Agnico Eagle Mines Limited (NYSE:AEM) Q4 2022 Earnings Call Transcript

Agnico Eagle Mines Limited (NYSE:AEM) Q4 2022 Earnings Call Transcript February 17, 2023

Operator: Good morning. My name is Julie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Agnico Eagle Fourth Quarter Results 2022 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. Thank you. Mr. Ammar Al-Joundi, you may begin your conference.

Ammar Al-Joundi: Thank you very much, and good morning, everyone. It’s a pleasure to be here and have the opportunity to talk about 2022, but more importantly, about 2023 and beyond, where we are quite excited, and we see some exceptional opportunities that by the end of the call, I think, hopefully, all of you will see them with us. Just before we jump in, some forward-looking statements you should take into account, the normal sorts of things. But why don’t we then just jump right in on page 5. So, we’re going to talk about, again, 2022 and 2023. I would say that 2022 full year can be characterized by two things: number one, solid and strong operational performance; but number two, and this is important, some very strategic consolidations that have led and will lead to some great opportunities that we’re going to talk about.

On the operations side, for the full year, we had a strong year with regards to production, meeting our guidance, but I would say more impressively, costs meeting the upper end, slightly above the upper end of our guidance where we had told the market we would come out. We all know that 2022 was a tough year for inflation. It was a tough year on the workforce side, but the Company delivered quite well overall. We had continued advancement of some key development projects, Odyssey, Detour Lake, some other key projects that we’re going to talk about. And we delivered all of that with the Company’s best safety record in 66-year history of the Company. That’s impressive. At the same time, we repaid $225 million of debt with cash as it came due.

And we paid a dividend of $0.40 per share quarterly dividend continuing, which is at a good level. At the same time, we increased mineral reserves by 9% to almost 50 million ounces. So a very strong year operationally, I think, across the board. And we’ll talk about the fourth quarter where there were a few more challenges, but I’m very proud of the team for what they delivered this year. On the strategic consolidation, very successful merger and integration between Agnico Eagle and Kirkland Lake that went very well. I used the past tense because it’s done. We delivered synergies faster and in greater quantum than we thought we would, which is great. And frankly, the teams are working exceptionally well together, and you will see that when I talk about 2023 and beyond.

Secondly, we’re looking forward to the pending acquisition of Yamana’s Canadian assets, including, most importantly, the second — the other 50% of the world-class Malartic mine and all the potential that it has. Those two strategic deals, the consolidation of Kirkland and Agnico and the acquisition of Yamana’s Canadian assets are core and fundamental to our strategy, which is to consolidate the best operating regions in the world for gold mining. Next page, please. And I want to take a minute because we talk about this a lot, but sometimes a picture is worth a thousand words. And what we try to show here is what this Abitibi gold belt means for us. It’s a region about 160 by 200 kilometers, and let’s take a look at some of these numbers. Mineral reserves over 30 million ounces, resources over 30 million ounces, inferred resources about 20 million ounces.

These numbers are about the same as the total Nevada Gold Mine JV. But in this case, we own 100% of it, and we’ve been operating here for over 50 years. So we think this region has a lot of potential, and that’s what we’re going to be talking about. We will be producing in excess of 2 million ounces from this region at about $800 cash cost, and this region also is a fundamental part of our ability to operate, we think, with a strong competitive advantage in Nunavut as this is a basis for a lot of those operations and Nunavut, again, going to be between 800,000 and 900,000 ounces of production. So you can see the quantum of this strategy of combining and consolidating what we’ve done over the last couple of years. Now, when we did the merger with Kirkland, and this time last year, when we had this call, there was a lot of emphasis on synergies.

So, we said very clearly, we didn’t do the merger because of synergies. We did the merger because of what we saw was a huge potential to consolidate this region and leverage off our competitive advantage in what we think is one of the best places in the world as measured by geologic potential and political stability. So, as we look forward, and — next page, please, that’s what we’re going to be talking about in 2023 and going forward. It’s really — where last year was about integrating the companies, delivering on the production guidance and consolidating this region, 2023 is all about optimizing what we’ve got. There’s a lot we’re working on. But I’m going to hit three things, and I think this is the most important page in the entire presentation.

And these are only the three biggest, there are a lot of others. But Detour Lake, we continue to have exceptional exploration results at depth and moving west. We are continuing to assess and Natasha and the team have done a great job already with the mill expansion. We think we can expand, and we’re looking at opportunities to go from 28 million tons to 30 million tons with minimal CapEx investment. And remember, the permitting is up to 32 million tons. And importantly, we are continuing to work. We promised that we would do this by the end of this year. We’re making good progress towards the potential for this mine to be producing over 1 million ounces a year for decades. And we’re looking forward to continuing to work on that and seeing where we are at the end of the year and talking more about it then.

The Canadian Malartic Complex. We’re now calling it a complex because that’s what it is going to be. We paid a fair price for the second half of Malartic based on its current life of mine, but the reason we did the deal is because we think there’s a lot more potential, and we’re going to talk about that a little bit. We think that the areas we have already approved an increase in exploration as soon as the deal is completed because there is a lot of exploration potential and we’ll talk about that a little later. We are going to be initiating initial production in March. We are sinking the shaft, and we are assessing the potential for additional ore source at Malartic. We think that the Malartic complex between the ore available at the mine site and opportunities to bring in or nearby, this could be another plus 1 million-ounce a year producer for decades to come.

So, this is what we’re trying to do in the best place arguably in the world to mine. You can see that between Detour and the Malartic complex potential each to be in excess of 1 million ounces a year for decades. And then, the third item to hit briefly is using excess capacity of existing infrastructure throughout the region and leveraging that infrastructure. This is what we mean by getting the full potential and leveraging off our competitive advantage. We’re going to talk about this later, but to hit the highlight. From the assets we will already own and that are near where existing mill capacity is, we think there’s the potential for up to 500,000 ounces of additional production by 2030, starting slowly in 2024, but really picking up sort of ’28, ’29, ’30 when this mill capacity comes in place.

Now, in and of itself, I think that’s impressive. And people talk about the best growth is organic growth. This is the best of the organic growth because it’s not just growth in areas where we exist, it is potentially growth with minimal additional capital expenditure. If you can bring a mine into production and not have to build a mill and not have to build tailings facilities, you’ve probably cut the capital cost of that mine in half. And you’ve done it in a region where you know it’s safe to operate, where you have the best reputation in town, where there is minimal environmental impact, minimal permitting impact. This really is the best organic growth. It creates — it generates the most money for our shareholders. It does it with the least risk, and it does it with the smallest environmental footprint.

That, we believe, is the future of mining, not just gold mining but any mining. Just quickly hitting on 2024, and the fourth quarter. The first three quarters I would say were exceptional quarters from an operational perspective. We delivered above budget on production and very good cost control. The fourth quarter, I would classify as a solid quarter. We did have some challenges, but the team still delivered pretty well. If you think we’re going to come in above the middle of our production guidance of 3.2% to 3.4%. So the bottom end to any quarter would have been 800,000 ounces, and that’s where we came in this fourth quarter at cost of $863 million. What I will say is, yes, the costs were a little bit — were higher — more than a little bit.

The costs were higher in the fourth quarter. And that is a function of two things. One, it is a function of the full inflationary pressures affecting us. Our team did a great job in 2022 of getting ahead of some of what we thought were going to be inflationary pressures, we did some — we had bought more inventory. We put on some hedges early. We did a lot of very good things that controlled costs, but we’re not immune from inflation forever. And what you’re seeing in the fourth quarter is some of that affecting us, including, in particular, as we had the sealift at Nunavut. So, the fourth quarter included those full inflationary pressures, but the costs were also impacted somewhat by some operating challenges. I’ll hit Kittila and Fosterville first.

Kittila, we have a restriction right now, a permitting restriction on the mill throughput. We applied for the permit to go from 1.6 million to 2 million tons a year. That permit was approved, it was appealed. And right now, we are dealing with that appeal. So we’re limited to 1.6 million tons a year. We have put in our guidance an assumption of 1.6 million tons a year. We are optimistic it actually gets resolved in the next couple of months, but we don’t know that it will. So our budget is, I don’t want to say conservative, but it does assume the $1.6 million. And if things go the way that we hope, they go — and that we’re optimistic they go, we will have an ability to produce more at Kittila and probably another 30,000 to 40,000 ounces there — and going forward, by the way, because we have that restriction in place in our forward year guidance as well.

And then at Fosterville, we have a noise restriction. We were in Australia — I was in Australia with the team a couple of weeks ago. We are optimistic that restriction, the noise restriction, which is limiting — about 25% of the production at Fosterville. We are optimistic that will be lifted. We can’t guarantee it. So, we have not included the full production at Fosterville. But if that restriction is lifted, it would be about another 50,000 ounces a year. So, I just wanted to point that out. Maybe some people say we’re being a little bit too conservative on that, but this is — I’m speaking to the owners of the company, and our job is to identify all of these issues, and that’s what we’re doing. LaRonde, we talked about LaRonde last quarter.

I’ll talk about it again. LaRonde has been in production for 35 years. It’s a fantastic mine. It’s a fantastic orebody. We’re hitting some of the best reserve — some of the best grades we’ve ever hit there. But the real word about LaRonde is sustainability. This is a mine that’s been expanded 5 times. It has a huge amount of potential, but the reason we’ve operated safely, and I’m going to emphasize that word safely, for 35 years and hopefully operate safely for decades more is because we’ve operated sustainably. And sustainably includes, in this case, having a team of world-class rock mechanics and internal and external advisors who guide us on the best way to sustainably mine this multi-decade asset. And they have advised that we go to a slower mining rate.

The gold is still there. We are just mining at a slower rate at depth. And so the opportunity at LaRonde is — and frankly, this is a good thing. We are going to start exploring more laterally. You always follow the highest grade gold, which is going down, and we know the gold continues to go down. But as we reduce the rate at depth, we are going to explore laterally and it might take a couple of years, but we are confident that we will be able to find additional operating phases and increase the production rate again. And then just before I flip, it was a good year. I want to call out to Detour, which had a record year, Amaruq that had a record year and Goldex that had a record year since the restart. Next page, please. Just very quickly as some of the operating and financial highlights.

Operating margin of about $720 million in the quarter, about $3.1 billion through the year. You’ve got all this data. We don’t need to go into it in detail. Next slide, please. This is impressive as well. Not only did we increase reserves by 9% but equally important, we increased mineral resources by 12%. The mineral resources of today set the basis for the mineral reserves of tomorrow. And so, we’re very proud that we not only increased reserves, but increased resources. And frankly, we think we’re going to be able to continue to do this over the next several years going forward. And so, at this stage, we talked about 2022. We really are excited about 2023 going forward. We identified Detour, and Natasha is now going to talk about that. We identified Malartic.

Photo by Anne Nygård on Unsplash

Dominique is going to talk about that. And then I’ll talk a little bit about the potential for that additional 500,000 ounces towards the end of the decade. Natasha?

Natasha Vaz: Thank you, Ammar, and good morning, everyone. I’ll provide a quick update on Detour and our vision to get to 1 million ounces per year, and I’ll start with the mill expansion project. We continue to advance multiple initiatives to increase our mill throughput from 23 million to 28 million tons a year by 2025. And the last major initiative in our plan to achieve 28 million tons was successfully completed in 2022 with the installation of our secondary crusher screens. The installation was completed in the second half of the year with the first line completed in Q3 and the second line completed in Q4. The initial results were very encouraging. We saw a daily average throughput equivalent to 28 million tons per year, but these rates are not sustained consistently over time yet.

So now the focus at the mill has shifted to optimizing the mill processes, analyzing the wear and tear from the higher throughput to optimize our maintenance practices, and basically just improving the mill run time so that the higher throughput becomes more and more consistent over time. And based on the work that needs to be done, we see potential for a faster time line than originally that was expected to be achieved in 2025. And in addition to a faster time line of getting to 28 million tons a year, as Ammar mentioned, we’re also evaluating a pathway to increase the mill throughput beyond that with further optimization and fine-tuning of our mill processes and our maintenance strategy as we adapt them to higher milling rates. The mill optimization includes improved process controls.

We’re also including the implementation of an expert system like we have at some of our other mills. So, these initiatives have the potential to achieve a range of somewhere between 29 million to 30 million tons a year with limited capital. And other ongoing initiatives include the screening and sorting of low-grade ore with the potential to bring the throughput even higher. And then just on the update for the underground study, an initial underground mineral resource associated with the mineralization outside of the planned final pit limits at depth and to the west is expected to be completed in the first half of 2023. And then this will be used as the basis for the potential underground mining scenarios that will be worked on in the second half of the year.

But we expect to complete an initial technical evaluation by the — by year-end 2023. Moving to the next slide. I’ll briefly touch on the exploration highlights at Detour in the last quarter, and I’ll start with the infill drilling program. This was a program completed in the Saddle zone and just below the west portion of the pit, the area that you see that’s highlighted in blue. The results shown on the right side of the slide, in the first bullet, continues to indicate a wide envelope of gold mineralization. And then just west of the infill drilling, just outside of that mineral resource shale as part of the expansion drilling program, you’ll see that we continue to show a similar trend where we had a hole that intersected a wide zone with pretty high-grade inclusions.

This one included 10.2 grams per ton of gold over 28.9 meters. And finally, the regional drilling program also showed promise. This was a program that was conducted approximately 2.4 kilometers west of the West Pit mineral resource. And it showed signs that these pockets of gold mineralization along the Sunday Lake Deformation Zone still continues. So all in all, very encouraging results in the quarter for Detour. One other thing I wanted to mention is that the good exploration results discussed in prior quarters has led to the significant increase in the mineral resource, mineral reserve update at year-end. But the exploration highlights that I’m talking about today and in the news release only became available after the MRMR year-end update.

So, it’s just — it just shows the potential to continue the growth at Detour from the — from both the open pit resources and advancing the understanding of the underground upside. And with that, I’ll pass the presentation on to Dominique Girard, our COO for Quebec, Nunavut in Europe.

Dominique Girard: Good morning. Thank you, Natasha. In the next couple of slides, I will give you an update on the Odyssey project as well as on exploration or infill drilling, what we see and how we’re going to see developing that complex to feed the mill that we have. On the production or let’s say, the development ramp, we are on target with the development, and we foresee to do the first blast in March, so on time. And we’re going to have approximately 50,000 ounces this year coming from the Odyssey South. On the construction project, everything is going well, despite not the easiest time to build with the logistics and the workforce challenges. But we have very — a team at site, and we’re proud with the advancement, a bit of challenges with the wind and the crane that you could see on the top right of the picture in the last quarter, but this quarter, we are back on track with installing the steel into the shaft.

And we’re going to be ready to do shaft sinking starting at the end of this quarter. Maybe to give you a perspective about where we’re going to be at midyear with the construction of the project, which is going to be to feed also the updated study that we’re going to do this year, we’re going to update our PEA study. But we’re going to be at the middle of the year where 80% of the surface construction is going to be completed. So, the electrical line, the shaft or, let’s say, the head frame, the garage, the warehouse, the paste plant Phase 1 is going to be all completed. So, all those costs are going to be secured as well as the schedule. And we’re going to have also an idea or a better idea, our mining rate into the Odyssey South as well as the sinking rate that we’re going to do into the shaft.

So all of that is going to be updated through the year to see, let’s say, a very good vision on where we’re going to handle with the project. But everything is positive. And on top of that, we see — I’m going to talk a bit about that in the next section, but we see very positive results from the infill drilling. We did the first conversion with the Odyssey South at 100%, the equivalent of close to 200,000 ounces at the Odyssey South, but we also see very positive infill drilling in the East Gouldie right now. If we go to the next slide, there is some holes that we could see here. The middle of the East Gouldie Zone, which is the dark blue, that — let’s say, a year ago, that was more patchy. But now with the better infill this is taking place.

And we’re expecting to do some conversion of that zone at the year-end. And just to highlight some interesting ore — at the 1 kilometer below surfaces approximately or it is 7.6 gram on 43 meters. And if you go down 300 meters, we’re 4.2 grams per ton 61 meters. And if you go a bit lower of that zone, we’re 93 meters of 2.6 grams per ton. So the infill drilling is confirming what we have into our study. And we also see the reddish zone increasing with the inferred resources, which is going to be all included into our updated PEA. So this is, let’s say, the first place where it’s going to be easy or easier to bring more ounces to that mill, is within that 5.6 kilometer long, 1.5 wide and 2 kilometer deep area. So, we’re going to continue to work and to focus on to drilling and better understanding that zone.

If we zoom out at the next slide, page 15, on the interior area, there is also other potential satellite deposits like Camflo, LTA property where we’re going to focus on more drilling and doing more study that eventually to bring that into the Canadian Malartic mill. Just the LTA property which means, Les Terrains Aurifères, French word, goldfield in English. 2 million tons have been processed there — no. 2 million ounces have been processed there, which was 10 million tons at 6 grams per ton, and that was done or only the first 800 meters have been drilled. So we’re looking for eventually to focus there. This year, we focused more on the Camflo deposit. There’s already a drill running, and we’re going to need to better understand could we do — could we mine an open pit crown pillar there?

But this is the vision that we have around the Odyssey project. Maybe to close, I would just like to congratulate the construction team, which did last year, full year with the zero combined frequency. This is something not easy to achieve, but with the quality — demonstrate the quality of the team that we have into that region and the good work that they did. On that, I’m going to pass the mic back to Ammar.

Ammar Al-Joundi: Thank you, Dominique, and thank you, Natasha. So if we go to the next slide, please, and let’s zoom in. So Dominique talked about additional ore that’s effectively proximate to the mill. But what this slide shows, we step back a little bit and we said, what is the potential? And again, there’s a lot of potential. Right now, I’m just talking about consolidating and optimizing the mill. There’s procurement, there’s central control centers. There’s a whole bunch of things we’re working on. But for 2023, we’re focused on the thing that’s going to move the needle very quickly, relatively speaking. And if you look at the position here, what you see in the red line and the black line, that’s the road in the railway.

And over the last 100 years where they’ve been mining, the towns, the road, the railway has followed the Cadillac fault. It makes sense. That’s where the economic growth of this part of Quebec and Ontario has been. And what you can see in the purple are our land positions. So, you can see that not only do we have a lot of land positions, we have a lot of land positions right on the Cadillac bolt, but also importantly, where there is existing strong transportation infrastructure. Now, just looking at three simple examples, things we already own. Macassa near surface additional production from the AK Zone, Upper Beaver and Kirkland Lake satellite deposits and Wasamac. There’s about 11,000 tons of ore that can be mined that conceptually could be milled at the Malartic or Lapa mill.

That’s only 11,000 tons. That’s one-quarter of what we expect the excess capacity to be. And those 11,000 tons are roughly potentially 500,000 ounces a year. Now somebody asked us, well, is this a fill the mill to fill the mill? Or are you going to — are you focused on IRR? What I would say is, again, I’ll repeat, and I was a CFO for a long time. I think this way. Obviously, if you’re building production and you don’t have to build a mill and you don’t have to build a tailings facility and you’ve cut the CapEx in half, your IRR — your return on capital roughly doubles. The math is more complicated, but it roughly doubles. So, this is not just organic growth. This is the best organic growth you can have with the best return on capital, the least risk and the least environmental footprint.

Now, before we move on, and we want to leave time because I’m sure there’s going to be a lot of questions. It’s not just these three things. As impressive as Detour is, as Malartic is, as optimizing the belt is, we had excellent exploration results at Hope Bay, excellent exploration results at Malartic, excellent exploration results at Kittila, at Goldex, at Fosterville and at LaRonde. So, we are firing, I think, on all cylinders, but we are focused on things that are in front of us that we’re always part, and I go back to where I started. This was always part of why two great companies like Kirkland and Agnico merged. This is why we really wanted the second half of Malartic. And by the way, nobody else could have had the second half of Malartic and delivered all this value into it because nobody else had the land positions and advantages we had.

Just going on to move forward ’23 to ’25 production moderate growth, frankly, about 7% by 2025, from the 2022 production. The numbers are there. Roughly about 3.35 — I’m sorry, about 3.3 midpoint in 2023, 3.45 midpoint 2024 and 3.5 midpoint 2025. I want to repeat that these numbers assume constraints at Kittila and at Fosterville. If we are successful in lifting those, that’s another 30,000 to 80,000 ounces, maybe a little bit more that we can add to that. And none of these numbers include any of the incremental production from filling the mill. Now granted, that will start pretty slow in 2024 and won’t really build up until ’28, ’29. But I just want people to know that we think we can add potentially more to these. Maybe just flipping forward to the next page just for time.

We are going to continue to do what we do in the most responsible way that we can. It’s not just the right thing to do. But again, if your strategy is rather than going anywhere in the world to build mines one at a time where we, instead, Agnico want to focus on regions for decades, you have to be the best at ESG. You have to be welcomed in the community, not just accepted, but welcome and part of the community and you have to demonstrate environmental responsibility because we don’t want to build just one mine, we want to build several mines. And I think our numbers, as reflected by third-party, demonstrate that we are leaders in the industry for greenhouse gas emissions. We’re leaders in the industry for freshwater usage. As I mentioned, we had the safest year in our 66-year history.

We have great relationships with local businesses, great relationships with local indigenous groups. We really believe and we can see that we, working with the communities that we’re in, improve the quality of life of the people that work with us, their families and the community that surrounds it. We are dedicated to zero carbon by 2050 and a reduction of 30% by 2030. We’re putting a lot of effort into how to get there, and we will get there. Next slide, please. Strong financial position, about $660 million in cash, $1.2 billion of undrawn credit facility. We paid down $225 million of debt in 2022 as it came due. You can see on the bottom left, our debt profile, we expect to continue to pay that down as it comes due with cash. Next slide, please.

We are going to — we’ve been paying a dividend for 39 years. I don’t know that there’s any other gold mining company — frankly, I don’t know if there’s any other mining company that’s done that. We are going to continue to pay a dividend, and our dividend yield is competitive with our peers. Next slide, please. So in conclusion, and again, we want to have time for questions because there’s a lot here, and there’s a lot in our almost 150-page press release. In conclusion, 2022 was a tough year for the industry. It was a tough year for us, but I think the team did a really good job. Three exceptional quarters and a solid fourth quarter overall. Importantly, 2022 was also a year where we successfully integrated two great companies and are going to be acquiring the second half of a world-class asset in our backyard and delivering value that nobody else could.

Just stepping back, it’s not always easy to integrate two companies. But I have to say, I’ve said it before, I’ll say it again, it went really well, and that’s only because of the quality of the people involved and the cultures that both companies had. So, while 2022 was a tough year, it was a good year. And 2023, we are very excited about it. Where 2022 is about consolidating, 2023 is about optimizing. And we are just starting to scratch the surface of the potential. Again, this time last year, we said we didn’t do the merger because of the synergies, even though we’ve delivered very well on that. We did this merger because we see huge potential. I hope through this presentation, we are starting to demonstrate that. And again, we’re just scratching the surface.

So, I will finish with how we always finish because it’s our consistent strategy, which is to be a simple, consistent, disciplined company with a proven approach to value creation based on consolidating assets in premier jurisdictions, businesses that make, a lot of money, a lot of cash flow and importantly, are always per share focused, proven leadership with a track record, maintaining a strong financial position to provide strategic flexibility. ESG is important to us. And we will continue to endeavor to be a trusted and valued member of the communities in which we operate and which we hope to operate for decades. The consolidation of the Abitibi gold belt is providing growth potential, high-quality growth potential, high margin, high return on capital, low risk, and we want to continue to build on our long history, 39 years of return of capital to our owners.

And with that, and thank you for your time. I know we took a little bit longer than we usually do, but there was a lot here. Operator, we’ll open it up for questions.

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Q&A Session

Operator: Thank you. Our first question comes from Fahad Tariq from Credit Suisse. Please go ahead.

Fahad Tariq: Hi. Good morning. Thanks for taking my two questions. Ammar, maybe just first on 2023 costs, which I think maybe surprised some people. It looks like it’s about 14% higher than the previous 2023 guidance, about 5% higher year-over-year, about 9% higher than, I think, what consensus expectations were. What is the market missing here when it comes to the underlying inflation? What part of the story are we not seeing that’s impacting the costs?

Ammar Al-Joundi: Yes. That’s an excellent question, Fahad. And part of what you’re not seeing is — and I said this in previous calls, costs are a function of two things. They are a function of inflation, but they’re also a function really of throughput. So 2023, I’ll give you an example at Meadowbank. The stripping at Meadowbank in 2023, the ratio is 16:1, the strip ratio. In 2024, it’s going to be 4 or 5:1. That simple change in stripping ratio has an impact on the entire company of about $37 an ounce in costs just about one thing. And it’s hard for you guys to see that, and I appreciate that, but that’s sort of your question. The other thing is, clearly, with the restrictions, simple things like 80,000 ounces of restrictions, once those are lifted, costs of those operations go down.

So you’re right. There is inflation, but there’s things that’s hard for people to see. And those are really the operating things. And we hope to be able to outperform what we’ve given, but we had to give cost guidance where it is because we don’t know if those restrictions are going to be lifted. We think they will be, but it would be not good of us to assume they will and then surprise you guys all at the end of the year.

Fahad Tariq: Okay. Fair enough. And then, just a quick follow-up. The synergy number that’s being baked into the guidance, it looks like it’s $12 an ounce. I think the number that was previously communicated the range was quite a bit higher, like $30, $40 an ounce. Did something change there when it comes to synergies, and what’s being included in the 2023 cost guidance? Thanks.

Ammar Al-Joundi: Yes. So, the synergies get a little more complicated because of inflation. And — but what I would say is we are still ahead of schedule on the synergies. The administrative synergies are easy to track, I think, and I had these numbers, I apologize, but the procurement synergies are on track. So, I’d have to go through Fahad and go through the number you just gave me and compare that to our numbers.

Operator: Your next question comes from Emily Chieng from Goldman Sachs. Please go ahead.

Emily Chieng: My first is a follow-up on the cost pace and maybe looking ahead beyond ’23 into ’24 and ’25, where you’re expecting some cost declines there. Perhaps could you bridge some of the items that you think about that would allow you to achieve this? I know you mentioned the Meadowbank stripping, but perhaps can you talk to maybe your diesel procurement strategy, labor, fuel and consumables there as well? Thanks.