Galiano Gold Inc (GAU) 2024 Q2 法說會逐字稿

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Galiano Gold Inc. second-quarter 2024 financial results conference call. (Operator Instructions) Mr. Matt Badylak, President and CEO of Galiano Gold, you may begin your conference.

Thank you, operator, and good morning, everyone. We appreciate you taking time today to join us on this call to review our second quarter 2024 Galiano Gold results that we released last night.

We'll be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary notes and risk disclosures in our most recent MD&A as well as this slide of the webcast presentation.

Our release yesterday details our second quarter 2024 financial and operating results. These should be read in conjunction with our second quarter financial statements and MD&A available on our website and filed on SEDAR and EDGAR. Also, please bear in mind that all dollar amounts mentioned on our conference call today are in US dollars unless otherwise noted.

With me on the call today have Matt Freeman, our Chief Financial Officer; and Chris Pettman, our Vice President of Exploration. I will initially go through the highlights and take you through the operations. Matt will then discuss financials. Chris will present a high-level exploration overview, and I'll wrap it up and open up for Q&A.

On slide 5, starting with safety. During the quarter, we had zero lost time injuries on site and no total recordable injuries. This results in a 12-month rolling LTI and TRI frequency rate of 0.15 and 0.6 million man hours worked, respectively. Health and safety remains at the forefront throughout our organization, particularly as activity has ramped up on side with the recommencement of mining activities. We consistently strive to reinforce our commitment to zero harm and the implementation of best safety practices at the Asanko Gold Mine.

As we ramped back up into hard rock mining operations at the Abore pit, our gold production during the quarter totaled just over 26,000 ounces of gold were partially impacted by the raining season in Ghana, which resulted in wet ground conditions, slower mining rates and ultimately, lower mill throughput. I'll get into this in more detail shortly.

On the flip side, through our early 2024 infill drilling program at Abore, we have increased our Abore reserve base by 45% or 151,000 ounces which has led to a larger pit shell at Abore, also increasing near-term strip ratios as we've moved more waste material. As a result of the slower-than-expected ramp-up and more backfill waste material in an older portion of the Abore pit, we are reducing our full year guidance to between 120 to 130 ounces of gold. On the cost front, we have recorded all-in sustaining cash costs of $1,795 per ounce. Our costs on an absolute basis are in line with expectations but we are revising all-in sustaining cash costs higher for the full year to between $1,975 and $2,075 per ounce as we expect lower production and investments in additional stripping at the Abore pits.

Galiano's liquidity remains at the top of our peer group with zero debt and $123 million in cash. As we continue to generate positive cash flows from our operations and maintain a robust balance sheet, we remain uniquely positioned to execute on our strategy of becoming a leading mid-tier gold producer. I won't steal Chris' thunder and leave it to him to discuss our exploration progress during the quarter.

Taking a look at our corporate slide, we've had a very busy quarter. We have strengthened our Board of Directors with two new additions. I'm pleased to welcome Navin Dyal and Dr. Moira Smith and look forward to working with them in the future. I would also like to thank Dr. Michael Price for his 10 years of service as he stepped out from his seat at the last AGM in June.

I'm pleased to announce that we have hired Michael Cardinaels as Executive Vice President and Chief Operating Officer. Mike will be joining us effective September 3. He brings over two decades of mining experience across various commodities having held progressively senior operational roles throughout his career. Most recently, he was the general manager of Yaoure mine after a successful five years at the Sissingué mine, both with Perseus Mining Limited. In early July, we released our 2023 annual sustainability report, where we examined our 2023 performance against objectives and laid out our 2024 goals, which we continue to track towards achieving.

On Slight 7, I'd like to highlight the progress we have made ramping up mining operations at Abore. Our mining contractor will complete final mobilization in August, which has occurred slightly slower than expected. That said, we have seen significant mining rates increasing production by 50% quarter-on-quarter since Q4 2023. During the quarter, we have experienced some challenges with the rainy season, in particular, saturated ground conditions in the upper part of the waste material. I want to stress that these are normal course start-up issues, and we anticipate these are largely behind us. As mentioned previously, the significant increase in our Abore mineral reserve is expected to give us more flexibility and enhance the optimized life of by plan. We anticipate this to be completed later this year in Q4.

On Slide 8, I cannot emphasize enough the impressive growth that we've seen at Abore, which highlights the value that we are continuing to add to the AGM since the delivery of the 2023 technical report. This ore body remains open at depth and potentially amenable to further expansion through additional drilling and potentially high gold prices. On the back of positive drill results, an increase of mineral resources in Q1, coupled with a rising gold price environment, we anticipated an expansion in mineral reserves would follow. At this time, we proactively stepped out and began mining a larger pit shell in Q2. This larger pit shell impacted strip ratios and deferred some ore production during the quarter.

Looking at some of our key optimization projects underway at the AGM. Our tailings storage facility evaporators have been commissioned in early Q2 and are now fully operational and I'm pleased with the results we are seeing thus far. The CIL tanks were unfortunately delayed due to a port incident in Turkey that hit one of our containers, and we had to wait for one new tank to be replaced. That said, we are back on track now and are eager to get them back up and running or get them up and running in the circuit. This is expected to be completed in Q4 this year.

Looking at the secondary crusher installation. This is an upgrade that will maintain the nameplate capacity at 5.8 million tonnes per annum in treating harder material -- the engineering and early earthworks are already underway, and we expect commissioning in the first half of 2025. With that, I'm now going to hand the time over to Matt Freeman, our CFO, to discuss Galiano's financial results.

Thanks, Matt. Good morning, everyone. On slide 10, as you can see, Galiano generated revenues of $64 million in the second quarter, which culminated a net income of $8.8 million and adjusted EBITDA of $17.6 million.

As Matt outlined, Q2 production was lower than we had anticipated. But from a financial perspective, operating costs in aggregate remained consistent or slightly below recent quarters. In particular, I'm pleased that we're able to report mining cost per tonne below $3 per tonne mined, which is in fact lower than estimated in the technical report from early 2023.

We've also remained disciplined with capital deployment, only spending where critical and with clear line of sight to value creation. The largest ongoing projects, as Matt mentioned, include the construction of two CIL tanks that will increase residency time and expected to have a positive increase in recovery rates across our deposits. And secondly, the installation of a secondary crushing circuit, which will assist in maintaining throughput at or above name paid levels even processing harder fresh ore from Nkran and Abore.

On to slide 7, you can see this close attention to costs highlight the strong gold price environment has meant that even while undertaking a significant stripping campaign to access in Abore, our liquidity and balance sheet remains very strong. We ended the quarter with $123 million of cash and still have no debt. Here it really demonstrates how our cash balance has benefited from the transaction consolidate the Asanko Gold Mine and how it has remained a strong sense.

Moving on to slide 12. As previously mentioned, we were pleased to see the increase of 45% in the Abore mineral reserve on the back of the successful infill drilling in '23 and early '24. This increase in reserve requires a substantially larger pit to deliver those ounces and in the current price environment provides significant additional value to the company.

The implication of this large strip however, as Matt mentioned, is that it will be required to strip more waste material over the balance of 2024 than we originally planned, and therefore, access less fresh ore in 2024. So we'll be supplementing production with lower grade stockpile material. Along with the lower Q2 production and plan, this means that we now expect to produce between 120,000 and 130,000 ounces this year, rather than 140,000 to 160,000 ounces that we previously guided to. Overall, though, we're pleased that deferring some ounces this year ultimately leads to more than 150,000 ounces added to the life mine plan. Additionally, given the lower expected production, our all-in sustaining cost per ounce is expected to increase to between $1,975 and $2,075 per ounce sold which indeed does include all of the stripping activities at Abore.

But I'd like to reiterate that underlying operating costs are actually trending quite well. So we're confident that once production starts to increase on the back of high-grade material, we'll start to see those all-in sustaining cost numbers come back down in 2025 and beyond. So although Q2 was a lower production quarter. Galiano remains in good financial shape to execute on our corporate strategy. and to continue to add value to the AGM. With that, I'll turn the call over to Chris.

Thanks, Matt. For the next few minutes, I'll be discussing our exploration activities and results for the first half of the year. And as always, our exploration efforts are focused on maximizing the value of our existing deposits through our near-mine work while also generating new organic greenfield opportunities through our regional generative efforts. And we've had another successful near-mine campaign so far this year that has been focused on three of our main deposits, those being Abore, Midras and Adubiaso.

As Matt discussed, Abore reserves were increased by 45% on the back of our 2023 and our Q1 2024 drilling. 2024 drilling has proved that mineralization is continuous and robust, at least 30 meters below the current reserve fit and is open at depth for intercepts, including 22 meters at 3.8 grams a tonne and 9 meters at 10.8 grams a ton below the south pit amongst others.

Phase 2, the Midras South conversion drilling program that consisted of approximately 7,600 meters was completed successfully in Q2 and results will now support a 2024 main reserve expected by the end of this year. A small infill program at Adubiaso confirmed the robust nature of mineralization, and results will now be used to support planning for potential mining.

Our focus on generating and testing new regional targets at the AGM continued throughout the quarter with the continuation of follow up drill testing at Gyagyatreso and first past drilling in Akoma which is formerly known as Target 3, which I'll touch on a bit more detail on the next slide. Preparatory work and crop compensation activities at Sky Gold B were undertaken throughout the quarter with the first drill test on schedule to begin in the next two weeks, which we're very excited about.

The Akoma target is located on the northern extension of the Miradani Shear Zone and fits approximately five kilometers from the process facility at Nkran, was identified as a priority drill target following prospecting activities in 2023, and our initial drill test of three primary targets in the area was completed in Q2, totaling just under 4,600 meters. We're very pleased with the initial results of gold mineralization intercepted in all three zones.

Mineralization is associated with quartz shear veins as a typical of the AGM deposits and our best intercepts were seen in the northern zone and include; hole 3 with 4 meters at 31.57 grams per tonne; hole 8, 16 meters at 3.57 grams per tonne; hole 6, 7 meters at 6.89 grams per tonne; hole 15, 10 meters at 2.63 grams per ton; and hole 4 at 6 meters at 6.96 grams per tonne gold. Now of notice hole T3RC24-003, which ended in 31.57 gram material. This is a hole we weren't able to complete due to ground conditions, so it remains open at depth and along strike. Interpretation of these results is underway, which will support likely follow-up work in the near future.

We're very happy with progress in the first half of 2024 as we are efficiently moving targets through our exploration pipeline. Aside from new mine's successes and new encouraging results of targets such as Akoma, we are continuing to identify and prioritize additional targets through early-stage ground activities across the AGM tenement package and are excited to continue drill testing in the second half of the year. With that, I'll turn it back to Matt.

Thank you, Chris. Before I close out the official presentation here, I want to remind the listeners of how much the company has changed in the last 12 months. Notably, we have completed the transaction with Gold Fields, which in turn puts us on the path to becoming a mid-tier gold producer. While we've had a challenging quarter with a ramp-up, we remain confident and steadfast in our vision for long-term value creation and growth as a company. With that, I'd like to turn it back to the operator and open up for the Q&A session.

(Operator Instructions) Heiko Ihle, H.C. Wainright.

Hi there. Thanks for taking my questions and welcome to Michael assuming you're already listening in on this call.

Thanks, Heiko. Good to have you this morning.

Always. It actually gets to be pretty giddy asking a junior minor that question. But with your 250 million shares outstanding, we're looking at a market cap of $330-ish million today. You got $123 million of cash, that's $0.48 a share. At what point is that just enough? I mean at what point do you think you can actually start paying out some incentives to your shareholders, be it through a dividend, a buyback?

I'm not looking for definite answers here, but maybe just walk me through your thought process on that issue, please?

Yeah, Heiko, thanks for your question. It is a good one, and it's one that we do get quite often. I mean I think ultimately, what we want to do here is build a long-term value for our shareholders. And we see that requires a little bit of investment of the capital that we currently have on our books, both with regards to implementing our life of mine plan, which you'll note does require a significant amount of capital to access high-quality ounces in the Nkran pit. And I think we've discussed that in the past. So there's a portion of that cash that's certainly allocated for that project.

In addition to that, I do feel that we're in a position to be able to use our cash to advance value for our shareholders in the current stock price environment by looking at very specific and unique M&A opportunities where we can utilize our cash to potentially add value to our larger portfolio through M&A activities.

So I think at this point in time, that's where we're focused on, and those kind of activities are going to yield longer-term shareholder value than and potentially the short-term value that could be created through shareholder buybacks. Although those kind of things are never off the table. I might add that as well. I mean these things are things that we can discuss regularly at the Board and also at the executive management level.

Fair enough. And then just quick clarification, and I'll get back in queue. Payments mining service contracts were $146 an ounce higher year-over-year, but mostly flat versus Q1. What are we seeing in Q3 thus farming where at this point, what, five or six weeks into the quarter? And how much correlation is there on gold price, say, gold goes up $100, how much does flow through to the contractors, please?

Hi, Heiko. It's Matt Freeman here. Just on the cost structure, the mining cost rates are kind of fixed rates through the contract. So it's obviously volume driven. So as you said, we've been pretty fixed around the $3 a ton or slightly less, and we expect that to carry on through this year. And indeed, as we mentioned, as we increase the volume of mining, as we've seen this good ramp up through this year.

And it should come down on an overall basis because with a certain element of the cost is fixed management fee. So as you start adding tonnes into that, it brings the unit rates down. So yes, so we're very comfortable with the contract with the miner -- with the mining contractor, and those costs are going to remain very consistent for the near term. so no surprises to come there.

With respect to the second part of your comment, the mining contractor has no gold price participation or anything like that in their contract, if that's how I understand your question correctly. So -- and I think as I said, the nice thing is to how our basic cost structure of processing, G&A, I think is relatively fixed period-on-period. So we're entirely grade dependent. So as production goes up or if gold price goes up, that goes straight to the bottom line. So it benefits us 100%.

Alfredo, Equinox Partners.

Yeah. Hey, Matt. Thank you for taking my question. I have two. So first, the Nkran mining contract. So you mentioned that is expected (technical difficulty) in half this year. Maybe comment on how the prices of that contract what are the, I guess, prices that you are seeing there and whether or not they are kind of in line with what you were forecasting?

Yeah. Hi, Alfredo. Good morning and thanks for your question. Yeah, I mean, we're pretty much advanced in the tender process for the Nkran deposit. We're coming to the tail end of that process as we speak. And we're really encouraged by the responses from the contractors thus far. I think we're not seeing anything that's shocking or surprising or even a large deviation from what we anticipated those costs to be in our technical report. So largely speaking, what we've received thus far is costs that are in line with that report with the cost described in our technical report for the mining of the Nkran deposit.

Okay. And then my second question is related to the capital waste treating, the capitalized waste stripping cost at Abore. Apparently, that's not included as part of sustaining CapEx? Is that included as part of development CapEx? Or -- and if not, how much is that CapEx?

Hi Alfredo, it's Matt Freeman here. All of the Abore stripping costs we have included in sustaining capital. So they are within all-in sustaining costs which is a large driver as to why those costs have are relatively high relative to life of mine plan.

Okay. Thank you for confirming that. And maybe just the last one, very quickly on the lease payments. Is that something that is included as part of ASIC or as part of sustaining CapEx? Or is something that's not included?

So the lease payments are also part of sustaining as you -- I'm sure you're aware, the accounting standards require us to classify the mining contract as a lease, which I think confuses things, unfortunately, but we're required to do that under IFRS. So because obviously, the mining contractor is predominantly focused on Abore, all of those costs flow through more in sustaining costs.

Okay. Perfect. Okay, that's helpful. Thank you.

Raj Ray, BMO Capital Markets.

Thank you, operator. Good morning, Matt and team. I have a few questions. The first one, Matt, is you did speak about the mining rates improving. Can you talk to whether you are at steady state in your mine right now or do you expect for improvement there? And when did you achieve steady state? And secondly, on Abore strip, you did highlight it looking at a bigger pit with the higher gold price.

Did the instability that you saw have anything to do with the increase in the strip as well? Or was that just in the above levels? Because I do see that Abore strip has gone from like 4.8% to 7.2%. You can answer that, and I have a couple of more questions

Yeah. Okay. Raj, Listen, the first part of your question regarding mining rates. The second part was a little bit muted. So I didn't really get that one, but I'll start with the first part. With regards to the mining rates, they are ramping up, as I mentioned, and we're quite comfortable or happy with the way that seeing those rates increase quarter on quarter. There is some additional equipment to come in quarter three. It's basically towards the end of this month. And on the back of that, we expect the rates to continue to increase.

What we are planning for, Raj, just to give you a little bit of an indication is that these mining rates on a monthly basis will continue to increase up and through until about November, December where they hit steady state. And at that point, we're expecting about 4 million tonnes movement, total movement per month. So that will be probably our steady state, and we're ramping up. And you saw roughly, we're about 3 million tonnes thereabouts in recent months. And so we'll be slowly ramping up over the course of the latter part of this half to that 4 million tonne per month mark by November, December.

And maybe just repeat the second part?

The second part was on the Abore strip. You did mention that you increased the gold price and you're looking at a bigger pit. But has there been any changes to your pit design as a result of some of the stability issues you saw in that (inaudible)

No. obviously, we've increased the gold price slightly to $1,650, Raj. In terms of stability issues and the pit designs obviously changed in terms of expanding across the deposit. We have done thorough geotechnical work to set the geotechnical parameters on a larger pit there, and we've held true to the consultants views on what those slow parameters should be. So there shouldn't be any concern on that front in terms of the pit stability on the larger pit.

Maybe I'll just add one thing here that if you look at the grade in the new reserve here at Abore. I mean the grade is slightly down compared to the previous reserve. But ultimately, that's on the back of a slightly reduced cut-off grade with the higher gold prices. But that kind of points to the fact that we're not chasing lower quality ounces here, right? The grade still remains relatively high.

We're using a $1,650 gold price for this reserve. Gold prices at the moment are in the 23-plus mark. So we're not going out there chasing low-quality ounces through this expansion.

Okay. That's good. The other question I had was, I mean, look, you just added your mining. So you still don't have the flexibility. So that I'm guessing this is going to improve over the next little while. But in your original mine plan, if I'm not wrong, you were supposed to stop initial mining activities at Esaase and Miradani North in the first half as well? Has that already started?

It's a really good question. And I think we've mentioned in the call here that this expansion in Abore actually gives us more flexibility in our life of mine plan. And this is kind of one of the aspects of that. But what we found now that the additional growth in Abore has allowed us to defer those commencement of the Esaase ore and also the Miradani ore delivery.

And the other benefit that it does also provide is we've got a new contractor on site with new equipment and new policies, procedures. It does allow us now to have one contractor focused on one pit delivering all the ore tonnes that we need from one single pit rather than having that contractor spread out across the Esaase, Miradani, et cetera. So we now believe that with this expansion, Abore is going to allow for longer and more sustained mill feed delivery from a single pit, which we're quite pleased with, actually.

Okay. And then one last question on the installation of the new secondary crusher. Can you remind us what's the part of the original mine plan? Or is this something that you decided to put in based on the hardness of the ore that more harder than you than expected for Abore?

No. Raj, it wasn't captured in our technical report, but we knew that we were going to need to upgrade our system for multiple reasons. One is throughput-related, particularly when we're treating the Nkran material as it's harder than, say, for example, in Esaase. But the other reason that we did it was from a cost perspective because certainly, we're using mobile crushers at the moment, which require a lot of rehandle and a lot of equipment to feed the final ore stockpile. And then probably more importantly than all of those is from a safety perspective.

We wanted to make sure that we manage safety on site better. And at the moment, there's a lot of equipment and human interactions in that mobile crushing circuit that we will remove through the addition of that secondary crusher. So it was something that we didn't capture in the technical report, but we knew we had to move on very quickly, and it's advanced quite quickly to date.

Okay. That's great, Matt. Thanks a lot. That's it from me.

Thank you, Raj. Cheers.

(Operator Instructions) Dan Ellsworth, World Micro.

Yeah. A quick question for you on -- if you could just highlight any changes that have occurred with respect to the hedges because that seems to be something fairly new since we took over 100%. And then just overall on -- we've managed whole project for several, several years. And then now we're kind of on our own.

And it seems as if we're adding additional management and some cost structure to it. I'm just wondering if you can kind of just explain what's changed, what's different now maybe than prior to us taking over because as the manager, we've kind of got a good visibility of what's occurred there along the way. But just talking about like executive compensation in terms of share compensation. I noticed some of those numbers seem to be up a little bit.

The hedges, just understanding what's the strategy with the hedges, if you could tackle those two topics and then also, on a go-forward basis, do we look at Q3 and Q4 and say, hey, we expect to have kind of similar $4 million, $5 million used in terms of total cash based on where we are? Or is that usage of cash, we still have $128 million, which is great.

But do we expect to use $4 million in the next couple of quarters? Or do we expect that to kind of get back to more of a simple normalized adding to that cash stockpile?

Hi Dan, good morning. Well, that's a lot to get through thanks for that. Let me try to start off quickly, and I'll pass the bulk of the answer to Matt to your question here. Maybe I'll just start with a little bit of color around the changes in the executive team. I mean, listen, we have made a few changes that were very necessary. I mean, the appointment of the COO is something that we've been looking to do for quite some time.

It certainly wasn't driven by any movement in terms of the ownership of the company. That position has been vacant really since I was appointed to the CEO role in early 2021. And we have gone through a very extensive search process to find the right candidate. So I'm really pleased to have Michael on board.

And in parallel to that, we have made some other senior management changes as well that we've described in the MD&A as well, that have reduced some overall headcount costs with regards to the corporate G&A here as well. So none of these were specifically driven on the back of the change of ownership of the asset.

So I'll just finish up there and I'll pass it on to Matt Freeman, to answer the bulk of your other questions.

Yeah. Hi Dan. So I'll try if I miss anything, let me know. So on the hedges side of things, our strategy hasn't really changed with the change of ownership with Gold Fields. Even during the period when we operated the joint venture, we did prudently put some hedges in place over periods of where we knew capital was going to be higher. So again, very much, and we've tried to reiterate this to everybody that -- we're only doing it for the risk mitigation standpoint during periods of known high stripping, high capital expenditures.

So as you know from the life of mine plan, we know that's going to be for a few years when we -- are stripping Abore at the moment. And then as we move into stripping the Nkron deposit, we know our cash flows are skinny and we're highly leveraged to that price of gold. So if we can take advantage of the current price environment to protect ourselves, we thought that was a prudent thing to do.

So the specifics of the hedges that we've got in place at the moment would run through the balance of 2025 only, are unchanged. We haven't -- didn't actually enter in 20 new hedges during this quarter. And as I think the key for me, as we've said, we're moving towards updating a life of mine plan with updated reserves by the end of this year. That will give us a greater visibility to what those cash flows look like in the medium and short term, and then we'll consider where there's opportunistic times to potentially add some risk mitigation to that.

So underlying strategy hasn't changed, again, with the change of ownership, and we believe we're being prudent given where the company is at, at the moment. Then on the executive G&A, I think as Matt outlined, I think, from a basic cost, we're pretty neutral through the changes that have happened this year. The books look a bit different. I think when we are consolidating the Asanko Gold Mine. And I take it's relatively modest, but part of our -- in our financial statements, we do add some sort of new G&A expenses that come from managing a corporate office in [a car] that we didn't used to have on the book.

So that does provide a modest increase in our base G&A cost that wasn't that pre-transaction on Galiano's books, but has always been under the joint venture rate. So there's kind of really been no change in that cost structure just the way it's reported a little bit.

And then turning to stock-based compensation, particularly I think it's very appoint to anybody reading the financials that, that number has been grown significantly this year. And that's clearly driven on the back of the increase in gold price -- sorry, in our share price, that's obviously on the back of the strong performance through the last 12 months plus the gold price environment. So what we've seen there is that under the accounting rules, where you have kind of units that are settled in cash. So we have performance share units and deferred share units with the directors will receive, they get mark-to-market each period based on share price.

So we've seen that big run-up in share price over the last 12 months, which obviously ultimately I think I've been happy with, but that does impact the short-term cost structure there. Obviously, through the last -- most of that run-up happened through to the mid part of Q2, and then we sort of flattened off through the summer. So I wouldn't expect unless there's another material increase in share price that to pick up significantly.

The base structure of people's compensation across the company is unchanged. So there's not been new awards or bonus awards, or any of those purely based upon share price movement. And there's no plan to change strategy there either. And obviously, full details are in the information circular. You can see on that compensation strategy that was approved a strong shareholder support at the AGM back in June.

Bereket Berhe, Beacon Securities.

Hi, Matt. A very basic question for me. I was wondering what sort of proportions are you going to be going forward for Q3 and Q4 relying upon the stockpiles and relative contribution now from Abore. And if you just could give me average percentages, that would be great.

Yeah. Good. Thanks for that, Bereket and good morning. It's good to have you on the call. We're looking at probably about three quarters of the balance of the year will be coming out of Abore and then roughly around a quarter of the mill feed will probably be coming off the lower grade stockpiles in -- so that should give you enough to do your numbers on that.

And maybe I will add something else to this. And I think this is important for all listening in is as we're stripping more, and we won't be as deep in the deposit by the end of the year, the grades out of Abore are probably lower in the upper portions and they start to get higher as we mine below the old resolute pit. So just to bear in mind that when we're saying three quarters out of the Abore, that will be slightly lower grade than the average grade of the deposit as well.

Perfect. That's answers everything I need.

Okay. Thank you, Bereket.

Alfredo, Equinox Partner.

Yeah. Matt, sorry, I just wanted to reframe maybe my first question on the sustaining capital also. So basically, your guidance for sustaining capital, excluding waste stripping is $10 million. So I guess my question is, how much is only the waste stripping?

Hi Alfredo, it's Matt here. I think as Matt alluded to; you can assume a ramp-up in mining costs to mining rates to approximately 4 million tonnes per month by the end of the year. And you can see from the numbers we put out sort of what we were having through Q3. So I think if you extrapolate that through, that should give you an indication that, obviously, the strip ratios are there that are high, and you can see that from the reserves.

So you should be able to kind of work out a good proxy. We can circle about moving offline if you need a bit more help on that one. But I think from what we've said, you should be able to get a reasonably good estimate of what our stripping cost is. And as we said, it is high through the balance of H2 because we're stripping this larger pit. So that is driving our all-in sustaining cost number up on a per ounce basis.

Okay. Yeah, that makes sense. Okay. Thank you.

Thank you, Alfredo.

At this time, I would like to turn the call back over to our speakers for any additional remarks.

Thank you, operator. I think nothing more to add from our side. And I appreciate everyone joining the call this morning and if there's any further follow-up, we'll be happy to take them online one by one -- sorry, separately offline one by one. Thanks, operator.

Thank you, sir. Ladies and gentlemen, this does indeed conclude the conference call for today. Once again, thank you for attending. At this time, we ask that you please disconnect your lines. Have a good weekend.