Aya Gold & Silver Inc. (AYA) Earnings Call Transcript & Summary

Good morning. I will now turn the call over to Salisha Ilyas, Aya Gold and Silver's Investor Relations Officer. Please go ahead.

Thank you, operator, and welcome to everyone who has joined Aya's Fourth Quarter and Full Year 2024 Earnings Conference Call. Here with me today, we have Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, Chief Financial Officer; Elias Elias, Chief Legal and Sustainability Officer; and David Lalonde, Vice President of Exploration. We will be referring to a presentation on this conference call, which is available via the webcast and it is also posted on our website. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, news release and MD&A as well as the risk factors included in our annual information form. Technical information in this presentation has been reviewed and approved by Raphael Beaudoin, Aya's Vice President of Operations; and David Lalonde, Aya's Vice President of Exploration, both of whom are Aya's qualified persons as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects. I would also like to remind everyone that our presentation will be followed by a Q&A session. With that, I would now like to turn the call over to Benoit La Salle. Benoit?

Salisha, thank you very much. Welcome, everybody. Welcome to this Q4 and full year 2024 conference call. I will refer to the presentation that you have and from Page 2 and 3, where we have the forward-looking statement. I draw your attention to our forward-looking statement. Moving on to Page 4 of the presentation and a review of the year. The highlight of the year 2024 is the fact that this Zgounder expansion plant has been completed and on budget. For the year 2024, we produced 1.6 million ounces of silver. We're ending the year with USD 49 million in cash and restricted cash. And we're also announcing a budget, an exploration budget for 2025, which will be between $25 million and $30 million, both covering Zgounder and Boumadine. So as I said, we've completed this Zgounder mine expansion on budget, which you all know is extremely rare in our industry. We've expanded mining operation. The new mill reached commercial production at the end of 2024. It was on December 30, 2024, that we declared commercial production as it was expected and it had been communicated. We've completed the underground development, both lateral and vertical, which is something that we do on a yearly basis to get ready for the coming year. We're also finishing the year with a stockpile of 336,000 tonnes of ore running at an average of 153 gram per tonne. This stockpile is being utilized when the mining is a little bit short of the ore that we need for the plant. We are ramping up the mill to reach steady-state capacity. We've already reached steady state many days in a row in January and February, and our goal now for 2025 is to reach steady-state capacity on a constant basis. In 2024, we've advanced the Boumadine development. We've completed 107,000 meters of drilling on the main trend and on other targets. We've extended the main trend where we see mineralization to 5.4 kilometers. Also, we announced a new mineral resource update in 2024 in April and in 2025 in February, we've updated the mineral resource estimate. During the year 2024, we've added 15 permits, expanding the Boumadine exploration footprint to over 200 square kilometers, which we've had by year-end. We've unlocked in 2024 some noncore gold projects. So we've announced the spinout of the Amizmiz gold project into MX2, a gold exploration company focused on North Africa projects. Aya is the largest shareholder of MX2, and the closing is expected any week, whereby some new shareholders will be putting $16 million of fresh money for the exploration of the Amizmiz and other projects. And in 2024, we've continued to progress all our ESG priorities. A key one was the completion and commissioning of the electrical line, which powers Zgounder from renewable energy, wind and solar. And we've also completed our ESG report with an aim of enhancing disclosure. Taking you to Page 5, which is Q4 and the full year 2024 Zgounder expansion completion with some basic statistics. So if we compare the year 2023 and 2024, you see the silver production is somewhat lower in 2024 by 16%. On the other side or on the other hand, the ore process per tonne has moved in 2023 from 281,000 tonnes to 358,000 tonnes. So if you look at it on a yearly basis, it is 1,000 tonne a day, remembering that the nameplate capacity of the older plant was 700 tonnes a day. We were running then around 800 to 850. And we had in December, the new plant that kicked in. So when we looked at the ore process for 2024, we were close to 1,000 tonnes a day. The average grade was lower from 2023, where we processed 250 gram per tonne. In 2024, the average grade was lower at 171 gram per tonne. Mill recovery directly affected by a bit of a lower grade. It was 86% or 87% for 2023. We were at 84% for 2024. You remember that the target once the new plant is up and running and is at ramp-up capacity, where our goal is to have between 88% and 90% recovery on a steady-state basis. So the revenue for 2024 reached $39.1 million compared to $42 million the year before. The profit and loss of both years were at a profit. We generated a profit of $15 million in 2023. We generated a profit of $382,000 in 2024, which is directly related to the fact that we process lower grade ore coming mainly from the underground mine. Furthermore, there was a onetime loss on a charge related to the Mauritania asset, the Tijirit project, and that created a $27 million write-off, which comes from a transaction that we put together 4 years ago. We did do a deal on Tijirit, and you will see this in the MD&A, whereby we wanted MX2 to take over the project and bring it to production. So -- but because of accounting rules and disclosure, we felt that we should take a write-down of the full value on our books of $27 million. So it's a onetime impairment charge, which has no effect on cash or cash flow. Moving to Page 6 of the presentation. You have, again, at the top, it just shows you the major milestone of the year, which was in Q3 once we had completed the construction. We successfully tested the new Merrill Crowe system, which is a brand-new system, and we were able to have our first silver pour in Q3, but just from the Merrill Crowe system. In Q4, when we received from the EPC contractor, the plant, we started hot commissioning of the new mill, and we were able to declare commercial production on December 30. In early 2025, we also reached nameplate capacity, which was communicated to our shareholders. When you look at some operational highlights, you see the year 2023 and the year 2024, and you also see the quarter. But when we look at the year, because I think now for us, 2024 is behind us. We did the construction, we build it, we commissioned it. We did the commissioning. We build the ROM pad and now we are into the ramp-up for 2025. But some high-level statistics on the ore mined in 2024, we mined 444,000 tonnes compared to 493,000 tonnes the year before. The average grade is 162 compared to 213. The ore processed at the plant, you see is 358, as I mentioned earlier, compared to 281. The mill recoveries are 84% for this year. And the average grade process at the plant is 171 gram per tonne. So the total silver production for 2024 is 1.6 million ounces. The silver sold, total silver sale is 1.5 million ounces. So there is an inventory at year-end, the difference of 135,000 ounces. The average net realized price in 2024 was excellent at $26. Obviously, now we're more towards $34, but that was a very good year at $26 in comparison to the spot price. The adjusted cash cost per silver ounces, once we made some small correction due to the fact that we were ramping up and we were completely overstaffed, the adjusted cash cost per silver ounces was at $19 compared to $12. We understand that this is not representative of the company going forward. It's just a fact of life as we were getting ready in Q3 and Q4 to really start the new plant. We were overstaffed. We had more equipment. And hence, the cash cost was higher than on the previous year, which was on a steady-state basis. Moving to Page 7, and I think that's where the new beginning is now that the construction is behind us, the ramp-up of the plant is being done. The ramp-up of the open pit is going extremely well. The open pit is running at 1,500 on average tonnes per day. And the underground right now is running at 1,000 tonnes per day. Obviously, we changed the focus of the underground from tonnage to grade. We want the underground to improve its grade, and we want the open pit to give us the regular production that we're looking for to feed the plant. So that's coming along well. The open pit is on all cylinders at 1,500 tonnes a day, and we expect that to increase and to grow until the end of the year. So the guidance for 2025 is extremely important. Our silver production for 2025 will be between 5 million and 5.3 million ounces of silver of ingot, no more concentrate. So very, very little. Because historically, we were producing 50-50 concentrate in ingot. As you know, the realized price on ingot is a lot better than on concentrate. So here, we are 5.0 million to 5.3 million ounces for 2025, and that's assuming the ramp-up. So Q1 will be around 1 million, and we will have a ramp-up until Q4 because there are many items that need to be adjusted at the plant, which is programming and pumps. And so these little things are getting done over 2025 to really come at the end of the year with a plant that is in full steady state and with top recoveries, top availability. So the silver cash cost on an average for the year should be between $15 and $18. And again, that is the average between Q1 and Q4. We expect Q4 to be lower than this because we will have done all of the fine-tuning. Same with the recoveries to average throughout the year, 84% to 88%, understanding that our goal ultimately is to be between 88% and 90% as per the feasibility study. The average grade is similar in the thinking between 170 and 200, understanding that the grade in the open pit is fairly straightforward. But the underground where we had some issues in Q3 and Q4, it's now improving. And that's why I said the focus of the underground is more now grade control than tonnage control. So we really are pushing to have a better control over the grade. The exploration for the assets for the 2 projects will be between $25 million and $30 million. That's something you recall, we review every 6 months based on results because if you have a structure and you have more systematic drilling, then sometimes we have more meters. If it's more exploration drilling, you have fewer meters and more geological work. So that's something that we're going to be reviewing as we go forward. So you see the major milestone on the chart at the bottom of Page 7, showing you how the production profile is now changing. Historically, the company was set to produce about 1.6 million, 1.7 million ounces. Sometimes depending on high-grade pockets, we did a little bit better. But you recall, the plants were geared to do 700 tonnes a day and 700 tonnes a day or even 800 tonnes a day. That was geared to give us 1.6 million to 1.7 million. And that's exactly what we did in 2022 and 2024. And now we have this major change from 2024 to 2025, where we're moving towards 5.0 million to 5.3 million ounces. Moving now to Page 8. A couple of financial highlights. You've seen the numbers. Let's go to the year-end 2024 and year-end 2023. We've talked about the revenue, the gross profit being $5 million for this year compared to $15 million last year. The loss is directly related to the write-off of Tijirit, the $27 million. So when you look at the net loss for the period at $26 million, effectively, the year, if you do not take into account Tijirit, would come out with a $1 million income, but Tijirit is now a onetime write-off based on the fact that we have no certainty of the outcome. Working cap is at $23 million, a very strong balance sheet with only one debt, which is the EBRD debt, which is USD 100 million, which has no capital repayment in 2025. So we are in a very strong financial position. The Tijirit is the main element to remember when you look at this financial, the impairment of $27 million. We believe that it was the right time, though we are still working on Tijirit with different possibilities. We felt it was the right time to take the write-down. Going to Page 9, which is the reason why we've created value over the last 4 years when we took over Aya/Maya in 2020 is the geological upside, the exploration upside. Today, you have a company that has 1,200 square kilometers between Zgounder, Boumadine, Azegour, Amizmiz and Imiter bis. We drilled in 2024, 35,000 meters at Zgounder at the mine. You've seen the results. You saw the results Tuesday, and you saw how good those results continue to be at Zgounder. Zgounder is a major system, and I'm going to show you the size of the property that we have now. Boumadine, Boumadine is an all-star project. We drilled 107,000 meters or 107 kilometers last year. We've expanded the main zone, as we discussed, to 5.4 kilometers. We have multiple potential parallel zones. Conductive anomalies have been identified. Now at year-end, we still have 27,000 assays that are pending because we are utilizing all the lab capacity in Morocco. We are helping the labs now increase their capacity so that they can service us faster and that's being done. Under Zgounder Regional, which is very interesting and has tremendous potential, we've completed 10,000 meters in 2024. We've tested Zgounder West, Zgounder East. We're increasing our understanding of the geology, which is extremely important because we're looking for a look-alike of the Zgounder deposit. If we have a look-alike of the Zgounder deposit, and we are looking at for that, we will be able to increase the mine life past the 11 years or increase capacity at the plant and increase total production. So we are using all the tools and methods that are available, geophysics, mobile empty. We're using all the tools available. We strongly believe that there is 1 or 2 more Zgounder deposits and maybe more. It's just now a matter of attending to it and getting the job done. And we have an extremely good team on Zgounder Regional. Amizmiz, well, that's been spun out into MX2, and we're going to follow this throughout the year. Going to Page 10, you have the picture of the Zgounder deposit. You can see it. It's like a loaf of bread. It's 1.4 kilometer long. It's 20-meter thick. It's 700-meter deep. And now you saw the results that we're showing you here, 2,000 gram per tonne over 70 meters. I mean, and it's on and on like that. This is a very, very large system. We just gave you some results this week at the bottom left-hand side, which is the West. And we believe that this is like a baguette. I say it's a loaf of bread, so it's a baguette because we're in Francophone Africa. And the fault that you see on the slide to the west is where the baguette was cut into 2 pieces, and we've been looking for that second piece. Now we did check up surface and it wasn't there. So clearly, there was a displacement towards the bottom. And if you look at some of the results that we showed this week, it's showing that the bottom left to the west is showing very nice mineralization. So we're pushing the interpretation, hopefully to find the second piece of this loaf of bread and to see it maybe lower down in continuation with this current structure, but starting from the bottom, touching the granite, which has always been the control rock where we see where the mineralization is. So very interesting project, lots of new theory behind the geology and a motivated team to find more look-alike Zgounder deposits. But this on Page 10 is a 2% or 3% of our property. And so when we arrived, we had 30 square kilometers 5, 4.5 years ago, and now we have 440 square kilometers. So there is definitely a lot of potential to come with a new zone similar to Zgounder mine, and we have a plant that has the capacity to grow, that has the infrastructure. It has power, it has water. It has a team at site that can take this plant and increase its throughput by 30% to 50% quite easily. Moving on to Slide 11, and that is the Tier 1 asset that we have called Boumadine. Boumadine, we completed in 2024, 107,000 meters of drilling. We've extended the strike from 4.2 to 5.4. Half of the drilling last year was extending the strike. The other half was drilling other structures. And we have been drilling other structures and some gave us resource and were added into the resource update. So we did a mineral resource update in February of 2025, which started from the one we had done in April 2024. And we're now pleased to say that Boumadine on the main permit -- on the main zone stands at 452 million ounces of silver. We've completed satellite mapping, all the studies, airborne geophysics, and we've identified many parallel structures on trend to the main zone, north/south, and we've also identified many new structures east/west that seem to be carrying mineralization, which I'll show you in 1 minute. Furthermore, in 2024, we've added 15 permits to increase the footprint to 212 kilometers from the original 34. And in 2025, we've added another 500 square kilometer to that. So we now control the district, and we've done a lot of work to understand. Slide 12 shows you the mineral update, which was communicated at the beginning of the year. But if we're talking about Boumadine, we have to talk about the mineral update. So as you can see, we've increased the percentage change in total ounces silver equivalent. The total indicated went up by 120%. The inferred went up by 19%. But what we need to remember is all this was done in 2.5 years. So we've discovered 450 million ounces of silver in less than 3 years of drilling with 200 kilometers or 200,000 meters of drilling. So this is extremely fast. The discovery cost is around $0.10 per silver ounce, extremely low, as I see, quite unique in our sector. When we've done the resource update, we also realized that 49% is pit constrained, so it's an open pit, and 51% is underground. So it's like a 50-50 currently project with the underground coming from a couple of pits -- sorry, the open pit coming from a pit and the underground being underneath the pit and on that 5.4 kilometer structure. Still open in all directions, South, North and at depth. Going to Slide 13. That is the secret pathway to a Tier 1, very unique project. You see here all the permits in the middle. You see the original permit where we have made the original discovery. You can see this, it's right in the middle. And the geophysics shows us clearly where the VMS system here, the volcanic system, the massive sulfide, which in this case here is pyrite, and we can see it clearly. So look at all these targets. So you have the main system, which is north-south. You have many parallel system north-south to the east and to the west of the main system. And then around that, you have some east-west structures where we've walked the ground. We've looked at grab samples, we've looked at the geology. And this is another mineralization type. It's another movement. It's not the first movement where we are north-south with gold, silver, lead and zinc. The one that is east-west seems to be more copper, silver. So that is what we're looking for, for 2025 as we are also increasing the drilling on the main zone to really fully understand the size of the main zone, knowing that it's continuing to the north, continuing to the south, and it has parallel system. So Boumadine is a very unique asset, very unique project. What you see on Slide 13 is our territory. It's our ground. And there are a few little pieces missing, but we're still in discussion with some families to add to the portfolio. So the exploration program, which is where we create value. And if you are with us as a shareholder, it's because you believe in the exploration program. This year, again, we will spend between $25 million and $30 million on exploration and development, both at Zgounder and at Boumadine. Boumadine will see again this year between 100,000 and 150,000 meters of drilling. Zgounder will see between 20,000 and 25,000 meters. And all of that is a function of results. If we find a new zone at Zgounder and we need to expand and drill it quickly because it could be another source of ore, we will be there and we will do this. As a group, as a company right now, we have 16, 18 drills turning at all time. It's a team of 100, just the geological team, and that's where the value creation is coming from. Of course, the plant, the mine, the cash flow is beautiful. It will fund all of this work over the next 1 or 2 years, but this is where the value is getting created. So at Zgounder, we will follow up on the underground targets, especially the one we identified this week, showing the west extension at depth and the Zgounder Regional permits where we have many targets. At Boumadine, for 2025, 50% of the drilling will focus on the Main Trend and Tizi, which was a beautiful discovery in 2024. And we will continue to extend the known mineralization trend along strike at depth, and we will infill some areas as well to understand it better. 50% of the drilling will be on exploration targets, which come from the geological thesis that the team is putting together and where we will be testing the east-west structure where we see copper, silver, and we will also test some of the parallel system to the current main trend. To conclude the presentation and before the question period, what are the catalysts for 2025? How are we going to set ourselves apart? Well, of course, we will commence the drill program. You have a company that will drill between 140,000 and maybe up to 200,000 meters depending on results and depending on what we're seeing. Commence the Boumadine PEA that started in 2024, but it will accelerate in 2025. We still don't know how big the plant needs to be, and that is something that we're waiting for drill results and for the geological team to tell us what they believe is the optimal size of the deposit right now, the main zone. We're not going to take any of the other zone into account right now. Of course, one of the catalysts is steady state 3,000 tonnes per day processing at Zgounder, ramping up to a steady state, ramping up to availability of 92%, 95% ramping up to a recovery between 88% and -- optimal 88% to 90%. That's what we aim for. Of course, the average of the year is not going to be this because Q1, Q2, Q3, we're ramping up. We will do a midyear update on Boumadine metallurgy and PEA. That's something that we've been working on now for many quarters, and it's something that we'll have much, much more information over the summer. And we will also publish a Zgounder mineral resource update as soon as the drilling is completed and we know the size of that first loaf of bread. We're still looking for the second piece. But as soon as we've completed the first loaf, we will do a Zgounder mineral resource update with a new mining plan, a new cash flow, new production profile just to show the strength of the deposit, the strength of the plant and the quality of the production and the profitability and the cash flow going forward. Thank you very much for your time. The team is here to answer any questions you have. And I would close and say 2024 was a very strong year where we built it on time. We were a little late receiving the plant, but we commissioned it on time. And now we're starting a new era, which is 2025 on with added capacity, with Boumadine where it is, with MX2, to develop Amizmiz, and I really look forward to 2025. Thank you very much.

[Operator Instructions] And our first question will come from Cosmos Chiu of CIBC.

Maybe my first question is on Zgounder. Benoit, as you mentioned, you're transitioning to 1/3 underground, 2/3 open pit. Is that only for 2025? Are we talking longer term as well?

Cosmos, thank you very much for your question. Absolutely not for 1 year, but for a minimum of 6, 7 years. The open pit was a test in -- beginning of 2024, we were testing it because it's not part of the culture in Morocco, and we were testing the contractors, testing the team. We realized that we had great success. As we saw that the costs were about half of the underground mining cost, we decided to review the mining strategy, and we decided in Q4 to go much more open pit and reduce the pressure on the underground. So currently, in the current mine plan that we have, we have a 6-year plan to be an open pit. But Raphael and his team are working over the summer on a completely new mine plan, resource update, reserve update, throughput update, new plant capacity. And we will see for how long, but it will be for much more than probably 6 years. You recall that the first 300-meter down is not an open pit. It's down the mountain. So we start with the first 300 meter of just bringing down the mountain. And after that, we're going to go deeper into a pit. So we do have a lot of flexibility. You saw the drill results at the beginning of the week. Every time we do some condemnation drilling towards the East, we find new zones. So the pit is getting much bigger than originally anticipated for some very good news, and the grade is excellent. Furthermore, as you know, it's much easier to reduce dilution in the open pit than in the underground because you have better definition drilling and tighter definition drilling in the open pit. So it is a permanent change. The beauty is we're fully permitted for that in Morocco. So there was no waiting time to get a permit. I mean, we're fully permitted, and we've executed it. Raph and his team have executed the switch. And as I indicated, we're currently running at about 1,500 tonnes a day in the open pit, and we've been doing it much better in the underground at 1,000 tonnes a day. So it is a permanent shift. Of course, towards the end or if that second piece of the structure is deeper on the west side,in 7 years or 8 years, maybe it's going to be only an underground mine. But at that time, we hope that we will have discovered an other Zgounder look-alike structure.

I guess reading into your answer here, my question is, is there any kind of potential impact to mine life? Or it doesn't sound like it because it sounds like there is potential for converting some of what would have been previously underground ore into open pit. Is that -- am I reading it correctly or...

You are. There will be no impact on mine life. If anything, it will increase it with all the new structures that we're identifying. It's going to allow us to take some of the pillars that were there historically that were not taken out because this mine has been in production for 2,000 years historically. So the open pit -- you know us in Canada in 2022, we were kind of saying, why don't we take this whole mountain down from top to bottom. But in country, this was like Canada, no, we don't do this thing. So we kept testing it and pushing it. And now we see that it does work. And there's another company, which I won't mention on the call, but that have now also gone to open pit mining for their silver assets. So it's kind of indicating a new trend. The structures are there, the grades there and the open pit is a lot easier and a lot cheaper.

Great. Maybe a question on the recovery. Benoit, as you mentioned in the press release earlier, February recovery was slightly impacted, 83% recovery, I believe, due to the processing of more oxidized ore. With more contribution from the open pit, is there any kind of potential impact on potentially more oxidized ore and then a potential impact on recovery for 2025?

Cosmos, Raphael is on site. He's there. He's moved from Montreal to Morocco. He's there following everything. Raphael, did you get the question? Would you answer if you did because I know sometimes the line is not great.

Yes, yes, with pleasure. Happy to answer that. Think of it this way. Indeed, when we have stripping, when we have the upper section of the open pit and we take that ore, indeed, sometimes it comes with a bit of clay material, which has an impact on recovery. That is for sure. What I have to say about this is any oxidized ore would not have been recovered anyway underground. So the open pit will give us a bit more oxidized ore than was initially planned. However, quite a bit of that would not have been accessible underground anyway. So as we extend the pit and we find these extensions, indeed, the first 1 to 10 meters are oxidized and we recover comfortably 80% plus. And as the pit goes down, we'll be able to blend it out. And the clay content and the oxidized content that gives us sometimes a bit more trouble on the countercurrent decantation solution washing will be blended away, and we don't expect on the long term, a lower recovery, but we do expect more ore. So that's a positive thing. The long-term recovery of the project is not affected because ultimately, we get into fresh rock. It's just that we have more ore, and we need to blend it properly. And with the stockpile that we have, we anticipated that. So we're able to blend it better and better as the quarters will go, and we'll have more fresh rock from the open pit, more fresh rock from the underground that we can blend to minimize impact on recovery. But bottom line is when we have strip ore that is part of the stripping, it wouldn't have been -- oxidized ore, sorry, from the stripping. It wouldn't have been accessible underground anyway. So this is essentially extra ore.

And Cosmos, in the feasibility study, if you recall, our target is to bring this plant to 89%, 90% over time, and that still is the target. And that's why our guidance has an upper number of 88%.

Right. Maybe switching gears a little bit, just a quick question on accounting. Your share price is kind of weak today, I think, in large part due to the write-down at Tijirit. And I think it should be taken out for adjusted earnings, in my opinion. From that perspective, two questions. Number one, was the entire $27.35 million taken out or expensed in Q4? And then number two, if I want to take it out for adjustment purposes, I want to tax effect it, what's the tax effected number?

Cosmos, I'm going to ask Ugo, who's with us here in Montreal, to give you the answer.

Cosmos. The entire $27 million was our entire book value for Tijirit. So today, our book value on Tijirit is 0, and that entire amount was taken in 2024. On taxes, the aspects that are in Mauritania, so the project is in Mauritania, don't affect where we generate revenue, which is in Morocco. So there's going to be no tax effect in Morocco. In Canada, though, we will have a loss, but that will kind of impact taxes. And in Canada, so far, we haven't made a profit. And so as time goes and there's profit from intercreditor loans and everything that come in Canada, we'll be able to take some of the losses associated with Tijirit as part of that tax offset here in Canada.

Yes. So if I want to adjust your negative $0.23 per share in Q4 to a more sort of normalized number, I would essentially back out the entire $27.35 million?

Absolutely, yes.

Okay. And then maybe one last question. I think, Benoit, you mentioned adjusted cash cost per ounce, $19.62 an ounce. Could you give us a bit more color? So I thought coming in, it was actually related to this impairment. But it doesn't sound like it is. So how should we use that number?

Yes. Cosmos, on that, a little bit like in Q3. I think we had a lot of costs that for us were more associated to our plant ramp-up that we have to expense, but that don't necessarily -- that we don't see as ongoing. And so it made more sense for us to give a better sense of what our actual costs were to operate in the current plan to remove that. So it's unrelated to Tijirit. It's really our costs that were at Zgounder and what we thought better reflected our actual costs versus the additional costs that we have to pass through OpEx today, but that were more related to wrapping up our plant.

So would you -- are you expecting to report cash costs and adjusted cash costs for Q1, Q2, Q3 as well in 2025? Or was that it?

No, no. We don't. And now that commercial production has been declared, we don't expect to have specific adjustments to cash costs moving forward.

[Operator Instructions] Our next question will be coming from Justin Chan of SCP Resource Finance.

My first one is just on the plan through the year. I think you mentioned on the call 1 million ounces in Q1, Benoit. I think you're trending above that with 2 months reported. So just curious there if there's anything to know on like plant shutdowns or anything in March because I think you're on pace or a little bit better than that. And then just -- but the trend through the year, I think we understand fairly well on the production side. I'm just curious on the cost side or unit cost side, maybe if you can give us some guidance on how to model that.

So Justin, you're right. We had a very strong January. We have a February that actually per day was quite strong in February, though we did have fewer days and we had a planned shutdown. March, the numbers are going to be coming out early April. March was a little bit more difficult because of some adjustments that they made to the plant and they tried a few things on the recovery. So there's -- it's just normal adjustment. So we know that we're trending above 1 million or around 1 million for Q1, which was our budget. So our plan is when we gave you the guidance between 5 million and 5.3 million, it's a ramp-up here. So Raphael is on site, and I'm going to ask him to comment on the ramp-up in a minute because your question is directly related to that. But yes, we're fixing things. We're doing some programming. He's adding some chemicals changing. We're working on the perfect recipe because we want to be in Q3, Q4 on a much higher run rate, much higher recoveries, much lower cash cost. And this is the reason why we gave you $15 to $17.5 on an average. And we believe that Q4, we're going to be below $15 on a cash cost basis. So it's just a matter of being conservative and giving you a bit of predictability. But -- so yes, technically, we could have been in March a little bit higher. But there were some adjustments that were made by the team, which were absolutely normal. And in our planning and in our budget, I mean, Q1 will be a little bit better than our budget and our planning. So we are there. And the cash cost, of course, is going to be a little bit higher at the beginning, and it will be coming down below $15 hopefully for Q4.

Got you. And in terms of -- maybe just on Zgounder exploration and also as it relates to mine plan and a potential expansion, looking at your long section, there's still a lot of drilling potentially below where your resources are to the depth of the granite. I'm curious if -- maybe for a potential expansion, if that is something you're considering, is there an ounce target you'd like to see? And in terms of access to get the drills in there to drill out Zgounder depth, do you feel like you've been able to prioritize that more? Or is that something to expect more throughout this year?

So Justin, the access was built last year. So we have been drilling the -- just we have not yet updated the long section, but the white part that is below level 1950 or 1925, going all the way down to the granite, most of that has been drilled now. You see some drill results. We will update that over the summer. But we have been reviewing all of this, getting some very nice hits, very nice mineralization. And the -- so that's being drilled and the access is available. We will do a resource update over the summer, I would say. And yes, absolutely, we expect to increase our resource. We expect to -- as we told earlier that the mine life is also going to be expanded. And we'll have a new business model and business case on Zgounder available in Q3, Q4 for the market and for everybody. So it's being done. Maybe I can ask David, who's online, to comment about the section to the bottom, David, and what you're seeing now at Zgounder on the extension to the west and to the east.

Yes, with pleasure. So most of the drilling has been done last year. We got the exploration gallery and drift ready for drilling. So we've almost completed all the drilling. There's a tiny bit of drilling left to do at the bottom part of the deposit. And the idea, as Benoit mentioned, is to update the resource later this year with all the information at this. Basically, what we're seeing is exactly the same type of mineralization that the rest of the Zgounder deposit is. So very wide mineralization with some pockets of very, very high grades. Like you've seen in the last press release, there is, again, incredible results and silver assays. So we basically expect similar type of resource as the rest of the deposit. We didn't see any surprise besides that it's nice and rich all the way down to the bottom of the granite.

That's great to hear. And I guess in terms of, I guess, when you have an updated resource, which will give you more life, I'm curious if there is thought towards doing an extension?

Well, when we have the resource -- yes, sorry, go ahead, David.

No. I'm basically saying what you say all the time is, like the place is very tight at Zgounder. So expansion of the mill, we've mostly put the focus on finding satellite deposits in a truckable distance from Zgounder to allow some places to bring ore to the mill.

Okay. That's very helpful. And then maybe just one on this year. In terms of capital or sustaining capital outside of your cash cost guidance, I'm just curious, what would be a reasonable number to expect this year?

The capital in our budget is $7 million.

Okay. That's really helpful. Okay. I've taken up the line for quite a while. I appreciate it and looking forward to seeing you ramp up this year. Actually, just maybe one last one. Sorry to do this, everyone else on the line. Just the status of the paste plant. And I remember late last year, that was maybe a factor in controlling access to some of your higher grade secondaries. I'm just curious if that's up and running and if that -- if we should expect to see some better grades as a result of that?

Yes. Raphael, do you want to comment on the paste plant? And maybe also comment on the ramp-up because the first question was related to that and you're the best person on site to comment?

Yes, absolutely, absolutely. So the cement plant is up and running. All the piping is done, and it has been used to backfill some of the stopes that we wanted to continue to develop. So that's what ongoing. And as we extend the pit, it will be moved through the year, but it won't affect our operation. And as for the ramp-up, Benoit mentioned it earlier, we wanted to reach a higher rate in Q1 to minimize the draw on our stockpiles, and that's going well. I mean, in January, on total mining rate, we did about 1,600 in January and February, over 2,200. And for March, we're well on track for close to 2,500. So the ramp-up has been impressive and will continue.

And there are no further questions. I would now like to turn the call back to Benoit for any closing remarks.

Thank you, operator. 2024 was a very busy year on construction and ramp-up of the underground and ramp-up of the open pit. Most companies, when they do that, are not in production, so they don't report any cost. They capitalize everything due to the fact that we have 2 plants running at Zgounder and we are in operation and we do pay taxes in Morocco, a lot of costs were put through the expenses, which had a direct effect on our cash costs and our all-in cost. You also see that on our balance sheet, we have a $3 million tax receivable from the government because we put through these expenses and we had less income in the country. Hence, we are now waiting for a $3 million refund. So it's hard to predict 2025, 2026 based on 2024 because contrary to the industry, we were very, very conservative at what we capitalize and we were expensing as much as possible. But the guidance is very clear and it's very conservative as we are now heading into a beautiful year of production and the team is on site. We will do between 5 million and 5.3 million. We will minimize our cost, and that's something that we're always watching to have the best cash cost possible. But for us, as you see over time, our AISC is very close to our cash cost because the sustaining CapEx is extremely low. So when we go from a $14 cash cost, then we have a $15.5 AISC. So that's the beauty of this project is that a lot of the development is done and the AISC cost will be very close to the cash cost. The recoveries, we talked about that. Our aim is to be to 89%, 90%, which again, for a silver mine is very, very good. The plant is well built. It's brand new. It's operating very well. And we have the open pit that's giving us beautiful production. As Raphael just said, we're running in March at 2,600 global, which is 1,600 coming from the open pit, where the grade is much better. And we're running at 1,000 tonnes per day on the underground, where we are now focusing more on grade than on tonnage and which is also helping. So with this and with one of the largest exploration program in the industry with a goal to drill between 150,000 and almost 200,000 meters at Zgounder, at Zgounder Regional and at Boumadine, it's a unique value creation proposition where so far, our discovery cost at Boumadine has been extremely low, around $0.10 an ounce of silver. And we hope that we will be continuing this in the coming years. So 2024 was a construction year with a development year. 2025 is the ramp-up. We are making very good money. We sold silver yesterday at $34.19. You also saw, for the ones who look at the financial statement, that we did not sell the ounces at the end of the year. We kept them in inventory. So there's 130,000 ounces that were pushed over to Q1 that were kept in inventory. We are extremely good at selling at the best price possible. If we don't like the price, we do not sell. Obviously, it has an effect on our financial statement. So technically, there was 130,000 ounces that were sold in Q1 at a much better price. So we follow this closely. We are producing close to 15,000 ounces a day right now. We are in production. Our costs are well controlled. Our selling price is currently $34 and up. So we are generating very strong cash flow, and that will continue. Morocco is still an amazing country to operate in with fantastic mining code, fantastic people around us. You see it at Boumadine, they are supporting us. We've been able to acquire like 18 permits very quickly. So we know that for 2024, it was a transition year, but we expect a very, very good year in 2025. Thank you to all of you who are following us. Thank you to all the analysts who are covering us. And you always -- you can communicate with the team. Alex and myself are on the road 80% of the time, probably. So we do pay a lot of attention to our market and to our shareholders. So thank you very much. We will see you in May when we will be reporting Q1. And also at that time, we'll be able to give a little bit of guidance on how the ramp-up is going. Thank you very much.

This concludes today's conference call. Thank you for participating. You may now disconnect.