. The plants are operating the -- two plants extremely well. The third plant, we will know in Q4, but it's coming very, very quickly and very well. And the drilling is going extremely well. So that covers my presentation. Operator, I think we are ready for questions.
Operator: [Operator Instructions] Our first question comes from the line of Puneet Singh from Eight Capital.
Puneet Singh: Hi, Benoit, team. I wanted to ask a couple of questions on Boumadine. First on the geophysics, really positive to see that conductive anomaly to the west. I understand you'll be looking for those massive sulfide bodies and cross cutting features. But how will you vector in further before drilling? Could you run us through that, expand on some of those tools you were talking about and why they're useful and what exactly they tell you? And if you can also just repeat, I think you mentioned, David, when do you expect to drill that area to the west?
Benoit La Salle: Okay. Well, Puneet, we have David on the call. So David, do you want to comment on the geophysics and on the spectral and when do you expect to bring the drills over to the West?
David Lalonde: Hi Puneet, I'll try to answer that question. Yes, the geophysic is very spectacular. I fully agree with you. What we are waiting when we start getting the final results from the company that did the survey is all the inversions. So right now, we do have the magnetics, we do have the surface response, different layers from the electromagnetic, the magnetotellurics. But what we want to see before doing a drill program is the full inversion to really narrow the potential conductive corridors. So to better allocate the meterage and to have a more accurate drilling plan. We expect to receive those deliverables by the end of August. So then it's a matter of building the drill program and bringing drills rigs there. So most likely end of September, beginning of October, around that time we should be able to start a drilling campaign there. Other tools that we have and use is the hyperspectrals. So the survey we've completed this year, we already have all the layers. So it allows us to really map the alteration created by hydrothermalism and or other features like dikes around the property. So that's a great tool to help us locate targets. And on top of that, we have some detailed mapping on the ground, lots of graphs, lots of geochemistry data. So it's a matter of putting all those data together and come up with the best drill program for Q3 end of Q3 beginning of Q4 this year.
Puneet Singh: Okay. Sounds good. Sounds like it could be well timed with higher production in Q4 first results. So that would be good to see. Had one last question on the main trend at Boumadine. And the survey was showing more anomalies at depth there. But will the bulk of the program be focused on targets closer to surface like it was before? Or how are you thinking about that split?
David Lalonde: Well, we have the 60,000 meters that is already planned and well advanced. Like at the end of the quarter, we were at 42,000 meter if I recall. Right now today, we're at 55,000 meter completed. So the main trend will remove the will lead the program as it was. So it was mostly to extend the strike length. But we did reserve few holes to go target at depth also at the Boumadine and see the big geophysical anomaly. So as soon as we have the inversion for that too, we will give it a try, so later in Q4. And the rest of the more regional program, if you want of 60,000, the idea was to go and test different targets. So [Indiscernible] was one. We have a big program completely at the south on some northeast west structures. We will just allocate some of those targets, especially the North 70 and North 30 structures. We'll allocate the meterage for the Western geophysical anomaly. It's always a matter of prioritizing the target and with this geophysical response we believe that it might be more significant than the small cross cutting structures. But again, lots of those structures will test this year and there is lot more coming for 2025 as well as there's plenty of geophysical target and lots of nice things we're seeing on the ground.
Puneet Singh: Okay. Thanks, David, and good luck. Sounds like you got a lot to do, but that's good to stay busy. Thanks.
Operator: One moment for our next question. Our next question comes from the line of Justin Chan from SCP Resource Finance.
Justin Chan: Hi, guys. Congratulations on getting [Indiscernible] to where it is and another good quarter. A couple of questions just on perhaps the path forward and where you are now. On the vertical development, could you give us a sense of what's left to do? Is it on the vent rate side or material handling? Or what's left on that? And how does that impact your ramp up rates, maybe is the first question?
Benoit La Salle: Sure. Happy to comment on that. This completion rate was on July 30, so the end of July. And we were still working on one last ventilation raise for the sublevels and that raise is now complete. So you can expect 100% on next quarter on vertical development. So all vent trays are completed, and we have one ore chute and one waste chute that are also completed. And we are finalizing to install the civil work with them online. But as we speak, all vertical development is now complete.
Justin Chan: Okay. Perfect. Thanks. That's a great update. And on the ore mine this quarter, what was the split between open-pit and underground? And could you give us the grades between the two if you have that data available?
David Lalonde: We comment on overall grade, overall grade mine and obviously, as per sequence, sometimes one goes up, the other one goes down, which is not quite relevant on a quarter before, that's why we publish overall grade. We target towards the end of the year to have about 1,000 ton per day from the open pit and for full ramp up for the open-pit at 1,000 ton per day. We're now about 500 ton per day, simply because we don't need more, but we can increase it to 1,000 ton per day when the new plant is up and running.
Justin Chan: Got you. And roughly where do you I mean, I think the guidance implies a fairly big step up in grade in the second half as well as tonnes. I guess, what are your thoughts on grades you're targeting for Q3 Q4, if you can give us any granularity there?
Benoit La Salle: Justin, it's difficult because as you know with the deposit, the way it is, it's when we hit these very high grade pockets, it goes very, very quickly into the 100 and 100 of gram per ton. But we are comfortable when we look at the model that globally we are going to meet our guidance. So if our guidance is around, let's say, we take the bottom part of the guidance at 215 and we are currently now on average at 196 for Q2, 184, that means we will be above the 215 for Q3 and Q4.
Justin Chan: Okay, perfect. Thanks. I appreciate that. And I guess given where your level of development is, you've got good flexibility. Well, anyway, I'll free up the line. Thanks very much for taking my questions.
Operator: [Operator Instructions] Our next question comes from the line of Don DeMarco from National Bank Financial.
Don DeMarco: Thank you, operator, and good morning, Benoit. Boumadine. Yeah. Boumadine on my mind. So with the new conductive anomaly, Benoit, shall we assume that you embark on a multi-quarter or even multiyear drills program before you start thinking about a PEA? I mean, if those new anomalies prove out, it just seems early to start thinking about what the through -- throughput should be and things like that.
Benoit La Salle: Totally you are absolutely right, Don. The drilling to the west could be a game changer. And we are doing some work right now. We have a Project Manager that we have hired who is a top of the line metallurgist and mining and a production man. So we are doing the test. We are doing some metallurgical test. We are doing all of that. But to finalize the flow sheet, the throughput, the quantity, it's a function of the size of the project. So we are working on understanding all of that and getting ready. Now there are a lot of chapters that you don't need the size on water management, electricity, tailing. So we started all of that. All these chapters have been started, but the actual PEA based on size is going to be a very dynamic system because if we find what we believe is there on the west side and on the south, we haven't yet have not yet put that out. But on the south, of course, it's a different size project. So absolutely based on drilling and based on results, the project will be dynamic.
Don DeMarco: Okay. And can you comment on the existing infrastructure at Boumadine, like for example, power, water? And is there driving access between the current and the new conductive anomalies?
Benoit La Salle: So look, at Boumadine, we've been together with Zgounder. Zgounder is 2,000 meters above sea level. It's quite hilly. It's higher. Zgounder is a lot it's a 1,000 meter. It's got an airport one hour away. You can drive from the airport which you've got flights from Agadir all the time because it's the entrance to the tourist area when you go on camel rides and on safaris. So it's quite good infrastructure. Power is not far away, so power will come from the grid. It's not at site yet, but it's going to be at site. It's not far away. There are villages around, there are good hotels in the -- and I'll ask Raphael maybe to comment after. So of course it's something that's pretty straightforward. The issue is always in Morocco and in North Africa is water. So we have a team on water right now. Is it going to be reservoirs? Is it going to be from some of the villages that are around? So we are working on that. That's always the pacing item. But at this point today, it's all about David putting in the drill and increasing the size of the resource. And, Raphael, do you want to add something on the infrastructure?
Raphael Beaudoin: No.
Benoit La Salle: Yeah. No. So that's what it is, Don.
Don DeMarco: Okay. Well, thanks for that color. Go ahead.
Benoit La Salle: And we'll organize a visit to Boumadine in the fall with Alex and a lot of people want to come and see it. And, it's like you'll see the infrastructure is actually, I would say, almost simpler than in Zgounder just because of the where it is and access to an airport very close by.
Don DeMarco: Okay. Good to hear. And then one question on Zgounder. When do you expect to reach mining rates at 2,700 tonnes per day? Is that going to be late this year or later with some reliance on the stockpiles?
Benoit La Salle: I'll ask Raphael, who's sitting right across me.
Raphael Beaudoin: So we take our time. We want to do it right, and we started early to be able to have this flexibility. Right now, we have extra mining capacity and we're not mining as fast as we could, if we wanted, because we have over 300,000 tonnes of ore stockpiled. But to answer your question, it's somewhere in mid-‘25, early 2025, mid-‘25 depending on mill throughput or mill ramp up. So we have this flexibility right now.
Don DeMarco: Okay. Thank you for that. Well, good luck with Q3 and that's all for me.
Operator: Our next question comes from the line of Mike Kozak from Cantor Fitzgerald.
Mike Kozak: Yeah. Good morning, Benoit and team. Congrats on the solid quarter. Most of my questions have been asked, but I just had one more. With the Zgounder expansion almost done, how are you as a company thinking about debt reduction next year? Do you have a kind of a target debt repayment amount per quarter in mind or something like that? Just any guidance there would be appreciated. Thank you.
Benoit La Salle: Well, that's a very good question, and I'm going not turn it over. It depends on David's demand on drilling. It's for us.
Mike Kozak: Fair enough.
Benoit La Salle: For us drilling is the most important value creation. And so far with 94,000 meters at Boumadine, we found 352 million ounces of silver equivalent or 4.1 million ounces of gold equivalent. You know what and David is on the line and I shouldn't say this, but when David is showing us things, he says I want to drill this, for us that's the top priority. EBRD is extremely flexible. We have a payback program over four years starting in 2026, and they are extremely flexible. They come to site. We are their star project in their new mining strategy. If we wanted to pay faster, we could. If we wanted to delay, we could. Not that we would delay, but they are very happy with those projects. And seriously, if David keeps coming up with discoveries both as Zgounder, Zgounder Regional, Boumadine and Tirzzit, the value of the drill the cost of drilling is -- our cost of discovery last year was like $0.10 an ounce of silver. So there is -- but yes, if we do have excess cash, it will be to pay down the debt obviously. But it's a soft loan with EBRD. It's extremely soft. They're very good, and hence we are comfortable. But yes, with a $35-$40 silver and the production that we're going to get, we'll probably have all the money in the world for David and to be able to pay down the debt.
Mike Kozak: All right. Good stuff. That's it for me. I'll revert back. Thank you.
Operator: One moment for our next question. Our next question comes from the line of Stephen Soock from Stifel.
Stephen Soock: Hi, guys. Most of my questions have been answered too. I just had one on cost structure. Now that you've kind of ramped up or largely ramped up underground, have a good handle on the open pit mining, how are kind of unit cost tracking versus your expectations and maybe versus the study? I know inflation in Morocco has been very low. So I think it looks like it has potential to beat there, but just wondering what you're seeing day to day and how you're thinking about that going forward.
Benoit La Salle: Yeah. So on open-pit specifically, it's a contract miner that we use. And so far, it's been exactly as expected in both in terms of drilling blast and in terms of haulage from the pit to down the valley and back up to the other mountain. So it's exactly honestly, we're quite happy and I think we've mentioned that in the MD&A. We're very happy with our contract for the performance and the cost, there's no surprises.
Stephen Soock: Perfect. No, that's great to hear. I know the expanded capacity will really have a notable positive impact on the cost structure and margin overall, so looking forward to that inflection point in the second half of the year. That's it for me. Thanks.
Benoit La Salle: Yeah. Thank you, Stephen. And as you said, the inflation in Morocco has been contained and the value of the dirham is devaluated just a little bit, not much. So you see it in our construction cost when you look at us coming through with 2022 CapEx numbers that we are able to build it on time and on budget. It says a lot about the capacity of the construction capacity in Morocco.
Operator: Thank you. At this time, I would now like to turn the conference back over to Benoit La Salle for closing remarks.
Benoit La Salle: Well, thank you so much. Thank you all for attending. It was a good quarter heading into a very interesting second half of the year with the commissioning ongoing. Keep watching our little videos. It will show you what we are doing and how we are doing it and heading into the commercial production in Q4 of 2024. What's also very interesting is the fact that we have 300,000 tonne on the ROM pad. That's like extremely important for a smooth ramp up and it's all there. So it's been mined. So when we look at the mining rate and the fact that we've been mining 1,200 tonne a day and including feeding the two plants, we have been able to stockpile 300,000 tonne. It just tells you that we do have, as Ralph said, the capacity to grow and we have also the capacity to slow it down if we have to, which is what we have done. So you have a very well-oiled machine, which is giving us 96% availability, and the third plant is coming live now and will be in commercial production in Q4. So on the operating side, it's going extremely well. On the exploration side, it's what can I say, 160,000 meters of drilling in Morocco with a very good team of geos that have made some big discoveries for Aya. So that will be a very, very good year. On the geopolitical front, Morocco, now that we have all the issues all over the world, Morocco is fantastic. They are now being recognized as one of the top mining jurisdiction, investment jurisdiction in the world. Their EV strategy is working out. They have many companies investing $1 billion of to the north in their EV strategy. And Aya is the key player with Managem on the mining front. They are organizing a conference, a Morocco Mining Conference in December from 3rd to 5th in Marrakech. I am inviting all of you to come and see us at the booth. It will be very interesting. So Morocco is coming through as a very good mining jurisdiction. We are there. We have many things going on for us. And H2 will be very, very interesting. So thank you for being shareholders. Thank you for being our analysts and being interested in Morocco, in Aya and the work that we do. We will talk to you in November at the Q3 call and that will be from the mine site as we will be having our Board meeting at the mine site in November of 2024. Thank you all of you. Have a great summer. And we'll see you in the conferences starting at Beavercreek.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
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