Eldorado Gold Corp (EGO) 2022 Q4 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Fourth Quarter and Year-End 2022 Financial and Operational Results Conference Call. (Operator Instructions)

I would now like to turn the conference over to Lisa Wilkinson, Vice President, Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. I'd like to welcome you to our fourth quarter and year-end 2022 results conference call. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures in our management's discussion and analysis as well as the risk factors set out in our annual information form.

Joining me on the call today, we have George Burns, President and Chief Executive Officer; Phil Yee, Executive Vice President and Chief Financial Officer; and Simon Hille, Senior Vice President, Technical Services and Operations. Other members of the senior leadership team will also be available for the Q&A session.

Our release yesterday details our fourth quarter and year-end 2022 financial and operating results. This should be read in conjunction with our fourth quarter and year-end financial statements and management's discussion and analysis, both of which are on our website. They have also been filed on SEDAR and EDGAR. All dollar figures discussed today are U.S. dollars unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy from our website. After the prepared remarks, we will open the call for Q&A. At this time, we would invite analysts to queue for questions.

I'll now turn the call over to George.

Thanks, Lisa, and good morning, everyone. Here's the outline for today's call. I'll provide a brief overview of Q4 results and highlights before passing it to Phil to go through the financials and Simon to review our operational performance. Then we'll open the call to questions from analysts.

In light of the devastating earthquakes that took place in Turkey and Syria at the beginning of February and earlier this week, I, on behalf of the Eldorado team would like to extend our condolences to those impacted by the disaster. In the immediate period following the initial earthquakes, our mine rescue teams from Efemçukuru and Kisladag mobilized to the impacted area.

A number of these team members are highly trained in underground mine Rescue, a much-needed skill for earthquake rescue and recovery efforts. The teams were able to save several lives and recover victims so they could be returned to their families to be agreed for. Additionally, [two Prague], Eldorado's tricky subsidiary, donated blankets, raincoats and other essential supplies to support those in the earthquake affected regions.

Working with our colleagues in Turkey , we will continue to provide aid and assistance to support the relief efforts as needed in the days, weeks and months ahead. Fortunately, our operations are located over 1,000 kilometers away and were not impacted by the earthquakes. We will continue to assess the situation and our top priority, as always, is to ensure the continuing safety and well-being of our team members.

I would like to thank our entire team in Turkey for responding so quickly and compassionately to this strategy. These efforts have been an inspiration for all of us. We faced operational challenges in early 2022. However, through diligence and resilience, we improved operational performance continuously over the year. Fourth quarter production was strong across all assets, which resulted in second half production being 20% higher than first half. Our full year production of almost 454,000 ounces was 1% below the bottom end of our guidance range.

In conjunction with our financial release yesterday, we published our 2023 guidance and 5-year outlook. We have introduced Skouries into our longer-term outlook with commercial production expected by the end of 2025. We are forecasting gold production to be between $675,000 and 735,000 ounces by 2027, representing a 55% increase over 5 years. Simon will speak to the operations and our guidance in more detail later in the call.

Now touching on cost. We continue to face inflationary pressures similar to the wider market. Throughout 2022, we experienced price increases for commodities and consumables, including electricity in Turkey and Greece and fuel and reagents at Kisladag. As a result, our full year 2022 cash operating costs and total cash costs were above our consolidated guidance, while our all-in sustaining cost was within guidance driven by our disciplined management of sustaining capital. Bill will touch on our costs in more detail later in the call.

Shifting to Skouries. In December, we announced the milestone news regarding the Greek bank financing and conditional Board approval for the full restart of the project. The project level financing covers EUR 680 million or 80% of the expected funding required to complete the project at competitive interest rates. The remaining 20% of the project funding will be fully funded by Eldorado. The financing is subject to customary closing conditions, which are expected to be completed in the first quarter.

With Skouries financing announced, we have delivered on our multiyear strategy in Greece, including the approval to deploy dry stack tailings, the amended investment agreement, investment in early works construction and finally, a fully funded financing package that allows us to shift into project execution and achieve commercial production by the end of 2025.

On the sustainability front, in the fourth quarter, we completed our first ever integrated SIMS Compliance Audit at Lamaque. As part of this global process, a delegation of auditors, including colleagues from our operations in Greece and Turkey A, reviewed Lamaque performance as set out in our internal standards referred to as a sustainability integrated management system. PWC provided limited assurance against all of the Mining Association of Canada's towards sustainable mining protocols and site compliance against the World Gold Council's responsible gold mining principles. The completion of the audit is a major milestone for Lamaque and Eldorado as we journey towards full implementation of SIMs and leading ESG performance against our peers.

I'll stop there and turn things over to Phil for a review of the financial results.

Thank you, George. Good morning, everyone. Slide 6 provides a summary of our fourth quarter and full year financial results. Eldorado reported net earnings attributable to shareholders of $42 million or $0.23 per share in the fourth quarter a net loss of $49 million or a loss of $0.27 per share for the full year. After adjusting for onetime nonrecurring items, including deferred tax expense related to foreign exchange translation and write-down of assets, adjusted net earnings was $26 million or $0.14 per share in the fourth quarter and $10 million or $0.05 per share for the full year.

Free cash flow in the quarter was $11 million, primarily due to higher sales. Cash operating costs averaged $741 per ounce sold in the fourth quarter and $788 per ounce sold for the full year, which was 5% above the 2022 guidance range, mainly driven by price increases for commodities and consumables. All-in sustaining costs averaged $1,246 per ounce sold in the fourth quarter and $1276 per ounce sold for the full year, which was in line with the guidance range.

In 2023, our consolidated cash operating cost guidance of $760 to $860 per ounce sold and all-in sustaining cost guidance is $1,190 to $1,290 per ounce sold, which reflects ongoing inflationary pressures related to key consumables such as cyanide, electricity, diesel, explosives, cement and labor.

In line with commitments under our collective bargain agreement in Turkey, labor costs increased in January 2023 to support our workforce with the rising cost of living related to high inflation rates. Labor costs in Turkey are based in lira, which has remained stable in recent months. As a result, cost increases in local currency are not expected to be offset by currency movements as they have in the past.

Capital expenditures on a cash basis were $81 million in the fourth quarter and $290 million for the full year, which included continued investment in growth projects at Kisladag and early works at Skouries. Income tax recovery is $24 million in the fourth quarter and $61 million for the full year. Current tax was lower in 2022 compared to 2021 due to lower sales volumes, partially offset by lower investment tax credits.

Turning to Slide 7. At quarter end, we had unrestricted cash, cash equivalents and term deposits of $315 million, up slightly from last quarter. We continue to focus on maintaining a solid financial position, which provides flexibility to unlock value across our business.

With that, I'll now turn it over to Simon to go through the operational highlights.

Thanks, Phil, and good morning. I'd like to start with our health and safety highlights. Recently, Eldorado's Quebec exploration team received Safe Day Everyday Gold Award. The greatest number for the greatest number of work hours without a reportable injury among Canadian exploration groups. From the Association for mineral exploration and Prospectors and Developers Association of Canada. I am very proud of the team for this recognition as it demonstrates our strong safety culture.

Now moving to our operating results. We produced 128,453 ounces of gold in the fourth quarter with a cash operating cost of $741 per ounce sold. Full year 2022 gold production was 453,916 ounces, which was just below the bottom end of guidance range, driven by lower production at Kisladag and Olympias. Looking ahead to 2023, our consolidated gold production guidance is forecasted to be $475,000 to 515,000 ounces, down slightly from our previously published 2023 guidance, which takes into account modifications to the production plan and higher stope turnover expected at lemak as well as an assumed slower ramp-up at Kisladag with the commissioning of the fine or agglomeration drum in the first half of the year.

Slide 9 looks at our operations in more detail. Starting at Turkey, at Kisladag fourth quarter production was 40,307 ounces and cash operating costs of $709 per ounce sold. In the fourth quarter, 8 larger high-capacity conveyors were installed, which has improved material handling and on boiled agglomeration. As we mentioned last quarter, in conjunction with the Northeast leach pad, we have also purchased an agglomeration drum which will treat a final split of the HPGR product to improve quality, consistency and favorability on the pad.

We are confident that we will have the agglomeration drum commissioned in the first half of 2023 as the equipment is on site and construction is progressing well. With this investment, stacking is expected to continue on the existing leach pad until mid-2023, at which time Stacking is expected to commence on the new North leach pad.

Looking ahead to 2023, Kisladag 's production guidance is between 160,000 to 170,000 ounces of gold. To achieve this, Kisladag is expected to mine in place on leach approximately 12.5 million to 13 million tonnes of ore at an average grade of 0.7 to 0.75 grams per tonne. At FN2 crude, fourth quarter gold production was 21,362 ounces, cash operating cost of $738 per ounce sold. Gold production throughput and average gold grade at Efemcukuru were in line with the plan for the fourth quarter and the full year.

For the year ahead, Efemcukuru production guidance is forecasted to be 80,000 to 90,000 ounces of gold. The site is expected to process approximately 530,000 to 550,000 ounces of ore at an average gold grade of 5.5 to 6 grams per tonne.

And now moving to Lamaque. Fourth quarter gold production was 51,349 ounces, a 20% increase over last quarter, driven by higher grade and increasing throughput outperformance at the mill. Cash operating cost was $541 per ounce sold. Resource conversion drilling from the Omak exploration drift will continue in 2023, targeting the upper 2/3 of the Lamaque deposit. Results of conversion drilling up to mid-2023 will be incorporated in our mineral resource and mineral reserve update at the end of the year.

In 2023, Lamaque production guidance is 170,000 to 180,000 ounces of gold, and this is based on mining and processing 860,000 to 870,000 tonnes of ore at an average gold grade of 6.25 to 6.75 grams per tonne.

Finally, moving to Greece. At Olympias, fourth quarter results was 15,435 ounces, and the cash operating cost was $1,325 per ounce sold. Overall, 2022 production for Olympias was below plan due to lower-than-expected tonnes processed and the availability of ore stopes. We continue to implement an operating initiatives designed to improve productivity.

Next year, Olympia's production guidance is 60,000 to 75,000 ounces of gold, and the site is expected to mine approximately 460,000 to 490,000 tonnes of ore at an average grade of 7.5 to 8.5 grams per tonne.

I'll stop there and hand back to George for closing remarks.

Thanks, Tim. We have an exciting year ahead of us. We are focused on delivering our operational guidance and transitioning to project execution at Skouries. Our priority is to continue to implement our growth strategy with production expected to reach between 675,000 and 735,000 ounces of gold by 2027, which will position us well to maximize value for all stakeholders.

Thank you for your time. I will now turn it over to the operator for questions from our analysts.

(Operator Instructions) Our first question comes from Kerry Smith of Haywood Securities.

Congratulations on a good quarter, guys. For Skouries, my first question is, you have $240 million to $260 million of CapEx this year, and could you just maybe kind of give me a rough idea as to what the CapEx might be like for 2024 and 2025 to finish out that project, just the spend?

Yes. Thanks for the question, Kerry. And congrats. Yes, next year, we expect the capital cost to ramp up above that $250 million middle point of guidance and then dropped down in the final year. We'll obviously have some revenue coming in, in the second half of 2025 as we do the commissioning.

So if I was to assume $300 million for next year and then, I guess, we assume USD 750 million in total, just have the difference in 2025. Would that be reasonable in George?

That's reasonable, Kerry.

Okay. Okay. Great. And just on the EUR 680 million debt package that you've pretty much got finalized, and you hope to have it all signed up and done here by the end of the quarter. How will the dry down schedule work? Can Phil, maybe just remind me how that schedule will work, like how you have to spend equity as you spend the debt or whether you can spend so much debt before you have to fund any more equity? Just how it will work.

Maybe I'll answer a high level and Phil can jump in. So the way it works, Kerry, is it's an 80-20 split between ourselves and the project financing. We've prefunded the part of the capital required to reach commercial production from the investments we did last year that were part of the feasibility study. So we're a bit ahead of the game. And so the banks have to play catch up at a 4:1 ratio on the funds we completed last year.

So there's EUR 120 million of bank base prefunding, EUR 30 million basically. And so we don't expect to spend anything off our balance sheet once we do first drawdown in the first quarter until Q3 of this year.

Okay. Okay. So in Q3 is when you think you'll start participating in terms of funding then?

Yes. I mean we're still funding. We are ramping up the construction activities. In fact, this week. We poured concrete for the first time on this restart. So yes, we're continuing to fund in Q1 once first drawdown happens, we expect the funding to come from the banking syndicate until the third quarter of the year. And then we'll be at a 80:20 funding rate after that.

Right. Got you. Okay. Okay. Great. That's helpful. And just on Kisladag with the (inaudible), what sort of recovery are you expecting once that [agglomerator] is up and operational.

So Kerry, what's included in our guidance right now is still a 56% recovery that was justified as part of the capital investment for HPGR. This year, the first quarter was pretty challenging for us. We had an abnormally cold winter, but we also found the need to add cement as a binder to get good permeability through that finer ore that came out of the HPGR. And so those challenges is really why we didn't hit our guidance last year. And as you saw, each quarter, we ramped up the tonnage and began to deal with the reality of agglomerating cement on the conveyor belt.

So we're back, I'd say, at the run rate we had on a tonnage basis prior to cement agglomeration. What the finer drum does for us, it makes it a better agglomerate product. We're going to be agglomerating the fines in the crushing circuit, and that will be combined with the course of material. And so the cement won't be added on conveyor belts. So it will be added in the crushing facility. We think that's going to give us some additional relief on the conveyance system itself.

Now in terms of what ultimately recovery ends up we're pretty optimistic we're going to beat the 56%, but we haven't publicly put a number on it. Bottom line is we know we get better permeability through the pad, and that has a pretty positive effect on lead cycle time. And ultimately, we think we can further optimize how fine the HPGR crushes the ore with a better agglomerate and that could lead to better recoveries.

So we're not putting a pin on what we think that upside is, but we're believing this year, we'll be able to really sort that out with the final agglomeration commissioning being completed midyear. We'll have about 6 months to understand the benefits we're getting out of that, that optimization between crushing finer, maintaining good permeability through agglomeration. So pretty optimistic we can beat the 56%, but we haven't included that upside in guidance, and it's really too early to pin a number on it.

And what is the size of the fraction coming out of the third stage of crushing on like how fine is fine? And what percent of that...

(inaudible) Go ahead, Kerry. Sorry.

Sorry, I was just going to say what percent of the total tons of the pad actually is going to go through the (inaudible) from the fine circuit to be agglomerated.

Yes. Kerry, it's Simon. We're probably planning around 30% of the tonnage to go through the final agglomeration. It potentially has higher capacity than that, but we -- the plan at this moment is to take that 30% feed rate. To the size of the articles, the answers probably less than [$1 million] on average. That's what we're sort of classifying is fine.

Yes. And just to bring a little color around it. We're really trying to get the fines to stick together in kind of balls to create that permeability and allow oxygen to get into the pad. You want a little bit of course, to get in there with it to give the core of those glomerate balls to have something to build upon. But basically, we're trying to get the finer material with a bit of course, into that drum to make a good agglomerate and to take pressure off the transfer points between the grasshopper conveyors, which is where we're doing the mixing currently.

Right. Okay. Okay. Yes. It almost seems like maybe the mill would have been the way to go. Are you getting pretty fine there now?

Yes. Kerry, hindsight is always 2020. If you'll recall, the mill scenario was $0.5 billion capital upfront. So at a high metal price, the mill is a better answer, but based on the decisions we had at the time, we made the right decision with heap leaching.

Right. And just last question, if I could. Just when would Ormaque be incorporated into the mine plan, when will we have a reserve there we want the drilling the pivotal level where we can get a reserve. Is that the end of this year then, George?

So we're doing the infill drilling as we speak. We're making good progress on that. Can we need an adequate amount of conversion to be able to call it a reserve. I'd say we're on track with getting that done end of the year, early next year. And we'll do a technical report when that's all completed.

In terms of the timing for bringing on Ormaque, I mean that we need to do trade-off studies to say what's the best solution here. You can make arguments right now on both sides. If you bring Ormaque in early, you really have 2 mining fronts. And as we get deeper in triangle, that would be a positive. Of course, if we do that, we need to put some capital in upfront to put in ventilation and set up for stope. So we'll be doing a trade-off study as we complete the ore reserves to determine what the optimum life of mine scenario is for Triangle and Ormaque.

Right. Okay. And that trade-off study won't happen until you've got the infill drilling done. So that would be a 2024 event then, I guess, to do the trade-off studies.

Correct. That's correct.

Okay. Got you. Okay. That's helpful. Congratulations.

(Operator Instructions) Our next question comes from Tanya Jakusconek of Scotiabank.

Great. Thank you very much for the capital that you answered for Kerry with respect to Stories and how that's going to pan out over the next few years. What I also wanted to ask is, how should we be thinking about the sustaining capital going through as we go to that 700,000 ounces per annum rate by 2027. If I do a quick calc right now, it looks like you're paying about $250 an ounce on sustaining capital. It seems a bit low relative to some of the other companies that are coming in at 350 to 400. Just wondering how I should see that going forward.

Yes. Well, I mean when you look at the existing portfolio on sustaining capital, I think the run rate on sustaining is going to continue. So if you're talking about over the 5-year guidance, it's really bringing in Skouries. And for Skouries, the copper byproduct revenue is going to pay all the sustaining and operating costs. So we end up with a slightly negative ASIC. In terms of the sustaining capital number, I don't have that number right at the tip of my fingertips. But I think I can probably answer that before this call is over. It's somebody to pull the number.

Okay. That will be very helpful. And just also my other question has to do with just how do you see the year play out? You've got obviously, you've given some guidance that second half is going to be stronger with the Kisladag having a stronger performance. What about Lamaque? Because Lamaque last year was -- had higher grade in the first part of the year and then lower grade. Just wonder how Lamaque plays out this year.

Yes. So for Lamaque, it's -- again, this year, going to have a bit of a stronger second half than first half driven by grade, probably not as significant as it was last year, for sure. And then... The first part of the question?

No, it was just -- it was how that's panning out. So if I think about your production profile during the year, would it be like a 45% first half, 55% second. Would that be a reasonable assumption given Lamaque and Kisladag both second half?

Yes, that's a good assumption. And just to follow up on Kisladag. Really what's driving Kisladag, we're doing a tie-in to that HPGR. We're doing a rebuild on the HPGR for the first time. So we've tied that shutdown to get all that work done at one time. So we're going to be down for a number of days during that tie-in. And then we're expecting some better performance in the second half, at Kisladag just from a grade recovery perspective.

Okay. That's helpful. And then my other question has to do really with Olympias and just the expansion permit. I just want to try and understand what's going on there. And in your 5-year guidance, what have you assumed for that? Because we've continued to wait for this pyramid. I think it was 2022, now it's 2023 in terms of how do we deal with the ore. So I just kind of wondered what you have in your forecast and where are we on your thinking there and the permit?

Good question. So a couple of components to that question. First, I would say, permitting itself. So this is a modification to the EIA that we're seeking. And that process requires public consultation, after the public consultation in Greece, there are a lot of departments within government that then review the consultation and look at all the environmental issues that need to be addressed.

We're pretty well through -- we're done with the consultation. We're pretty well through the comment period from the various departments. And we're in the stages now of finalizing the document itself that will be the control document for our Cassandra operations. Now the significant change here is the ability to increase capacity in the mill and to be able to move more tons out of the underground. So obviously, noise, vibration, water quality, air quality or all things that are modeled and monitored.

So I would tell you that process has taken longer than we would have liked, but confident we'll get that permit this year. It's not on the critical path for the ramp-up of Olympias. So on your question, the 5-year guidance that we have this year and we had last year assumes we get the EIA assumes we make some minor capital investments to allow higher throughput through the plant. There's a bit of capital on the Stratoni part included and a bit of capital on the underground to support the ramp-up.

The critical path on making all this happen is really getting the tons out of the underground. And last year, we made good progress. In the fourth quarter, we had our highest tons out of the underground. Now when you look at our performance at Olympias from a cost perspective, it wasn't a good quarter. And the challenge we have, Tanya, is that we're in a process. We've got to reduce the cost and drive the denominator up at the same time. On the cost front, one of the major drivers is the number of people we have. And we shut down the Stratoni Mavres Petres operations last year. It's our -- it was our noncore base metal mine. Lack of reserves, old equipment. We came to the conclusion that it wasn't going to be profitable in this current environment, and we shut it down. We did not lay off the workforce. We've had reductions last year. But we're carrying a larger workforce than we need to run Olympias.

And so our costs haven't come down even though we are making progress on productivity and efficiencies. This year is -- the year is going to change. And it's because as we ramp up the Skouries operation, we're going to be creating significant jobs during the construction phase. And as we move into production, we'll be adding jobs from an operating perspective. And so we've made the decision to cushion the blow on the workforce and allow them -- a lot of these new jobs to be created, allow people to move out of the redundant jobs in the construction jobs and ultimately, into new operating jobs.

So we're carrying a higher burden on labor. We are improving the productivities and efficiencies. And this year, as you see from the guidance, we're expecting higher production, and we're expecting those costs to come down materially from what they were last year. Once we ramp up production post the permit and post delivering on productivities and efficiencies to support this nominal capital investment, then you'll see another kickup in both production, as indicated in the 5-year plan, but more importantly, driving those unit costs down and creating margins and profitability.

Okay. If I remember correctly, and remind me if I'm wrong, but I thought like the expansion itself was going to cost in sort of like the $60 million range or thereabout just for the -- is that still a number that I should be using?

Yes. $650 million is still the number. And from a current perspective 400...

I was talking about the CapEx.

Oh, sorry, I thought you were talking production. Could you repeat the question?

Yes, it was just on the expansion. When you said there's some monies that have to get to do all of that besides the underground, which I'll leave but everything else on the infrastructure, I think getting to that 650 tonnes like that was going to cost about $60 million, 60. Is that still?

Yes, that number has come down a bit. We're in the range of $35 million to $40 million. And the reason for the drop, we've had success in debottlenecking the plant of this year without substantial capital. So in looking at that success, we've taken down that expansion number to between $35 million and $40 million.

Okay. And then just in your 5-year plan just to finish off, when you've assumed you get your EIA this year? And then when are you going to the expanded rates?

Yes. In 2025, we're assuming we're at the expanded rate.

Okay. And given we're having all of some movement of people from Stratoni and from Olympias going to scores, what are the whole -- what would be the holding cost we should think about through the income statement for Stratoni this year?

(inaudible)

And then I'll leave it. If I could get the holding costs and sustaining capital, that would be awesome.

Yes. I think as George has outlined, Tanya we do expect to see the holding costs on the study until Scores restarts construction. So in the long term, we're anticipating impaired maintenance costs for Mavres Petres Stratoni to be in the range of $2.5 million to $3.5 million a year.

Okay. And so anything on the sustaining you can help me with longer term? Or should I use that $250 or maybe $150 million per year.

On the sustaining CapEx?

Yes.

So the sustaining CapEx, I think, for the current operations is probably pretty consistent with what we've seen in 2022. And then you add on Skouries, and the sustaining CapEx or Skouries would be in line with the feasibility study. But over time, as we go through the 5-year plan, you're going to see sustaining CapEx at Kisladag and Lamaque start to decrease.

Yes. No, fair enough. Okay. No, I appreciate all of the insights.

Our next question comes from Mike Parkin of National Bank.

Just a follow-up question on Olympias. You report your tonnes milled for the operation. Are you building a stockpile because I'm just noticing like tons milled in 2022 versus 2021, was fairly flat, but your comments are you're getting better performance out of the mine.

No, we don't have much of a stockpile. Really, what you looked at as a tough Q1 in Olympias due to across our portfolio, we were hit by COVID for the first time. We had high absenteeism and every one of our sites were impacted. So Olympia has got hit with that in Q1. And the better performance is really in the second half at Olympias ramping up that tonnage. So overall, year-over-year, you didn't see much improvement. But if you look at the second half and fourth quarter production out of Olympias relative to prior quarters, a significant [uptick].

Okay. So you could -- it's fair to assume what's milled is what's mined.

Yes. There's just very little capacity to stockpile material at Olympias underground or on the surface.

Okay. And then so any kind of tick up in production year-over-year is largely grade-based until we'll get this expansion online in 2025? Or you're expecting some tonnage improvement year-over-year as well?

Yes. We're expecting tonnage improvement this year over last year. So fourth quarter, again, we had good tons, but we didn't in the first half. So we're expecting to get better tonnage out of Olympias and more consistency this year than last.

And again, in 2024, you'd expect tonnage to be up again?

Well, it's really permit dependent. So we're going to be pushing that production out of the underground as hard and fast as we can. And when we hit the bottleneck of the plant, it will be that expansion capital required to debottleneck it. And I don't know, maybe it's helpful to just add a few comments on Catalyst for Olympias this year. There are a number of projects underway that will be completed this year. They're going to support better economics. So one, we've been running with the transformer that is at its full capacity. We've completed construction on an upgraded transformer that will -- is suitable for the expansion that's underway, but will lower our unit cost for electricity just because we're right at the top end of that old equipment's capacity.

We're waiting for turnover and tie-in from the national grid and expect that to happen in the first half. A number of other projects that we've talked about in the past, we're going to emulsion blasting that enables us to have longer blasts, better productivity in the mining cycle. We've got the permits for it, a piece of gear being manufactured in Europe is expected to be deployed in Q2, and that's going to drive productivity and efficiencies in drilling and blasting and a whole mining cycle.

So there are a number of catalysts just beyond the labor that I mentioned earlier that are going to drive better performance out of Olympias and just note that this has gone slower than we would have liked. And I know this is an opportunity for us to gain a bunch of credibility to get Olympias into a profitable criteria.

Maybe one last comment. And it is a pretty significant bottleneck right now is ventilation. We are in the middle of constructing some new ventilation fans on surface that will make a material change in air flow, allow us to be finding more faces underground, open up in parallel areas to be mining. So there are a number of projects underway that are going to help our team in country to improve their performance and then getting the full-time [equivalent] workforce consistent with Olympias being profitable. We expect that to happen as well in the first half of this year.

(Operator Instructions) That is all the time we have for today. And this concludes the question-and-answer session as well as today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.