Aya Gold & Silver Inc. (TSX: AYA) reported its Third Quarter 2024 earnings, revealing a transitional phase with a focus on ramping up operations at its Zgounder and Boumadine projects. CEO Benoit La Salle announced that the company is on track for commercial production at the Zgounder mine by late Q4 2024, with a stockpile of 347,000 tonnes of ore.
Despite a lower than expected production of 355,927 ounces due to delays in new stopes, the company revised its annual guidance to 1.6 to 1.8 million ounces for 2024. Revenue for the quarter was $11 million with a net loss of $300,000. Aya Gold & Silver also spun out its gold assets into a new company, Mx2, raising $15 million and confirming high-grade mineralization at Zgounder.
Key Takeaways
- Zgounder mine on track for commercial production by late Q4 2024.
- Q3 production lower than expected at 355,927 ounces; annual guidance revised to 1.6-1.8 million ounces.
- Revenue for the quarter stood at $11 million with a net loss of $300,000.
- Successful spinout of gold assets into Mx2, raising $15 million.
- Robust exploration program with 160,000 meters of drilling planned for the year.
Company Outlook
- Optimistic about future production and exploration developments.
- Expansion plans on track, maintaining budgetary discipline.
- Strong educational and health initiatives in progress.
Bearish Highlights
- Adjusted cash cost of $19.93 per ounce due to disciplined mining approach.
- Minor delays in Zgounder expansion due to plumbing issues.
- Some production misses acknowledged, particularly in grade.
Bullish Highlights
- Record drilling program of 160,000 meters for the year.
- Positive exploration results, including a significant geophysical anomaly at Boumadine.
- Zgounder processing plant nears completion, with 99% done.
Misses
- Production lower than expected due to delays in new stopes.
- Net loss of $300,000 for the quarter.
Q&A Highlights
- Management discussed operational status and projections for Zgounder and Boumadine.
- Plans to trial long-haul stoping next year to reduce costs.
- Emphasis on disciplined mining practices and safety.
The company's operational updates included the nearing completion of the Zgounder processing plant and effective water management during the rainy season. Aya Gold & Silver is also prioritizing ESG initiatives, achieving ISO 9001 certification, and expanding community engagement through educational programs. The Boumadine project has identified over 352 million ounces of silver equivalent, with a resource update expected in Q1 2024.
Management remains optimistic about returning to expected performance levels by Q1 of the following year, with a strong focus on health and safety, and well-capitalized operations. The company is prepared to enhance efficiency and continue its robust exploration efforts.
Full transcript - None (AYASF) Q3 2024:
Operator: Hello, and thank you for standing by. Welcome to Aya Gold & Silver's Third Quarter 2024 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to Ruth Hanna. You may begin.
Ruth Hanna: Thank you, Operator. Good morning, everyone, and welcome to Aya's third quarter 2024 results earnings call. Today on the call, we have Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, CFO; Raphaël Beaudoin, Vice President, Operations; and David Lalonde, Vice President, Exploration; all calling in from Marrakesh. We will finish today's event with a Q&A session with the team. As always, please contact our IR team directly with any follow-up questions that are not addressed during the call. Before we begin, I would 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 November 14 news release as well as on SEDAR+ and on www.ayagoldsilver.com. With that, I would 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, everybody. Thank you for being with us this morning. Q3 2024 is a transitional quarter, but with key strategic accomplishment. We continue advancing Zgounder mine and it is on budget and as we had indicated, we were a couple of weeks late from the original plan but we've made up some of that time and we are commissioning on a going basis. The -- we're targeting commercial production in late Q4 2024. And for that, we have a stockpile as of the end of this quarter of 347,000 tonne of ore, which is ready for commissioning of the new plant. The expansion is 99 point something completed. You saw the video last week. You saw the press release. So we're almost there and we will be seeing more development in the very, very short-term. It is a transitional quarter on production. We've produced 355,927 ounces and the reason we're below our budget and below expectation is, we were developing new stopes but those were not ready for the -- this quarter. They are ready for the Q4 quarter, so the delay in reaching the new stopes and the fact that we have a very disciplined mining method now, we stayed in stopes that had lower grade and less tonnage, hence the reason for a lower production. We already see this being corrected in the month of October. We generated in the quarter $11 million of revenue at an average realized selling price of $27 per ounce, which is very good considering the general market of the past few months. The net loss for the period is not significant, it's $300,000 and the adjusted cash cost is $19.93. As you can see, we're also reporting a total cash cost of $23.47. However, we have to tell you that this cash cost include non-recurring expenses. The development of the six stopes that are now ready were not capitalized and were passed through as an expense in Q3, hence increasing the cash cost by almost $3.50. So this is non-recurring expenses. It was a contract given outside to a contractor to develop the six stopes and obviously when you use a contractor it's a lot more expensive than our own team. But we wanted to do this because we are getting ready for the plant to be up and running by Q4 2024. And as you know, by that time, we will be mining underground 1,600 tonne per day. So when we talk about commissioning, very often people think of commissioning of a plant. But there's also ramp up and commissioning of the underground mine where you have a lot of equipment, a lot of new people. And let's recall that it used to be a 700 tonne a day mine and now, it will be a 2,700 tonne a day mine. So there is ramp up at the plant, but there's also ramp up at the mine, mainly the underground mine. The open pit is going very smoothly. We are mining 500 tonne a day and we will be going to 1,000 tonne a day. So just for you to understand the cost, in Q3, we processed 42,000 tonne and the underground cost of mining was $85, which included the development of the six stopes. Our stockpile has a cost of $35 of mining. So you can see that it is really a very unusual quarter with non-recurring expenses. As I indicated, we already see a big changes coming through in Q4. Due to the fact that we were a couple of weeks late and the fact that the commissioning is now starting more in Q4, and then in Q3, we will revise the guidance for this year to 1.6 million up to 1.8 million ounces for the year 2024. As well in the quarter, we've done a spinout. So we have created the spinout to better value our gold assets. So we signed a term sheet with Mx2, a brand new company for the Amizmiz asset and the Tijirit asset. So the spinout is -- has been a very good success. They started the new team with a financing of $7.5 million and they ended with a financing of $15 million. So it has been a very good success and it's all being put together as we speak. On the exploration program, as you know, Aya is a very, very interesting exploration story. So we've confirmed high grade mineralization at depth and on lateral extension at Zgounder and we'll review some of those drill results. We grew Boumadine main trend from to -- up to 5.4 kilometers. You recall last year, we were at 4.2 kilometers. And we've also shown potential for new mineralization styles in one of the drill hole where we obtain close to 2% copper and 2,000 gram per ton silver. We have also in the quarter; we are preparing ourselves for new drilling, which has started now in Q4. And to the West, we have new anomalies to the East and to the South; we are currently drilling the new anomalies to the West. So quickly, a very quick review of the spinout. Mx2 is a private company for the time being. It's North Africa and West Africa because it has an asset in Mauritania. Amizmiz is a mining permit in Morocco. It has a resource that's not 42-101 that goes back many years of over 300,000 ounces at 13 gram per tonne. And right now underway, there's a 2,400 meter drill program to look at the extension and to start the understanding of the geology. The new team in Mx2 is on site as we speak with our team, the Aya team. And the drill program is underway. There's also the Tijirit asset, which we've done a feasibility study on. It has a resource of a little bit above 500,000 ounces. It's between 2 grams per tonne and 1.6 gram per tonne, depending on the deposits. Mx2 have an option to buy this from Aya over the next three years. They will be looking at fast-tracking this into development or more drilling and development and construction hopefully in the very near future. Our positioning in Mx2 after the financing will be 42% ownership for Aya. The company will have $15 million in cash and Aya will have two Board members sitting in a Board of about seven individuals. So going to Slide number 5, on the presentation, again, this is just a quick summary of where we are at the end of Q3. So you see the silver production is a little bit lower than what we wanted. But again due to stopes not being ready and because the other thing as well as I say we are very disciplined is historically they would open stopes, never close them and go to the next one and then maybe come back later. We don't do that anymore. We finish the stopes. We backfill them. We have a cement backfill plant. So we backfill them, so that we can come and take the stopes that are between two stopes that are mineralized. So we have a very disciplined approach and hence, sometimes it forces us to continue into some stopes where we have lower grade material. But globally, for the company as a whole, and for the project, it's the way to go to be disciplined to take all the ore that's available, do the cement backfill and then move to the next phase. So you have -- on Page 5, you have the production compared to the rest of the year. You have the grade. Again, due to the fact that we stayed in some older stopes, we were getting an average grade of about a 161 gram per tonne, which is absolutely too low for this deposit. But the reality is, we don't want to leave it there and not take it. So currently in October, we're already back to 190 and we expect this to continue to go back up. Mill recovery is always between 82 and 85, again continuing smoothly. But the real important chart here is the quarterly tonne process. We are at 83,000, which is a 19% increase year-over-year. And the two plants that we have function extremely well. And they are older, but they will keep running even once we have the third plant up and running. The -- on Page 6, you have a few financial tableau in French I said, charts, a few financial charts. You have your cash flow from operating activity, which is negative $6 million this quarter due to the fact that we've invested heavily into the development of the six stopes. You have the gross profit, which is again a little bit lower due to the fact that the grade was lower and profit and cost of goods sold go hand in hand. And with a little bit less production for the quarter, and a little bit lower grade, you have a higher cash cost, which we saw at $23, which we have on the next slide. Therefore, with that, you have a quarter where at the end, when you look at the financial statement, we are breakeven, which I find not that bad in a transition quarter where we are ramping up the plant, ramping up the mine. And we did hit this week 1,600 tonne per day from the underground mine. So we are there. We are where we want to be for this project to really get going. So you have on the construction front. You have that on Slide number 8, this Zgounder expansion, plus you saw the video last week, which is telling. But we are 99% done at the processing plant. The underground and the open pit are both operating very well. Tailings water management very good news on water management. We are at the beginning of the rain season and all of our water reservoirs are full. So that is again very unique. It's the time of the year we've had very good rainfall and we -- our water management system and the way we capture the water is working extremely well. So I'm pleased to say that on the water front, we're doing extremely well. Electricity infrastructure well that's built. You saw some of the pictures. We have green energy coming to site. We have as you know 20 year PPA. It's coming, it's operating extremely well and we're pleased with that. The -- on this Zgounder expansion, you saw that we started decommissioning. You saw the ball mill, the lubrification system that created a few weeks delay is now all back and operational. The issue that we had, it's all been fixed. We've done all the tests. The oil is pure. The ball mill can turn. And you saw the conveyor. So it's all working very well. We've also completed the -- our lab. So we have a very big lab at Zgounder where we can do all of our samples and our preparation, so that's also been completed. Taking you to the exploration aspect of our business. As you know, we are one of the largest drill program in Africa. We are drilling this year 160,000 meters and we have some three main zones: the Zgounder mine, the Boumadine project, and the Zgounder Regional. So at Zgounder the mine at the end of Q3, we had 25,000 meters done on a program of 30,000 meters. As always, tell David, David, if you need more drilling because you keep finding and you keep finding extension, just come back to us. And Zgounder mine has no limitation on the drilling that we want to do there because it's at site, it's truckable, it's something that's extremely important. Boumadine has 69,000 almost 70,000 meters done of the 120,000 meter project program. We should get to the end of the year to close to 120,000. We are now running at 11 rigs and one RC and we will probably bring a second RC for the deeper holes, so that we don't go core all the way. It will be less expensive and faster. So -- but we are running 11 rigs right now. So the first 60,000 meters was done on the expansion on the main zone and it expanded the main zone to 5.4 kilometers strike. The other 60,000 meters are being done on targets. And as I indicated at the beginning, we are currently drilling the West target, which is a very strong geophysical anomaly. At Zgounder Regional, we're almost done. We had 10,000 meters in the program. We are at the end of the quarter at 9,800. We are finding mineralization. We need to find a pocket where it's accumulated and we can mine it. The area, as you know, is very large. We've done all the geological work, spectral imaging, satellite, geochem. We've done stream sediment and we're looking at many targets and we are doing -- we are drilling all the targets that we see. And at the same time, we have the Tijirit asset that we bought last year. So we've completed the geophysics program because Tijirit has also a copper component to the gold and silver. And we are analyzing that as we speak. On Amizmiz, which used to be part of us directly now is part of us indirectly through Mx2. Well, this year, we did mapping and we did a bit of geology. But drilling, as I indicated to you, has started being managed by the Mx2 team and by our team. At Zgounder, on Page 11 of the presentation, we keep hitting some beautiful mineralization zones. To-date, we've drilled 8,000 meters in Q3 of a 30,000 meter program. Look at the some of the results again, 1,000 gram per tonne over 13 meters, 322 over 17 -- 2,800 over 8 meters. So it is as we expected a very nice loaf of bread, 1.4 kilometer long, 20 meter thick, all the way down to the granite, which is between 600 and 700 meters. When we get down to the granite, as we had expected, there's kind of an enrichment of silver at the bottom. And we're seeing that. So this is ongoing. It's a 30,000 meter program. We did 8,000 this quarter. And as I indicated, this is -- we will drill this as we keep finding extension at depth and to the East and West. On Page 12, you have the original geophysics of Boumadine. So Boumadine is our main exploration asset because it's got so much potential. And last year, with 94,000 meters of drilling, it gave us globally in all categories over 300 million ounces of silver equivalent at very good grade, or 4.1 million ounces of gold equivalent at 5 gram per tonne. So it's a beautiful project. We -- as indicated, we've drilled in the quarter 27,000 meters. So you can see it's very, very busy. We've drilled so far 69,000 meters. You see results continuously and you're going to keep seeing more as we have 11 drills turning and this is continuing. Throughout the year, we've added 18 new permits, which is because we're seeing the structures at surface, because we did the geophysics for the whole region. We did 13,000 line kilometers of mobile empty geophysics, but we've done the complete district and we have many, many geophysics anomalies and that those are being looked at. We do the geochem. We walk the ground. We do some sampling. And when we're ready, we will -- we drill them. So currently we are -- as I indicated to you, we are drilling the West, which is an important system. So on Page 13, just a few results of the quarter coming from Boumadine, 1,000 grams over 13.5 meters, 322 grams over 17.6. So you can see we have continuous resolve on this 5.4 kilometer slab, which we do see over 6 kilometers in geophysics. It's continuous, it's there. We have drilled 60,000 meters into it. And we will do a resource update for Q1 of next year. But the highlight is on Page 14, it's the high conductivity anomaly. So what you see at the top, on top of the two potatoes or cherries is the surface. You can see the drill results on Page 14. We've drilled Boumadine, which is the one on the right-hand side. You see on the left-hand side is a similar anomaly and the top is mineralized. So we know the top of Boumadine is mineralized because we already have discovered 352 million ounces of silver equivalent. But what's very interesting right now, and you see it on the bottom picture is, we are drilling that long hole that is going right into the eye of the anomaly. So as of now, we are just touching the green. So we're about 900 meter into that drill hole and we're just beginning to enter what we hope to see, the mineralized zone, which has the same signature as what we have at surface. But this is geophysical. So is it exactly there? It's the beginning of a program. Now, why we're drilling this because we want to understand if this is a pore-free system, if this is mineralization at depth. Because look, if you look at the surface and how small it looks from where we are now, and we know that this is 5.4 kilometer long and 300 -- more than 350 because 352 million ounces was on strike of 4.2 kilometer and now we're 5.4. And look at the system underneath. So this we will be entering the zone, I would say in about a week to 10 days, of course. And we are watching and the geos are giving us feedback of what kind of rock they're seeing and where we are going. So this is Boumadine. You've got the lateral extension to the West to the East to the South; it's still open to the North. And you have this at depth structure that looks very, very interesting. On the ESG side, to complete this presentation on Page 15, look, we are very, very serious about health and safety. We only had three lost time injuries in the quarter and they were not very, very grave. It was just some small injuries. We've given 5,000 hours of training in the quarter, which is a 90% increase year-over-year. And we take this seriously. If you are with us on LinkedIn, you do see a lot of pictures of some of our employees who put up pictures of the training, which is health and safety. It can be education. It can be emergency. All of that you can see. I'm also very pleased to say that we've received the ISO 9001 certification. It was a team effort at the mine site. So from geology, all the way to health and safety production, we've received the ISO 9001 certification. We've also submitted all of our data for the carbon disclosure project. That the, our ESG loan with the EBRD is an ESG-driven facility. We have received all of the money in 2024, because we've met all of our ESG requirements. So that is something that we take very, very seriously. With the communities, it's also going very well. I'm pleased to say that our program in first school showed 68% increase year-over-year in the percentage of students opting for science projects or science streams. So this is really very, very interesting. And we are now taking our program to second middle school. So primary school, high school, in Morocco, they call this first school and second school, middle school. But it's -- we are very much involved on with education, online education, health and safety, health for the communities. We are now starting a mobile clinic, pediatric. You remember last year, we added for the eyes. We've had diabetes, we've had many, many clinics and livelihood with the saffron project, with agriculture, we have water pumps and we are really very much involved. We've added some signals at the saffron and vegetable farms, and -- which is just for health and safety. So globally, it's been a very, very, a good quarter for some of the milestones. It's been a little bit low on the production and we agree, but we're building the future. We're not just trying to maximize one quarter. And if we have to, and we don't want to compromise the mine. So when we need to stay in one phase and finish it so that we can backfill it with cement, we do it and knowing that it's just better times ahead. So the takeaway is again at Boumadine 120,000 meters of drilling ongoing interpretation major, major exploration program on the West and at depth which is very interesting. While the major strike, the main strike continues to expand. As Zgounder 40,000 meters of drilling, you recall 10,000 regional, 30,000 at the mine ongoing and again on track. Probably, we will exceed the 40,000 meters and at Zgounder silver mine expansion well, as indicated, it is on track, it is on budget. A budget that was prepared in 2022 that saw -- some inflation in transport. And today, we are within 1%, not even less than 1% on budget, we reviewed that this week and it's -- we can still say today we are on budget. We cannot say we're on time because we had that short delay with the plumbing of the lubrification system. But within three to four weeks, we're close to on time, but we are on budget. So thank you very much for your time. And I will turn it over to the operator for the question period.
Operator: Thank you. [Operator Instructions]. Our first question comes from the line of Puneet Singh with Eight Capital. Your line is open.
Puneet Singh: Hi, thanks, guys. Hi Benoit and team. Just to get a little nitty-gritty this quarter on the modeling, could you expand on some of those underground issues you were having on those stopes and the rework you have to do? Just trying to understand the grand scheme of things here. Those four stopes being rehabbed, are they different from the six stopes in development right now? What's the thinking there?
Benoit La Salle: Thanks, Puneet. We are all together here in Morocco, we just came back from the mine. So we could not be better prepared to answer your question as the whole team is with me and we are -- we have reviewed obviously with the Board for the past three days the operation of Q3. And I will pass it over to Raphaël, who is, as you know, our VP, Operations and is in charge of the team, in charge of the construction and of the operation. And I would ask Raphaël to give you his view and a bit of feedback on what we saw and on the plan going forward.
Raphaël Beaudoin: Good morning, guys. Yes. So this quarter, I wouldn't say we have issues. We are ramping up. We are ramping up the mine. We have three folks in rehab. That's just as we learn more on geology and we refine our geological process. That's okay. I would say that the lower grade in Q3 came from our access drive [indiscernible]. We are developing new stopes and as we do the drives, we get ore and as we do the ore drive through the body, those tend to be the lowest grade of the stope. And as we go on higher cuts, on higher ranges on the stope, we got the higher grades on the stope. We also have three stopes at least that we did the ore access, we did the ore drive, we got the primary reserve, and we are ramping up our cement plant to backfill them. So we have three stopes that are awaiting. Just as we do the commissioning of the cement plant, we are integrating the cemented rock fill in our mining sequence and we need to do that correctly. So it's going good. And as we commission the cement plants, we'll be able to backfill those primaries, mine the secondaries and go to the upper cut. Q3 is very important and so is Q4. We need to get ready for Q1. Services are ready. We've been doing a lot of stope development in the East where we have good grade, but we need to mine it properly and that is mostly on cement backfill. And as we fully integrate our cement field into operation, we'll be able to continue mining the first trench and to do the drilling.
Puneet Singh: Okay. Got it. Okay. So that sounds good. Seems like you're working through it in Q4 hopefully better starting next year. I guess, my second question was open pit seems like it's doing better for now, right? And could you maybe look at sequencing it more open pit ore to get better grades in the coming quarters, or are you just going to go as is?
Raphaël Beaudoin: Yes. Happy to talk about the open pit. Indeed, the open pit is going very well and we are ramping it up. And we even found some extension a bit north that wasn't originally in the pit shell; the entire team is quite excited about that. And the open pit was always there for two reasons. Well, the first one is obviously to recover all the top ore that cannot be taken on the ground that's obvious, but also to make sure we have the flexibility we need to do this mill and the my ramp up. So with these small extensions North and South, we still working on it? Absolutely. We are above 500 tonnes in the open pit now. We're targeting 1,000 before year end. We even reach a 1,000 depending on the strip of processed [ph] every month. And we started a second shift on the open pit and it's going -- again, going quite well. I mean, in October, in the open pit, we had about 200 gram per tonne. The strip is as expected. So yes, we will sequence it to get as much as we can from it, especially to give us more flexibility. It will also help to drive cost down, especially in Q4 and Q1, where we are going -- continuing the commissioning and ramp up of the mill.
Puneet Singh: Okay. Got it. That sounds all good. I guess, my final question is just on that anomaly, Benoit, when do you -- do you think you'll expect some results before year-end on that or it's probably Q1.
Benoit La Salle: You mean on the big potato underneath the Boumadine trend, is that what you refer?
Puneet Singh: Yes, 5 kilometers. Yes, to the West, yes.
Benoit La Salle: I do call that is 5x a day. And we're following the drilling. We're all following the drilling. We are now, as of this morning, David told us we were at 1,000 meters. So we're entering the zone. The rock sequence that we wanted to see is there. And we are a couple of days away, a couple of days maybe 10 days, 15 days away. Obviously, this is going to be top priority at the lab, because the turnaround time at the lab, when you do 160,000 meters of drilling, we represent 80% of the capacity of the country, but that will have top priority that it is there, the team is there. As you understand it, it's like a new theory that we're testing due to this massive geophysical anomaly. So yes, we hope to have results before year-end. You understand, it's not one drill hole that's going to make it or break it, but the anomaly is strong. And also when you look at the math, the same anomaly or the same strength is also to the West. So when you look at the West and we walk the West, you have the surface anomaly, but you also have the anomaly at depth, which is identical, but even bigger than the one under Boumadine main trend. So yes, it is a priority. The drilling to the West is also a priority because that surface and again, the geochem, when we walked around, showed us a similar type of rocks. So yes, we're very pleased with the 1,000 meter done so far and we are expecting results.
Puneet Singh: Okay. Great. Look forward to those. Thanks, guys.
Benoit La Salle: Thank you, Puneet.
Operator: Thank you. Please standby for our next question. Our next question comes from the line of Kevin O'Halloran with BMO Capital Markets. Your line is open.
Kevin O'Halloran: Hey, Benoit and team, thanks for taking my question. Just wondering if you can give us a bit more color on the backfill issues that you mentioned in the press release. And are these resolved now?
Benoit La Salle: Absolutely. Thank you for asking. And again, I'm going to pass it over to Raphaël and just to give you a bit of explanation on where we are and the reason for the commissioning took a little bit more time.
Raphaël Beaudoin: Yes. So we started commissioning, it went well. And I mean, this is literally a small field on the cement tank that was leaking. So we fixed that. We changed a couple elbows in the piping that get a bit clogged up as we're doing the testing and we failed the first stope. We're getting the parts in FedEx (NYSE:FDX) and we're starting back up. So I mean, it's part of commissioning. You commission things work, you need to change a few parts and we're back in business. So essentially this is already fair.
Kevin O'Halloran: Great. Thanks for that. And then you mentioned the grades are coming up. Just wondering if you can give a little bit more granularity in terms of what the grade profile we should expect over the next few quarters as you ramp up.
Benoit La Salle: Well, we are not yet giving guidance for next year, but Raphaël, maybe you want to comment on what we're seeing right now.
Raphaël Beaudoin: Yes. I mean, we mentioned this in the MD&A in October in the open pit we had above 200 gram per tonne, so 209, which is in line, what we were expected and which is also in line with our mine plan. Some large benches that might have a bit more dilution and a small one depending on it, but we're quite happy with the grade. As for the underground, we do see a pretty good increase in October too. And again Kevin, it's always the stope drive and the first ore drive before we do the raises, those always a bit lower grade and it's normal as we develop more stopes initially the grade over. So to answer your question, it would be what we've been historically mining and some stopes are higher, some stocks are lower and we have stopes right now above 200 and we'll continue to have some.
Kevin O'Halloran: Okay. Great. Appreciate that. That's all for me guys. Thanks a lot.
Benoit La Salle: Thanks Kevin.
Operator: Thank you. [Operator Instructions]. Our next question comes from the line of Eleanor with SCP Resource Finance. Your line is open.
Eleanor Magdzinski: Hi, wonderful. Hi Benoit and team. I just have a couple questions a little bit in the details on some of the operational here today. Some of them were already sort of covered. But the first question has to do with the rehabilitation. You had mentioned it before, but I kind of missed maybe one part of the response. Is this kind of rehabbing the browse and access points to long haul stopes of the four that are kind of undergoing rehab or does any of it have to do with kind of fine tuning, blasting and timing to prevent hang-ups and things like that?
Benoit La Salle: Thanks. Again this is actually for Raphaël.
Raphaël Beaudoin: So at Zgounder, we have lots of high grade stopes closer to a historical stopes and when we get closer to them, we need to get the design right to make sure to mine the entire wall. And we have to be careful for historical back here. So when we get to the stope, we always reassess our design and then we need to make sure to have the proper filler to improve recovery and make sure we keep it safe. So this is why sometimes as we do the first hard dryer in a stope, we always evaluate if we have backfilled size from a historical stope, especially where these three stopes in particular are placed. So just a matter of taking the time to assess the wall thickness before we can take the other task. And if we're a bit too small, sometimes we need to push the access a bit East or a bit West to make sure to leave us there.
Eleanor Magdzinski: Okay. That's really helpful. And so of all the stopes that you have currently developed or are in development and are being rehabbed, are these all long-haul kind of access or plan to be long-haul stopes? Are there any cut and fill being planned for these initial stopes I think?
Raphaël Beaudoin: So currently at Zgounder, we don't do long-haul stopping. We have a plan of trial next year and I always say the same thing about long-haul. Long-haul is something we want to do as Zgounder. It would bring the cost down, but it's not something that we need. So currently our cost production is only in cotton field and it sure would be nice to introduce long-haul next year. And we're actively working on that as part of our long-term plan. But we don't need it and when we do it, we'll make sure to success.
Eleanor Magdzinski: Okay. Great. So then of these current stopes that you have, there's going to be about 19, the ones that are rehabbed here are kind of up and running. What kind of mucking rates are you kind of anticipating from these areas in general? I guess, trying to get an idea of how many stopes you sort of need open to achieve the projected like steady state production basically?
Raphaël Beaudoin: Well, we're on track for a stockpile that we have, so it's the first thing to mention. And we're also on track for the mining rate of the open pit, which has quite a bit of flexibility to increase. So we're not too concerned about the underground mining rate. We need to improve what we had in Q3, don't get me wrong and that's where I'm going in October and November. Now if you ask me, the final mining rate or what we're looking for the underground mining rate is something between 1,500 and 2,000 tonnes per day that we need to reach in underground, which we'll get to in 2025 and depending on the sequence with the open pit. So we will remain flexible with both the open pit as we learn more about the opportunities we have there. And we will take a reminder underground to make sure both open pit and underground we have the funds that we need.
Eleanor Magdzinski: Okay. And I guess, also one other question on the backfill. So it mentioned there's a backfill station that's currently underway. Is that like are all the boreholes drilled and inserts in place and kind of trunk lines and piping there? This is just part of the commissioning that you were just sort of talking about moving through or is this a new backfill station for a different area that you haven't quite accessed yet? So just try to get some more color on that statement from the MD&A.
Raphaël Beaudoin: Okay. Yes, maybe I wasn't clear enough on that. I mean the backfill plant is all installed. We have service holes and access points for cement on every level. And we have mixing base to make the cement with the waste rock. So everything is installed. I mean, we're talking about commissioning. We're aggressive at Aya. We thought we'd do it in two days and it turns out it takes like more time two days, more like a month-and-a-half as we need to change a couple parts and it's all installed. We just need to get it back up. And this is happening as we speak.
Eleanor Magdzinski: Okay. Great. So it's just the main backhaul station. I wasn't sure like sometimes, like if you have little substations underground, people might call them stations. So I didn't know if that was something separate that you were referring to, but that makes a lot of sense. That's really helpful. And then I guess, my last question, sorry for hogging the line on not all of these details, but for ventilation, so for the last 1925, raise to the upper levels. So that's planned to be commissioned by the end of this year with kind of stopping planned basically right afterwards. So that vent trays will kind of open up the upper levels to where a bit more of a higher grade and things are as well. I just wanted to kind of confirm that that's still kind of the case. Is anything else hold up? Not hold up, but is there a sequencing bit on like on stopping that's required ahead of accessing those upper levels or once the vent trays is in place, can you start some of your access drives and begin stopping kind of right afterwards basically?
Raphaël Beaudoin: Okay. So some ventilation, most of that work was done in 2023 and early 2024. We have two ventilation trays, one that goes from surface to main level 2000 and another one that goes all the way down to 1925 exhausting straight on surface. So both our main vent trays are done and we also have all of our secondary vent system installed all the way down to 1925. As we go down to 1900, we'll need to have the, inter level tray, which is done very quickly and we also have the secondary ventilation. So any -- we never had any issues in ventilation because we're on a mountain and most upper levels they go directly outside. But for levels sub 2000, we've completed the secondary shaft all the way to 1925 and we can use secondary ventilation 1900 until we get the other trays. And all the engineering is done for the ramp moving down. So all of engineering for sub-level 1925 is complete all the way down to granite with electrical pumping vents the service. So that's actually going very well. And no, no it's not an issue. It's not something that we worked out a long time ago. That's okay.
Eleanor Magdzinski: Okay. Great. And then yes, I guess, the last question on the -- I think I saw it in the press release. I just want to double check, what's the current processing rate from the new plant? Like, things seem to be going really well there since the ball mill kind of adjustments and kind of re-commissioning that whole spot. But just yes, I just wanted to check what the current processing rate is.
Raphaël Beaudoin: Well, thanks for asking, Eleanor. I mean, we're always signing it for mill ramp up and nobody's asking, so I was looking forward to talking about. So yes, let's talk about it. I mean, crushing plant is fully operational. That's been on point for a while. We have excellent milling rate. We're still in commissioning, so I'm just talking about the milling rate here the rest of circuit we still need to go through. I mean, we've reached 100 tonnes per hour. The availability is improving every day. I mean, on milling rate, we're above main plant even. So, we've been leaching for about a week now, a couple of weeks ago, we commissioned the Merrill Crow and we've been producing our first silver cake for a few days now. We hosted the Boumadine site last week. The mill was running and we did silver ore. We're very excited with how the commissioning is going and with the commissioning team. I mean, the entire team is working day and night to get this going and we're very excited that we started producing silver cake. And there's no real bottleneck. I mean, it's just small tweaking and tuning and programming every day and we're very excited. So we started producing silver cake and it was a fun week for all of us.
Eleanor Magdzinski: That's really great to hear. Yes, I'm glad I asked that question. No, because it was such a quick turnaround from, I guess, the initial announcement of having to make some edits. Let's call it, to the entire mill circuit and yes, that's really great to hear. It sounds like things are going quite well there, so. Yes, that was all my questions for today, but thanks so much again for the time and for answering all my questions and all the best. Look forward to talking to you guys next quarter.
Benoit La Salle: Thank you.
Operator: Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back to Benoit for closing remarks.
Benoit La Salle: Thank you. Thank you very much for attending. Thank you for the questions. Thank you, Eleanor, for asking how the new plant is coming because at the end of the day, that is so important. And it is -- we have done this build on time, on except for, as I mentioned at the beginning, except for the little problem with the lubrification system. We did it on budget. All in all, globally to build this kind of a plant in Morocco is exceptional. The cost is below anywhere you would see around the world. And the plant is extremely robust. We have seen it. We were there this week and it is extremely robust. And I believe that the ramp up is ongoing and it will be very interesting to see the power that the plant will have. Now, one element that was presented by Raphaël is we have flexibility. We have three sources of oil. We have the open pit, which is also giving us very positive surprises. We were very careful at building a stockpile. We originally planned for 200,000 tonnes. At the end of the quarter, we were at 357,000 tonnes. So we have half a year or hundred and some days of ore ready to go that's already been mined, that is in inventory. Then we have the underground mine, which, yes, is needs to ramp up like a plant. But it is being done. It is an increasing capacity. I did mention that we did hit one day in this quarter in Q4 of 1,600 tonnes per day. That's not where we are today, but we did it. The teams have been built. We now have 1,300 employees on site. The teams are going to grow still a little bit. We discussed that this morning. We're going to grow the team especially for the underground mine. So flexibility in mining is key. And the open pit is better than expected. And now some of you who've been to site, we're saying it's an open pit. It's not an open pit. We're meaning that the mountain. The first 200 meters is above the base camp. So there's a mountain of 200 meters where the mineralization is in the mountain. So we're meaning up that mountain right now slowly. We're just at the very, very first level and the grade is good. We see extension. The contractor is doing a very good job and we will take the rate from 500 to 1,000 tonne a day. We have the stockpile and the underground is moving up and it's just getting better. We and -- Raphaël said it, we want to be disciplined in mining because that's extremely important to be disciplined. And if we do hit lower grade material, we will take it out. We're not going to run to the next stope because we want to get a better grade discipline in mining is the key and we are extremely disciplined. We are also very disciplined with the health and safety. So if something looks a little weak or if we need to step back a little bit to secure the stope, we do that. We have a very good record of health and safety. We want to continue that way. No casualty. Our LTI is extremely good and we want to continue. So you have a company that is well capitalized, that has a plan that's 99.999 built, that is in fruition and take a look at the last video. It is beautiful. It's wide, it's open, it has capacity to grow and it's just about done. We also -- and the big story for Aya is the exploration of site. We have between 16 and 17 drills turning. Sometimes the little RC drill is not turning, so it's not powerful enough at the Boumadine, but it extremely -- it's a very big program. Raphaël was telling us this morning that he had 80 people on his team running exploration between Boumadine and Zgounder and Zgounder Regional. So when you have 160,000 meters of drilling on many targets and on structures, well, you do get very, very good results. So when you see the Zgounder new plan coming to life, when you see the drilling continuing, the exploration results continuing, the stability of the country we're in, as you know is extremely jurisdiction is a key component of mining these days and we are in probably one of the best traditions in the world for mining. The team is extremely motivated to show you and the world how strong that project is and will continue to be. And on the corporate social responsibility side, we continue to have fantastic success. We will put out a video most likely next week on the saffron farms that we are sponsoring. You will see it's very, very nice, extremely interesting and that's part of our social license to offer. So that concludes this Q3 call. It's not a quarter that we're pleased and we saw some of the notes this morning and it said, yes, there's a miss on cost and there's a miss on production and there's a miss on grade. But at the end of the day the only miss is on grade because if you missed on grade, if you look at the throughput at the two plans gets better than last quarter. If you look at the availability of the two plants, it's 96%. So -- and the cost is we've capitalized development. So I agree that it's not a quarter that we like and we know that it was a great issue and we addressed that and Raphaël is explained why. And we believe that going forward things are coming back to where they should be. Thank you very much. We will see you in Q1 for the year-end call where we'll have a full year of operation. Keep watching our little video. There will be more to come on corporate social responsibility and on the plant as well. And we look forward to keep you informed. Thank you very much.
Operator: Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.
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