Aya Gold & Silver Inc (Quebec) (AYA) 2023 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to Aya Gold & Silver fourth quarter and year end 2023 results conference call. (Operator Instructions). Please be advised that today's conference is being recorded. Ms. Hanna, you may begin your conference.

Thank you, operator. Good morning, everyone, and welcome to Aya's fourth quarter 2023 results conference call. My name is Ruth Hanna, [Aya's] IR and Communications Manager dialing in with some of the IR team in Montreal on Morocco this morning. On the call today we have with Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, Chief Financial Officer; Raphael Beaudoin, Vice President, Operation; and David Lalonde, Head of Exploration. We finished today's event with a Q&A session with the team. Please contact our IR team directly with any follow-up questions, but 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 all the forward-looking statements are contained in today's news release as well as on SEDAR plus and at 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.

Thank you, Ruth. Hello, everyone. We can summarize the year as saying that 2023 was an exceptional year for Aya. We've delivered a very strong year with record revenue record earnings and record cash flow. We generated $42.8 million in revenue, and we generated $21.2 million of cash flow. The net profit of $5.3 million, is that a 281% increase year-over-year. Furthermore, we have low total cash costs at $12.50 per ounce sold.

For and we are also on track to deliver our plant expansion, the 2,700 tonne per day when their mine expansion. We are today on time and on budget for commissioning in Q2 2024. To start the commissioning, we have a stockpile of 250,000 tonnes of ore at year end for commissioning of the new mill. And we've also have a combined mining rate underground and open pit of 2,300 tonne per day at year end. And if you remember that we need to be at 2,700 tonne when we will achieve nameplate capacity.

We're fully funded and we have a really healthy balance sheet. The cash at the close of the quarter stands at $17.3 million US and that does not include the$57 million a bought deal in Carillion, $77.6 million. That was done in Q1 of 2024. We've also delivered the milestones on the EBRD-CTF financing loan and the reason why would they have disbursed, so far as per the schedule.

So, we've continued to invest in our growth opportunities. You will remember that last year we doubled the Boumadine budget, extending the strike length of the structure to 4.2 kilometer and discovering new types of mineralization. We've also signed a 20-year renewable PPA, which will be connected to the -- which we will be and we will be connected to the grid shortly. And that has also an effect of reducing the cost of energy for the new project. We've increased our land position by 20% at [Zgounder] and by 200% at the Boumadine.

So, this will take me to the next page, if you're following on the slide to page 4, and just to review quickly the actual production versus the guidance because we know it's extremely important. So we have for the year 2023, our guidance was between [1.7 million to 1.9 million], and we've achieved 1,970,000 ounces. So beating our production guidance. Our cash cost in the guidance was around -- was estimated at 1440 and we ended the year at 1250, and we all know that this is in the low quartile of our sector.

The average grade process, our guidance was 264. We were at 250, which is in line and the mill recovery, so the KPI for the minerals and mill recoveries, the mill availability were all good that mill recoveries of 86% and the guidance was 86%. So we've done extremely well. And in the total tonnes processed, we were budgeting [$245,000] for the year and we did [$281,000]. So at the place of work above nameplate capacity throughout the year, we actually had over the nameplate capacity of 700 ton per day and the average for the year, 772 tonne per day. So we've done extremely, extremely well.

Going to page 5, just a quick summary of the last five years, you see the production growth when we took over in 2020 to 2023, obviously 2024 and further, there will be a major change as the new plant will be commissioned and in production. So you see the silver grade process as well at the bottom from 2019 to 2023 being constant between 225 and 250. The recoveries when we arrived were around 60%. And now we are more towards the 86%, 87%, which is excellent, and the ore process as discussed that is based on the availability of the plant. We now are extremely good with the availability of the plan, and that's why we have the ore processed at 281,000 tonnes for the year.

Moving on to page 6 of the presentation. On a cash flow basis, it's quite interesting to see that today for 2023, we're looking at $21 million of operating cash flow compared to the previous year is a record year on gross margin. We are also on a record year, as you can see on page 5 -- on page 6, sorry, cost of sales is a function, of course, of our cash costs and all cost, is quite aligned with where we should be at $25 million (sic - see press release, $27 million) sorry, of cost of sale. And the cash cost is, as I said, extremely good being at $12.50 per silver ounce sold.

So, page 7, is just the picture of the new construction. I know we'll give you a video every month that you watch carefully, but it's coming very well. And again, we can say that this project is coming on time and on budget. So it's there are a couple of weeks left and it will be I think we will start commissioning towards the end of Q2.

So, on page 8, you have there's good their expansion. We have some statistics. So, we are on budget. We have incurred $110 million so far and we have the other $38 billion committed. So, we are within budget and the CapEx that we had identified in 2022. The underground development is on track. That is doing extremely well. 90% of the lateral development is done 80% of the vertical development is done. And if you recall, the most sensitive item of the project expansion was to make sure that the mining was going to be at 2,700 tonnes a day. So that is on track and developing extremely well.

The plant is all on site. So now it's a question of assembly. So the power line, the substation, the Merrill-Crowe at the silver room, the ball mill and obviously all of that is on site and the it's just a matter of now of putting it all together. So we gave you a little progress chart of the processing plant, the underground and the open pit mine, the tailing, the water management, the electrical infrastructure and the on-site infrastructure. So again, moving smoothly and all this being done in with our team and with our EPC contractor.

So, you have here a picture of a brand, new water reservoir and tailings dam. Now, you know that our $100 million loan with EBRD is ESG driven. So those elements were extremely, extremely important. And at the (inaudible) site every quarter, they review the work that's been done and as you can see, this is his state of the art execution for the water reservoir and the water basin and tailing that. The pylons are 90% up, whereas we have a few left to go. The cables have been pulled and the end of this station has arrived on site.

The exploration program is always a major focus because as you all know, we create value by increasing the ounces in the ground and by finding new deposits. So for 2024, and we've put that in the press release of this morning. At Zgounder, we will be drilling at the main mine. We will be drilling 15,000 meters minimum because often over the years, once we've been through the budget, we looked at what needs to be done and we increase it.

At Boumadine, we've completed last year, 76,000 meters. This year, we are going to do 120,000 meter. That's the budgeted amount of drilling, which is 60,000 meters on the known structure, there which we refer to as the 4.2 kilometer strike, which we follow our geophysics and 6 kilometers. And we will also do 60,000 meters to test new targets. Because the team has identified parallel targets that are within our permits, the reason for us to amend the number of permits that we have. So we will divide that half and half. Obviously, the second half to 60,000 meters is something that will move based on what we find with geophysics. And that's something extremely important. We are doing the geophysics right now. It's really generating targets and its ongoing.

It's Zgounder regional also a very important aspect of our strategy as we are looking for an additional mine or deposit to feed the three plants that we have as Zgounder that we will have. So the budget there is 10,000 meters. We're looking for similar mineralization that we have as Zgounder, which is the silver, but we are, we also are doing the geophysics at Tirzzit. And that we know with a copper silver mine, historically, we know that there is a structure there is it just a structure for digital mining or can it be a structure for us and we will find that out with the geophysics geochem and of course, drilling throughout the year.

Now there's a new project that we're going to do a little bit of work on Amizmiz. It is a project that's been in our portfolio for a long time. It was actually one of the first project that this company acquired in 2010. It was a [gold mine] historically is a very high-grade mine and the team have looked at it and believe that it's worth a bit of work, not a lot of work, but to go and find out what is really the size of this deposit. So that's something to look forward to as we -- as the year goes by.

On page 11, you have, as Zgounder the main structure that we refer to every time we make a presentation and we've been drilling this. We're a little late on our drilling. So last year we were supposed to do 20,000 meters. We didn't do it because we focus more on the development of the underground for the mine, and we did not have access to the lower level to drill.

So we know that we were a little late, but we're making it up right now. Something very interesting happened in the past month and is we found that the real light, which is the footwall of the deposit, we found that the realized was carrying mineralization. And one of the drill hole that went into the real light gave us a 1089 gram per tonne over 13.5 meters.

So that was quite a surprise. Of course, David and the team immediately went back to the core Shack, pulled out all the drill logs and all the core that went into the realized to reassess it. It wasn't the least locally and with everybody on site that the realized was that mineralized until we then got those resolved and found out that is, it is, it could be mineralized. So that's a very interesting development.

Now on page 12, you have the result of the work that has been done by the team on site in identifying another Zgounder look like because that's what we're looking for to debug a little bit this Zgounder mine and not -- and when I say debug is because it's there's a lot -- it's going to be very busy at 2,700 tonne a day. That is the traffic capacity of that deposit. I mean it will be many trucks up and down and so we would like to find another pit and other underground structure where we could and autonomous mining that could also feed the plant.

So the team has identified similar structures choose Zgounder on the far East. And we are currently drilling the one to the far East and there's one to the South as well, which we are currently drilling right now. So we are looking forward for these results and the team is very positive. It's the same geological sequence, that we have as Zgounder.

And as we know, historically [management] at Imiter, which is a look-alike identical, but pure silver mine, they have discovered around their main pit and their main underground mines, many satellite deposits and that's what we are looking with this work that we're doing.

Now coming to Boumadine, which is on page 13. Boumadine, is a very, very interesting project. As you know, we've talked about it. We've had very good results, very good drill result with we raised the money in Q1 because we buy now that we're going to put that money to work at Boumadine. So we have budgeted, as I said, 120,000 meters this year. Again, 60 on the main zone, 60,000 meters of those these new targets that are being generated, which we are some we already have. Others will come from the ongoing geophysics. It's really, really interesting.

Now you also see that we're adding permit. So, at year end, we were we had added four new permits. We announced the more permits last week, and there will be more coming. We are in the process of hopefully controlling the whole district as we did at Zgounder by the way, here what we have at Zgounder we have done a lot of ground and now we have close to 400 square kilometers of ground and we have the most of the permits that we want to have as Zgounder.

We want to do the same thing at the moment. So our land position, which originally was -- at the very beginning was very small. It's now it was 36 square kilometers, the original mining permit. Now we are at 141 square kilometer. And that is we'll keep going. Last year, we did some metallurgical testing because it's always a question that we all have is how are we going to treat this material. The initial tests gave us mid 80s to high 80s recovery using different methods.

We have not yet decided on the flowsheet, we've looked at for method. We are continuing as well as the team on this. And we are continuing to work to add to have the optimal flowsheet and methods that we will be using. Obviously, it's a function of the ore and David is finding different types of ore to the north or to the south. So all of that will be taken into account. But ultimately, Boumadine imagine is now becoming a Tier one project in size, in grade. And it's we will be spending a lot of money and a lot of time on this project.

On page 14, you have the geophysics that we've been using and some of the hits that we've had over the year 2023. So you see that the grade is 1,000 gram per tonne over 23.5 meters. I mean, it is it's a very good grade project. It's gold, silver lead and zinc and a little bit of copper. And it's really is well set in this -- as you as you can see with the geophysics in the pyrites structure. Now furthermore, if you look at as the press release where we announced a result, there was figure number three was showing some grab sample towards the north where copper was really, really present 6% to 12% copper. So those were grass samples. So obviously, we have, we know what they mean, but it's also interesting to see that there's copper in the system.

But [I mean this] is again, I want to take much more time, but it's a small project yet, but we see that with the gold price and this currently at the historical mining in this historical resource, which is it's not ours is was there way before our time they were looking at about 13 gram per tonne. It's an underground system, but we're going to take the work that was done historically, we will review it. We will do a little bit of work and we'll see what's out there before we do a corporate transaction on it or we will we need to know what's there before we do. We make a decision.

Now to close. Of course, the ESG is extremely important in this world of mining for us, it's always been it will continue to be to the point where we teamed up with EBRD for $100 million facility. So, the ESG component is extremely, extremely important.

So on health and safety, we've done quite well. We had very few lost days. We had a lot of training, 10,000 hours of training. We had no fatalities, which is something you never want to have. So it's in 2023 has been a big year of transition of training, but we are pleased with the results. Obviously, 2024 is a more delicate year because we're increasing the number of employees. We're increasing the throughput, we have more production. So, we have to be extremely careful, and we know that and we're acting accordingly.

So the Clean Technology Fund, the milestones were achieved this year, Milestone number one. So that reduce our rate on the CTF tranches to 6.98%. We have other milestones to meet over a year. And as we meet them, the rates are going to be coming down even further. On the community Allyes something at the great importance to all of us. Education we organize classes and online classes for the schools in our community health.

We have mobile clinics, and our mind doctor is also available for the community. Water access, we have villages in securing water access, and we do that for all the communities where we are and as well, we have the economic project which creating of sustainable development and we launch a Saffron farm and we've had our first harvest. You may know that but Morocco is the Saffron producer like Iran and in countries in the Middle East and the quality of the Saffron is extremely high.

So to conclude, a year it was a very good year for [20 for IFA], 2023 silver production and cost guidance done. The milestone on the for Zgounder silver mine expansion, not totally done, but all most done. And again, you're following it with their the videos that we put out all the time.

These Zgounder underground and regional drilling that's ongoing. We did some it's ongoing this year to complete all the drilling that we want to do. The Boumadine resource estimate is just about ready. It will come out in two weeks plus or minus a few days. We're just about ready. It's an ongoing process, but the drilling is ongoing. Out of the 120,000 meters that we wanted to do this year were already asked 12,000 meters already.

So we're 10% done. And it's ongoing. We will have or we have I mean, it's a question on day seven drill turning and on the ESG front, which is, again a major component. We didn't meet all the milestones, EBRD as disburse $85 million of the $100 million. EBRD going to site in a couple of weeks with the team, they will review again on the their questionnaires regarding the loan and we will draw on that $50 million -- that last $50 million in the month of April or June.

(multiple speakers) May-June sorry, May-June.

So, operator, this concludes the official portion of the presentation, and now we will open the floor to questions.

Thank you. (Operator Instructions)

Puneet Singh, Eight Capital.

Thanks. Good morning, Benoit [and team]. A couple of questions for me. You guys have a [habit] of beating guidance to better again this year and production costs be to I know this is an expansion year, so probably better to [hear] on the side of caution. But just wondering how much conservatism you're baking into those numbers, especially on the grades because I remember the tech report was calling for you to mine some of that 300 gram per tonne material upfront. So just asking, how conservative are you being there because it will be a cost driver. And do you think it could be into some of that higher-grade material by the end of the year? If things go well?

Puneet I'll pass this over to Raphael, who runs this on a daily basis.

Hi, this is Raphael. The great of Zgounder is obviously the driver of this mine and also quite a challenge considering the geology of the of the deposit. And as we increase tonnage, obviously, to keep the great stable, as is our focus. In 2024, there are many things coming up to play. We are once again almost doubling our mining rate. We need to commission the new plant, and we also will include the open pit ore within the the new mill as well commissioning. Throughout 2023, we've kept the grade fairly high at during production, which ensured us very good production in 2023.

And we have stockpile, let's say, lower grade to ensure a smooth commissioning and not wasting any ounce. And that was that's a classical or classical strategy that we're certainly not inventing. That being said, we really need to focus on commissioning the mill, making sure to bring availability up to bring recovery up to make this mill run at nameplate and only then, we will slowly increase the grade to the mill. Does that answer to your question?

Yeah, that makes sense. Thanks. I had one more question on exploration, David on the line, I'd like to hear maybe the expanded take on that Ryan light because it looks like it could be a game-changer for you guys. And my final question is it's been a couple of years now since you've updated that Zgounder resource, what do you think you'll update the market next on that? Because you've been hitting some great intercepts. So just wondering when you look to update the market on that? Thanks.

Hi, David Lalonde speaking. Concerning the real life, you see, we believe it can be a game changer still early to fully understand it. But so part of that take it related to flat falls to the realized that most likely could have serve as a conduit to bring the mineralization in. It definitely change our approach in the coming drilling program. And as Benoit mentioned, we are also relaunching, resampling at the right intervals that was historically not sample because I believe in Barron, and that's one thing.

Concerning the resource update we are in the progress of making them. We expected to make it earlier, but the underground development was slow, and the drilling last year was slow, but currently this year were already 58% complete with our underground drilling program. So, we expect by beginning of H2 to be able to update the market on the resource at [that going back].

Okay. Sorry. So the second half of this year, you'll look to update --

Yeah. At the beginning of the second half, hopefully.

Okay, sounds good, David. Thanks very much.

Eleanor Magdzinski, SCP Resources Finance.

Good morning, everyone, and great work (inaudible) putting [together] last quarter in [year end result] tell with us today and as always, a great presentation. Had a couple of questions. First, on the underground versus open pit splits of tonnes and grade after the quarter. And I didn't see that. (inaudible) I was just curious --

Eleanor can you speak up a little bit, please?

Yeah, absolutely. So, I think the headline is it better?

Yeah.

Is it better, sir?

Yeah.

Okay, wonderful. Yeah, I just had a question, the first one on split between underground and open pit for tonnes and grade. I see the totals are reported, but I was just curious of the breakdown on that first.

The open pit -- you mean for last quarter of 2023?

That's right. Yeah.

So we mine on the underground 114,000 tons at 210 gram per tonne for the underground and the open pit was 60,000 tonnes at 186. So the open pit obviously has the strip we mine on the [mountain] side and we will have quarter at 180 and we'll have quarters that the 280.

So that split right now, we mined the open pit at a rate of between 500 and 1,000 tonne per day and the underground more around 1,000 to 1,500 tonnes per day. And we can expect over the next two, three years the open pit to feed the mill to about , 25% to 35% of the mill feed.

Okay, awesome. Thank you very much. My second question, I guess have to do with the ramp-up schedule. I know, there was the range of guidance, but in terms of how things and are expected in your view with commissioning towards the end of Q2? Do you feel in the fourth quarter that would be the major step-up and in terms of like things being commissioned and getting to nameplate or is it a six-month process to get there? I know obviously you're set up well with the stockpiles and everything and finalizing the process plant and things like that. But yes, curious on the timelines and the ramp-up schedule.

So we look at commissioning the plant towards the end of Q2, like Benoit was said, now we are towards the the end of construction talking about electrical and piping and quite in a construction crunch right now. Things are good. Ramp-up, it's always, ramp-up is never hit or miss, but it's never quite smooth either. So we can expect there is a sequence, [obviously, there is] sequence the nothing new in that. The cold commissioning or verification, cold commissioning, hot commissioning and so on.

So, we'll start that around June and then we'll need a couple of months to bring it up to a certain rate, which we hope to be close to 80% to 90% capacity, and then we'll stabilize the production towards the end of Q3 and hopefully have a very good Q4. So that was the plan and above the guidance as you can imagine, if we push back commissioning by two or three weeks or we fronted by two or three weeks. I have huge difference on production because the new plant will carry the bulk, the bulk of production as soon as it started. Hence the spread into the guidance for 2024.

Awesome. Yeah, makes perfect sense. Thanks very much. After that, I just had one more question related to the expansion for actually maybe two or more, but just quick one, just question on infrastructure progress. Every quarter you've been reporting, how things are going. It seems in my view, anyways, maybe probably not as critical path as some of the other ones. And that I was just wondering what's included in the on-site infrastructure development that's still required so that's aside from obviously the purchase plan and electrical commissioning which I mean, obviously, they're pretty big ticket items. But for the remainder on-site infrastructure, just curious what's included in that type of stuff?

So on-site infrastructure includes essentially everything else. So, we're talking about here's some housing for extra workers, some small roads we need to finalize. And I can think also of different pipe works that we need to do between water basins and plant and many other things of which are not necessarily critical for the commissioning of the new plant or the ramp up of the mine.

But it has to get done at one point or another, for example, or underground [garage house] of who's been dragging along a bit, but we have a surface garage, so it's not as near is not as critical as the rest. So sometimes it falls on second priority, but it will get done and it's on a critical path. So that's what explains the other on-site infrastructure that might be a bit lower as opposed to everything else.

Okay, awesome. Yeah, that's what I figured it just seems obviously in prioritize anything that could be more critical path in terms of the commissioning and then. Like you said, those are just things that need to get done by [tonne] yeah, [dollars] actually, that doesn't get tacked on and it's not us. It's a lot of smaller jobs, let's say. I guess my last question. I'm cognizant I've been hogging the line here, this will be the last one.

But just in terms of the anticipated spend, so if you take that budgeted CapEx, turning $59 million. There's still about $49 million total have spend. So that in addition to that $36 million of exploration spend allocated for this year, I was just curious on if there's a time line or an expected time line of spend for that over then also that total over the next, whatever three quarters at this point now or four quarters that you could speak on retrospectively a little bit. Yeah.

Sure. Yeah. So on exploration, you can see that pretty evenly split a little bit back H2, H2 you can see here we had a major number of meters, (inaudible) maintenance or it's a little bit of push towards H2, but exploration is pretty linear. You can divide it by four or take 60% or 65% the H2 versus H1. And in terms of construction, I would say it's the reverse. It's probably 75% of that. 80% of that in H1 and the remainder in H2.

Okay, awesome. Thank you so much. Appreciate all of the feed back.

Don DeMarco, National Financial.

Thank you, operator. And then well, congratulations on the guidance beat in 2023. And hopefully you have a guidance beat 2024 and for '24, clearly it's going to be back-end loaded year. Can you give us some color on the grades and costs quarter by quarter? And what costs would you expect in Q4 in the plan fully ramped up?

Don, (inaudible) A little a bit fortune telling we're not going to guide quarter by quarter. I think it we've known and I think the history of the progress the company has shown here in the last few years like there's some good quarters and some less good quarter. That's a function of the grade that's at the mill. We're ramping up mine production board commissioning, I think for us we're going to stick to an annual guidance here.

Okay. Fair enough. What's the grade of the stockpiles? Maybe you can tell us like how you plan to use the stockpile throughout the commissioning and maybe as a percentage of total fees?

Well, so we've been mining in 2023 about 215 gram per tonne. And we've processed 250 gram per tonne. So that obviously the stockpile at quite a bit lower in the range of 160. And we have about [250,000] tons of it. That will be the sole theme for to say, couple of months of commissioning. And then we'll slowly include our high-grade on the open pit or high-grade on the open pit ore that will follow and we'll bring up the grade as we stabilized production.

Our key target here is not to waste ounces essentially. So there is no good or bad ounces, but there's lower higher grade ore. And we want to make sure commissioning is done with the lower stockpile. And as soon as recovery gets up, we will diminish the blend of the stockpile in the feed of the plan, and we'll bring up the grade.

Okay. That sounds reasonable and then for my last question, shifting to permitting. So David, you've got a large airborne geophysics campaign plans being flown over promoting in the area would expect to find from this and when do you expect to release results?

(multiple speakers) sorry, (inaudible) Yeah, we need the geophysical survey right now is about 70% complete, and we like the results so much that we are planning to extend it. The idea of the service, we wanted to cover the new license, of course, but took the chance as well to take a different technology that will allow us to measure conductivity all the way down from one kilometer of depth and resistivity to 2,000 meters to two kilometers of depth.

One we are the original survey at Boumadine, the depth coverage was about 600 meters, if you can recall. So, the idea is to look for deep roots of the system eventually start looking for [gold] free type mineralization and of course, to identify any massive sulphides that we could find in new areas.

So hopefully, the survey will be completed in May with final reports, and that's a process probably late H1. And as soon as we have a nice colorful maps. I'm sure we'll have lots of pressure to feed the market with the news, and we're quite confident about it.

Okay. That's all from me. Good luck with the ramp-up and commissioning of the Zgounder.

Thanks, Don.

Justin Chan, SCP Resource Finance.

Hi, guys, congratulations. [Believe it or] we have. We have a couple of more questions. Maybe just the first one on permitting and the exploration budget. In the past, you've expanded budgets later in the year. I guess how much potential is there for that?

And then in terms of the timeline from the first resource onward, I should we expect a scoping study, or would the next update be another resource update before you start ramping economics on it?

No. So on the exploration budget, I think Boumadine, we've taken quite a bit by Tier two to move from 36,000 to 120,000 meters, a lot of it is greenfield as well. And so, we're going to have to see what those results of that green color exploration gives us in that like in the past has driven what we'll do in the future. As David already mentioned, the result of our regional geophysics has been exciting, and we've already extended that a little bit.

At Zgounder, again I think there is quite a few targets, especially in the regional that are interesting and that will really depend on what we find and follow up on that. So because it is such early, like in the past, we've had a lot of targets establishing that was one of the things that we wanted to do. Now are in last year, the team generated several targets. We budgeted to follow on those targets. And then now it really depends on results. So, it's hard to say how to project forward. Okay. How are we going to modify it or not the result of dictate that. We have the capital if we wanted to extend it to extended the results have to be there.

On what's next for (inaudible) after that, the resource estimate, again, I think a lot of that will be driven. We've done some work. We've budgeted some engineering work this year, but it's still a new project we haven't been working on for a very long time. So hopefully, there's still a lot of nice surprises associated with [Boumadine]. We think there are and so. I think we'll do a scoping study when we're confident in that the resource we have is a good representation of what Boumadine as a project.

So it's an ongoing thing. I think Aya's team on the engineering side is following closely to make sure that when we want to do a scoping study, a lot of field work that needs to be done, which is the long part of doing the study is executed. But we have to make sure that the deposit and the resources that we present are a good representation of the project.

Okay, got you. So probably, just reading between the lines is probably that scoping study will be less likely this year, more likely next year, given that you have a lot of results to come in, that could determine whether or not you think the resources is where it is or it can be done?

Seems like a reasonable hypothesis to me, Justin.

Okay, great. Thanks. And then on just a question on the mine sequencing at securing there. I mean --

It's the ramp-up is going quite well and the recoveries are where you want them.

Will be I know, Ralph, you mentioned that the open pit will be contributing high-grade before now. First once go through low-grade stockpiles, but I'm just curious on the underground sequence. Will you have is there much high-grade plan this year in the mine sequence you could that you could blend in, if you're happy with how the plant is performing or is that mostly coming in maybe next year?

I think in 2024 report a high grade of the mill is certainly another priority as we've been going down the level. What we want is also to switch our mining method to include some long-hole stopes. And I think once we'll be ready with long-hole stope, we will attack some of those high-grade pillars low in the lower levels to 1925 and 1900. That being said, because we work on the infrastructure for quite a while. We have done many stope access over the last two or three months.

So I mean, we do have a stockpile management plan and we do stockpile the high-grade especially, of the open pit. The rest has been [fair] more or less to the mill roll-up of all years of what we've been mine. So right now, the focus of the underground mining team is to prepare a stope access and we will mine those high-grade stopes as we are at the mill need them. And as we are ready for stope, does that require long-haul stoping.

Okay. Thanks. That's really good color. Appreciate it.

Stephen Soock, Stifel.

Thanks, operator. Hi, Benoit and team. Congrats on a great 2023. Just a few quick ones for me here. First one is around reconciliation of the underground. Specifically. I know it's a difficult party ore body, but how has it been reconciling versus your call it a year ahead, year look ahead, geologic model. Again, just focused on the grade guidance here for 2024, and wondering if there's any longer-term implications or fastest function of the ramp up? Thanks.

For reconciliation of [Zgounder] ongoing battle non-growing, a technical front. I don't know how else to put it. What we see as Zgounder is hysterical stopes, they always give more than we hoped for. So which is very good. On the new stopes. When we do things right, we tend to get things right. Now it's excessively variable I mean, we've seen the quarters we got quarters and the upper 300 we've got quarters and the lower 200 and the long-term trend is somewhere in between what we say Zgounder as one would take a whole quarter and we will consolidate.

We're not far off on the grate side, but stope by stope, it can vary like five times the grade or 20% of the grade. When we look on a stope-by-stope basis, we always have more than 20 stopes at operating at the same time as Zgounder out of which sometimes 80% of our production comes from two or three stopes.

So yes, if you miss one of them, great goes sideways very fast on the good side, sometimes and obviously on the bad side sometimes. So the key here is reconciliation of Zgounder is to have many stopes open to make sure to scan everything right and to make sure to be and definition, that's what we've been working on.

So what I can say in a nutshell on reconciliation is when we look at the big scheme of thing has Zgounder things do we reconcilement to that. When we go stope-by-stope, sometimes yeah, sometimes it's a mess. So the key to solve that is to have is to prepare the stope access long, long time before we need them. And this is what we've been doing the last three months. And what is comforting, though, is when we look at it quarter-by-quarter and we put the stopes together, we're not too far.

Yeah, it makes sense. I know it makes it tough to plan around, but good to hear that overall shaking out, we're expected in the big picture. I appreciate that. The last one for me here is just on the permitting resource. I think this was originally guided to come out mid-February. So can you provide any more color on the delay here now that we're looking at mid-April for a potential release?

Yeah. Stephen, we have and we have decided to push that out a little bit. It was really a question of making sure we were able to negotiate permits around our two mining permits or one mining permit. Now it's one permit. And so you saw that we have added probably close to 10 permits so far for last year. I think six this year. We're in negotiation on probably five or six more, and we wanted to do this because we think that once we put up the resource a little bit more difficult.

So we are very happy where we are right now. We are -- we have targets or permits that we target and we want that. And but that being said, we the geophysics that we're doing covered all the ground that we want to have and that we have. So we're in a very good position. We have good information and it was the reason for pushing it out of it. And we're all sat down have the early April, probably the second week of April, we'll be done acquiring what we want to acquire (inaudible) others may not be done, but the the only real way for them for a little bit later. And the resource will be coming out on the as we explain on that main structure, 4.2 kilometer long, and that will be the resource that we will present.

Perfect. Appreciate it. That's all for me, guys. Thanks again.

Thank you. At this time, I would now like to turn the conference back over to Benoit La Salle, CEO and President for closing remarks.

Thank you very much and thank you all of you for assisting today. It 2023 was a stellar year. It was a very, very good year production-wise, construction exploration, ESG, we had a very, very good year. The we will continue on this trend. I think 2024 will also be a very, very good year for Aya. I know some of you are looking at a bit of a higher guidance on production.

But, we've always been very conservative and that's something we will maintain and we will maintain. It's a discipline and the Raphael is going to site next week for a couple of weeks or couple of months as we're getting into commissioning.

So it's we're confident that this will continue to deliver. We're certainly confident that the geology will continue to deliver as Zgounder and Boumadine. And we will follow with our ESG program as well, which is extremely important. So, thank you for being there. Thank you for following us, and we are always available for comments and discussions. And we really will probably be talking to you in the next few weeks on a Boumadine update. Call with you separately or maybe somebody will do it altogether. But it will, it's coming in the next few weeks. So thank you very much. And again, we had a great 2023. The team is motivated, and we're continuing on the same trajectory for 2024.

This concludes today's conference call. Thank you for participating. You may now disconnect.