Dundee Precious Metals (DPMLF) Q4 2022 Earnings Call Transcript

Dundee Precious Metals Inc. (OTCPK:DPMLF) Q4 2022 Earnings Conference Call February 17, 2023 9:00 AM ET

Company Participants

David Rae - President, Chief Executive Officer

Navin Dyal - Executive Vice President, Chief Financial Officer

Jennifer Cameron - Director, Investor Relations

Conference Call Participants

Wayne Lam - RBC Capital Markets

Don DeMarco - National Bank Financial

Raj Ray - BMO Capital Markets

Operator

Good time and convey you for opinionated by. Welcome to nan Dundee Precious Metals 4th fourth 2022 net results convention call.

At this time, each participants are successful a listen-only mode. After nan speakers’ presentation, location will beryllium a mobility and reply session. To inquire a mobility during nan session, you’ll request to property star-one-one connected your telephone. You will past perceive an automated connection advising your manus is raised. To retreat your question, please property star-one-one again. Please beryllium advised that today’s convention is being recorded.

I would now for illustration to manus nan convention complete to your speaker today, Jennifer Cameron, Director of Investor Relations. Please spell ahead.

Jennifer Cameron

Thank you and bully morning. I’m Jennifer Cameron, Director, Investor Relations, and I’d for illustration to invited you to nan Dundee Precious Metals 4th fourth convention call. With america coming are members of our elder guidance team, including David Rae, President and CEO, and Navin Dyal, Chief Financial Officer.

Before we begin, I’d for illustration to punctual you that each forward-looking accusation provided during this telephone is taxable to nan forward-looking qualification which is elaborate successful our news merchandise and incorporated successful afloat for nan purposes of today’s call. Certain financial measures referred to during this telephone are not measured aliases recognized nether IFRS and are referred to arsenic non-GAAP measures aliases ratios. These measures person nary standardized meaning nether IFRS and whitethorn not beryllium comparable to akin measures presented by other companies. The definitions established and calculations performed by DPM are based connected management’s reasonable judgement and are consistently applied.

These measures are intended to supply further accusation and should not beryllium considered successful isolation aliases arsenic a substitute for measures prepared successful accordance pinch IFRS. Please mention to nan non-GAAP financial measures conception of our astir caller MD&A for reconciliations of these non-GAAP measures.

Please statement that unless different stated, operational and financial accusation communicated during this telephone are related to continuing operations and person mostly been rounded. References to 2021 pertain to nan comparable periods successful 2021, and references to averages are based connected midpoints of our outlook aliases guidance.

I’ll now move nan telephone complete to David Rae.

David Rae

Good greeting and convey you each for joining america today. I’d for illustration to commencement by welcoming Navin Dyal, our Chief Financial Officer and newest personnel of DPM’s elder guidance squad to his first quarterly telephone since joining america successful November of past year. Overall, nan activity squad astatine DPM is very proud of what our world squad has achieved this past year, delivering beardown results astatine our mining operations and advancing nan company’s early prospects, each while maintaining nan precocious standards for information and sustainability capacity that are halfway to our culture.

Today Navin and I will supply a little update connected our Q4 results and afloat twelvemonth results for 2022 and talk why we judge DPM continues to beryllium good positioned to present worth to each our stakeholders now and complete nan agelong term. I’ll besides outline why we are excited astir what lies up for DPM successful 2023 and beyond fixed our early pipeline, our occurrence successful exploration and our proven expertise to optimize our assets, each DPM strengths that were underscored by our 2 caller announcements, namely nan updated life of excavation scheme astatine Ada Tepe and nan caller precocious people find astatine Čoka Rakita successful Serbia.

Looking backmost astatine nan past year, I’m pleased to study that successful 2022, we continued our grounds of beardown accordant capacity astatine our operations. We produced astir 273,000 ounces of golden and complete 30 cardinal pounds of copper. Despite industry-wide costs pressures, our all-in sustaining costs were wrong our guidance astatine $885 per ounce. We generated $166 cardinal successful free rate travel and we ended this twelvemonth pinch a beardown financial position pinch complete $430 cardinal successful rate and beardown liquidity, including a $150 cardinal undrawn revolving in installments installation and nary debt.

We continued our awesome information grounds pinch our Bulgarian operations, achieving complete 6 cardinal hours without a mislaid clip incident. We stay leaders successful sustainability performance, scoring successful nan 93rd percentile among metals and mining companies successful nan 2022 S&P Global Corporate Sustainability Assessment, and we were included successful nan Sustainability Yearbook, which recognizes nan apical 15% of companies for nan 2nd consecutive year.

We completed a life of excavation and works update for Ada Tepe, adding further precocious separator ounces to our accumulation profile. We announced a precocious people find astatine Čoka Rakita which has important further exploration imaginable and past period announced that our committee has approved a caller stock buyback programme to acquisition up to $100 cardinal of our outstanding shares.

Looking astatine our operations successful much item and starting pinch Chelopech, our largest excavation continued its way grounds of beardown capacity successful 2022, producing 179,000 ounces of golden and 30.8 cardinal pounds of copper, wrong its yearly guidance for golden and somewhat beneath nan debased extremity of guidance for copper. In 2022, brownfield exploration astatine Chelopech focused connected an intensive drilling run that supports nan exertion for a commercialized discovery. The exertion is now adjacent completion and we expect to taxable it to nan Bulgarian authorities successful nan first quarter. In 2023, we scheme to drill astir 50,000 meters to trial conceptual targets connected nan Brevene exploration licence which instantly surrounds Chelopech arsenic good arsenic wrong nan Chelopech excavation concession, which includes follow-up connected nan [indiscernible] imaginable and testing for deeper extensions of nan Chelopech deposit. Within impervious successful excavation and brownfield exploration drilling, we judge location is beardown imaginable to proceed our way grounds of extending excavation life astatine Chelopech, which presently extends to 2030.

Turning now to Ada Tepe, nan excavation had different beardown twelvemonth successful 2022 pinch accumulation of astir 94,000 ounces of gold, which was astatine nan higher extremity of our guidance. All-in sustaining costs of $755 per ounce of golden sold was beneath nan debased extremity of its guidance range. Ada Tepe delivered its highest quarterly accumulation of 2022 successful nan 4th quarter, producing complete 28,000 ounces of gold. After completing nan push-back successful nan 3rd quarter, golden grades accrued arsenic planned and nan excavation is good positioned for precocious grades continuing successful 2023. Ada Tepe has consistently outperformed our expectations since commissioning successful 2019 and we are assured that Ada Tepe will proceed to present beardown results supported by nan updated life of excavation scheme we announced successful January.

Highlights of nan updated life of excavation plan, which was nan consequence of our accelerated people power drilling programme and nan strategical excavation readying study, includes a 22% summation to life of excavation recovered for an further 66,000 ounces of golden compared to nan erstwhile life of excavation plan. There was besides a 13% summation successful golden people and a 1% alteration successful recovery. The caller life of excavation scheme has besides improved DPM’s three-year outlook for production, arsenic Navin will outline shortly.

Overall, nan caller scheme for Ada Tepe is different illustration that highlights nan spot of our method and operations squad successful Bulgaria and their expertise to maximize nan agelong word worth of our assets.

At Tsumeb, capacity successful nan 4th fourth was impacted by a 17-day shutdown to repair a h2o leak successful nan off-gas system, arsenic good arsenic instability successful nan powerfulness grid arsenic a consequence of abnormally dense rainfall successful December. As a result, analyzable ore smelted for nan twelvemonth of 174,000 tons was beneath 2022 guidance. As we look up to 2023, we person a attraction strategy successful spot to reside nan h2o leaks which we encountered past year, and we are forecasting a accordant throughput complaint complete nan adjacent 3 years. We are besides expecting costs per ton to decline, reflecting our efforts this past twelvemonth to optimize efficiencies and trim cost, an inaugural that continues.

Turning to our improvement projects, I’ll commencement pinch our activities successful Serbia. Last month, we were pleased to denote a caller precocious people find astatine nan Čoka Rakita imaginable located 3 kilometers southeast of nan Timok project. To reiterate a fewer highlights from that announcement, drilling astatine Čoka Rakita defined a ample precocious people footprint that remains unfastened successful aggregate directions and which we judge provides further upside potential. Significantly, preliminary metallurgical trial results bespeak that nan mineralized worldly is amenable for accepted floatation, produces a cleanable golden concentrate, achieving full mixed golden recoveries of greater than 93%, including floatation and tails leaching. Test activity to perchance amended golden betterment utilizing nan mixed gravity and floatation circuit unsocial is planned for 2023.

Given nan imaginable effect of Čoka Rakita connected Timok, we will beryllium focusing connected further exploration astatine Čoka Rakita successful 2023 and we are truthful pausing further activity connected nan Timok feasibility study. Exploration this twelvemonth will see astir 40,000 meters of infill and extensional drilling, and we are targeting an first mineral assets estimate by nan extremity of 2023. We are excited astir this caller improvement and I look guardant to updating you pinch nan adjacent group of drill results expected successful nan 2nd quarter.

Turning to Loma Larga successful Ecuador, drilling activities arsenic good arsenic nan citizens information process for nan biology effect appraisal stay paused pending nan result of nan appeals process related to nan determination connected nan law protective action pursuing nan proceeding held successful mid-October. The determination connected nan entreaty is expected to supply clarity connected nan consultation process and whether an Indigenous consultation could beryllium completed successful parallel, arsenic we primitively planned, aliases would request to beryllium completed anterior to resuming nan citizens information process. The expected timing for receipt of nan biology licence is taxable to nan result of nan entreaty process.

As we announced past night, we are extending nan optimization shape of nan updated feasibility study, which we now expect to complete successful nan 2nd half of nan year. This will let america clip to measure further optimization opportunities and to leverage our important operating acquisition pinch akin deposits specified arsenic Chelopech, and perchance to incorporated nan results of nan drilling programme erstwhile we’re capable to restart those activities.

Prior to nan acquisition of Loma Larga, we wished that nan superior estimate made by nan erstwhile owners successful their 2020 feasibility study was debased comparative to our assessment. We’ve besides incorporated definite scope changes arsenic portion of our feasibility study activity to heighten task execution and meet DPM’s operating standards, and we’ve seen inflationary pressures accordant pinch wide manufacture trends which are impacting superior and operating costs and perchance nan calculation of mineral reserve and resources. By extending nan timeline for nan feasibility study, we person nan opportunity to prosecute optimization opportunities to offset these impacts, including by leveraging nan spot of our operations team. We proceed to spot Loma Larga arsenic a precocious value task pinch nan imaginable to make beardown economical returns pursuing nan results of this ongoing optimization work.

In parallel, we proceed to advancement discussions pinch nan authorities of Ecuador regarding an investor protection statement which we are targeting for completion by nan extremity of nan first quarter. In statement pinch our disciplined attack to task development, we do not expect making immoderate important superior commitments to nan task anterior to nan completion of nan investor protection statement and receipt of nan biology license.

At our Tierras Coloradas concession successful Ecuador located successful Loja province, we completed astir 2,700 meters of drilling wrong nan past quarter. This programme tested nan precocious people debased sulphidation vein strategy which was antecedently identified successful 2020. The alteration successful stages of nan Tierras Coloradas task from early to [indiscernible] shape exploration is successful advancement and each regulations and authorizations required from nan different Ecuadorian authorities are expected to beryllium received by early 2024.

In closing, this past twelvemonth our group person demonstrated nan strengths that thief DPM guidelines retired successful nan golden manufacture and which correspond a compelling worth opportunity for investors. These highlights see strong, accordant accumulation from our operations and an all-in sustaining costs that ranks among nan lowest successful nan golden industry. There is besides a robust free rate travel profile, financial spot and flexibility, a grounds of disciplined superior allocation and returning superior to shareholders, charismatic improvement projects, proven exploration occurrence some successful extending excavation life astatine our operations and discovering caller brownfield opportunities, an industry-leading ESG capacity and an awesome way grounds successful securing our societal licence to operate, and yet a beardown and tempered squad pinch a history of adding existent worth to innovation.

Now I’ll move nan telephone complete to Navin for a reappraisal of our financial results and outlook, pursuing which we will unfastened nan telephone to your questions.

Navin Dyal

Thanks David and bully greeting everyone. I’m very pleased to person joined DPM arsenic CFO during an breathtaking clip for nan company. Since joining, I person been impressed by nan value of nan people, nan spot of nan equilibrium sheet, arsenic good arsenic nan tremendous opportunities for growth. Looking forward, pinch robust free rate flow, important rate connected manus and nary debt, we are good positioned to put successful our early arsenic we proceed returning a information of our free rate travel to shareholders.

Now fto maine move to nan financial highlights connected our 4th fourth and twelvemonth extremity results, aft which I’ll talk our 2023 guidance and improved three-year outlook.

As David mentioned, we delivered robust golden accumulation successful statement pinch guidance. All-in sustaining costs per ounce of golden sold, which was wrong nan guidance range, reflects varying factors passim nan year, including inflationary costs pressures and little volumes of metals sold, arsenic expected, partially offset by a stronger U.S. dollar. Notwithstanding, we generated adjusted nett net of $33 cardinal successful nan 4th fourth compared to $51 cardinal successful nan 4th fourth of past year. The quarter-over-quarter alteration was mostly related to little volumes of metals sold. As well, adjusted nett net of $129 cardinal compared to $202 cardinal successful 2021 were impacted by little volumes of metals sold partially offset by a stronger U.S. dollar.

Net net attributable to communal shareholders successful nan 4th fourth of 2022 were $33 cardinal aliases $0.18 per share, compared to $52 cardinal aliases $0.27 per stock successful nan aforesaid play successful 2021. Net net successful 2022 were $36 cardinal aliases $0.19 per stock compared to $191 cardinal aliases $1.02 per stock successful 2021. These increases were owed chiefly to an impairment complaint of $85 cardinal successful respect of Tsumeb, which were recorded successful nan 3rd quarter, arsenic good arsenic little volumes of metals sold partially offset by a stronger U.S. dollar.

In position of our rate travel metrics, 4th fourth and afloat twelvemonth rate travel from operations earlier changes successful moving superior were $52 cardinal and $227 cardinal respectively, while free rate travel which besides considers outlays of sustained superior were $33 cardinal and $166 cardinal respectively. These results were some little than nan corresponding periods successful 2021 mostly owed to little volumes of metals sold.

Turning to our cardinal costs measures, arsenic expected, costs were up complete 2021 levels, reflecting nan section inflationary environment, and successful nan lawsuit of all-in sustaining costs little by-product credits from little copper accumulation and income and higher sustaining superior which was partially offset by a stronger dollar. Taking a person look, our all-in sustaining--consolidated all-in sustaining costs successful nan 4th fourth 2022 were $1,008 per ounce, up 33% comparative to nan anterior twelvemonth period. All-in sustaining costs for nan afloat twelvemonth 2022 of $885 per ounce were 35% higher than 2021 owed to nan factors I mentioned earlier, arsenic good arsenic higher freight charges.

At Tsumeb, rate costs for nan 4th fourth and 12 months of 2022 of $443 and $463 per ton respectively was comparable to nan corresponding periods successful 2021 owed chiefly to nan higher by-product credits from sulfuric acerb income and little labour costs related to a costs optimization inaugural we undertook successful 2022, partially offset by little volumes of analyzable concentrates smelted and higher section rate operating costs.

Turning to superior expenditures, sustaining superior expenditures incurred during nan 4th fourth and 12 months were $16.7 cardinal and $58.2 cardinal respectively, which is comparable to nan corresponding periods successful nan anterior twelvemonth of $12.3 cardinal and $52.5 million. Growth superior expenditures incurred during nan 4th fourth and 12 months of 2022 were $11.1 cardinal and $32.4 cardinal respectively compared to $7.4 cardinal and $17.1 cardinal successful nan corresponding periods successful 2021 owed chiefly to activities related to nan improvement of nan Loma Larga and Timok golden projects.

Let’s move to our outlook and guidance. Our updated three-year outlook reflects higher accumulation successful 2023 and 2024 arsenic good arsenic an improved outlook for all-in sustaining costs comparative to nan update we provided successful nan 3rd 4th of 2022. Highlights of nan updated outlook see mean yearly golden accumulation of astir 270,000 ounces of golden and 32 cardinal pounds of copper complete nan adjacent 3 years and an effective all-in sustaining costs floor plan that continues to rank america arsenic 1 of nan lowest costs golden producers of our size. All-in sustaining costs are expected to scope betwixt $700 and $860 per ounce successful 2023 and betwixt $720 and $880 per ounce successful 2024 and 2025, which is little than antecedently expected. This reflects nan benefits of higher expected volumes of golden sold arsenic a consequence of nan updated life of excavation scheme astatine Ada Tepe and higher by-product credits owed to a higher copper value presumption partially offset by a weaker U.S. dollar.

At Tsumeb, we are focused connected achieving a accordant complaint of throughput on pinch little costs. We expect to resoluteness nan h2o leaks we encountered successful 2022 by April of this twelvemonth and we are forecasting analyzable ore smelting to beryllium betwixt 200,000 and 230,000 tons complete nan adjacent 3 years. A accordant throughput complaint is besides expected to use rate costs per ton of analyzable concentrates smelted, which is planned to inclination little complete nan adjacent 3 years. It besides reflects further estimated costs savings arsenic we proceed to beforehand nan costs simplification programme that we initiated past year.

In position of our consolidated sustaining capital, we expect spending to inclination little complete a three-year play owed chiefly to nan completion of nan upgraded tailings guidance installation astatine Chelopech and a gradual simplification successful activities astatine Ada Tepe arsenic nan excavation approaches its extremity of life successful 2026. Our elaborate guidance for 2023 is outlined connected Slide 17 of nan webcast.

A fewer items to statement pinch respect to our expected maturation superior and exploration spending for 2023. For 2023, we are forecasting astir $10 cardinal to $14 cardinal of maturation superior for Loma Larga, which is mostly related to nan estimated tally complaint for G&A arsenic good arsenic permitting, societal and biology related costs. As we execute definite milestones for nan project, we will summation our guidance for [indiscernible] capital, reflecting backing [indiscernible] drilling and to further beforehand permitting. As we disclosed successful January, we are pausing activity connected nan Timok feasibility study to attraction connected further exploration astatine Čoka Rakita; arsenic a result, maturation superior for nan task is importantly reduced comparative to past year, ranging betwixt $1 cardinal and $2 million.

Our [indiscernible] successful 2023 reflects accrued activities successful Serbia pursuing nan precocious people find astatine Čoka Rakita we announced past month, and an precocious brownfield drill programme astatine Chelopech related to Sveta Petka and Sharlo Dere. As a result, our exploration spending this twelvemonth is expected to beryllium betwixt $25 cardinal and $30 million.

DPM continues to return a balanced attack to superior allocation which focuses connected equilibrium expanse strength, superior returns to shareholders, and reinvestment successful our business to prolong nan agelong word early of this organization. In 2022, we accrued our return of superior to shareholders. In addition, done our sustainable quarterly dividend which offers an charismatic output of 2.7%, we purchased astir 2.5 cardinal shares nether our NCIB. In aggregate, we returned a mixed full of $44 cardinal aliases 27% of our 2022 free rate travel to shareholders. To connection different measurement of looking astatine it, this translates to astir $182 per ounce of golden successful 2022.

In 2023, we are further enhancing our stock repurchase programme pinch committee support to renew nan NCIB taxable to acceptance by nan TSX for nan acquisition of up to $100 cardinal of our shares outstanding. This represents astir 10% of our nationalist float astatine today’s stock price. With a rate position of $433 cardinal arsenic astatine December 31, nary debt, an undrawn $150 cardinal revolving in installments installation and continuing beardown growth--strong free rate travel generation, we are good positioned to money each of those opportunities that generates further worth for stakeholders while continuing to return superior to our shareholders.

With that, I will move nan telephone backmost to nan Operator for Q&A.

Question-and-Answer Session

Operator

[Operator instructions]

Our first mobility comes from nan statement of Wayne Lam pinch RBC Capital Markets.

Wayne Lam

Yes, thanks. Good greeting guys.

Just wanted to inquire you, nan guidance for nan 3 years is comparatively flat. Just wondering really does that facet successful nan readying and shutdowns [indiscernible] 18-month cycle, and when’s nan adjacent scheduled shutdown fixed nan attraction periods undertaken successful 2022?

David Rae

Yes, bully greeting Wayne. The adjacent shutdown is planned towards nan extremity of nan twelvemonth successful Q3, and there’s immoderate anticipation that whitethorn move out. Having said that, you’ll callback that Navin said that we person immoderate imaginable to switch immoderate of nan items successful nan h2o cooling strategy successful Q2.

If you look backmost astatine our accumulation complete erstwhile years, we’ve achieved 230,000 tons [indiscernible] connected 2 occasions, erstwhile pinch a shutdown, erstwhile without, truthful if you look past astatine nan guidance of 200,000 to 230,000 tons, we tin execute that pinch aliases without a shutdown.

Wayne Lam

Okay, perfect. Thanks.

Then possibly conscionable astatine Chelopech, tin you conscionable remark connected nan copper grades and what you’re seeing location successful position of humble trim versus nan anterior outlook?

David Rae

Some portion of that is conscionable practicality. If you spell backmost to nan erstwhile method report, you’ll find that we were saying we were going to nutrient a little people copper concentrate, and portion of producing a little people ore is accrued ore tons. We’re conscionable waiting for nan installations of immoderate upgrades to our system, truthful moderating nan copper people going into nan works is 1 of nan options that we person and that’s what happened successful Q4.

Wayne Lam

Okay, great. Thank you.

Then possibly conscionable lastly, conscionable astatine Loma Larga, what benignant of timing are you guys looking astatine if nan Indigenous consultation can’t beryllium completed successful parallel, and past conscionable wondering if location mightiness beryllium a script successful which Timok is capable to beryllium accelerated and perchance prioritized successful nan pipeline up of Loma Larga.

David Rae

The timing, it’s obviously--I would opportunity nan champion point astatine this constituent is to hold to spot what happens successful position of nan consequence [indiscernible] but peculiarly nan law protective action, and astatine nan constituent that we get that result, we’ll beryllium capable to springiness amended guidance. At this point, we’re saying we would expect that would beryllium six months of quality betwixt being capable to tally successful parallel and having to tally successful bid pinch nan Indigenous consultation and nan planned consultation from non-Indigenous groups.

In position of nan script connected prioritization, I deliberation astatine this constituent what we’d for illustration to do, our activity is chiefly focused not connected Timok but connected Čoka Rakita. Could we accelerate that one? I deliberation nan reply is nary for Timok, but we’re doing what we tin to understand our action to prioritize Čoka Rakita.

Wayne Lam

Okay, that’s it for me. Thanks.

Operator

Our adjacent mobility comes from nan statement of Don DeMarco pinch National Bank Financial.

Don DeMarco

Thank you Operator, and bully greeting David and team. Congratulations connected nan three-year outlook - amended than expected costs. But regarding nan costs, tin you supply immoderate colour connected really nan consolidated AISC remains unchangeable from ’24 to ’25, contempt accumulation easing and copper remaining flat?

Navin Dyal

Sure, hullo Don, it’s Navin here. Yes, truthful we tin [indiscernible].

One of nan things that’s happening, and we were seeing this successful nan 4th fourth pinch our all-in sustaining costs, was that we are still moving done a ample inventory equilibrium erstwhile it comes to [indiscernible]. That really ends up successful our sustained costs, and we would expect that that inventory, that’s really non-cash, it’s really inventory that’s been built up and we person rate allocated connected that successful nan equilibrium expanse that’s coming done basal until 2024, truthful don’t beryllium expecting to spot that inventory activity that is really benignant of conscionable buried successful our costs look successful 2025.

Don DeMarco

Got it, okay. That’s helpful.

Second mobility regarding nan upsized NCIB - it’s welcomed, and this should supply immoderate stock value support. But did nan committee besides see redeploying nan proceeds from Sabina into different developer? With Dundee’s beardown equilibrium sheet, you guys are successful a bully position to mitigate improvement risk, not dissimilar what B2 has done pinch nan acquisition of Sabina.

David Rae

I deliberation we support an oculus connected opportunities successful nan market, look for opportunistic ways successful which to, let’s say, return a balanced attack to superior allocation, truthful decidedly we look for opportunities for illustration that; but astatine nan aforesaid time, we admit that we’ve sewage nan Sabina rate successful our [indiscernible] which we had not planned astatine that stage, and besides we person a business wherever Loma Larga is perchance moving backmost successful time, and fixed that, we thought it was due to springiness ourselves immoderate [indiscernible].

I deliberation conscionable to make judge that we’re not confusing things, nan NCIB is not reliant connected Sabina. I don’t cognize if that makes sense, Don, aliases if there’s other--

Don DeMarco

Yes, that makes sense. I mean, you’ve sewage a beardown warfare thorax of rate and you’re looking astatine different options to deploy it. Buying backmost shares is surely a bully option. I’m conscionable wondering--you know, it sounds for illustration you’re besides considering replacement developers to Loma Larga, but conscionable maintaining a prudent attack connected that.

David Rae

That’s right.

Don DeMarco

Thank you, that’s each for me.

Operator

As a reminder, to inquire a question, please property star-one-one connected your telephone.

Our adjacent mobility comes from Raj Ray pinch BMO. Raj, your statement is now open.

Raj Ray

Thanks Operator, bully greeting Dave and team. My first mobility is connected your costs. Look, it’s awesome to spot $800 an ounce, I presume nan full manufacture is adjacent to $1200. If I look astatine nan energy subsidy that you sewage successful 2022, conscionable wanted to spot really overmuch of that is baked into your 2023 and 2024. Is that a number that you tin provide?

Navin Dyal

Yes, hullo Raj, it’s Navin again. Yes, truthful successful 2023, we’ve--the Bulgarian authorities has continued that subsidy, truthful for 2023, that subsidy equates to 200 Bulgarian lev per megawatt hour. That translates to astir US $110 per megawatt hour. We’ve assumed for purposes of our outlook [indiscernible] 2024 and 2025 that that would proceed arsenic well, either successful nan shape of a subsidy aliases nan shape of reduced power costs arsenic you spot nan activity return to normal.

Raj Ray

Okay, that’s great, Navin. If you look astatine your costs building and your three-year outlook, what’s nan biggest outer consequence you spot to maintaining that cost? I mean, evidently you’ve built successful immoderate [indiscernible], but is location thing location successful your sentiment that mightiness move nan costs connected nan higher side?

Navin Dyal

Yes, again we use from that power subsidy, which is simply a immense use to us. I mean, we person been seeing inflationary pressures erstwhile it comes to cement, steel, hence why portion of nan determination we made is to further look astatine [indiscernible] to further optimize that, because we’re seeing nan inflationary pressures. I would opportunity successful position of risks, astir apt pinch respect to immoderate of those materials that are utilized successful building arsenic we look to grow and turn our business, but wrong nan operations, I deliberation we’ve sewage a beautiful bully grip connected costs and we’re doing different things that perchance could mitigate nan effects of this emergence successful costs aliases inflationary pressures.

At nan aforesaid time, section inflationary pressures are being offset by a beardown U.S. dollar, which has helped america tremendously to nan tune of astir $100 per ounce this past year.

Raj Ray

Okay, that’s great. My adjacent mobility is for Dave. Dave, connected Ada Tepe, if you look astatine nan three-year outlook, what’s nan portion ratio complete those 3 years that we should beryllium modeling?

Navin Dyal

We tin travel backmost to you connected that, Raj.

Raj Ray

Okay, nary worries.

Navin Dyal

We’re going to person an updated method study connected that.

Raj Ray

Okay, convey you. Then connected Chelopech, arsenic I understand, nan results of nan reserve connection is going to beryllium retired by nan extremity of Q1. Can you springiness america immoderate consciousness of what we should beryllium expecting successful position of really overmuch of nan drilling was infill versus description , and whether you’re conscionable looking to replenish reserves this twelvemonth aliases should we expect immoderate incremental maturation arsenic well?

David Rae

I can’t springiness you immoderate specifics connected what will hap astatine nan extremity of nan month, of course, nan extremity of March, but what I tin opportunity is that two-thirds of our drilling underground is extensional, and that’s typically what we do twelvemonth in, twelvemonth out, truthful we do astir 44,000 meters successful total. Of course, we’ve sewage immoderate further drilling for nan circuits, and a batch of that is into nan areas specified arsenic Sharlo Dere, which are wrong nan concession, but still much to do location arsenic you’ve seen from our exploration plans for this year.

For nan past 2 years, we’ve been capable to deed our depletion and adhd resources and reserves to Chelopech, and that’s our ongoing goal.

Raj Ray

Okay, acknowledgment Dave. Then 1 past mobility connected Čoka Rakita, really is nan news travel looking complete nan adjacent fewer months? What should we expect?

David Rae

There’s going to beryllium further news coming retired successful Q2. We person 7 drills moving astatine nan infinitesimal and we are actively--[indiscernible] we’re doing what we tin to get further insights arsenic quickly arsenic possible. All 7 of those rigs are connected Čoka Rakita. We’re correct smack-bang successful nan mediate of winter, which doesn’t ever make it easy erstwhile you person an inch and a half of snowfall connected nan site, arsenic we did nan different day, but I’m happy to opportunity our team’s doing an exceptional occupation of making judge that we get that information. It will return a small much clip for america to get nan results backmost because we are doing further analytical activity connected thing wherever we spot visible gold, truthful conscionable if you’re trying to activity retired what normal you mightiness spot successful position of timing, that’s why it takes america a small longer connected this adjacent [indiscernible] that we’ve sewage clarity connected nan analyses of nan [indiscernible].

Raj Ray

Okay, that’s great, Dave. Thanks a lot. That’s it for me.

Operator

That concludes today’s mobility and reply session. I’d for illustration to move nan telephone backmost for closing remarks.

Jennifer Cameron

Thank you everyone for joining us. If anyone has immoderate further questions, please consciousness free to scope out; otherwise, we look guardant to speaking pinch you successful nan coming weeks. Thanks and return care.

Operator

This concludes today’s convention call. Thank you for participating. You whitethorn now disconnect.