Centerra Gold Inc. (NYSE:CGAU) Q2 2024 Earnings Call Transcript

Centerra Gold Inc. (NYSE:CGAU) Q2 2024 Earnings Call Transcript August 3, 2024

Operator: Good morning, everyone. Thank you for standing by. This is the conference operator. Welcome to the Centerra Gold Second Quarter 2024 Conference Call. As a reminder, all participants are in a listen-only mode. The conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I’d like to turn the conference call over to Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications with Centerra Gold. Please go ahead.

Lisa Wilkinson: Thank you, operator, and good morning, everyone. Welcome to Centerra Gold’s second quarter 2024 results conference call. Joining me on the call today are Paul Tomory, President and Chief Executive Officer; Paul Chawrun, Chief Operating Officer; and Ryan Snyder, Chief Financial Officer. Our release yesterday details our second quarter 2024 results. It should be read in conjunction with our MD&A and financial statements, both of which can be found on SEDAR, EDGAR, and our website. All figures are in US dollars unless otherwise noted. Presentation slides accompanying this webcast are available on Centerra’s website. Following the prepared remarks, we will open the call for questions. Before we begin, I would like to caution everyone that certain statements made today may be forward-looking and are subject to risks which may cause our actual results to differ from those expressed or implied.

Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. Certain measures we will discuss are non-GAAP measures. Please refer to the description of non-GAAP measures in our news release and MD&A issued yesterday. I will now turn the call over to Paul Tomory.

Paul Tomory: Thanks, Lisa, and good morning, everyone. We delivered another quarter of solid operating performance and maintained consistent quarter-over-quarter cash flow from operations before working capital and income taxes paid. Our year-to-date production costs are in line with our guidance ranges and full year 2024 consolidated guidance for production costs and CapEx is unchanged. In the first half of the year, we’ve made good progress executing on our strategic plan focused on maximizing the value of each asset in our portfolio. Earlier this year, we announced an additional agreement with Royal Gold which allows us to assess Mount Milligan’s potential to be a multi-decade operation. This was the first key step in our strategy to realize the full potential of this cornerstone asset located in a top-tier mining jurisdiction.

We continue to progress work on the preliminary economic assessment, to update the larger resource to include all the drilling completed to date, to identify value-added initiatives to the plant, and to optimize the mine plan. We expect to complete the study in the first half of 2025. Also at Mount Milligan, we have continued our progress on the site-wide optimization program that was initially launched last year, and Paul Chawrun will speak to this later in the call. We remain focused on maximizing the value of our Molybdenum Business Unit assets, which are comprised of the Thompson Creek mine, the Endako mine, and the Langeloth Metallurgical facility. In the second quarter, we advanced our permitting work at Thompson Creek with strong collaboration and proactive support from our regulatory partners.

We successfully obtained authorizations for additional lands at Thompson Creek mine, which will enable a proposed pit highwall layback. This is an important deliverable in the overall permitting process and provides for a long runway of mining activities under the current plan. We remain on track to release the Thompson Creek FS study later this year, at which time we also expect to outline our commercial optimization plan for Langeloth. We’re encouraged by the value opportunity in Langeloth and the expected synergies with the Thompson Creek mine. With respect to our pipeline of growth projects, we continue to progress work at the Goldfield property in Nevada. Our focus this year has been on exploration on the large land package, looking for more oxide material as well as metallurgical test work to support a lower capital flow sheet to maximize returns on the project.

We expect to release an initial resource at Goldfield by the end of the year. Finally, I’d like to provide an update on our ESG initiatives. In line with our commitment to sustainable and responsible mining practices, we recently published our 2023 Annual ESG report. We’ve made meaningful progress in our sustainability journey over the past year, marked by significant achievements across the organization, including the following. Throughout 2023 and this year, efforts have been made to identify potential efficiencies in greenhouse gas reduction opportunities at the site level, with the goal of establishing attainable targets. Second, the number of reportable incidents by 17%. Thirdly, we contributed over $3.2 million to community investments and donations across our operations.

And finally, we achieved the 2026 gender diversity goal two years ahead of schedule with 38% female representation on the Board of Directors and 33% among officers of the company. As we look ahead, we’re dedicated to continuing our efforts to drive sustainable value and positive impact. And with that, I’ll pass the call over to Paul who will walk through our operational performance for the quarter.

Paul Chawrun: Thanks, Paul. I’d like to start with Mount Milligan’s safety performance. The operating team continues to embrace the site-wide optimization program, which starts with continuous improvement to our safety performance. Year to date, we have seen evidence of this through a significant reduction in high-potential incidents. I would also like to congratulate our Mount Milligan mine rescue team for placing first overall in the Northern BC competition. On slide 5, we show operating highlights at Mount Milligan for the quarter. Mount Milligan produced over 38,000 ounces of gold and over 13 million pounds of copper in the second quarter. Gold and copper sales were down quarter-over-quarter, which was anticipated due to the timing of shipments.

Both gold and copper sales are expected to increase in the second half of the year, contributing approximately 60% of the annual sales. In the second quarter, all-in-sustaining costs on a by-product basis were $1,234 per ounce higher quarter-over-quarter due to lower sales and higher sustaining CapEx. The 2024 guidance metrics at Mount Milligan remain unchanged. During the second quarter, we continued our progress on the site-wide optimization program at Mount Milligan that was initially launched last year. This program has been focused on a holistic assessment of occupational health and safety, as well as improvements in mine and plant operations. While the optimization program is still ongoing, year to date, we have begun to see productivity improvements in the load-haul cycle at the mine as well as the plant processing costs.

In the first six months of 2024, milling costs at Mount Milligan were $5.60 per tonne, processed 12% lower than the same period last year. Due to the longer-term nature of the mining optimization initiatives, we expect to see improvements in the unit mining costs in 2025. Now moving on to Oksut. Starting with safety performance, year-to-date Oksut is tracking on target on both total reportable injury frequency rate and severity rate. By embracing various safety systems and programs, including our Work Safe Home Safe initiative, we are demonstrating our commitment to continuous improvement in our journey towards Zero Harm. On Slide 6, we show operating highlights at Oksut for the quarter. Second quarter production was over 51,000 ounces. This is less than last quarter due to the winding down of inventory built up during the operations shutdown in 2022 and 2023.

Our 2024 production guidance at Oksut is unchanged with approximately 40% to 45% of the annual production weighted to the second half of the year. In the second quarter, all-in sustaining costs on a by-product basis were $943 per ounce, which is higher compared to last quarter due to lower sales and higher royalty costs resulting from higher average realized gold prices. Oksut’s cost guidance ranges for the full year of 2024 are unchanged. However, we could be at the high end or potentially exceed the guidance range if gold prices remain at current elevated levels, mainly driven by higher royalty rates. I’ll now pass it on to Ryan, to walk through our financial highlights for the quarter.

Ryan Snyder: Thanks, Paul. Slide 7 details our second quarter financial results. Adjusted net earnings in the second quarter were $47 million or $0.23 per share. In the second quarter, sales were 83,258 ounces of gold and 11.7 million pounds of copper. The average realized price was $2,097 per ounce of gold and $3.79 per pound of copper, which incorporates the existing streaming arrangements at Mount Milligan. At the Molybdenum Business Unit, approximately 2.7 million pounds of molybdenum was sold in the second quarter at the Langeloth facility at an average realized price of $22.10 per pound. This annualized throughput rate represents utilization of approximately 30% of the facility’s capacity. More details on future plans for Langeloth are expected to be provided later this summer with the release of the Thompson Creek Mine feasibility study.

Consolidated all-in sustaining costs on a by-product basis in the second quarter were $1,179 per ounce and our full year consolidated guidance for unit cost metrics is unchanged. Slide 8, shows our financial highlights for the quarter. In the second quarter, we generated consistent cash flow from operations before working capital and income taxes paid of $94 million. After routine statutory tax and royalty payments to the Turkish government in the second quarter. Cash flow from operations on a consolidated basis for the quarter was $3 million and we had a free cash flow deficit of $27 million. In the second quarter, Mount Milligan generated $29 million in cash from operations and $14 million in free cash flow. Due to the timing of shipments, gold, and copper sales volumes are expected to be higher in the second half of the year.

Oksut used $2 million of cash from operations and had a free cash flow deficit of $11 million in the second quarter. This was impacted by routine statutory tax and royalty payments of $105 million made to the Turkish government. We expect to generate strong cash flow from operations at Oksut in the second half of 2024. The Molybdenum Business Unit as a whole used $8 million of cash from operations and had a free cash flow deficit of $13 million this quarter. This related primarily to activities at the Thompson Creek mine as Langeloth operating cash flows were breakeven for the second quarter. Interest income was $8 million in the second quarter, which primarily includes interest on bank term deposits. We continue to generate significant interest income on our cash balance.

A key focus for Centerra is returning capital to shareholders. In the second quarter, we were active on share buybacks, repurchasing 1.4 million shares for total consideration of $10 million. Also, the Board declared a quarterly dividend of $0.07 per share. Returning capital to shareholders remains a key pillar in our capital allocation strategy and we expect to remain active on the share buybacks dependent on market conditions. At the end of the second quarter, our cash balance was $592 million. This provides us with total liquidity of $992 million and positions us well to execute on our strategic plan and deliver shareholder value. I’ll pass it back to Paul, for some closing remarks.

Paul Tomory: Thanks, Ryan. We remain committed to delivering consistent operating results each quarter and driving value for our shareholders. Looking ahead, we expect to continue to deliver on our strategic plan with the release of the Thompson Creek feasibility study and the Langeloth commercial optimization plan later this summer. And with that operator, we’ll open the call for questions, please.

Q&A Session

Operator: Ladies and gentlemen, at this time we’ll begin the question-and-answer session. [Operator Instructions] And our first question today comes from Anita Soni from CIBC World Markets. Please go ahead with your question.

Anita Soni: Good morning, Paul. Thanks for taking my questions. First one is with regards to Oksut and the pit sequencing. I think I was expecting a little bit more stripping to be done this quarter, and I’m just wondering if some of that was pushed out into the back half of the year, or are you done with this — the stripping campaign that you had that I think was happening in the first half of the year.

Paul Chawrun: Thanks, Anita. It’s Paul here. We’re continuing with our waste stripping through the year that’s relatively even, and it’s approximately 16 million tonnes. So we’re on track for that. We did have a little bit of change in our ore sequencing, though, and that was really just to blend our Guneytepe pit, which is higher grade, has a little bit higher clay. And so we needed to adjust our mine ore sequencing. And then we did have, as we noted in the MD&A, we did have a little bit of dilution due to the rainy season.

Anita Soni: Okay. So, what you’re saying that this quarter you were in a higher grade — it was actually lower quarter over quarter. I’m not — little confused about that.

Paul Chawrun: No, no. We needed to change the ore sequencing timing in the larger pit, the Keltepe pit, because we needed to blend some of the higher grade on Guneytepe. Overall, the grade was lower. And then, of course, we were winding down the inventory that was built up during the shutdown.

Anita Soni: Okay. All right. Thanks. That helps. And then just a bigger, broader question for Paul Tomory. As you think about, you do have some significant free cash flow coming into the back half of the year. As you think about where gold prices sit and where molybdenum sits, has that changed your thinking at all in terms of what gets prioritized in terms of uses of cash?

Paul Tomory: In terms of use of cash, the first thing coming down our pipe here is the Thompson Creek feasibility study. So that’s coming here at the end of the summer. We’re happy with where things are at on molybdenum price, but more importantly, we’ve done a lot of work internally over the last six, eight months on understanding the value potential of the integration between Thompson Creek and Langeloth, and that’ll be shown when we put out those study results. So we really like what we’re seeing on the Thompson Creek, Langeloth combination. And you’ll see that when we put out our results and our intended path forward. So that remains an area where we will prioritize capital allocation. The other — we’re always looking at opportunities externally to add specifically on the gold side.

But as you know, things are pretty fully valued out there, and a lot of the assets that come up for sale are not always, you know, they’ll have various issues technically or locationally, or another matter. So we’re very disciplined in the way we look at M&A. So another example is this past quarter we made an investment in a Junior and we think there’s good value to be had very early in the chain, partnering with Junior’s explorers, and that forms another key part of our capital allocation. So, yes, Molybdenum will remain something we’re going to talk about in the near term here. We continue to look for opportunities in gold, and that remains a major strategic focus. And by the drill bit as well, we’re going to continue drilling, and we’re also going to provide updates on our resource models for Goldfield and Mount Milligan by the end of the year.

And we’re pretty encouraged by what we’re seeing, particularly at Mount Milligan.

Anita Soni: Okay, I’ll leave it there and get back in the queue. Thanks.

Paul Tomory: Thanks.

Operator: Our next question comes from Raj Ray from BMO. Please go ahead with your question.

Raj Ray: Thank you, operator. Good morning, Paul and team. My first question is on Mount Milligan. Q2 grades were lower. You did mention it was mine sequencing, but was it lower than what you had expected, or it was as per what your mine plan suggested? And then looking at the second half of the year, how should we look at grades for Q3 and Q4? And then also on recovery for gold, slightly lower. Should we expect second half recoveries to pick up again like Q1, or do you expect recoveries to hover around these levels? So that’s first on Mount Milligan. And then secondly, with respect to the Moly study that’s coming up, I understand that once the feasibility study is out, you will decide on what capital to spend. But should we anticipate any spend in Q4, or is this more 2025 if and when you decide to spend any capital there?

Paul Tomory: Well, Paul will do the Mount Milligan and I’ll take over on Langeloth.

Paul Chawrun: Sure. Okay. Okay. So Mount Milligan, there was a number of questions there. So in Q2, yeah, we had standard mine sequencing, and that’s why you saw the grades somewhat lower. That being said, in terms of recovery, our gold recovery, we can expect that to go up a little bit. And that’s just some of the initiatives that we’re doing on our optimization program. We’re calling that M Plus. So we can expect to see somewhat higher gold recovery for a number of different reasons. And then in terms of the grade going forward to the remainder of the year, I think the best thing to do is just take a look at our guidance we’re on track for that. And then that will pan out. But we will expect a little bit higher grades for the remainder of the year, not exceptionally higher. And I think that was the bulk of your questions on Mount Milligan.

Paul Tomory: All right. So on Molybdenum, Ryan would have mentioned in his prepared remarks that there was some spending in the quarter at Thompson Creek related to early works activities. We continue to do that. So in anticipation of the project study coming out in a few weeks here, we continue to prepare the site for a potential go decision on the project. And so there has been some spending and there will continue to be spending here through August and into September as we prepare for a decision there. If you want more details, Ryan could speak to that, but perhaps that answers your question.

Raj Ray: No, that’s good.

Ryan Snyder: I think —

Raj Ray: Thank you.

Ryan Snyder: We will guide the spending for the remainder of the year as part of that release. So if we do go forward, there will be spending. There is spending now. There is early works, as Paul says, it will provide an updated number for the remainder of 2024 with that.

Raj Ray: Okay, that’s great. Thank you. That’s it for me.

Operator: Our next question comes from John Sclodnick from Desjardins. Please go ahead with your question.

John Sclodnick: Yeah, thanks. Thanks for taking my questions here. I guess looking at Goldfield, it looks like, I guess most of the planned drilling is done. Just wondering if you can give any indication on kind of what you’re seeing there, maybe cutoff date for the resource estimate if you’re thinking about using the same resource gold price of 1800, or if you might take that up? And how those column leach tests have been going?

Paul Tomory: Yeah. So I’ll remind — because we did that pivot on Goldfield, what we’re looking for here is a principally run of mine oxide resource. So we had to prove to ourselves two or three key things. One is that we have sufficient oxide material, having temporarily put disulfide on the shelf. We continue to drill, and we are adding to our internal view on quantity there. And the column leach tests are going extremely well. We’re getting recoveries in line with what I would have expected for run of mine Nevada oxide. So those are going very well. In terms of drilling, we will do more drilling this year, and we will incorporate the remainder of that drilling into our resource estimate. With that resource estimate, we will also put out what the recoveries look like, a high-level view on a flow sheet, and then a path forward on engineering and a potential path to execution.

Your second question there is what do we use a higher gold price for the resource at Goldfield, potentially, I mean, it’s a relatively low-risk in Nevada, fairly easily digestible project. We haven’t made that decision yet, but certainly, I think what you’re asking is a good question. We’re going through the same logic as well.

John Sclodnick: Okay. Yeah, no, I appreciate that color, and looking forward to the update there. I guess one other one for me. This is just kind of annoying modeling one, but the depreciation has been trending a bit below guidance. And then just wondering if that’s going to pick up in the second half, or if you’re kind of going to be targeting the low end of that depreciation guidance range?

Ryan Snyder: Yeah, I mean, I think it’s probably heading towards the lower end of it. Mount Milligan, with the increase in reserves at the end of last year brings down that depreciation a little bit of it. It will pick up a bit in the second half of the year as we sell more material at Mount Milligan, but I think we’re heading towards the lower end of the range on that.

John Sclodnick: Yeah. Okay. Appreciate that, and, yeah, Raj asked my Mount Milligan question, so good for me. Thanks, guys.

Operator: Our next question comes from Mike Parkin from National Bank. Please go ahead with your question.

Mike Parkin: Hi, guys. A couple questions for me. Could you first start off, there’s quite a few forest fires in BC. Are you seeing any impact at site, or at risk of being able to move material in or out?

Paul Chawrun: Thanks for the question. We pay very close attention to that, of course. At this moment in time, we’re actually category two, which is fairly low risk. It’s not the lowest category one would be. There was a period of time earlier in the quarter, we were at category three. There were a number of fires. We had the fire in Jasper and some of the other locations, but no, that’s not an issue in our locale at Mount Milligan, and back in April, we had a fire relatively close to Endako and we were on alert for evacuation there, but that didn’t need to happen.

Mike Parkin: And can you just remind us in terms of, like, the forest fire seasonality, is that something that generally kind of continues through Q3 and then as you get into, like probably, I’m guessing kind of late Q3, it dies down in Q4, it’s like a non-issue with, like, snowfall?

Paul Chawrun: Well, definitely Q4, it’s a non-issue. Best way to answer that is we’re in a bit of a different climate change. It’s always been out in Western Canada that you had May, June was the high-risk period right after the fresh head. But that being said, we’ve seen risks right early in April, right on through to August and September, in the past. So we’re on alert right through.

Mike Parkin: Okay.

Paul Tomory: Last year was a lot worse for us.

Paul Chawrun: Yeah. BC was worse, but it’s also where you are in BC. At this moment in time, it’s not as high risk as it has been in the past, throughout in the past of this summer.

Mike Parkin: Okay. Just circling back like you’re making some pretty impressive cost improvement success at Mount Milligan. Something you guys certainly were highlighting here some low-hanging fruit on the site tour last year. With respect to the mining cost improvement, can you give us a bit more color on what are the initiatives like focus that? Is it like, I know tire life was, I think, something standing water on roads improvement that seemed like some kind of low-hanging fruit from site tour. Can you just give us some high level of like, where you’re focused in the near term? And where you expect to kind of realize those savings?

Paul Chawrun: Yeah. So there is always some opportunity on consumables like tires and diesel, perhaps a little bit on powder factory, although we got to be very careful on fragmentation since that’s the main goal. But the bulk of the gain is going to come from improving the load-haul cycle production and productivity. And that’s actually already been happening at site. Why we’re not seeing in the unit operating costs for the quarter is because we did have some residual costs on equipment, some of the major component changeouts, so it doesn’t reflect in the operating costs. And so going forward, it’s really going to come from the load-haul cycle itself and improving on all the various components there. That’s where the biggest ticket is. And then, of course, some of the other items, like the consumables, as you pointed out.

Mike Parkin: It’s like the vision of making the pit bigger does that I remember from site, I think it would, the way I would kind of summarize it was if you guys were specking the equipment, you wouldn’t have necessarily picked the equipment that’s there now. It would seem kind of the wrong size for the operation. Does that like with this expansion you’re talking about in pit size, does that make use of that underutilized scale of the fleet, or are you all still looking to like as assets mature in terms of rolling stock, do you look to optimize scale going forward?

Paul Chawrun: Yeah, that’s a great question. So if you were to start fresh, you might look at a different fleet, of course, probably the biggest one that I would change right away would be the loaders, the use of the loaders, the 994s in the pit. But that’s what we’re working with. So going forward, we’ll optimize those. In terms of the change out of the fleet proper, we need to do the decision to capital allocation decision based on what we have, and for the long-term expansion, of course, there’s a number of different options we can take a look at expand — extending the current fleet, we can take a look at a larger — a larger truck size. But then, of course, the larger your truck size, you then have to take a look at what the overall productivity is and where you’re coming from, the different phase events and you have a little bit less optionality on that.

So we’re looking at all these options, but I think the overarching component of our current stock and then going forward, what would make the most sense, you need to take a look at what we have today and use it in your capital allocation. That’s far and away the most important variable.

Mike Parkin: Okay, thanks. That’s it for me.

Operator: Our next question comes from Brian MacArthur from Raymond James. Please go ahead with your question.

Brian MacArthur: Good morning, and thank you for taking my question. It relates back to the Moly operations, and again, the study. You’ve talked a lot about the potential at Langeloth, and it’s only working at 30% of capacity. When you come out with the details, I assume we’re going to get a Thompson Creek study, which is sort of apples to apples to what we did before, but the second part of it at Langeloth, in that analysis, are you just going to assume the integration of Thompson Creek, or given I think there’s even more excess capacity, does the fact that you can actually put the Thompson Creek stuff in allow you to go out and get more third party materials so we’ll not only get the benefit of, you know, the Thompson Creek material over, fixed costs over larger volumes and things like that, but there’ll be another uptick. Is that what we’re getting on the Langeloth study, or to the extent you can comment on that, it’d be helpful.

Paul Tomory: Yeah, I think you’ve described the strategy. Well, one of, I’d say that the most important component of our thinking on the Molybdenum Business Unit, meaning the integrated Thompson Creek-Langeloth operation, is that Langeloth is the principal value driver. It’s not the only value driver, but it’s the principal value driver. And by utilizing that fixed cost leverage and increasing utilization of the capacity there, we not only create a strong EBITDA business, but we also, to a large degree, insulate ourselves from fluctuations in molybdenum price because of the way we would purchase concentrate from a third party and then sell it onward to the steelmakers. So the strategy here is use Thompson Creek as a significant component of filling the capacity at Langeloth.

So as you pointed out, we’re roughly running at one-third capacity. In broad brush terms, Thompson Creek would fill the second third, which would then allow us to fill the final third with third-party material, and particularly dirtier or higher copper content cons where we can charge a bigger spread, a bigger TCRC because we have the very clean con coming from Thompson Creek. When you look at the world of molybdenum, interestingly, the two cleanest cons out there are actually Thompson Creek and Endako. So the Thompson Creek feed the con from there will allow us flexibility in blending in order to fill that final third. So, yes, the answer to your question, which you kind of previewed there, is that study will be a standalone mine feasibility study with its accompanying NI 43-101.

But we will have an entire other section showing the economics of the integrated whole, Thomas Creek and Langeloth and you will see that the value is generated in significant part by an optimal use of the roasting facility.

Brian MacArthur: Right. But just so I’m clear, would that study assume 66% utilization of Langeloth?

Paul Tomory: No.

Brian MacArthur: [Multiple Speakers] How are you actually going to —

Paul Tomory: No.

Brian MacArthur: [Multiple Speakers] Yeah. Okay, so you’ll be able to do 100, so you’ll make assumptions about what you can do on the other side, and we’ll get to see all that.

Paul Tomory: Precisely, yes. But the important part is that Thompson Creek enables that ramp from 66 to 100 because you now have the clean con that you can blend with higher copper percentage cons. So, yes, we will show a full ramp-up.

Brian MacArthur: Perfect. And again, just to be clear, as you said, the value add is in treating the dirty cons. It’s not like you bring Endako into that something, because it’s another clean con. So it’s still a total standalone unit that you have to look at going forward if you decide to go down that route. Is that fair?

Paul Tomory: Yes. I think that if you were to look at this very, very high level strategically, Endako has no place in the plan until Thompson Creek is exhausted. So if you look at a perfect situation here, you run Thompson Creek, and then, whatever, 15, 20 years later, you then bring Endako into the mix as the next source of clean con, which you can then use. It would not be good for us to open both together.

Brian MacArthur: Great. That’s what I thought, but I just wanted to confirm. Thanks very much. That’s very, very helpful.

Paul Tomory: Thanks, Brain.

Operator: [Operator Instructions] And our next question comes from Jeremy Hoy from Canaccord Genuity. Please go ahead with your question.

Jeremy Hoy: Hi, Paul and team, thanks for taking the question. You guys have made some good progress with your optimization study at Mount Milligan. We saw that in your per tonne processing costs this quarter. Do you expect to see continuing improvements in the processing throughout the year, or have they largely been realized? And then am I correct in assuming that those were not factored in when providing guidance at the beginning of the year for costs for the operation? That’s it.

Paul Chawrun: Okay. Thanks, Jeremy. So first, no, we did not include these gains in our guidance at the beginning of the year, and so, and then to answer your question, are we going to continue to see gains? So this is a very long-term view. And so we had some low-hanging fruit, recycling some of the steel, which was a big gain. We’re looking at optimization of our concentrate qualities. So that actually improves our overall gold. And so that’s why you’re seeing some of the gains in the plant. And yes, we’re looking at a number of different optimization programs to improve the plant overall, both on recoveries, throughput and also the mine-to-mill. Because if we can have a steady state and have less disruptions in the plant, then that actually helps the overall costs.

And then lastly, through the winter, that was a problematic area and we’ve done quite a lot of gains there. So yes, we can expect to see continuous improvement in the plan, but just overarching. This is a comprehensive program to put Mount Milligan into a world-class operation, and this was key for the long-range plan. And so we’ll be adopting those operating metrics into the PDA and into the plan itself going forward with — these demonstrable improvements.

Paul Tomory: And I’ll use this as an opportunity to plug the PEA. What we’re looking at here at Mount Milligan is a very significant potential mine life extension beyond the 2035 reserve, incorporating the drilling that I mentioned earlier. We’re doing a lot of drilling. We’re getting very good results on that. So we’re looking at a resource model update. We’re looking at, I’ll remind that we’re currently capped on reserves with tailings capacity. We’re looking at incremental opportunities to store tailings and we’re making good progress on that. And lastly, as Paul said, we’re incorporating these new operating metrics into the way we look at mine and plant operations for consideration in that study. So things are going well on that study and we’re hard at work on it and we still need several months to do that. But we’re very encouraged by what we’re seeing.

Jeremy Hoy: Okay, great. Thanks for the color and we’ll look forward to see further results from that.

Paul Tomory: Thanks, Jeremy.

Operator: And ladies and gentlemen, in showing no additional questions, we’ll conclude today’s question and answer session and today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.