Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gold production for Q2 was 25,524 ounces, slightly ahead of budget.
- Cash at the end of the quarter was $11.5 million, with a further $4.9 million of senior debt repaid.
- Zero Lost Time Injuries (LTIs) recorded over 1.3 million hours worked.
- Completion of the MV3 wrap, providing essential access to the Southern Mining Area.
- Greater than 95% grid power availability since July, improving operational stability and throughput.
Negative Points
- All-in sustaining cost per ounce sold was elevated at $1,613 due to low grid power availability and high power interruptions.
- Significant downtime of 176 hours (8% of total plant availability) due to power interruptions.
- Lower production and higher costs led to a sequential decline in revenue, earnings, and cash flows for Q2.
- High processing costs due to reliance on higher-cost on-site diesel power generation.
- Scheduled lower grade mining in Q2 due to mine sequencing, impacting overall production.
Q & A Highlights
Highlights of Orezone Gold Corp (ORZCF, Financial) Q2 2024 Earnings Call
Q: What are the critical path items for stage 1 construction?
A: The SAG mill was initially the critical item, but Orezone has purchased a new, unused SAG mill, reducing the timeline by about seven months. The jaw crusher is now the main item, but it is not considered a long lead item. (Patrick Downey, President and CEO)
Q: Can you provide more details on the progress of the MV3 wrap and access to the Siga pits?
A: The MV3 wrap is complete, and MV2 is ahead of schedule. The community has given permission to build access roads to Siga for advanced grade control drilling, keeping the project on schedule for 2024 production. (Patrick Downey, President and CEO; Peter Tam, CFO)
Q: What is the expected timeline for releasing exploration drilling results?
A: Initial results are expected to be released in late Q3 or early Q4. Results will be released in batches to show targeted areas, rather than one hole at a time. (Patrick Downey, President and CEO)
Q: How did low grid power availability impact Q2 results?
A: Low grid power availability led to increased use of higher-cost diesel power, impacting all-in sustaining costs by approximately $110 per ounce and causing 176 hours of unscheduled downtime. However, grid availability has improved to over 95% since July. (Patrick Downey, President and CEO)
Q: What are the financial highlights for Q2 2024?
A: Orezone produced 25,524 ounces of gold, with an all-in sustaining cost of $1,613 per ounce. Cash at the end of the quarter was $11.5 million, and $4.9 million of senior debt was repaid. Revenue, earnings, and cash flows declined sequentially due to lower production and higher costs. (Peter Tam, CFO)
Q: What are the plans for the hard rock expansion?
A: The hard rock expansion is fully financed with a $58 million term loan and a $47 million private placement. Major works will commence in Q3, with first gold expected in late 2025. The expansion will increase production to 175,000-185,000 ounces per year by 2026. (Patrick Downey, President and CEO)
Q: What are the expected production and cost improvements for the second half of 2024?
A: Production is expected to increase as mining advances to higher-grade soft oxide ores in Siga East and Siga South. All-in sustaining costs are expected to decrease as grid power availability improves. (Peter Tam, CFO)
Q: What are the key exploration targets for the multiyear program?
A: The exploration program will focus on a 14-kilometer belt, including Maga, Siga, P8/P9, and P17 South. Initial drilling will target high-grade plunging subzones, with results expected in the second half of 2024. (Patrick Downey, President and CEO)
Q: How will the company manage its balance sheet and future expansions?
A: The focus will be on deleveraging the balance sheet, paying down debt, and building a strong treasury. Stage 2 of the hard rock expansion will be built using cash flow from Stage 1, aiming for production of 225,000-250,000 ounces per year. (Patrick Downey, President and CEO)
Q: What initiatives were taken to improve plant throughput during power issues?
A: The plant operating team increased the mill's power draw and reduced retention time in the CIL circuit, achieving a monthly record of 525,000 tonnes processed in June. (Peter Tam, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
