CA - i-80 Gold Corp. (IAUX) Q4 and Year End 2022 Financial and Operations Results Conference Call Transcript

2023-03-15 16:04:06 ET

i-80 Gold Corp. (IAUX)

Q4 and Year End 2022 Financial and Operations Results Conference Call

March 15, 2023 10:00 AM ET

Company Participants

Matthew Gollat - Executive Vice President

Ewan Downie – Chief Executive Officer

Matthew Gili - President and Chief Operating Officer

Ryan Snow - Chief Financial Officer

Presentation

Operator

Good morning. My name is Justin, and I will be your conference operator today. At this time, I’d like to welcome everyone to the i-80 Gold Corp. Q4 and Year End 2022 Financial and Operations Results Conference Call. [Operator Instructions]. After the speakers' remarks, there will be a question-answer-session. [Operator Instructions]. Thank you.

Mr. Gollat, you may begin your conference.

Matthew Gollat

Thank you and good morning everybody. Thanks for joining us today, as we talk about our 2022 operations and financial results.

Moving on Slide 2, on the call with me today is Ewan Downie, CEO; Matt Gili, President and Chief Operating Officer; Ryan Snow, Chief Financial Officer and myself, Executive Vice President. And also I'll be here to answer any questions the half way -- at the end of the call.

Moving on to Slide 3. We will be making forward-looking statements, so we encourage you to read the slide and go through our forward-looking disclosure and the accompanying notes on the slides.

So with that, I'm going to turn over to Slide 4 and have Ewan Downie start off the call.

Ewan Downie

Thank you, Matt. Just quickly go over 2022 for the Company as a whole. We had solid share performance realized over the year, increasing our share price year-on-year by approximately 22%. That performance is one of the top performing, if not the top performance amongst the developer peer group that in the gold sector. We've seen a recent decline of our share price earlier this year. We feel mainly onset because of the recent financing that was completed with our shares by our largest shareholder Equinox, but expect to fully recover as operations and exploration success continues throughout the year.

The year was really built on our exploration success. The Hilltop zone discovery that we made at our Ruby Hill property, in my opinion is one of the world's highest grade new discoveries of 2022 and we are having significant success in 2023, as we continue to expand and discover new mineralization along that Hilltop fault corridor. We also in the first half of the year had significant success delineating the South Pacific zone at Granite Creek that will be a big part of that mine's future.

We continue throughout 2022 to progress our mine development. Granite Creek is now delivering material to both Lone Tree and Twin Creeks. The refractory ore is being stocked piled at Twin Creeks and we expect the processing of that material to begin this year. The one thing that we've realized from Granite Creek is that, we have more oxide mineralization than we anticipated. Right now, we have a stockpile. Some of that material is being processed at Lone Tree.

However, we are in the process of securing longer term solutions for our oxide mineralization at Granite Creek and we'll bring the market more up-to-date on that in the very near future. We have submitted our permits for the underground development at Ruby Hill that's expected to be our third underground development project that we are expecting to get those permits in the second half of this year, and begin the development of that project.

In terms of Cove, we've completed more than 60% of the underground decline and exploration platform there and commence drilling at the end of 2022. This is a 40,000 meter drill program that should see substantial results throughout the year.

The Granite Creek mine development has been one of our core initiatives over the second half of 2022. The first half of 2022, a big focus at Granite Creek was on completing a significant underground drill program that went well into the third quarter to better delineate mineralized zones that we are developing for mining. We also extended our drill program during the year because of the success we had in expanding the South Pacific zone, which has become the priority for future development at the Granite Creek mine. And we expect to be in a position to declare a production decision at Granite Creek in the second half of this year.

In terms of resource growth, I think 2022 was a great year for the Company and 2023 is starting out with very significant success. We completed more than 25,000 meters of underground and surface drilling at Granite Creek. The South Pacific zone will be included in in an updated resource, we expect to release in the second quarter. We completed more than 40,000 meters of drilling at Ruby Hill, and this year that successful program has resulted in a significant increase in drilling such that now we have five drill rigs operational on the property and soon we'll have six.

We also began the 40,000 meter drill program at Cove, and that program is expected to continue into 2024. On the back of that, we expect to deliver a full feasibility study. It's our expectation that these drill programs especially on a gold equivalent basis will result in a significant increase in the Company's overall resources. And 2023, we'll see a significant increase in mining at the Granite Creek project.

With that, I'm going to hand over the next few slides to Ryan, and then I'll jump back in and talk about the individual projects. Thank you.

Ryan Snow

Thanks Ewan, and good morning listeners. Yesterday, the Company reported our financial statements and MD&A for the fourth quarter and full year of 2022, and they can be found on SEDAR, EDGAR and the Company's website.

On Slide 5 of the presentation, we present a graph of our production and sales by quarter for the year. This production is from the residual leaching activities at both Ruby Hill and Lone Tree and is highlighted by a record third quarter where we produced and sold 9,332 ounces. Fourth quarter production was steady at 6,769 ounces and full year production was 21,097 ounces.

On Slide 6, you will see our total cash cost and all-in sustaining cost by quarter for the year. Fourth quarter all-in sustaining cost was $1,137 per ounce, and year-to-date is $1,182 per ounce.

On Slide 7 of the presentation, highlights our revenue of $11.7 million in Q4 bringing year-to-date revenue to $37 million. This revenue generated mine operating loss of $3.4 million for the quarter and mine operating income of $3.6 million year-to-date. The mine operating loss in the quarter was primarily the result of a write-down of leach pad inventory to net realizable value at both Ruby Hill and Lone Tree totaling $6.4 million.

The Company reported a loss for the quarter of $63.9 million or $0.27 per share when adjusted for the impact of mark-to-market gains on the Company's convertible debt, outstanding warrants, gold prepay and silver purchase and sale agreement, the loss was $13.1 million or $0.05 per share.

For the year, the Company is in a loss position of $79.2 million $0.33 per share and when adjusted for the items previously mentioned was in an adjusted loss position for the year of $63.3 million or $0.26 per share. I also want to highlight the Company invested $38.8 million in exploration, evaluation and pre-development in 2022, with $6.6 million of that investment coming in the fourth quarter.

On Slide 8, the Company's production highlights for the period include the production and sale of 6,769 ounces of gold at a cash cost of $1,037 per ounce and an all-in sustaining cost of $1,137 per ounce. Our average realized price per gold ounce sold in the quarter was $1,714.

Year-to-date production highlights include 21,097 gold ounces produced and sold, at a cash cost of $1,053 and an all-in sustaining cost of $1,182 per ounce of gold sold. Average realized price per gold ounce sold was $1,744 for the full year 2022.

Slide 9, the Company's liquidity position shows that we ended the quarter and year with $48.3 million in cash and had an inventory balance of $16.5 million. Current assets were $77.3 million while accounts payable and accrued liabilities were $17.2 million, and total current liabilities were $85.6 million. This resulted in a current ratio for the Company of 0.9 to 1.

The Company took steps to bolster the balance sheet by closing the convertible financing in February of 2023 bringing $65 million into the Company's treasury. I also want to highlight that the Company has $32.9 million in restricted cash and ended the quarter with total net assets of $333.4 million.

With that, I'd like to turn the call back over to Ewan Downie.

Ewan Downie

Thank you, Ryan. And I will begin again on Slide 10 of our presentation. i-80 Gold operates entirely in North Central Nevada. The North Central Nevada region is host to whether or referred to as the Battle Mountain, Carlin and Getchell trends. These trends respectively combined represent one of if not the world's most productive gold district with numerous mines operated by numerous companies, including Nevada Gold Mines, which is the largest producer in the district. The i-80’s land position includes five main project areas. And these deposits contain resources that make our Company the second largest holder of gold resources in the North Central Nevada region.

Recently, we announced our intent to acquire Paycore and the FAD deposit. FAD, that is a project acquisition that will consolidate our flagship Ruby Hill project. It increases our position as -- it will position our Company as the largest holder of gold resources in Central Nevada next to Nevada Gold Mines. And the combination is expected to solidify our time to become a prominent producer of gold, silver, and base metal, as we develop projects in the region. And the FAD project we believe will benefit significantly from our existing mine permitting that's being established at Ruby Hill and the share of infrastructure that we'll see the deposit developed on a much faster basis than it would have been on a standalone basis for Paycore.

On Slide 11, our Company -- we believe our Company has a significant competitive advantage in the state. First, we acquired the Lone Tree processing facility from Nevada Gold Mines just over a year ago, and that acquisition positioned our Company as one of only three companies in the state that has facilities capable of processing refractory ore. So, as our Company grows our production over the coming years, we do look at refractory ore as one of the key parts of our growth strategy. And these deposits are these -- this facility strategically located on Interstate 80 and just across the highway from the Nevada Central Railway, making it potentially the most strategic processing facility for refractory ores in the state.

The Ruby Hill facility that is existing at the Ruby Hill property, has a plant that could be used for either gold and or base metals and we're currently completing additional work at the restart of that facility. And it's our plan to start both of these facilities. We're just working right now on how we sequence the development of these two processing facilities over the next five years.

On Slide 12, as I mentioned earlier, i-80 is second only to Nevada Gold Mines for gold resources contained within the Carlin and Battle Mountain trends. With the drill programs, we've completed at multiple projects in 2022 and have ongoing projects -- programs in 2023, we expect to continue to solidify our position as one of the top three holders of gold resources in the entire state. And we are expecting significant increases in our resources based on the success we've had. In addition to the gold, our Company has approximately 104.3 million ounces of indicated silver resources and 76.5 million ounces of inferred silver resources.

Moving to Slide 13, it is our Company's intent over the next several years to become a prominent U.S. focused producer. We are planning to develop three separate deposits with processing of underground refractory ore being ultimately completed at our Lone Tree complex. That’s complex is targeting production of more than a 25 million ounces of gold per year.

In addition to that production, we are just finalizing the trade-off work for the Ruby Hill oxide gold plant that you can see in the lower left of the image. And we're looking at using that plant potentially as a base metal processing facility and are very quickly advancing that the engineering work on that to make a very informed decision. We don't expect to build both facilities at the same time, but we do expect to sequence those and we're just trying to make sure we have all of the information required to make the best decision for us to grow as a company.

On the next slide, you can see a picture of the Lone Tree facility. Lone Tree is a very strategic plan for our Company that includes a central processing autoclave facility and operating heap leach. In fact, in the foreground, you can see ore pile there and that material that has been processed is the oxide, some of the oxide material that has been mined out of Granite Creek. So we are doing a pilot leaching program to see how high grade mineralization leaches on a dedicated leach pad.

We also have an operating assay laboratory facility here. So we do complete a lot of our own assay, especially from underground. And when we have early exploration success or results, we can do some assay internally, though we don't release those because it's from an internal lab, but allows us to plan our drill programs better than we would if we were waiting for external lab facilities that often takes months for getting assays. This facility also contains a climate controlled warehouse.

Core cutting and logging facility where most of our material that has been drilled is cut and logged and then we ship it out for assay. We have a full maintenance shop and office complex and the site also includes the 1.8 million ton/year flotation circuit. We are this week completing additional review of that flotation circuit to see what if anything from that flotation circuit could be used in a potential startup of a base metal processing plant at Ruby Hill.

The next slide is an image of the Company's Ruby Hill plant. Ruby Hill also has significant infrastructure. The foreground in this image is some of the crushing. There's very extensive crushing capacity here. And on the right is the current vat leach plant. That is the plant that we are currently assessing as a restart as either a gold facility or a base metal that converting the plant to a base metal facility, which would process both lead and zinc concentrates. I would call it polymetallic processing because the gold and silver grades in these polymetallic deposits is very significant.

Moving to Slide 16 of the presentation. The Eureka District is quite spectacular in my opinion. It is host to multiple types of mineralization. In fact, right where the Archimedes pit is at the north part of the image that you see here on Slide 16, there is oxide gold mineralization. There's refractory Carlin type gold mineralization. There's CRD polymetallic mineralization in multiple historic mines and are our deposits that we're drilling off. And there's also scarring mineralization, it's found at the Blackjack and recently intersected in the east Hilltop area of our property.

So it is a really unique environment that you have all of these different types of mineralization essentially imprinted on top of each other at this operation. And we think that the potential feeder for all of this mineralization could exist below the pit. The district itself has a 150 year history of production. The first hundred years of that production history was essentially all polymetallic or CRD. And the historic mines like the historic Ruby Hill, the [Fair Lindsey] (ph) and Holly-Helen Mines, ranked amongst highest grade CRD mines ever in anywhere in the world. And we are discovering new mineralization adjacent to those historic projects, the FAD property down or deposit down to the south is immediately adjacent and down dip of the historic Ruby Hill Mine. And we believe that in the future this district will be viewed, again as one of if not the top CRD district in the world.

Since mid-2022, when we started our generative exploration, we've had significant success. In June, we discovered the Lower Hilltop Zone with an intercept of 9.4 meters of 20% combined lead zinc and more than 238 grams per ton silver. In August in following up that discovery, we discovered the Upper Hilltop Zone with world-class intercept of over 515 grams per ton silver, 28.9% lead, 10.5% zinc and nearly a gram per ton gold over 28.3 meters. And that zone continues to be a focus of our drilling as we are drilling out what we expect to be a significant resource in the Upper Hilltop.

In September, we discovered the East Hilltop Zone with an intercept of 12.3% zinc over 39.6 meters. And in November, testing another gold target, we discovered the 428 Zone with an intercept of 12.3 grams per ton over 10.7 meters. That is a pretty substantial intercept in itself. But we have very little plans to follow that up in -- at least in the first half of this year because of the success we're having in the polymetallic zones. And so far in 2023, we've had substantial success intersecting multiple new mineralized horizons that we expect to be releasing assays for here in the near future. The upside in the untested area between FAD and the Archimedes pit in our opinion offers huge upside and will be a focus of our ongoing exploration on the property throughout this year and likely into next year.

Slide 17, just a surface or an aerial view of where the Hilltop zones are. So, the Lower Hilltop is a deeper discovery that we have been drilling and are doing additional drilling. Obviously, very high zinc grades occur in this zone and it is completely open for expansion. The Upper Hilltop zone has now we've delineated what we think are two different land lease up, potentially three, and we continue to perform definition drilling to quickly advance this to hopefully resource and reserve and into mine planning.

As we drill out to the east, we've discovered the hole 61 intersecting a skarn mineralization approximately 450 meters south of the known skarn deposit at Blackjack. We also early this year intersecting the hole 2310 CRD mineralization in this area that we are currently following up. And we expect assays on that mineral here in the near future.

Moving on to Slide 18, this is our section view. It's actually a 225 meter slice. So we're looking at a sort of 3D view of these different deposits and you can see how these are appear to be stacked lenses of mineralization that occur in this area, because of the Upper Hilltop and these hilltop areas being much closer to surface, they are more of a current focus for our drilling, but the Lower Hilltop zone is a target we will continue to pursue this year.

In fact, what would be just off the page on the left, we are currently drilling a deep hole in the property to test really an untested part of the property. And we have intersected significant mineralization in that hole, several hundred meters from Lower Hilltop that we are eagerly awaiting the assays for.

In terms of our development plan on Slide 19, we are in the process of getting all of our submissions in place to begin with the underground decline here at Ruby Hill. The underground design for infrastructure is to access both gold, so the Ruby Hill and Ruby Deeps in 426 Zones that occur at the northwest side of the pit. And the also polymetallic base metal deposits, which include Blackjack, the skarn deposit that occurs immediately below the pit and the Hilltop zones that are represented on the image on the left with the three red stars.

The underground infrastructure this is a preliminary planning, how we're looking at, how we would access all of these deposits, would be mining both the polymetallics and the gold from the same underground infrastructure and really an early design of how we would do this as shown on Slide 19.

On Slide 20, we'd really like to highlight the fact that even though it wasn't completed in 2022, we announced recently our agreement with Paycore Minerals for a combination of the companies. The benefits to our Company include an additional high grade deposit. The historic resource of the FAD deposit is more than 3.5 million ounces at five grams gold, 196 grams per ton silver, nearly 12% combined lead zinc, making this a world class deposit in our opinion that is open for expansion.

The deposit is located approximately two kilometers south of the Ruby Hill processing infrastructure, and it's a long trend from the mineralization that we're drilling currently at Hilltop and Blackjack. It also consolidates approximately 2.5 kilometers of the favorable trend to the south of the mineralization that we're drilling and we believe the combination is a win-win for both companies.

On the image on the right is a -- more of a step back or a big picture view. The top half of this image is now be -- would be the combined Paycore i-80 project position. You can see the red circles here all represent either historic CRD mines or current polymetallic deposits. And the yellow circles represent the Carlin type gold deposits.

So you can see that it's a very extensive district, and we think that the properties to the south and our adjoining neighbors have significant potential as well and we also assist in helping them to define what we believe they should be drilling on their projects.

On Slide 21, introduction to Granite Creek, we will quickly go through the next couple of projects before we take questions.

On Slide 22. Granite Creek is situated immediately south of the combined Turquoise Ridge Twin Creeks operation of Nevada Gold Mines. On the image you see here on 22 on the right, the processing facility, the autoclave facility that we are stockpiling material at is situated at Twin Creeks and we have an interim processing agreement with Nevada Gold Mines.

The South Pacific zone was discovered to the north of the main Granite Creek deposit and has been the main focus of our exploration in ’22 and now is a priority for us in terms of our development here in 2023.

The overall underground resources you can see here are 337,000 ounces of gold and average grade of 10.4 grams per ton. In the measured and indicated categories and 319,000 ounces of gold at 13.4 [gram ton] (ph). That resource did not include the South Pacific zone and in our current work, which we expect to release an updated technical study for the underground deposit with an updated resource will include the South Pacific zone and we are expecting a significant increase in resources at the Granite Creek project.

In terms of our development on Slide 23, the historic mine workings that you can see on the image, the larger image here on Slide 23, is the infrastructure that was put in place by Aetna and was kept under care and maintenance by Waterton prior to our acquisition. We have rehabilitated that those workings. So throughout late 2021 and early 2022, we completed a significant rehabilitation of those workings. We completed a few test mining projects in the upper part of the Otto, Adam Peak zones where we encountered a significant or difficult ground condition, but we did complete all of that test mining. Some of that material continues to be stockpiled today.

We are doing limited mining in those upper parts. But in 2022, the main focus for us was putting in multiple levels into the Ogee Zone. The Ogee Zone shown in blue is completely open at depth. We are currently putting in the fourth sublevel onto the Ogee Zone and are going to circle around on the decline and we expect to put in the fifth level starting in the near future. And from that fifth level, it's our intent to drift to the north which is the right in this image to begin underground drilling on the South Pacific zone. Subsequently, complete assuming we get the continuity we'd like to see completing test mining of that structure and moving that into our mine plan here later in 2023.

The addition of the additional levels in the Ogee Zone, especially in the recent months has resulted in a significant increase in our daily mining rates and we expect that to continue throughout 2023. The South Pacific zone itself is a continuous deposit that we have expanded mineralization approximately 600 meters along strike to the north. And you can see holes 26, 27 and 30 as last year's program were are north most holes intersecting 4.6 meter to nearly 12 meter intercepts of grades between 9.9 grams and 15.7 grams per ton.

The deepest hole we've drilled to date is hole 2205 that intersected 16.4 grams per ton over 15.3 meters. So, the deposit remains completely open at depth and it does appear to be expanding as we go deeper.

We will continue to follow-up expansion at depth mainly from underground in the future this year owing to the substantial success in delineating new mineralization at Ruby Hill the surface exploration at Granite Creek is taking a bit of a backseat to exploration at Ruby Hill. But the focus for 2023 is getting the mining rate increase throughout the year and getting infrastructure into the South Pacific zone that we have established as being entirely refractory.

The Ogee Zone has been largely oxide and those who know our Company know that when we negotiated our interim processing agreements with the Nevada Gold Mines, we have access to roaster and autoclaves processing, but we did not do oxide mineralization. We are in discussions with two parties about potentially working with us on the oxide side and we hope to come to a successful conclusion here in the very near future.

The next slide is the Cove project. The Cove Mine at the McCoy Cove property is 100% owned by the Company. It was a deposit that was delineated by Premier -- as previously by Premier. It was a project I was intimately involved in the reinterpretation of this deposit that was resulted in the successful delineation of one of North America's highest grade undeveloped gold deposits.

We took it through the permitting process to go underground and it's a project that we are now developing. The image that you can see here on Slide 24 is the early development into the project -- building the decline to drill off from underground.

On the next Slide 25, you can see what the infrastructure looks like today. So the -- we've significantly upgraded the underground infrastructure structure here. We're getting close to 70% complete on the decline and expiration platform that you can see in the conceptual image, the larger conceptual image on Slide 25, and we've started the underground drill program.

The total resources at the Cove Mine project currently stand at 3.5 million ounces of gold indicated at 10.9 grams per ton and 1.35 million ounces inferred at 10.9 grams per ton. The underground program that we're completing is the delineation primarily of the inferred part of that resource so that we can move it into indicated and go to full feasibility.

The deposit continues to remain open for expansion with the east most holes drilled as you can see on this image. Holes that were actually drilled as far back of 2010, demonstrating that the deposit is completely open, down plunge to the east.

And with that on Slide 26, we have our ESG slide. Don't think in this call, we don't go through that in any detail, and move to Slide 27. A summary of our Company.

Our Company does have a very large resource base but over the next several years, we are looking to move to development and ultimately mining of at least three mining operations. That organic growth platform positions us to achieve our future goal of becoming the second largest gold producer in Nevada with sustainable development opportunities because we have several open pit projects that aren't even shown in our presentation that we will look at for future growth.

We're executing on our strategy to grow reserves and resources through sustained exploration and the production and cash flow will increase as our operations continue to ramp up. We are prioritizing reserve increases and mine development with minimal dilution in the future to our shareholders. So as we continue to finance our projects, we will look to continue to be creative and how we build our deposits without necessarily being coming to the market every year to dilute our shareholders further.

So, I thank everybody for attending today's call and we'll open up the floor for two or three questions. And we do have -- I know our team is pretty busy today, so we'll take a couple and then feel free to reach out those who don't get their questions fielded today offline. Thank you.

Question-and-Answer Session

Q -

Operator

Thank you. [Operator Instructions]

Ewan Downie

It doesn't sound like they're already. So hopefully, we did a pretty detailed job in our presentation. But if not, I urge everybody to reach out to our Company. We are very open to being transparent on how we're looking to grow our production base, and the exploration programs that are Company's projects. So feel free to reach out to the Company. And with that unless there is a question from the operator, we will finish this call. Thank you very much.

Operator

[Operator Instructions]. There are no questions at this time, sir.

Ewan Downie

Thank you. Everybody for attending and again reach out to the Company directly if you'd like any additional color on the presentation. Looking forward to next quarter.

Operator

Well, thank you and that does conclude today's conference. We do thank you for your participation and have an excellent day.

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