B2Gold Corp (BTG) 2023 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the B2Gold First Quarter 2023 Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Clive Johnson, President, CEO and Director. Please go ahead.

Good morning, afternoon, wherever you are, everyone. And thanks for joining us. We're here today, of course, to talk about the B2Gold Q1 2023 operational and financial results.

We had another strong quarter of operating performance, which led to some very positive financial results. Mike Cinnamond, our CFO, is going to walk you through that, and then Bill Lytle, our COO, is going to update us on the Back River project, the status of that and talk a bit about the Fekola complex expansion projects looking on, then Vic King, our Senior VP of Exploration will talk to us a little bit about exploration plans for Back River. We've just approved the large exploration budget and Neil obviously, will update the progress in terms of exploration in the Fekola complex. And then we'll open up for questions after that.

So with that, I'll hand it over to Mike Cinnamond.

Thanks, Clive. So I'll walk us through the operating results, first on the cash flows. On the revenue side, we sold 4,000 ounces more than we budgeted, so a total of 249,000 ounces from our operating mines. And good news is we had an average price of just over $1,900 for the Q. When we budgeted, we had $1,700. So we're pretty happy to see that $200 plus an ounce. And obviously, gold prices continue to increase, as you know, to today.

On the production side, from all the operations, including our share of Calibre, 267,000 ounces and from our 3 operating mines 251,000 ounces, both of which were 5,000 ounces ahead of budget. And most of -- the 5,000 ounces was spread pretty evenly across the 3 operations.

So Fekola had 166,000 ounces. Production was higher. We expected it to be higher because we had that favorable higher grade material coming from Phase 6 of the Fekola pit. And the grade was 2.47 grams per ton, which is right on budget.

Then Masbate. Masbate was pretty much as planned. The grade this year is lower than it was in the comparable quarter last year, as we know, the C grade was 0.95 grams per ton. And then Otjikoto, 38,000 ounces, slightly ahead of budget. Again, we expected -- we were in some of the higher-grade portions Wolfshag underground mine. But reminder -- for Otjikoto, as we look through the -- to the balance of the year, it's more weighted to the second half of the year as we get into more high-grade material in Phase 4 of the Otjikoto pit plus continuing high-grade ore from Wolfshag. But overall, good results. Production pretty much on target, slightly ahead of budget.

Cash costs, we actually did consider to be better than budget. So from -- on a consolidated basis from all operations, total cash costs were $600 an ounce, which is $85 ahead of budget. And if we take our 3 operating mines, $576 an ounce, which was $88 lower than budget. And -- so looking at the individual operations, Fekola, there were 2 main reasons why it was -- significantly it was $60 lower than budget.

One was that we mined less material in the period due to some of the tighter working conditions in Phase 6, including only having one ramp available for haulage, which has now been resolved in April of this year. And then we also had lower fuel costs. The mining tonnage shortfall is expected to be caught up over the balance of 2023.

On Masbate, again, we were $176 an ounce below budget. That was a function of slightly higher than budget gold production and quite significantly lower than budgeted diesel and heavy fuel oil costs. We haven't revisited any of the lower fuel cost for the balance of the year, we've assumed that it'll stay where we budgeted it at. But certainly, current indicators are -- definitely the prices have dropped a bit. And while the forward curve is the forward curve and not in backwardation anymore for fuel, it's pretty flat. So we may see some benefit as we roll through the balance of the year on the cost side.

For the all-in sustaining costs, total all-in including our share of Calibre $1,060, which was $146 lower than budget and same story from our 3 stand-alone operating mines. And it's really a function of the lower cash operating costs, as I mentioned. And then timing of CapEx, we've seen CapEx for Q1 was below budget. Sustaining CapEx was about $10 million below what we budgeted just for the timing of things like the completion of the TSF, grades at Fekola. And then some of the other fleet equipment rebuilds, and that's just timing. We expect to see all of that reverse as we go through the balance of the year.

Few comments maybe on the operations of (inaudible) Bill is going to talk about Fekola complex generally, but we are continuing with Fekola regional development through the period. And as we announced in our news release, we're now -- because we've done so much drilling on that Fekola regional area since we did the original Anaconda Area, we just -- we wanted to take those results and put them into a new resource for Anaconda. So that resource is going to take a bit longer to produce with the result of that Fekola regional Phase 2 mill. Study is now expected in the fourth quarter of 2023.

On the Otjikoto side, we continue to develop Wolfshag underground. We continue to explore there. The Otjikoto pit itself is scheduled to ramp down in '24 and wind up in 2025 based on our current plans and we've disclosed that.

On the Gramalote project, as announced, we have -- we are undertaking a joint sales process with our partner, AGA. That process is moving along. It seems to be good interest in Phase 1. We're still on Phase 1 of the process. We expect to wrap that part up within probably the next 2 months -- 1 month to 2 months, with the goal that we'll wrap up this whole process before year-end.

And on Sabina, I think Bill is going to give an update, but we have some disclosures done there about the acquisition of Sabina. We haven't put in the purchase price allocation yet. We'll do that in Q2 when we publish our results. Bill is going to talk about currently what we're doing there. But one thing I will mention is that subsequent to the completion of transaction, we did revisit a fair amount of the financing obligations that -- the financing plan of Sabina is put in place. And so we bought out the offtake agreement over 100% of it. So that's gone. We've also canceled the debt facility that they had and the gold prepaids that they set up.

And in addition, as we were permitted to under the terms of the agreement, we bought out 1/3 of the streaming arrangement that was there with the precious metal. So that's total cost of $111 million in cash, just -- which you'll see come through in Q2. But it does let us really focus on financing with the facilities and the financing capacity that we have available through our own cash flows and our debt facilities and also allows us to benefit more from future upside, which, as we mentioned many times, when we discussed Back River, we see a lot of upside there.

On the earnings side, when you translate all those operating results, the attributable earnings to shareholders just under $86 million or $0.08 per share. Adjusted earnings attributable to shareholders of $106 million or $0.10 per share.

And a couple of comments on the cash flow. So cash flow -- net cash flow from operating activity is $203 million or $0.19 per share or as we've also disclosed in the news release, cash flow before working capital, $223 million or $0.21 per share. So very solid cash flow quarter. Of course, the gold price helped as well as some of those lower costs that I mentioned.

On the financing side, we continue to pay dividend at the same rate, USD 0.04 per share. It was an annualized $170-plus million per year pre-Sabina, but now with the additional Sabina shares that are being issued, the Sabina acquisition, we think we'll see that jump up to somewhere around $210 million -- $210-plus million -- $210 million.

On the CapEx side, $131 million spent in the Q. In total, we were about $42 million under budget. $10 million of that was lower sustaining capital, as I mentioned already. And then $32 million was just lower non-sustaining capital, which is all related just to the timing of the underground development, development of Fekola Regional. Again, these are all timing, I think, and we think they're all going to reverse in the Q, also what they are in the full year.

And the other thing I'd highlight there is that, as we disclosed, we're excited to get going on the exploration side at Back River, so we've just approved an actual $20 million that wasn't in the original exploration budget. That budget in total is now $84 million for the year with $20 million really focused on additional drilling that we plan to do at Back River, and I think Bill can give you an update on that in a second.

Overall, we finished the period $673 million in the bank and not been drawn on the revolver and really minimal debt on the balance sheet, other than a few leases. And I think -- and I cannot think anything else that we touched on there. I think that's -- those are the highlights.

Okay. Thank you. Bill Lytle is going to talk to us about update on the -- how we are doing at Goose and then talk about expansion of trucks, lands at Fekola.

Yes. So thanks, Clive. Mike covered the operational stuff quite in depth, so I'm not going to talk about any of that. But just quickly talking on the Anaconda Phase 1 study. So I think everyone is aware, originally, we talked about potentially putting out a BA in Q2, that's been moved to Q4. And it is the -- based on some of the exploration success we've been seeing. But I would like to expand upon that a little bit. I don't think it's just the exploration success. As you know, the Anaconda Phase 1 or Phase 2 study is really about the oxides, but they're also having success on the sulfides. So what we're talking about doing now is more of an integrated kind of regional complex where we look at everything, and we give you an update not only for what will be happening at the oxide plant, but also what will be happening as far as sulfides and where they would go. So all that has to come into play and we're talking about putting that out in Q4 this year.

Related to what's currently going on there, the Phase 1 and our Phase 1 is a trucking study or trucking program, which basically takes us between 80,000 and 100,000 ounces a year down to Fekola while we're finishing the study in building Phase 2 if that's what we so chose to do. That project remains on track. So basically, all of the roads are in now. We're just finishing up the final culvert.

The infrastructure is being built. We have received our ESIA for the Phase 1 study. We're currently waiting for them to finalize our feasibility review and issue the exploitation license. And so what I can say is that really -- I'm going to say, right at the end of Q3, beginning of Q4, you're going to start seeing ounces come out of there. And what I will tell you is that I always remember what we said is just because that's what the study says, that's not necessarily what we're going to do. We're going to take the ounces, the highest grade ounces, the highest NPV ounces and process those first.

So what I can say is that right now, there's about 18,000 ounces we're talking about in 2023, which would come out of the Anaconda Phase 1. Anything else I'd add?

That's good.

Okay. So Sabina, everyone's aware that Sabina closed kind of in the third week of April. Since then, we've been extremely busy. Some of the questions that we got early on when people were asking about the deal is, did we think that we could keep -- that we could bring the B2Gold construction team back together to build this one and I'll say with pleasure that almost to a person, everybody jumped at the opportunity to come back. So we do have all of the necessary people in place to include Karen Lofgren and Tom Carter, who've been with us really for the last 20 years building all of our projects in Far East Russia and Africa and Nicaragua. They're busy assembling the rest of the team. And I will say that we've had very few people turn us down. They want to come back. But on top of that, I think it's really important to highlight that the people that were at Sabina, the people that were running the site and kind of managing these contractors on site have also agreed to come across and work with our team together.

So now what we've got is we've got a very good historical knowledge of the site. Certainly, the people that were in charge of logistics have been critical in both last year and this year, they're with us. And we've got our build team to add on to that. So I feel very strongly that we have the right team that can certainly execute this project, and we're still calling for it to be on time. So we're still talking about a Q1 2025 commissioning.

As far as the logistics, I think everyone's aware this is a logistics project even more than the mining project. The winter road this year was a success but while they were saying that they needed -- that they had 1,200 containers, they had 600 which were on the critical path. They brought in more than 800 containers this year. So we have all of the necessary equipment's and supplies to do all of the key things that need to be done in order to keep us on the schedule. So the -- really, the intent of this year is to get the camp up, which they're already doing, I can say with confidence.

This morning, I talked to them, the kitchen is already up and they're getting ready to run power into the kitchen, so then the wings would come up next. And so we're seeing kind of a July 1 day for the opening up of the kitchen or of the first phase of the camp. And then over the next couple of weeks after that, they'll finish it up into August. We have to pour concrete this year. That's concrete for the warehouse, the mill building and potentially the powerhouse. All that concrete is on site, all the steel for those facilities are on site, and we're just currently scheduling in which order we want to do them.

As far as orders for 2023, 2024, sealift/winter road, that all remains on schedule. We've done a very good job of integrating the former Sabina team with the B2Gold construction team. They were in the office last week finalizing orders. Everything has to be on the sealift and heading up towards the Marine Laydown Area in kind of August, September. So by July, everything has to be at the point where they consolidate. All of that remains on schedule at this point.

And then we're actually shooting for an earlier opening date of the winter road next year. We have as many as 2,000 containers who want to drag up the road next year. So we're talking about an early February date. And we worked with the Sabina team -- the former Sabina team to make that happen. And what we've done is we've brought in more trucks, we've brought in more equipment to operate to open up the road from 2 directions, actually, 3 directions from the middle and from both ends. And we're hoping that it will get open, as I said earlier, like the first week of February.

What else can I say on that? As far as additional logistics, we have extended the airstrip. So we're able to bring stuff directly on the site with something as big as a 727. And overall, that project remains on schedule. I will tell you that before the end of June, it is our intent to update the budget based on what we have put forth and come up with what our final cost is going to be.

Yes. So we continue -- as far as things that are happening off-site, we continue to maintain very good relationships with the Inuit community, the Kitikmeot Association in Nunavut. We just attended the conference up there. I don't know if Clive wants to talk about it a little bit more. But in general, because we've maintained all of the Sabina key personnel to include Matthew Picard and Andrew Moore, those people have really continued to bridge that relationship, and we maintain very strong relationships with Inuit Community.

Sure. Yes, I'll just touch on we went to the symposium in Nunavut. The mining symposium. The timing was really good because we just closed the Sabina deal. So we were able to introduce everyone there to B2Gold and talk about the fact that some of our experiences, the Russia days, as Bill mentioned, a construction for some of us go back to that in terms of knowledge about the logistical challenge in the north. So we -- that was very well received.

And I also talked to them of a -- bit of a personal homecoming for me, I think 40-some years ago, but I liked kind of claim seeder and expeditor in Yukon. So I'm sort of back to the north as well. But I think the most important message that we brought to them was continuity, as Bill mentioned, from some of the great work that we've been doing with (inaudible) group, continue along with some very good CSR projects. So we'll be able to increase the budget on that as B2 has also financial strength. But the big message was we were, as Bill said, maintaining the schedule that Sabina put forward.

That was a great relief to many people because unfortunately, Agnico Eagle to take over team exit, run the mine for a while, obey and then decided to shut it down and go back to drilling. So I think they're very concerned whether another big company might come in -- bigger company might come in and do the same thing.

When we did the acquisition, when we started looking at Sabina, I made it very clear to Bill that it was up to him and his team to decide the schedule that we could live with it. And I did say to Bill that if we thought we needed more time, I thought our shareholders would understand that to get it right. But the good news is with the quality of work done by Sabina, very good work and Bruce McLeod and his entire team, we were able to update lots of scrutiny and tremendous amount of diligence conclude that we could, in fact, maintain the schedule as Bill has said.

So great symposium that we went to. And frankly, it's nice to be investing in Canada. We're not a foreign investor on this one. And I think as long as we can do what we've done for a long time, deliver on the promises we made in the north, I think we'll have a great success rate in relationships with the local communities. So it was very positive.

We're also talking potentially with Agnico Eagle are there some things we can combine as 2 companies, Nunavut to do some projects together, maybe be some CSR projects, et cetera. So I think this is a real positive view of our -- from our perspective, going north and also of the community and the industry. We felt very welcome. The key is to deliver, as always, on the promises that we made.

I think with that, I'll get Vick King to talk a bit about this new budget and maybe he can talk a little bit about -- briefly about the team. He's not only inherited some great people and whether it be the indigenous relationships, but also in terms of construction, et cetera. But obviously, you can tell what you think of us joining forces with the existing team focused on the exploration side.

Thanks, Clive. Yes, absolutely. The quality of the work that's been done by the Sabina team is top class. And I'm very happy to say that we've virtually retained almost the entire team. So we'll be hitting the ground running for sure and supplemented by people from our existing B2Gold team as well.

The budget has increased by -- our global budget, as Mike mentioned, has increased by USD 20 million. That is, to put it into context, I think Sabina had in the order of around CAD 5 million, I think, on average, as an exploration budget. So this is -- this USD 20 million, CAD 27 million is a fivefold increase to be spent in 6 months, it's a 10x increase. So we intend to hit the ground really hard. So bringing in additional dregs. We plan to complete at least 25,000 meters of diamond drilling. The allocation of that drilling will be on the Goose project, which comprises a number of deposits. But a lot of that will be on the Umwelt deposit, which is the highest grade and also the biggest contributor to the resource.

Some of that drilling will be in full to improve the density of drilling to optimize the underground planning -- underground mining planning, but also to extend what is clearly open-ended mineralization on each of the 4 deposits on the Goose project itself. That's going to be about $15 million of the budget. There's another $5 million that we intend to spend on what are clearly top-class projects, gold opportunities in this banded iron formation hosted technologies.

George, which is about 50 kilometers to the northwest of Goose is where there has been -- there is a resource there already and over 40 targets on that license, below on the -- on those claim blocks. Sabina had been drilling there this year, completed drilling, I think, 2 weeks ago, the current program. We'll get back in there and drill in George. And just to highlight I've just mentioned 2 projects there.

Within this 80-kilometer belt, this gold district, we also have another 3 project areas, Boulder, Del and Boot that have had economic intersections of mineralization, which will certainly be following up on as well over time. I think that covers Back River.

Just to get back to Mali. Mali had the lion share of the budget this year, over $34.5 million. And that really is a record amount for Mali for sure. We have more rigs turning there, more people busy in exploration than we've ever had. It's -- we've already completed over 100,000 meters of drilling in Mali. Lot of that, as Bill mentioned earlier, had been focused on infill drilling in the saprolite, so moving more material into the indicated category to support the studies that are going into the Phase 2 mill options that we're looking at in the area. That infill drilling is complete, and we're back.

We're currently updating the resource, hope to complete that certainly before the end of this quarter, and it will feed into the timeline that both Bill and Mike mentioned earlier. We haven't only been doing infill. As you would have seen in the press -- an earlier press release, I think, earlier this month, we've had some significant success in sulfides on the Anaconda properties.

At Mamba, we hit actually our highest or biggest intersection we've ever had across -- in West Mali, 8.6 grams over 46 meters. This supports another hit in the same zone, Mamba main zone of over 8 grams of nearly 16 meters. So the sulfides potentially are certainly not over yet for sure. And there are plenty of more intersections that would tend to support the potential for underground and certainly, extension of the sulfide. A lot depends into the sulfides at the Anaconda project.

Additionally, you'll recall that we acquired the Bakolobi license, which is essentially the piece of the jigsaw sitting between the 2 Anaconda properties in Medinandi, where our Fekola mine is located. We've extended the drilling onto the Bakolobi license, particularly one of the stakes, Cobra has shown to be extend over 2.5 kilometers of additional strike on the Bakolobi side of the fence. That's within the oxides. So that will certainly contribute as well.

In the last press release, we also named a -- indicated a new zone, which is further to the south, but still on Bakolobi, which we call Taipan, and we've had some pretty good intersections there as well. Yes, for instance, 28 meters at 1.8 grams, 23 meters at over 4 grams and that's really just getting started. So I think a lot more work planned for Mali, keeping those rigs and those people busy. I guess those are the highlights.

Can I -- I forgot something. Can I jump back in?

Yes.

One of the things that we've been asked to do as we've taken on this project, as you know, B2 does things a little bit different than the schedule of day or the way they were going to do it. So we've been asked to generate kind of a new capital schedule and a new operating cost profile. It is our intent to have those done in Q2. So internally by the end of this month, but I think by the end of Q2, we are ready to talk about. That also includes, as Sabina was talking about, they were talking about bringing some ounces forward from the underground. We are currently revisiting the underground, both the methodology and the schedule, and we will include that in our next update on how far we think we can push this thing as it comes up out of the ground.

Great. One of the studies that will be Sabina, at the start and will pick up is the study on potential for wind power. Obviously, we're a leader in the industry in solar power, what we've done in Namibia and Mali, but we'll be having a hard look. There's no assumptions for anything. Currently we're waiting for a study to be done, but there is precedent for it in the north of Canada. That could be an interesting opportunity in terms of reducing emissions, but also could have a positive effect on cost up there as well.

In terms of strategy going forward, we are very happy with the growth profile we have right now in terms of looking at the 2 stages of expansion, Fekola Complex and also, of course, the exciting project at Goose. And a lot of that is because of our -- one of the reasons we did the acquisition and are confident about our ability to accomplish these things subject to a study on the second mill. And I call this, of course, our extraordinarily strong financial position. But if you look back in our history, the strategy really, if you put it quite simply is that our strong operational and therefore, financial performance for years has fueled growth by our ability to do accretive acquisitions to build mines ourselves and also do a lot of exploration work. So I think that's one of the keys to our success. But we're also a very focused group. So we've heard us talk about the sequencing of the expansion of Fekola, if we go forward with the second mill, how that works within during the first expansion with trucking, which has happened -- happening now in Fekola, then goose construction and then potentially building the second mill.

So we're not going to build 2 mines at -- mills at the same time. We've always said that. But also, we're not going to be looking now as hard at the M&A, development project M&A for that same reason. We're going to stay very focused on the growth profile we have now in the company. We will continue to look at exploration opportunities, something we've been very good at. And that will include not only entering into deals with landowners or -- but also smaller companies. We've started to invest in some junior companies with exciting projects like Selwyn up in the Yukon and Matador in Eastern Canada.

So that's a pretty exciting strategy we think. Also offering to these groups that have good exploration teams offering if there's any systems we can provide in terms of looking at their exploration plans, et cetera. So a lot of junior exploration companies. Unfortunately, they're struggling these days, even with growing higher. So for a lot of these companies, I think it's quite attractive to have a friendly shareholder. I'm not sure if they're getting anybody, but a friendly shareholder would be to go. So we're going to be exploring those kind of alternatives as well as we go forward. But the thing we're going to continue to do as we've done for many years is to be very focused on what -- now on the acquisitions we've done and the opportunities we have to grow the company.

Michael, do you have anything you think we should add?

No.

Okay. Well, I think with that, we'll open it up for questions.

(Operator Instructions) Our first question comes from the line of Ovais Habib from Scotiabank.

Congrats on the beat and a strong start of year, and really great to see the development of Back River progressing well. Just a couple of questions from me. Just starting off with Anaconda Phase 2 study. It looks like based on exploration success, especially on the sulfides you pushed out the study to Q4. Now maybe this is a question for Bill as well. Would you look to change the scope of the project with larger processing facility? Or any color you can provide as to the size and scope of the project kind of looking going forward?

Yes. Surely. Once again, it's never enough to put a second mill. Now it needs to be bigger, harder, best and stronger mill. But what I would say is that we're definitely not changing the scope of the second mill that we're looking at a 4 million ton per annum oxide mill, but we -- as you know, as B2 often does, we did put in capacity to expand and/or eventually add a sulfide circuit if necessary. That's all being looked at. But really, what we're talking about is, remember, you're going to have this very interesting situation if you build the mill there because it only takes oxides, the sulfides have to come south to Fekola. So instead of kind of cheating you and saying, okay, I've got this great oxide mill, and then my sulfides, as you know, in the long term, of course, start to decrease, I'll be able to tell you, listen, my life of mine is extended because of the sulfides, which means I've now got 2 options for oxides. Don't forget we've got [Indalco], we've got Bakolobi. The whole concept is to roll this thing into a regional play and really show you what this complex can do.

Clive asked me to mention that as B2 is -- want to do from time to time, they get all of the decision-makers in a room with the technical people, and they beat these things about the head, Clive calls them swirls, where -- and we just had one yesterday. And it was an interesting swirl in the sense that all the options put on the table seem very good. It's just a question of which way you want to go inside of a larger corporate strategy.

And just any sort of color you can provide right now how things are moving along with the underground at Fekola or underground component of Fekola?

Yes. I can talk about it a little bit, and then I'll turn it over to Dennis Stansbury, who was just there working with the regulators to get the permits. But I'll tell you, remember, the exploration project -- sorry, the underground project is an exploration project at this time, with the concept to develop it and get down to the phase so you can drill it off and put the resource into reserves. So we're basically -- we've done a step-wise where all the surface infrastructure had been approved already, and now we're up to really putting in the portal and all the supporting infrastructure for that.

So Dennis, maybe you want to say a few words, because you were just over there?

Yes. We met with regulators last week. We had a good session with them. They come back with a very, very short list of questions. We're putting that together right now this week to submit. And with the tone of their letter, it sounds like we will have the permit to go full speed on that underground property next week with any luck. That's what we hope. They're ready in the pit. They're getting down to the final level. They're prepared to face for the first blast. The access is quite good. It looks -- [Robert Cross] doing an excellent job there. The work looks very, very first class. And so the -- hopefully, we'll be kicking off the first rounds and hitting underground very, very shortly.

And then maybe moving a little bit to Otjikoto. I believe open pit mining is ending in 2024. Underground kind of ending around in 2026. Do you right now see potential to increase, extend that underground mine life at Otjikoto or pretty much we're kind of wrapping up Otjikoto around in the next couple of years?

So the answer is yes. I think we've always said that there's a resource down plunge that has to be drilled off from underground, which we're getting down to that but we'll start to do that now. We've always cautioned that we're not going to extend the life -- the overall life of mine. Of course, you'll extend the underground, but it's unlikely that we'll find enough resource at that spot to extend the life of mine. We are on to something which has potential, which I think is a bit preliminary to talk about. But at the end of the day, the existing underground will not extend the life. It might extend the ounce profile, but we're certainly digging around and we're onto something we think could do that somewhere else.

More fix and exploration, so he can talk about.

Yes. About 3 kilometers south of the Otjikoto pit what we call, hopefully, the Otjikoto feeder structure, we've hit some interesting intersections. These are at -- definitely will have to be mined underground. The question here is whether we can actually get these to hang together of a sufficient strike extent to actually build up a resource that would warrant basically developing down to those levels. It is early stage, as Bill said, it's still very encouraging.

(Operator Instructions) Our next question comes from the line of Ralph Profiti from 8 Capital.

Just a couple of questions on sort of the success that we've seen on the logistics side. Is there an ability to take advantage of some of the sequencing on delivery of material -- critical material between the ice road and the sealift? Just wondering if that's being taken advantage of in order to sort of stay ahead of schedule? And then sort of a follow-on question from that. If you're talking about an early opening in February, can you put that in context for me how the -- sort of the 2022 season figured out in terms of the timing? And just sort of what's behind that more opportunistic approach? Has there actually been work done on the ice road that's opening up that window a little bit more positively?

So the answer -- I'll start in reverse. The answer is yes. So the logistics question, at the end of the day, as you know, basically what happens is you get 15,000 tons or 18,000 tons onto a vessel, they bring it up normally on the Eastern route up past Ontario and then Quebec and then down into that area. That happens -- everything has to be in by July -- sorry, by September, October. There, we have the Marine Laydown Area where we do prioritize things to come up the winter road. So that's what actually happened in 2022. They listed things which were critical for the 2023 construction season and operational season, and those came up the road first. That's why, as I said, they only got 800 out of 1,200, but that still was enough surely to make sure that we were able to maintain the schedule.

Related to the extension of the hauling season or the increased number of containers we want to bring down, the answer is yes, we -- they did kind of a deep dive after this year, and they looked at a couple of things. One, last year, they only had -- in 2022, they only had 28 trucks. We currently have -- we've increased that to 40 trucks that will come up the road. And each truck could basically do a load a day, so up and back in a day. And then we try to increase the season. The season started out in March this year for a couple of reasons. One, they changed the contracting group that did the ice road. So this was the first time that they've constructed this particular ice road. And they struggled a little bit, my understanding was with the sea ice. The sea ice has to be actually done last because it has to freeze up a little harder. So what they should have done is they should have -- what we're actually doing is they should have scheduled equipment kind of in the middle and worked out towards the sea ice and towards the site -- and from the site where the sea ice is the last to go. So that is not planned for this year.

And then additionally, there's always talk about kind of this padding material, not creating a permanent road but actually being able to build kind of a gravel, sub base up, which will allow you to get the freeze in earlier and get road in. They can actually, this year, even before the road opens up just because it's within our license area within our operational area, they can put another 6 or 7 kilometers of kind of permanent road in, that would actually fit very well, I think, with some of the exploration activities that are happening up at that end, which we're looking at.

So we see opportunities really to get these incremental gains. And of course, it's one of these things that each year, you learn more and you get more experience on that. I would say that I think 2 years ago, I heard that they brought up -- not 2 years ago, they didn't do anything 2 years ago. But the last time before this last one, they brought up 80 containers, right? So they didn't have this experience of this full on ice road. 2022, they had full on experience. And I think they've done a pretty good job looking at the Laydown Area onto itself. It is a very adequate facility complete with currently, what is it, 50 million liters -- 10 million liters of fuel capacity. We're putting up an additional 15 million liters this year, and then we'll put up more capacity on site. So we're going to have 50 million liters of fuel capacity at the end of this year. So overall, I think we're in really good shape for 2023/2024.

Yes. And maybe just a reminder, back in the day, in the Bema days, when we built Kupol, we actually had to build 470 kilometers of ice roads every year to get everything in where the road is secured. So the individuals involved in that -- a lot of the individuals involved in that are involved here. And there's always logistical challenges, but I don't -- can't think of a group more qualified to handle these types of things, working with the existing Sabina team. So we're feeling pretty good about that. Bill mentioned by looking at the second quarter to have more information on the capital cost as we see it and also the operating costs, et cetera. So we're targeting to have that available for the AGM. So at our Annual General Meeting on June 23, we'll have a lot more information to tell you about our view and why we're feeling so positive about Goose.

(Operator Instructions) Our next question comes from the line of Justin Stevens from PI Financial.

Congrats on a good quarter. Definitely a beat what I was looking for. And a few more questions just in terms of modeling for the rest of the year here. Obviously, Fekola Phase 6 was a nice boost for the quarter, but should we expect a bit of a tail-off in grade in the coming quarters as that sort of works its way through the mine plan?

Was that at Fekola?

Fekola Phase 6.

The answer is yes. We are in Q3, Q4, producing slightly fewer ounces. So it -- the grade will be lower. Yes, of course, on guidance.

And remember, last we mentioned the Otjikoto production is inflated the other way, so they kind of offset to a large degree.

Makes sense. And then just sticking with Fekola, obviously, the Phase 7 strip is underway. So that'd be pretty evenly throughout the year? Or is there going to be a bit of a bump in a particular quarter?

Well, we're already stripping in phase 7. So I'd say will continue to be throughout the rest of the year.

Got it. And just in terms of the modeling for the Fekola regional Phase 1 trucking, how should we be looking at the attributable production? Obviously, there's the mulling 10%-free-carry, does the truck saprolite going to be 90% attributable to B2? Or is that potentially still in flux?

Well, sorry. I think you're asking what percentage -- I think you must assume the state is going to end up 20%.

Yes, 80:20.

It's the same as we have for Fekola. Maybe under different mining depending on how they settle out on the final code, right, 2019 versus 2012. But right now, this could have been flux. But either way, you can expect they're going to have 20%, I think.

Got it. And that will be subject to the same sort of independent valuation procedure that happened with the initial plan, right?

That's correct.

Got it. Perfect. And then last one for me. For Goose, given the bulk of the required supplies to the -- to meet the timeline, I'm assuming you're going to be coming into the 2023 sealift to make the 2024 ice road season. So we expect a spike in terms of the capital spendings in the middle of this year?

I think we're kind of even this year. I mean...

I think we spread it out pretty evenly over the 3 quarters from Q3 -- Q2, Q3, Q4.

Yes. So if you remember what's happening, so we've already ordered the stuff, which is already -- we've already paid for all the stuff that is getting on a boat right now to go up to the Marine Laydown Area. And so that's already paid for. What you'll see is the labor is kind of -- it's -- I think I heard something like more than 90% of all the material that we need for site has already been purchased or is under PO for sure.

So yes, if you think about the POs already, then, yes, it should be fairly even. It will just be the transportation then.

It's not just labor and how we schedule that.

Q2, we can give you a better idea of timing. Right now we've scheduled it out pretty evenly through the 3 quarters.

(Operator Instructions) Our next question comes from the line of Don DeMarco from National Bank Financial.

Congratulations, Clive and team. Continuing with the question on CapEx. So it's going to be evenly distributed, but what it would -- what should we model for the magnitude of the CapEx in 2023? I know that Bill had mentioned there's going to be more color in Q2, but can you give us any kind of order of magnitude right now for what to put in our model for this year on Goose?

Well, I think what's out there is what the Sabina model has. I don't think -- at this point, we're holding that in our budget or in our estimate, right?

I think we guided -- we think it's somewhere between $750 million, $850 million, so assuming CAD 100 million, anywhere in that range. For total capital, Sabina had spent between $100 million to $200 million. So why don't you take $150 million and assume that the balance is left for us.

Yes. And remember, that includes supercharging the underground, which we're currently placing POs on as well.

And we will -- I think we'll expect that it will -- again, we haven't guided this yet, so it's coming in Q2, but you can expect they're pretty evenly balanced between 2023 and '24 with the goal of we get at least physical construction completed in Q1 '25.

Okay. And you mentioned that you extended the airstrip. Can you now fly directly to the project site from Vancouver or Edmonton?

From Edmonton, for sure, they're bringing in, I guess, Dash-8s right now with the rotations. So the answer is yes.

And just to supplement that, too, as well, we're going to be planning a site visit or the analysts up to Back River in September. So obviously, a good time of year to see the progress that we've made and good to see the airstrip first hand.

Okay, great. Look forward to that. And I noticed in the financials, it indicated that you incurred a $16 million write-off of some mineral property interest, the noncore greenfield targets, not a big magnitude, but can you just give us a little more color on where this might have been?

I can comment on the majority of that is Uzbekistan, we had 3 projects, the properties we were working on. And so we evaluated those and decided that we weren't going to pursue those. But we are still interested there's -- there are other things of interest there for us. So we're currently in discussions with the state. I don't know, Vick, if you want to add anything to that.

Yes. The 3 projects that we had in the Kyzylkum gold fields, which is near Muruntau really didn't measure up. We've identified another other area closer to Samarkand, that's closer to the capital that we're in discussions with the Ministry of Mines.

Okay. So just in conclusion and so the -- for some of these greenfield targets, I know you're kind of across the world over the last few years. So Uzbekistan still -- there's still some interest there. What about Japan and Finland? And is there any others where there might be some early-stage greenfield interest still ongoing?

Well, Finland is definitely up there as an area that we're spending quite a bit of money and putting a lot of effort in, and it's ongoing. Japan is through our interest in B Metals. They're running that project. Elsewhere, we've upped our budget in Cote d'Ivoire. Obviously, leveraging off our West African experience, the geology is the same. It's a Francophone country. It is less volatile, I guess, you could say in terms of the Francophones in West Africa, and it has huge potential. So we picked up 2 licenses there in our own right -- on our own right. Worked them up from basic -- absolute greenfield from concept through source sampling and we're basically doing -- over drilling next on 15 kilometers of strike of anomalism. So that's going well. Yes, I think those are the main ones at this point in time. We've shared a few as well other areas that we are consolidating and obviously, have a intent now in Canada, as Clive said, through placements and hopefully building those relationships with junior companies or picking up our own ground in Canada.

Congratulations again on a strong start to the year.

(Operator Instructions) Our next question comes from the line of Steven Green from TD Cowen.

Just a couple of quick follow-ups. Bill, you talked about developing a plan for Fekola and kind of giving us some guidance on that plan in Q2. Would that include kind of your road map to the 800,000 ounces or will we have to wait until Q4 with your kind of mill plan for that?

Yes. What I said was that the original plan for Q2 was going to be in Q4. So you're not going to see anything at the end of Q2. What you're going to see is a comprehensive plan in Q4 for the whole complex.

With the new resource.

With the new resource, that's right.

And would that include a new reserve as well?

A new reserve for Fekola regional complex Q4?

It depends on the outcome of the study. I mean that's why we're doing the study. Certainly, portions of that that would be eligible to be reserves, and we would evaluate all of those as far as which specific pieces would come in, I think it's too early to comment on that.

But in really kind of direct answer to your question, that is one of the reasons we're doing this whole comprehensive study is to kind of show where all the pieces fit together for this 800,000 that we are putting out there.

Okay. Fair enough. And just a clarification Otjikoto. I know you have some lower grade stockpiles there, and there's been discussion in some of your literature on that taking you out to 2030 and beyond. Is that still the case? Or is it dependent on kind of keeping some of the grade up with the underground through those years?

No. So it is absolutely the case. As a matter of fact, some of the things that we're doing with power and locking in these, we're getting some offtake agreements on some solar power that absolutely is giving us a hedge against any potential increases in fuel price type of stuff to make it abundantly clear that this project is economic after 2031 with the low-grade stockpiles.

Okay. So that remains the base case, okay.

Yes.

(Operator Instructions) Our next question comes from the line of Mohamed Sidibe from CIBC World Markets, Inc.

Clive and team, congrats on a good quarter. It's Mohamed Sidibe from CIBC on behalf of Anita Soni. She's in the mine touring off.

So most of my questions have been answered, but I just wanted to clarify on the Fekola -- on the Anaconda area of study, which will be in Q4 '23. Is the thinking to hit the ground running as soon as the study is out or would you delay the economic decision on the project for some time later? I'm basically thinking about the timeline of the 800,000 ounce gold as early as 2023. Is that still ahead?

Yes. So I would say that, obviously, we got to wait until the study comes out to get the results. But as of right now, we see no reason that our current kind of projections don't hold. I mean obviously, what we're doing is we're doing the studies to prove it. But at the end of the day, as far as how it gets -- how the Phase 2 gets scheduled, if we go, we see holding the schedule on that kind of if we do Phase 2, it will be a 2026 kind of into production.

That's perfect. And then just a final question for me, I think more on the modeling front really, thinking about the Masbate unsold ounces, how should we expect this to flow through in Q2 or maybe it will be some time later during the year?

What was it? I heard some Masbate in Q2, I thought.

Yes, exactly. Sorry. Just a question on the Masbate unsold ounces. The unsold ounces from Q1, should we expect that to be sold in Q2? Or would it be later during the year?

Yes, it's just a timing issue of getting it through customs. You can't put this on an item. It doesn't always work perfectly with the quarter end. So yes, absolutely.

(Operator Instructions) Our next question comes from the line of Harmen Puri from Bank of America Securities.

Most of my questions have actually been answered. I just have another sort of modeling question. Can you provide us with some color on sort of the grade profile at Fekola? In the results, you noted that you had a favorable mine phasing sequence start to 2023. Could you sort of provide color on as to whether or not you're still going to be hitting that 2.2 gram per ton guided number for 2023?

Yes. I don't think overall for the annual amount, we're re-guiding. We say it's at least that number. So whatever it was 2.2 gram or 2.3 gram, that is our annual number.

Yes. I mean we were right on budget in Q1 for grades, like we're right on budget.

At this time, I would now like to turn the conference back over to Clive Johnson for closing remarks.

Okay. Well, thanks, everyone, for taking the time to present the Q1 results and talk about our plans going forward. So thank you all very much. Have a good day.

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