IAUX - i-80 Gold Corporation (IAUX) Q2 2023 Earnings Call Transcript
2023-08-05 15:12:05 ET
i-80 Gold Corporation (IAUX)
Q2 2023 Earnings Call Transcript
August 03, 2023 10:00 AM ET
Company Participants
Matthew Gollat - Executive Vice-President
Ryan Snow - CFO
Matthew Gili - President & COO
Conference Call Participants
Justin Chen - SCP Resource Finance
Presentation
Operator
Good morning. My name is [Zanis], and I will be the conference operator today. At this time, I'd like to welcome everyone to the i-80 Gold Corp. Second Quarter 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-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 on this warm Thursday in Thunder Bay, and I'm sure it's a nice day in Reno as well. On the call with me is Ryan Snow, Chief Financial Officer, Matt Gili, President, Chief Operating Officer. Unfortunately, Ewan Downie is having a travel delay, so we're going to go on ahead with the call without him. So, you'll get the presentation from the rest of us.
Going on to Slide 3, I just want to highlight that we will be making forward-looking statements, so I encourage you to read this slide and understand that some of that forward-looking statements will be made.
With that, I'm going to turn it over to Ryan Snow to talk about the financial results, and then we'll get into a brief presentation on the company. Ryan?
Ryan Snow
Thanks, Matt, and good morning to the listeners from me. Yesterday, the company reported our financial statements and MD&A for the second quarter and first six months of 2023. They can be found on SEDAR, EDGAR, and the company's website. On Slide 4 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 also includes the oxide material we've placed on the leach pad from Granite Creek.
Second quarter production was 4,329 ounces, and year-to-date production was 6,678 ounces. The company expects increased gold production in sales in the second half of 2023 when compared to the first half. Slide 5 of the presentation highlights our revenue of $11.3 million in Q2, bringing year-to-date revenue to $16.9 million. This revenue generated a mine operating loss of $3.6 million for the quarter and $7 million year-to-date.
The mine operating losses in the quarter and year-to-date were primarily the result of write-downs of leach pad inventory at both Ruby Hill and Lone Tree totaling $4.5 million and $8.5 million, respectively. The company reported a loss for the quarter of $16 million or $0.06 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 $0.08 per share.
For the year, the company is in a lost position of $29.1 million or $0.11 per share, and when adjusted for the items previously mentioned, was in an adjusted lost position for the year of $39.5 million or $0.15 per share. I think it's important to highlight on this slide that the company continues to invest in exploration, evaluation, and pre-development in 2023 with $11.1 million invested in the second quarter and $20.1 million so far in 2023. This investment has resulted in three new discoveries this year at Ruby Hill and many great assay results, the most recent of which was published yesterday, and we'll be discussed in further detail later in this presentation.
On Slide 6, the company's liquidity position shows that we ended the quarter with $19.4 million in cash and had an inventory balance of $18.8 million. Current assets were $49.8 million while accounts payable and accrued liabilities were $22.3 million and total current liabilities were for $64.1 million. This resulted in a current ratio for the company of 0.8 to 1. The company took steps to bolster the balance sheet by closing the bot deal private placement on August 1, 2023, bringing $36.8 million Canadian dollars into the treasury. I also want to highlight the company has $47.6 million in restricted cash and ended the quarter with total net assets of $425.7 million.
With that, I'd like to turn the call over to Matt Gollat.
Matthew Gollat
All right, thanks, Ryan. So, we'll begin a brief presentation on the company. So, looking at Slide 7. Now, what is i-80 is a U.S. focused Gold Explorer developer and producer with all of our assets located in the wonderful state of Nevada. Our goal is to become the second-largest gold producer in the United States with a pretty aggressive growth plan. And we'll be developing what we believe to be a pretty significant resource base within the state. 6.465 million ounces of gold and over 104 million ounces of silver and measured indicated, and then further inferred resources of just over 8 million ounces of gold and just over 76 million ounces of silver.
And with that, we've got a wonderful team working to build these assets, credited for multiple discoveries, a strong history of building mines within the state of Nevada, and very strong skilled at M&A as i-80 founding business was Premier Gold Mines and we sold that business and we created i-80 Gold.
Looking at Slide 8, we look at the, where we are in the state. So, this area here in North Central Nevada represents one of the most productive gold districts in anywhere on the planet, really. So, it's the Carlin, Battle Mountain, and Getchell trends, in this Poche stamp, the home of Nevada Gold Mines, which is the joint venture of Newmont and Barrick in Nevada. We are the second largest holder of resources in this Poche stamp [ph] as part of the state, and we have two processing facilities that'll help us process our gold and base metal or PolyMet mineralization as we grow our business. So, looking on Slide 9, we can talk a bit more about the processing facilities.
We have, to the north, the Lone Tree autoclave, situated in highway i-80, and once retrofitted, it will allow us the ability to process refractory gold, which is a pretty major competitive advantage in the state as there are only five refractory processing facilities in the United States owned by three different companies, and i-80 is one of them.
The second facility we have is the Ruby Hill facility. It's currently a vat leach plant, at the Ruby Hill site. And we are currently assessing retrofit plants to turn that into a flotation plant or looking at the viability of that to process some of the very impressive polymetallic grades we are seeing being drilled at Ruby Hill. And while we are retrofitting the loan periodically, we also secured both oxide and sulfide processing arrangements to help us bring in cash flow as we develop our hub and spoke model of developing the three underground mines into the company as we build the Lone Tree autoclave.
Going on to Slide 10, looking at our resources, we are the third largest resource holder in the state. And we are one of the largest holders of silver resources in the United States, with over 104 million ounces of silver in the indicated category and 76.5 million ounces in the inferred category. We are also undergoing a pretty extensive drill campaign as Ryan mentioned. We do anticipate releasing updated mineral resource estimates on all of our projects.
Well, on all of our projects following the current drill campaign, and we will include our initial polymetallic mineral resource estimate with the Blackjack, Hilltop, and FAD deposits following this drill campaign. Why are you looking at the plan or what we are trying to do in the state? We have got the Lone Tree complex, which we talked about earlier. It's going to be the hub of our Hub and Spoke model, the goal would be to develop the Granite Creek, Ruby Hill, and Cove underground mines, to be truck to the Loan Tree complex.
And once that's completed, we will look at, sort of Phase 2 part of the plan, which involve an open pit at, Granite Creek. And then we are also looking at how do we process the interesting base metal and polymetallic mineralization we have at Ruby Hill, and that would be done hopefully, via the flotation plant at Ruby Hill.
So, with that, I'm going to pass it off to Matt Gili, again a bit more of the details on the assets, and we will start off with Granite Creek on Slide 12.
Matthew Gili
Thanks, Matt. Thanks, everyone on the call. First, let's review Granite Creek property. On Slide 13, we highlight the location of Granite Creek in Northern Nevada, along the I-80 corridor and adjacent to the Twin Creeks processing plant. Granite Creek is the first mine that I-80 has brought into development. Current project status includes completion of mine rehabilitation, completion of Phase 1 mine design and proof-of-concept, installation of additional dewatering capacity with Well 6, located at the intersection of the Ogee and South Pacific zone. Both oxide and sulfide material is being trucked to processing facilities. A total of 6651 tons of oxide material was sold for proceeds of $2.8 million in the quarter.
The upcoming milestones include completion of current and ongoing drilling program at Granite Creek, representing both surface and underground drilling. This drill program is primarily intended to upgrade inferred mineralization for inclusion in the upcoming feasibility study. Second, commence our monthly deliveries to NGM of refractory mineralization for total process.
On Slide 14, shows a long section of the underground gold deposits at Granite Creek looking to the Northwest. First thing I would like to point out is that, we have completed mining on two levels, the 4490, 4445 of the Ogee zone, the tons grade analysis from our -- samples are shown in the figure above. Second item I would like to highlight on this slide is the inferred ounce in the underground resource, representing 339,000 ounces of gold. This inferred resource is the material being targeted in the current infill program.
On to Ruby Hill. Slide 16 team shows Ruby Hills location in Central Nevada, South Carlin. Current activities at Ruby Hills are focused on two main activities. One, advancing exploration and delineation of our multiple discoveries. I will talk more about this on the next slide. And two, advancing the studies and permits for underground development from the Archimedes pit.
We have all necessary permits in hand to begin surface construction at the site of the portals. Permitting for the underground development itself is fully underway. And we have also completed a scoping study for conversion and restart of the existing gold VAT leach mill to a base metal processing facility. The upcoming milestones include: finalizing the permit for underground development, completing the PEA for the gold mineralization of Ruby Hill.
Ongoing detailed metallurgical testing of the base metal resources and ongoing drilling for the base metal resource estimate. And not to be overlooked, the team at Ruby Hill produced and sold 1,629 ounces of gold during the quarter, 2,871 ounces year-to-date from the residual, each program.
The relative locations of all the deposits of Ruby Hill is shown here on Slide 17. Ruby Hill continues to demonstrate just how rich and diverse of a property it is with six primary deposits and now Tyche. During the second quarter of 2023, drilling at Ruby Hill was focused on advancing exploration and delineation of multiple CRD mineralized discoveries.
Multiple holes were also drilled for infill in the Blackjack and FAD zones. The Tyche discovery was made while infill drilling at Blackjack. A total of 13,439 feet of core and 13,275 feet of reverse circulation drilling was completed at Ruby Hill during the quarter. Additionally, 3,070 feet of core and 7,260 feet of reverse circulation drilling was completed in the quarter at our adjacent FAD property.
Slide 18, I suspect by now you've had a chance to review the press release we issued on August 2nd regarding Tyche Zone. Over 45 grams per ton gold and over 50 grams per ton silver on a 17.5-meter interval. This discovery was made in a previously untested area along the contact of the graveyard flats intrusive. Data suggests a different phase of the intrusive and a different style of the mineralization being high in bismuth in tellurium, low in arsenic, and with visible gold.
Note that we have received permitting approval for our exploration work program and we will be able to drill this target conventionally from ads further to the south. And onto Cove, by 20 shows the location of Cove immediately south of Battle Mountain. The Cove deposit is expected to be the core asset in the company's hub and spoke business plan, likely the highest grade of the three properties.
Activities of Cove in the second quarter focus on completing the underground portal and exploration decline, including a second fault crossing that is all now complete commencing underground infill delineation drilling of the Cove resource that's in progress, and advancing studies and permitting for all for full underground development. The upcoming milestones include completing the Definition Drilling program for a full feasibility study in 2024 and advancing the full mine permitting.
Slide 21 shows how the results we're getting from our current drilling campaign. Those holes starting in iCHU23 is reinforces and enhances what was previously drilled by Premier Gold, those holes starting in PG. Underground delineation drilling continues during Q2 with 13,350 feet of core drilled, yielding extremely positive results including the previously released acid results for whole iCHU23-11, which indicated 15.7 grams gold over 22.5 meters and 18.9 grams per ton gold over 29.3 meters. Pardon me. To date, we have completed 22 of the planned 115 underground core holes as part of our delineation drilling program.
And now our final property, Lone Tree. On Slide 23. The company continues to advance the engineering studies and cost estimate for the recommissioning of the autoclave facility of Loan Tree, working in conjunction with our partners at Hatch. During the first half of 2023, the company continued leaching the residual material on the pads as planned. The team here is doing a fantastic job, maximizing the residual leach ounces produced. Lone Tree produced and sold from its residual leach activities. 2,700 ounces of gold during the quarter and 3,363 ounces of Gold year-to-date.
ESG, Slide 24. The i-80 gold team continues to engage in community outreach efforts to earn us goodwill in the community and retain our social license operate. Each of our operations are in a different stage of permitting, and it is imperative that we continue to interact with our stakeholders, including our employees, legislators, business partners, and community members to build trust, align our mission, and communicate our plans.
Earlier this year, we published the inaugural environmental social and governance, our ESG report titled Driving the Future, which highlighted i-80 gold's ESG strategies, our policies, and commitments to deliver leading industry practices in Nevada. Over the past year and a half, i-80 gold has focused on the six pillars of our ESG commitments. We are building on these priorities to achieve our 2023 ESG goals. Our team is working with ERM to assist with data collection and building a long-term business strategy for continual improvements and our path to sustainability.
Thank you. Back to you, Matt.
Matthew Gollat
Thanks, Matt. That was great. So, I think we'll open it up to questions now. Given we've got some extra time here.
Question-and-Answer Session
Operator
[Operator Instructions]. Your first question comes from Justin Chen with SCP Resource Finance. Please go ahead.
Justin Chen
Hi, guys. Hopefully, I'm off mute and you can hear me. Thanks very much for hosting the conference. To start, I was wondering if we could perhaps get an update on what your thoughts are on Granite Creek for the second half, but from a production perspective. And then where's the ramp currently and where would you like to like it to get to? And your current development rates? Are you on track with where you'd like to get to where you want at the end of the year?
Matthew Gili
All right. Thanks, Justin. So, where we're sitting, we're not putting out guidance, but I can tell you where we are sitting with the evolution of Granite Creek. During the first half of the year, we encountered oxide mineralization, that was unintended, unknown. And what we did is, we stockpiled that material until we could find the optimal processing plan. First, we tried some, doing some leaching at Lone Tree and the leaching was fine, just the kinetics are really slow. So, then we engaged with some of the other operators in Northern Nevada and have found a entity that is, we have engaged in an or processing or purchase agreement, pardon me, Justin.
So, they are actually buying this ore and they are treating it themselves. So, we started that in May of this year with the shipments to that partner. In the same time, we have been stockpiling the material to initiate the refractory processing at NGM, as part of our previously discussed, toll-milling agreement.
We now have the quantities available for our first 10,000-ton test parcel, and we are initiating that work as well. So, what I'm trying to say in a long way there, Justin, is that we have a lot of materials kind of like it's called work or in stockpile that we are starting to roll into the system as well as continuing to produce from the levels at Granite Creek. So, anticipate -- without putting out guidance anticipating, continued ramp up of production in the second half of Granite Creek. So, when we talk about where we are? We are exactly where we expected to be this time with the development at Granite Creek.
We have four active levels in production. Those are those are sub-levels. So, each sublevel has three or four cuts, depending on which sublevel it is. So, we have four that are actively mining right now. We have completed the first two full levels on the Ogee side. We are at the intersection of the fifth level to Ogee, and this is also the approximate going, it will turn out and start going on to the South Pacific zone, and we have put in a drill platform that we can drill the South Pacific from underground as well.
So, we are on track. We are slowly ramping up. As I said, we have four levels that are currently in production. We are developing on the fifth level. And we are near the intersection with the access to the South Pacific zone.
Justin Chen
Got you. And how many more meters are on the map, before that turn off to SP Zed?
Matthew Gili
It's less than 100.
Justin Chen
Okay. Excellent. So, you have got plenty of time, between now and...
Matthew Gili
We are still on -- we have talked about this before. We still anticipate being, into South Pacific zones in the first quarter next year.
Justin Chen
Right. But it sounds like you are actually well ahead of that. Just based on...
Matthew Gili
Yes. I don't want to -- you know me? I'm a cautious man. But we are certainly, I'm certainly pleased with the progress. I'll say the ground conditions in the decline have been a brilliant of some of the best ground I've worked in Nevada. So, with all the concern we had about ground conditions to have it materialized. Anyways, it's going well.
Justin Chen
I'm glad to hear that. And just one, if I can ask you for ore mining rates? Because it's a bit hard to tell right now because as you said, there is a lot of ore being stockpiled and such. I'm just curious what you think your ore mining look like in Q3 and Q4.
Matthew Gollat
Okay. You asked a great question, Jess. I'm being very pensive here, so I don't want to put out guidance. But I will tell you that, right now, we are mining just under 100 tons per day from each of our production levels. So, the key there is adding more production levels. And so, yes, we continue to add those. We will continue to have more production, as you would expect. Yeah. So, I don't know if I answered your question or not, but I'm trying to be cautious and not talk about non-public information.
Justin Chen
No. Understood. I really appreciate that. So, roughly 100 tons a day and per level, and you've got four levels going.
Matthew Gollat
Wordless.
Justin Chen
Okay. Thanks, Matt. I really appreciate that. And then just one last one. I'm not sure. Just on the - I mean, is that like gold carried over from the contact or is that, do you think there's large bodies of sulfides in the graveyard flats area? I know it's the first discovery there, but I'm just curious what you see right now.
Matthew Gollat
I mean, look, right now as I described it, that's about what we have right now and it's very exciting for us. It's very exciting for Nevada. This is the first time I've seen visible gold on one of my properties in Nevada. It's a high grade. We're just starting to understand that was discovered during infill drilling program at Blackjack. So, look, just another example of Ruby Hill, just the surprises you get and where'd this come from and oh my gosh, look at these greats.
So, we're really just absorbing that Justin, and I'm going to wait for Tyler to have a chance to really understand what's going on. He's got some other holes in there that he's analyzing right now and starting to get results back on for those as well. So, what, just anticipate further information as we understand that deposit better.
Justin Chen
Just maybe one last one on that. Sorry.
Matthew Gollat
What kind of a host do they look at?
Justin Chen
Sorry about that.
Matthew Gollat
Matt, do you want to add to that?
Matthew Gili
I would just add to that. Yes, so it's the current contact, but what's really exciting about this hit, obviously the grade is very exciting. But it's been drilled in a brand-new rock unit in the camp, and it's a different type of mineralization that we see at Ruby Hills, a high sedation mineralization, which leads to a greater conversation around what's the fertility of the camp and what's the driving force behind it all. So, it's another ingredient end potential, but what we see Ruby Hill to be, that'd be the best way to put it.
Justin Chen
And what kind of a host rock are you sitting in, is this like a bleached vuggy, silica or something?
Matthew Gollat
It's the graveyard stock. Matt, do you know how to describe this stock?
Matthew Gili
Yes. Tyler described it to me, it's vuggy. So, like it's been bleached and then re-deposited. I mean, I'm kind of testing all of my geologic knowledge right now. But I'm just going to let Tyler expand on that as we get more results back from that area.
Justin Chen
Okay, great thank Matt appreciated. Thank you very much.
Operator
Thank you. Your next question comes from John [indiscernible] Independent Research. Please go ahead.
Unidentified Analyst
Thank you. Congratulations on all the great results. In terms of having the several projects, does it strain your management team to have success on so many fronts? And if we were to be in a little bit of a slower capital market, which projects would you prioritize to be the one or two first to get capital versus the ones that might be less emphasized?
Matthew Gili
That's a great question, John. And you're right, it's been a bit of a slow market as of late. Just to remind everybody on the call that we closed this financing this earlier this week. We do have a $100 million accordion with Orion that we're actively negotiating with them on to bring in more capital. I would say for the plan to work, we need to be forwarding all three of the underground mines in order to get the loan periodically up and running. Granite Creek is essentially, it'll be cash flow neutral, cash flow positive in the very near future where it's in the end of its development life. So, that's going on its own.
At Cove, we are drilling off the deposit into measured indicated resources to be included into a feasibility study when it's done. And at Ruby Hill, we are working through studies and have the, and permitting to drive a ramp underground there. So, we really need all three of them to work in order to fill that autoclave.
In the meantime, we're also able to bring in cash flow from these toll processing arrangements that we have with Nevada Gold mines. And if you're going to ask me on a, so generally seeing we need all of them to work is the short, short answer. If you're asking me, which one is seeing a lot more attention in terms of expiration, Ruby Hill, obviously we're really getting a lot of very interesting results there, and I really think that's a camp that's a bit of a game changer. And, maybe I could let Matt or somebody else speak to the complicatedness of having the different assets.
We really see them all as one sort of mining camp. So, they're separate portals that would drive a central milling facility. Matt ran the gold rush mine, and they did very similar type of mining where they had several different underground mines, they were shipping or out bringing in. So, it's really not something that is very new to Nevada in terms of how things are operated.
So, I would say we, what we're trying to build here is, even calls it a mini Nevada gold mines, and it's something that we certainly have the team to do, and I don't see it stretching us from a management perspective, but you're right there. It's a capital-constrained environment, a good thing. We've got good partners like Orion to help us manage our way through that. Hopefully, that helped. That answers your question.
Unidentified Analyst
Is it an option to not restart the autoclave and have third-party processing or to chase the lead zinc zones that carry gold and silver at Ruby Hill and the FAD deposit? There's nothing wrong with cash flow, even if it comes from lead and zinc.
Matthew Gili
You're absolutely right. I would say, the polymetallic mineralization is not as advanced as the gold right now, but at some point, that could be the case. I'm confident that we'll be able to finance our way to grow the business. What was the first question, what was the second question there, John?
Unidentified Analyst
Is it an option to just not fool with the autoclave and chase the base metals or to go for third-party processing? Let's just say that, you're mining successfully at one of the underground mines, but not all three of them.
Matthew Gili
So, I would say, and I don't want to speak for Nevada Gold Mines, but they don't want to treat our or forever would be my thinking. They certainly are great partners and they want to see us succeed and get our autoclave up and running, but I don't think they want to be a third-party processor for another company in perpetuity would be the way I would answer that.
Unidentified Analyst
Is the Jar Canyon roaster good for any of your ores?
Matthew Gili
Well, it's a roaster, so it does, it will process refractory ore. It is not, it's further away from our projects than the Nevada Gold Mines refractory processing facilities and certainly further than our own. But, yes, it is a roaster and it does have the ability to process for factory gold.
Unidentified Analyst
It's good to hear that there is lots of options.
Matthew Gili
Thanks, John. Thanks for the questions.
Operator
Thank you. There are no further questions at this time. You may proceed.
Matthew Gollat
Well, thanks everybody for joining us. We really hope you have -- we got a lot of this call. And if you have any other questions, Matt, Ryan, and myself are available at your convenience to call and have follow-up discussions with. So, feel free to call any one of us. And we hope you have a great day. Thanks.
Operator
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and asking to please disconnect your line.
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i-80 Gold Corporation (IAUX) Q2 2023 Earnings Call Transcript