Aya Gold & Silver Inc (Quebec) (AYA) 2025 Q2 法說會逐字稿

Good morning. I will now turn the call over to Elizabeth Hamaue, I have Gold and Silver's Director of Corporate and Financial Communication.

Thank you, operator, and welcome everyone to Aya's second quarter 2025 earnings conference call. Here with me today are Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, Chief Financial Officer; Elias Elias, Chief Legal and Sustainability Officer; Raphaël Beaudoin, Vice President of Operations; and David Lalonde, Vice President of Exploration.

We will be referring to a presentation on this conference call, which will be available via the webcast and is also posted on our website. We will be making forward-looking statements during the call. Please refer to the cautionary notes included in the presentation, news release and MDNA, as well as the risk factors included in our annual information form.

Technical information in this presentation has been reviewed and approved by Raphaël Beaudoin, Aya's Vice President of Operations, and David Lalonde, Aya's Vice President of Exploration, both of whom are Aya qualified persons as defined under National Instrument [43,101] standards of disclosure for mineral projects.

I would also like to remind everyone that our presentation will be followed by a Q&A session. With that, I will turn the call over to Benoit La Salle. Benoit.

Thank you, Elizabeth. Welcome everybody to our Q2 2025 earnings call. Before I start the presentation, I would like to tell you and announce that we have reached the 10 million ounces of silver production last week and since we took over as Management in April of 2020, so we did produce now we are over 10 million ounces of pure naked silver in the last five years. I thought it's worth mentioning.

There is a presentation that you where you can follow my comments. You have the forward-looking statement on page 2 and 3, and then we will start on page 4. The Q2 highlights, it is a very strong quarter, a very good quarter. We've delivered across all the key pillars of our strategy. First, the production, 1 million 42,000 ounces in Q2, very similar to Q1.

Gold and silver, but in our case it's silver revenue of USD38.6 million. We report in US dollars. Cash flow from operation in Q2, $8 million and I'd like to point that we are now at $15 million after Q1 and Q2 of cash flow from operation.

Remembering that this is a ramp up period. We commissioned the plant at the end of December last year. We started the ramp up in January of 2025. We are now completing the ramp up as we will see while we're evaluating our KPIs at the end of Q2. So during ramp up, during the first six months of ramp up, we did produce $150 million of cash flow from operation.

At the end of the quarter, our balance sheet is strong. We have $114 million in cash in our bank. We have a line of credit of $25 billion and we have a very strong working capital position. So reviewing some of the key milestones on production, we've had a very good quarter, solid operational KPIs that I will review with you, and we did reach a million ounces of production.

On the expiration front, drilling programs are on track. We are, we have many drills starting both as Zgounder and Boumadine, and we are continuously giving you results that are very, that are positive. We've also have been acquiring new permits.

At Zgounder and at Boumadine, which is part of our strategy, we really do take advantage of the fact that, we're first in country and we add a lot of ground every quarter at Zgounder and at Boumadine. On the development of our second asset, which is Boumadine, the work supporting the upcoming Boumadine PA is going extremely well and according to plan.

On the ESG front, in the quarter, we published our 2024 sustainability report. We are always focusing on health and safety, and we had a clean quarter in Q2, 2025. No incidents, nothing. And we always strengthen our community engagement. We actually in Q2 have accepted 26 new initiatives that were presented to us by local communities. They actually presented 80 initiatives. We selected in Q2 '26 that we will be implementing.

So strengthening our community engagement is part of our core value. Financing position, cash from operation, as I mentioned, $8 million, $15 million after two quarters. Extremely pleased with this number. We've completed an equity raise in June of [140] million Canadians, so let's say 100 million US, hence giving us a very strong balance sheet.

Taking you to slide number 5, we're going to go through the KPIs. You recall, I always say in the ramp up we have 5 KPIs that we need to manage. The first three or process and milling rate. Well, as you can see in Q1 2025, we were at 2.8 tons per day, at in Q2 2025 we're at 3,000 tons per day. So we are moving up the ladder. Remember that the nameplate capacity when we build the plant was 2,700 tons per day.

By the end of Q1, we're at 2,800. By the end Q2, we're at 3,000. And we are now approaching for Q3, 3,500 tons per day. So it's this this KPI is well managed, well under control, and exceeds nameplate capacity by, more than 20%. Recovery rate has always been something extremely delicate. We know that metallurgy is an important element of a good mind, and currently in Q2, the average was 86.5%. We have reached 92% recovery in June.

You recall that at the beginning of the ramp up the oxygen plant was creating the main issue that's been solved and working according to plan, and we are now above 90% recovery, which is better than what we had in the feasibility study.

The availability of the plant, this is another key KPI and for Q2 2025 we were at 98%. We wrote exceeding industry standard. I've been in this business more than 30 years, and I've rarely seen plant. Availability better than 95%, sometimes 96%, and here we are at 98%. So the operational KPIs are sustainable into H2. We expect that the ramp up is near completion. We're going to be at cruising speed at 3,500 tons a day, good recovery and good availability.

Moving on to slide number 6. The Zgounder ramp up phase on ore mine. Well, so when you look at the ore mine, the tonnage is there in Q1 we did 195,000 tons, which is 2,100 ton a day, and you recall we started at 900 ton a day when we had the two smaller plants.

We, our goal is to go to 3,500 tons a day. We were at 2,100 in Q1. We're at 2,600 now in Q2, and this is increasing as we're ramping up the open pit in Q3. In Q2 we were preparing the open pit. We did a lot of stripping. We'll continue to do that in Q3. For our objective to go to 3,500, which is equal, so the mining will be equal to the processing.

So another KPI that is green, that we manage very well and is according to plan. The only KPI where, we've talked about in the previous quarter that we're still, working on and that we need to improve is the average grade. And the issue here in the ramp up as we move from 900 tons a day to 3,000 ton a day and 3,500 tons a day, it's not a metallurgical or a metal issue. It's not a metal issue. The metal is there. What we need to address is dilution.

So it's the way we mine it, the way we mine the underground, and the way we mine the open pit. I mean, historically we were doing a lot of selective mining and we had the time because we were mining originally 200 tons a day, then 500 ton a day, 900 ton a day, so the dilution was not a big problem. But currently with the speed of execution, the dilution is becoming our number one enemy.

We know this, we are all focusing on improving or reducing, should I say, the dilution. We're improving mining selectivity. We're improving operational control. We have hired more people. We've hired more senior underground managers.

So the last KPI of the five that we need to address in the ramp up is really the dilution of the grade from the mining. On the open pit, we need to monitor better blast movement because we see where the grade is. We blast it, then it moves, and then we dilute it again too much. Then the ground is definitely even more difficult. So all of that is something we understand, is something we is our, it's our key priority right now is, we need to stabilize the mining rate.

Reduce the dilution, control the ore, and send all the ore to the plant and all the waste to the waste dump. Going to slide number 7, which is the financial highlights, of course, on the revenue side, it's a record quarter, $38.6 million of revenue, obviously driven by the ramp up and the higher silver price. So we've moved from $33 million in Q1 to $38 million in Q2.

The average selling price is excellent, and that is even getting better now in Q3. On the left side of the slide you see the average netized silver price and when you compare that to the cash cost just to show you the margin, we do have a $12 margin. We had a $12 margin in in Q1 as well, and we expect that margin to increase in the coming quarter.

As the selling price is higher than what it is right now. And really, as we're completing the ramp up phase, and as we're improving the grade or reducing the dilution of the grade, you can expect the cost to come down, the selling price to go up, and the margin, therefore, to increase.

Slide number 8 shows that we have a very strong balance sheet, and that's something extremely important as we are really stepping up now, the Boumadine in development. So this quarter we discussed this we had $8 million of cash from operation, $15 after two quarters.

CapEx and exploration in line with our budget of $13 million. We spent about $3.5million to $4 million per quarter on exploration. As we have two large drill programs. The cash position is extremely important at $114 million as we plan to increase the drilling at Boumadine and really get into a more detailed feasibility study next year. So that cash position is instrumental. And when we raised the money in June, it was clearly identified that it was for the [Boumets] development.

So strong cash flow, CapEx completely under control, and a recent development, some of you saw that we did receive two weeks ago now or a week and a half ago, $8 million payment in compensation for the EPC contractual breach. You recall that, in last October, the plant was delivered to us with a delay, and you recall that, we had a fixed date for planned delivery.

We had obtained in the EPC contract some contractual obligation, which there was a breach, and because of this breach, we were able and have received $8 million in compensation. So that of course is not accounted for right now. The cash position because that came after the quarter end, but it's it just now tells us that we've built this new plant at Zgounder.

We've built it. It was already on budget, but now it's $8 million below budget. And the on time of delivery was late, and you recall we explained that in Q3 of last year, but the commissioning was very quick, much quicker than expected, and we did the commissioning in three weeks. So the commercial production was declared in December and that was aligned with the plan.

So, to conclude, the balance sheet portion, strong balance sheet, enough balance sheet to really develop Boumadine and continue with the exploration at Zgounder and at Boumadine.

On page 9, just we gave you a few pictures. I know many of you have been to site. It's beautiful. There's no more snow on the top of the mountains as last week it was 48 degrees, so a little bit warmer than Canada, but not that much. And so you can see all of those pictures. Now, talking about exploration because as we are a producing company. We have a beautiful pure silver mine at Sunda, but the exploration portion of AA is extremely important. The exploration at Zgounder there at the mine and the exploration at Zgounder regional. So at Gunder at the mine, we've drilled 4,700 m.

And that drill is in the structure. You remember our structure is 1.4 kilometer long, about 700 m deep, 20 m thick, and we've been drilling the bottom left of the structure. I mean, we've been drilling everywhere, but in the bottom left, the drill results. Outlines significant down plunge extension which we show you when we put out a press release with good thickness, very good grade, and it confirms the continuity of the high grade mineralization beyond the current resource boundary. Extremely important. Because it is a major system. It's very well understood, but we're seeing extension.

To the west, at depth, we've also seen extension to the east in the open pit, because we've shown you new results in the open pit over time. So the Gunde main zone is still growing.

It's Regional, which I'll show you a slide in one minute. We've drilled 1,000 m there. It's more exploration drilling. So we have an area called Far East, permits that we've obtained and that we've done the work in Q2. We have identified.

Many very interesting targets through, geochemistry, through satellite imaging and spectral imaging, and we are drilling some of those targets now. The drills are turning. We're drilling some of those targets. So as I said, detailed geology is being done and it's being carried at Tushkan at Gunde far east, and we'll see this on the next slide.

So you see the next slide is showing you where the mine is, which is the permit right in the middle, and then you have the 10 kilometer, 20 kilometer, 30 kilometer, and we are focusing on finding a new structure which is, a distance that we can track to a plant to either increase plant capacity to maybe depending what we find to use, we have 3 plants a small leaching plant, a flotation plant, and the bigger plant that we just completed.

So we're looking at different things. We have identified structures that are gold bearing. We've identified structures that are silver, copper and enhanced we're really working to find that other structure which we believe is there. And we're also using AI probably in the next quarter we'll be able to tell you what a massive AI program has done in reviewing all the data that we have, all the data geophysics, geochems, satellites, spectral, stream sediment, and we're using AI now to do the work of many geos that would do in a number of years, and that's being done in a couple of months.

The next project, as we all know, is Boumazin. Boumazin is our tier one asset. It's we've completed 33,000 m of drilling in Q2. You know that 33,000 m for most companies is they don't even do that in one year. This is what we've done in one quarter. We are at 79,000. Meters after two quarters and there's more coming. There's more coming because we're finding new structures.

So this time we've done a lot of drilling on the main trend, on the TZ trend, and on the EIN trend, which are all parallel. So those are the parallel structure to the main trend, and we've confirmed continuity and extension. The PA is only on these three structures, the TZ, Iran, and the main trend.

Everything else that we're looking at is not going to be included in the PA. It's going to come in a second step as we are developing, other satellite deposits at Bouma, but the mainre TZ and ERN have enough quantity of ore in grade to become a tier one producing asset.

In addition to the surface work, we have identified a new zone which you're going to hear over the next couple of weeks and months called ACM, which, is a permit that we knew because we had done the geophysics that we were able to acquire because, as I say, we do acquire permits every quarter.

David and his team are picking up additional ground based on additional information. So we have acquired this permit. It has a 9 kilometer traceable structure.

Where we discovered gold and copper, so gold at 3 g per ton, copper at 4%, and we can see it on 9 kilometers. So this is the, you can see the color, you can see the anomaly. This is what you see on the northwest corner. You see this elongated structure we are covering it on 9 kilometer. We're also buying additional ground to the north, but that is a geochem and a geophysics anomaly and where we're very positive about the grab samples, what we're seeing, and we will be drilling that in the coming few weeks.

So [Boomin]. It is again a world class asset. You, you've seen that slide many times. We have done a lot of work on the main trend on the parallel trend. We are doing work now on the West structure and over the next few quarters, we're also going to be doing work to the south on these very long geochem and geophysics anomalies.

That completes the geology. David will be on the call with us if you have questions. Also on the, on the outlook we're confirming what we've put out in the past. We're, really motivated to meet all of this guidance. The production guidance is between 5 million and 5.3 million ounces, and we are committed to meet this production number.

So, as a summary, and before we get into the question period, the catalysts for 2025 were and are commence the drill program and of course, we have done that. We have commenced and our way into 140,000 m of drilling at Boumazim and 25 to 30,000 m of drilling at It's good that.

Our second catalyst was to commence the Boumets in PA that was for 2025. We are way into this boomed and PA as indicated, we expect that this will be released in Q4 of 2025. We wanted to reach 3,000 tons per day of processing at the new plant.

It was part of the ramp up plan. We have reached that throughout the quarter of Q2, and we are 15% above this already in Q3. So the ramp up is following a steady state on the plant. I would say the ramp up is complete. On the infrastructure, it's complete and the only KPI left and we're fully aware of this, is the dilution of at the mine, and that's something that we're addressing.

Provide update on Boumazin, metallurgy, and PA and it's mainly metallurgy because that's been kind of a question mark for many shareholders, and there will be a complete update on the metallurgy. The studies are coming to an end, and we will have a full update for you in Q4 of 2025.

And publishing the updated Gunde technical report, we are working on this. The beauty of it is we keep adding beautiful structures and beautiful grade and new extension, but we are on it right now and want to have that done before year end or in Q4 of 2025. So, this completes the official presentation. We are open for business and for question. So this concludes my formal remarks. I would like to now hand the call back to the operators for a Q&A session. Thank you.

(Operator Instructions) Bryce Adams, Desjardin.

Thank you, Benoit, and I appreciate the presentation. A couple of weeks ago you put out July month to date production numbers. When we extrapolate, those data points for the full month of July, it gets to over 400,000 ounces produced. Can you talk to those July results and if it cleared that 400 level, maybe got closer to 450?

Yeah, Bryce, thank you. We did give you a two-third of July, and yes, for July we have surpassed the 400 as we indicated, we will stop giving monthly production numbers because it does create some turbulence sometimes when you were in the ramp up. The ramp ups pretty much. Done now you saw the steady state in 2 at the plant. So yes, so July is above 400. It's really, it's on our goal to go towards the 500, and we had a good July. The grade was better, the throughput was excellent, and yeah, no, so July is a is a good month.

Okay. Yeah, sounds like it. I'll mark that down more than 400. For the full, second half results, in the open pit, what's the key factors to managing the grade there? It looks like open pit grade is more of a problem than underground. When we were on site a few months ago, the upper benches were a little bit constrained, a little bit tight for space. I mean, that could be normal course when you're opening up the bigger pit, but operational flexibility was maybe not that great a few months ago. How has that improved and is that the big factor in managing the open pit grade profile through the rest of the year?

Yeah, so look, you're absolutely right. I mean, we, there's no grade issue that's going there. So let's be very clear about this. There's no grade issue. There's a mining learning curve, and the mining learning curve was slower than what we had anticipated. And at the beginning, and we were in kind of a H1ymoon with the open pit, we were hitting all the structures that was pretty straightforward. It was lower tonnage and the open pit was quite steady, and the underground, as we were really pushing up the underground, it, created dilution that we didn't expect.

So we changed the focus, we pushed more the open pit, we reduced the underground. By doing that, we did not solve the dilution of the underground, but we kind of got that under control a bit more and are getting good grades from the underground. But the open pit, then we realized we need a bigger open pit, so we started doing some stripping, moving some of the infrastructure that you saw, the ventilation and getting our contractor to bring in more trucks in order to prepare for the better structures. So that was part that was Q2. So the open pit execution in Q2 was excellent. The dilution was not, and we therefore had lower grade than expected in the open.

So we know that in Q3 this is getting better, but you're right, the open pit preparation to go on a much bigger pit is definitely the issue why the grade was a little bit lower, but we expect that to correct itself in Q3 and definitely get getting even better in Q4.

Okay. So expand that footprint, gives you more flexibility.

It does.

The last one for me, Ben was on, exploration, in the, in your newsroom, on your website, the last results from Zgounder were back in June. Should we be expecting another bunch, batch of drilling results in the near term? And how have I a lab times been, is that a factor in the timing of drilling updates?

Yes, so you're absolutely right that the expiration results have lagged a little bit. It's because we gave the focus to the development drilling and the drilling at the mine site. So at the lab there's so much capacity and we've told the lab, look, we want, the, to have a priority on all the sample the samples coming from production because then, with better definition we have better grade, we have less dilution, so we gave priority to that.

But now that look, the team is back, August is the month on holiday in in in in in Africa and mainly also in Morocco, but we're working at capacity and David will have. Releases both on Zgounder and on Boumadine, I would say at the very beginning of September as we are, getting, we're drilling, you see that we see that, you see the meters that we've done. We've done like almost 45,000 m in Q2. So yes, there'll be more results coming out. The reason we're a little bit behind because we gave priority to the production samples than the exploration samples.

Okay, I get it. Thanks so much for all of that. I'll jump back in the queue.

Thank you for your questions and thank you very much for your support.

Justin Chan, SCP Resource Finance.

Hi Benoit and hi team. Congratulations on the progress in the quarter. I was just curious maybe to get an update at where the plant is now because, it's been, it was making steady improvements and, thanks to Alex and the team for hosting us, a couple of months ago. I was just curious where the oxygen plant is at if that's a name plate now and I think recoveries were trending up associated with better oxygen performance and as you mentioned, tons were getting above 3,000. I was just wondering if you could give us a snapshot now of what the planned performance is like.

Yeah, thanks, Justin. Rafael came back from the plant to Montreal for the call. So he's here still wearing his working boots. So he can give you a very fresh summary of where we are right now.

So in July we had we had a two day shutdown during which we did some improvement. So recovery stands above 90% now for the last two months and that's continuing around at 92. Through, throughput would be around 3,400 and we have days above that, but on average we stand about 3,400. And yeah, availability is good and we continue to test the limit, but right now this is where we stand.

The oxygen plant, the question is back to normal.

Yeah, the oxygen plant is no longer a limiting factor in recovery. We fixed what had to be fixed. There's still tune-ups to do, but it's no longer a limiting factor for recovery and that has been. That has been the case for the last three months now. And yeah, like I said, we stand around 92% recovery and we are in in excess of oxygen in our reactors.

Okay excellent now it sounds like there's been really great progress in that side of things and I know you have a healthy stockpile, but I suppose that will put. Some pressure on the mining side of things.

I guess just curious where where you see mining rates in in 23 and 4 this year, do you think you can match the the processing rates or will that still be wrapping up over that period of time?

So we, our mining ramp up plan is through the year and as we discussed a bit earlier on this call, we need to make more room in the open pit, which we're doing. That's the, our super pit pro progress is a project is doing well. So we will continue to ramp this up to the year and of course, ultimately the target is to have the same mining rate as the milling rate.

Got you thanks and maybe just the last one raf, when we were at site, you mentioned, improvements on on blast monitoring as part of the open pit, improvements just curious like what what the timeline for that is and is that well that starts coming to the numbers this year also.

Well, we have, we're putting in place the team, we have the software, we have the procedure now this is going to be a continuous improvement, journey that that we're putting in place, and for the second half of the year. So I would say I would say Q3 is is the implementation and by Q4 will be in place and we expect to see good results from that.

Okay, great, thanks thanks a lot guys. I'll free up the line for other people and jump back in if there's any more. Thanks so much.

Thanks, Justin.

Don DeMarco, National Bank.

Thank you operator and good morning Benoit team and congratulations on these improvements and recoveries and throughput on a quarter by quarter basis, but maybe I'll return to grades, just to see if I can get a little more color, where do you see the most opportunity whether open pit or underground, both in terms of addressing dilution or also in terms of mind sequencing, do you have any higher grade zones that you might be. Geared up for the second half of the year.

Yeah, thank you, Don. Of course, your question is right on. This is something that we manage. I looked in doing the review because we do review this on a weekly basis with the team. I looked at the original budget that we approved, and our average grade in the ramp up for Q1, Q2 in our original budget was 155 g per ton. That was the original budget that we had, so we were very clear on what needed to be done.

And finally, the average grade for H1 or for Q1Q2 is 150. So yes, we're a bit lower, but we, because we knew as of last year that the dilution was something that we needed to manage. Now when we look at what we will be mining in Q3, Q4, it's between 180 to 200 g per ton. So that, that's what's out there in the mine plan. So we know it's there.

Now, we also know that we still, have, dilution issue which, about blast control on the open pit and reducing the dilution, which we're addressing. We're now using new software where we have hired new people to be with us because that's something we've realized. We just need more bench strength because our learning curve was slower than what we wanted. So we have hired bench strength. We have more people. We are mining in Q3, Q4, 180 to 200g per ton.

July was already better. We know that. And because of the nature of the deposit, we can go into some. Grade zone and that's your, that's, your question sequencing. So we do have in the sequencing better grade than Q1 and Q2 knowing it was a ramp up.

And again, when you compare yourself, you see that finally our ramp up, we still made $15 million of cash flow in the ramp up in Q1, Q2. So we want to get into Better grade in in Q3, Q4. We are going into better grade, but we also absolutely need to reduce the dilution, and that's going to come in the open pit with, better blast control and in the underground which is just, better geological control. We do have, 3 by 3 spacing, drill spacing in the open pit.

We cannot do that in the underground, but we are, improving. We are improving, not where we want to be, but we are improving, and that's the last KPI of the 5 KPIs that we're managing in the ramp up. So, we are mining in the mine plan 180 to 200 in the, in the Q3, Q4 period. And for us to meet guidance, all we need is to be in the mid 160 so we are very comfortable with our guidance because we need 160, we're going to be mining 180 to 200, so we're quite comfortable.

Okay, thank you very much that's helpful. Well, we've got a catalyst later in the year with the Boomadine PEA and I know you've considered a range of different processing options. So with the PEA, have you sort of made your decision? I know you've talked about a roaster at some point, so will you go with that method in the PA and also it will there be perhaps options presented that show, what the economics might look like if you were to just sell the concentrate. And not roast it.

The answer is yes, exactly that. We will have a two-step. Project, one with the concentrate. Step 12 with the roster. Step 2, we indicated that last year that the roster was ahead of the game on the others, and it's clearly coming out that way.

So Ralph and his team are working on this. We've actually even this week started to work on the org chart of how many people we need to recruit to fast track this project. So that's where we are. We're very, happy with what we're seeing right now. We'll have something in Q4 available, but you're absolutely right. Step one, do a concentrate.

See the economics of that step one, much lower CapEx, lower or, easy OpEx, easy to build. It's about a logistic game. Step two, talk about the roster, which we've always said would be done with, the state with a partner. It's that's becoming a very important project in the country, and that's something that that is a step too. But yeah, it will be part of the PA.

Okay great well thank you for that that's all I've got so thanks again and good luck with the rest of the quarter.

Thanks, John.

Thank you.

Charles Aeman, Scotiabank.

Thank you for taking my question. So I'm asking you on behalf of over, maybe I can just start from, domain. I just wanted to be clear on the PA year. So the expectation is that you'll be putting out the PA in Q4 of this year.

As if the question is PA4 this year, the answer is absolutely Q4 this year, yes.

Okay, thank you. I guess my next question is just going to be on, the mind grid, and I think there's a comment in the outlet that talks about, like targeted initiatives like are you able to speak to some of that? Sorry if I missed that already.

I, I'm sorry, I don't, I didn't get the question precisely. What's your question?

So in the outlook section of the, press release you talked about targeted initiatives to strengthen mind rated as operations maintain the stad and I was asking if you could specific news.

Yes. You want to, you, what kind of initiatives we have. Absolutely. So, we, first initiative was stronger bench strength. So that was number one, is bring more people in.

That have underground or open pit expertise and just, bring senior management get that can support the operating team so that we've done that to in the open pit we're using software on blast control, we're using better definition, we're using, we have a contractor that with whom we work closely. There's a change of equipment as well. The contractor has purchased new trucks that have bigger capacity, more trucks, so for the preparation of the open pit so that we can have access to better benches. So that is being done as we speak.

And in the underground, it's similar, mining bench strength, better definition, more geologists, more mine production geologists so that we have, a better planning of what is out there and compare that to execution. We were doing. It this, but we're now going to, increase the bench strength on the on the underground mining. I don't know, Rafael, anything from what I just said that you would add that to make us better open pit and underground? Yeah.

We also continue the underground development and we're sinking the ramp which will give us access to new, always new levels. In the open pit, the blast movement, we know, we know the blast movement is a big contributor to the dilution, and this is what we're tackling head on. And as we go down the pit, we also refine our understanding of the deposit, which will also contribute to help us out. So in a nutshell, I would say a blast movement for open pit underground as we open new levels, we learn from the levels above and we have a bit more manpower, especially on the geology for mapping on the ground.

Alright, thank you. And just on exploration, I mean, when could we expect results from the regional exploration project? I know you have talked about, the Gunda and the modin exploration results coming soon, but like the regional, bit of it, like you want to be expect results.

Yeah, thanks for the question. So exploration results, especially for what's regional, it really depends on what we hit. A lot of it is greenfield, and right now there's, as Ben was mentioning before, we're putting priority, we were putting priority to what was near mine first going to specifically what. Was near mine and was development and so regional it really depends, but on Boazin, as Bea mentioned, there, there's some nice, there's some interesting things that that we've seen and so those I would think is more back half of the year, in terms of results from that.

But we will be, we'll be putting out results on the drilling, in September, October, I mean, on a regular basis because it's, we're doing a lot of drilling and, so we'll keep you informed.

Thank you very much.

Justin Chan with SCP Resource Finance.

Hi guys, thanks, just a small and maybe for Hugo, but, just on and you now have some income taxes built up on your payables. I'm just curious, if there's any guidance you can give us about the schedule for for tax payments this year. Yeah.

So the tax payments are in Morocco are a little bit different than in Canada. We do not have our provisional accounts, our taxes that we have to pay are based only on last year's numbers. And so we don't have to make provisional accounts based on expectations as we would in Canada, for example, and a lot of our taxes payable are derived from unrealized foreign exchange gains because our debts by our local company are in USD and and the functional currency there is is the Moroccan dirran, and the Moroccan drons appreciated quite a bit compared to the USD.

So we'll see how the end of the year ends. And then a determination will be made or a calculation will be made at the end of the year and then we have to pay taxes, kind of in the end of March or April time frame if if taxes are payable.

Okay, got you. So, I guess maybe for, so for the rest of this year, should we just model that as, you accrue taxes but don't pay them or just maybe model them as matching? Like what's accrued.

Like a one. So we pay our provisional accounts as per what we had last year and so we do pay taxes on a quarterly basis but based on last year's results and then if there's additional income tax then right now we accrue them on our balance sheet and that's and we show them and we show them as liability.

Okay, gotcha.

All right, thank, thanks, Hugo. I appreciate it. That, yeah, that was my question for this one. Tha thanks very much, guys.

That concludes today's question and answer session. I'd like to turn the call back to Ben La Salle for closing remarks.

Thank you, operators. Thank you everyone for being on the call today.

Thank you for all the questions. I'd like to close in saying, and coming back to the fact that we've already produced 10 million ounces of silver production from Zgounder in the last five years. There's much more coming as we will present the new mine plan before the end of the year. I've also would like to comment that due to the fact that we have a strong balance sheet, we can be very selective on how we sell the silver. We're never in any rush to sell, and this week we were able to sell 100,000 ounces at 38.5 and kept 130 for a better price. Price and we also have a 100,000 ounces delivery next Monday in Geneva.

So we do have a very smart selling strategy, and that pays off. We always get a very good selling price and as well we did talk about new hires, but let me tell you that. Aya is a very good name in country. It's now a very, it's a very well recognized name, and we are bringing in some new senior managers at the mine level where which will be complement to the existing team which will allow us to correct that last KPI that has been an issue.

So this going there ramp up. It's six months. It's done at the plant, as Rafael said, consistently between 3,400, 3,500, even some little peaks above this. So with this kind of throughput, with an improving grade and strong recoveries, you can expect a very strong H2 coming.

Focus is 100% on underground and open pit operation. We, this is the last KPI and we are focusing on this on a daily basis. And we're fully committed to our production guidance. Boumadine PA true question on it. It is a transformational PA. It's, as we all know, it's a multi-million ounce silver equivalent or gold equivalent. It's a tier one asset.

And it's staged for, massive growth of our production profile and also grow in other structures that are, in this portfolio in Boazin, which, as we have now over 700 square. Kilometers of land. So from that, it's we're heading into a very exciting time on exploration and resource growth. We have ongoing success that's good there. You see the result.

We have also ongoing success at Boumadine on the main structure. We will continue to drill and have a very extensive drill program. We are also looking next year at a larger drill program at Boumadine than what we have this year because we will be heading into resource conversion from inferred to MNI and to reserves. So you can expect a very large drill program next year.

And Boumadine, it's a district scale project and there'll be also regional drilling at Boumadine where we have some very strong anomalies that we need to drill.

And we will continue to add ground asunder and Boumadine. The fact that we were the first one in which we is referred as first mover advantage is absolutely true, and we keep adding ground asunder and at Boumadine. So very exciting time next year for exploration.

A cash flow is continuing. We expect a stronger cash flow for HQ. Of course we don't control the silver price, but assuming that it's constant, we expect a very strong cash flow position for the rest of the year. In our, when we will be, we are cash flow positive now, and we will continue to be in the next few quarters, margin, are expanding, throughput is stable, and recovery is strong.

In our strategic positioning in Morocco, we are continuing to be focused exclusively on Morocco. We're looking at additional ground on the fault. There are some families that have good assets, good projects that are dormant. We're always continue to review those and bring them in under the AA name and under the AA portfolio.

So, and to close on cost, because we did talk about grade as a direct effect on cost, and we looked at that very precisely, but I just want to also tell you that when we look at the team here. And how they manage the the the the good their mind. When we looked at the cost per ounce, it's a certain amount, but we manage cost per ton, which is the cost of each ton that we move. In our budget, open pit and underground, we add $50.56 dollars a ton. The actual for the first two quarters is $46.

We are almost 20% below our budgeted cost. In processing, the budget was 31.5%. The actual is 32%. The difference is additional cyanide that was needed. So you see that the costs are very well managed. The plant's doing extremely well. There's one element we need to reduce dilution. By reducing dilution, we will reduce cash costs. We will reduce [ASIC]. We will improve cash flow, and we will come back to where we want this project to be so that we can focus on developing and building Boumads in the next few years.

Thank you very much for your time. Thank you for being there and supporting us, and we will talk to you over the coming months, and we will be together in November for the Q3 conference call. Thank you so much.

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