Galiano Gold Inc. (GAU) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. At this time, I would like to welcome everyone to the Galiano Gold Inc. improved long-term outlook for the Asanko Gold Mine 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. Instructions will be provided at that time. And now, Mr. Matt Badylak, President and CEO of Galiano Gold, you may begin your conference.

Thank you, operator, and good morning, everyone. I appreciate you taking the time to join us on the call today to review our long-term outlook at the Asanko Gold Mine that was released earlier this morning. Before we continue with the discussion on behalf of myself and the rest of the Galiano team, I'd like to extend my sincere condolences to the families and all those impacted by the tragic accident, which occurred on our site earlier this month. Historically, the operation has achieved a strong safety record. However, this event reinforces how important it is to maintain continuous focus on creating a safe work culture. Since the accident, we have worked closely with our employees and our contractors to reinforce our commitment to zero-harm operations with safety being our #1 priority. We'll be making forward-looking statements during the call. Please refer to the cautionary notes and risk disclosures in our most recent MD&A as well as this slide of the webcast presentation. Additionally, please note that all financial figures presented are in U.S. dollars unless otherwise stated. All operational data is presented on a 100% basis at the AGM. With me presenting on the call today, I have Matt Freeman, our CFO; and Chris Pettman, VP Exploration; as well as Richard Miller, our VP Technical Services. I will initially go through the highlights and then take you through the operations. Matt will discuss the financials, and Chris will review the exploration opportunities across the AGM. I'll then wrap it up and open the call up for questions. Okay. Before getting into the new Life of Mine Plan that we just released, it is important to acknowledge the fact that the Asanko Gold Mine has had its fair share of challenges over the years. I joined the company in late 2020 as COO and discovered a complex multi-deposit operation with a hungry mill that required multiple feed sources and deposits to be brought into production at a fast pace in order to continue milling at the required processing rates. This also coincided with a strategic shift to rebuild the technical team, which is being transitioned from Johannesburg to Vancouver. Board composition also changed considerably over the last 2 years, and I truly appreciate the skills and experience they now all bring to the table. Fast forward to Q1 2022, when we'll face with some metallurgical challenges at what was then our primary deposit as Esaase. Fortunately, at this time, we already had put in place a competent technical team with enough time on the ground and skill sets needed to address this challenge. With the team in place and availability of stockpiles on hand, this event presented us with an ideal opportunity to slow down operations and advance our technical understanding of known deposits. We did this through engaging a to third-party independent consultants to commence work on a feasibility level study and focus on an extensive geo metallurgical drilling campaign. Additionally, we also embarked on a thorough infill and step-out drilling campaign across all core deposits. These drilling campaigns are primarily focused on expanding resources and improving our geological understanding of these deposits. As we are now releasing our updated feasibility study and preparing to restart mining, we have the team in place and are confident in our ability to execute the Life of Mine Plan. Next slide, please. Looking very quickly here at some of the updated feasibility study and MRMR highlights. The key points I would like to emphasize on that, we have now reinstated and grown our mineral reserves compared to the 2019 technical report. We have advanced Abore and Miradani North such that they now make up 4 cornerstone deposits, significantly derisking our Life of Mine Plan compared to previous plans, which comprised of just 2 principal deposits. We have a new mine sequencing plan with a focus on cash flow generation to support the restart of mining at the AGM. Average gold production is estimated at 217,000 ounces through to 2031 totaling -- producing a total of 2 million ounces, almost 2 million ounces of gold. The mine has robust economics with $478 million expected in pretax NPV at 5% discount and all-in sustaining costs just over $1,100 per ounce. Next Slide, please. This slide is just showing where we are positioned on the Asankrangwa Gold Belt, where we hold 467 square kilometers of land tenements, and are flagged on both sides by the more mature Ashanti and Sefwi greenstone belts. Ghana has a long history of mining and he's one of Africa's largest gold producers we are surrounded by many of the gold majors who operate in this country. Ghana has a highly skilled domestic workforce with high levels of education and as a result, low levels of expats employed in the industry. Although the country has endured some economic challenges through 2022 and into 2023, Ghana has a stable democratic government, which supports the mining industry. We have a 45%/45% JV partnership with gold fields at the Asanko Gold Mine and the remaining 10% free carry interest is held by the Ghanaian government. Galiano are the operators of the AGM gold mine receiving a $7 million annual management fee. We are pleased to report that as outlined in our press release this morning, we now have just over 2 million ounces of mineral reserves in the P&P category totaling just under 49 million tonnes at a grade of 1.31 grams per tonne gold. The opportunities to continue to grow these reserves and extended 8.5-year mine life will be touched on shortly. Next slide, please. This is a high-level overview of base case feasibility study at $1,700 gold. Over mine life, we expect to produce 1.8 million ounces of gold and average approximately 254,000 ounces annually during peak production years. Mill will continue to process 5.8 million tonnes at an average grade of 1.31 grams per tonne and an average recovery of 89%. I must stress the significance of our new mine sequencing plan as by pushing [Indiscernible] out a few years and focusing on Abore and Miradani North pit first, the AGM is projected to be able to self-finance the restart of mining. Looking quickly at some of the capital requirements, I just want to highlight the following: Asanko Gold is a well-established and ongoing mining operation with all infrastructure in place to continue existing operations. Future capital includes site establishment to allow mining at various deposits and subsequent TSF investment raises. Capital waste stripping is obviously a large item here, but you must remember that this is spread over 6 deposits with Nkran contributing to more than half and beginning in mid-2025. Next slide. This is just to show the overview of the mine. Again, key point here is that there are no additional major infrastructure requirements at the AGM other than an 11-kilometer haul road to North Miradani North and 2 additional TSF embankment raises. We are expecting to begin the construction of the Miradani haul road later this year, the TSF Stage 7 embankment raise is already underway. We have a fully permitted and operating mine with the mill TSF, waste dumps and water treatment plant. At site, we also have full accommodation of medical facilities, offices and core storage shacks. All of this is saying, we are a fully operating mine here with a mill that has been in operation since 2016. Looking at reinstated mineral reserves. Abore and Miradani North had previously been thought at -- thought of as satellite deposits. But through the 2022 drilling campaign, they are now elevated to core deposits. They have relatively low strip ratios with robust economics and an ability to support capital requirements at Nkran. Next slide. Looking at the AGM mining schedule for 2023, we will continue to process the existing stockpiles until Q1 2024. While we are processing these stockpiles, we will advance JV approvals to allow us to commence stripping at Abore in Q4 2023. Following a short waste stripping campaign, Abore will provide the majority of the mill feed starting in Q2 2024. And currently, we'll be utilizing some of the Esaase ore that is readily available with mineral strip throughout the first half of 2024. We are then moving on to Miradani North, where the stripping campaign is expected to commence in Q2 2024. Looking of Nkran is expected to commence in mid-2025 with Esaase coming in, in late 2026 and the remaining satellite deposits filling the gaps in later years. Looking at the AGM mining schedule over the next 6 years, we'll be mining nearly 343 million tonnes from the pits including nearly 42 million tonnes of ore at a grade of 1.43 grams per tonne gold with an average strip ratio of 7.2:1. Obviously, these are big numbers, and we'll be looking at opportunities to improve cost and efficiencies on the mining front. Next slide. Here is our production profile for the current life of mine. You can see that we'll be ramping up gold production over the next 24 months until we reach steady state in 2025. This is largely a function of stockpile processing as we return to hard rock mining. Metallurgical recoveries are slightly reduced in years 2027 and 2028 as well as the tail end of the mine life as Esaase contributes to the mill feed. We know that there are small zones of carbonaceous material at Esaase and we'll be treating this deposit in isolation from other deposits in order to avoid impacting their higher recoveries. In addition to separating Esaase from the other deposits, we'll be looking to segregate Esaase low and high-carbonaceous material, and this will be achieved through organic carbon assays of grade control samples at the time of mining in combination with a great carbon model for the deposit. I'd like to emphasize that we are confident in the recovery numbers reported here for all deposits, including Esaase. Moving on to the next slide, where I'll now turn the time over to Matt Freeman, our CFO.

Thanks, Matt, and good morning, everyone. As Matt previously mentioned, the Life of Mine Plan demonstrates Asanko Gold Mine's strong operating margins with all-in sustaining costs at just over $1,100 per ounce, generating a post-tax NPV of $343 million, assuming a gold price of $1,700. The most significant operating cost of the Life of Mine Plan are our mining costs to anticipated to be $3.66 per tonne mined. This includes all deferred stripping costs and the transportation cost of material mined at Esaase, which is hauled down the road to the processing plant some 30 kilometers away. Key focus of the technical team in the coming months will be to find ways to optimize the mining operators in order to reduce these costs where possible. Processing and G&A costs are anticipated to remain consistent with those we've seen in the second half of 2022, which will reduce substantially following a successful restructuring that was completed in Q1 of 2022. It's worth noting that G&A costs presented also include a $7 million management fee that is payable to Galiano each year. Now turning to planned capital expenditures. Sustaining capital is anticipated to equate to approximately GBP 100 million over the life of mine. The largest component of this being the completion of the taking facility and associated water treatment plant totaling $45 million. Stage 7 expansion of the TSF is currently underway and then a Stage 8 lift will be required in 2025 and '26. Routine plant and infrastructure is modest, given the plant is fully operational and ready. And finally, site establishment costs at our smaller deposits will form the balance of the spend. Development capital is estimated to be approximately $60 million, primarily for site establishment costs to bring the Abore and Miradani into production. The large [Indiscernible] of this of the new haul road to Miradani, which is approximately 11 kilometers south of the processing plant, but also certain building relocation costs for structures that currently exists within 500 meters of the plant pits. Deferred shipping is also a major component of the mining cost that I highlighted above, the most significant component being $259 million required for Nkran Cut 3, which is planned to be undertaken between 2025 and '27. The mine plan [Indiscernible] enabled this significant investment to be funded from cash on hand and cash flows from Abore and Miradani deposits. Through the period from the stripping campaign commenced with the technical team, we focus on further optimization to reduce the length of the stripping period as well as reducing mining cost unit rates in order to further enhance the economics of the project. Finally, our estimate for mine closure reclamation is approximately $80 million that will generally start to be incurred for the cessation of mining activities. Cash flows are somewhat constrained, as you can see from the graph here, as we invest in the future of the mine over the next 2 years. But once the Abore and Miradani are in full-scale ore production in 2025, significant cash flows begin to be generated that are estimated to cover the costs of the stripping campaign at Nkran. Importantly, the JV was sitting on more than $90 million of cash as of December 31, 2022, following strong cash flows in 2022. And with this treasury, the JV, we'll be able to fund the anticipated recommencement of mining later this year and the execution of this business plan. Overall, life of mine demonstrates significant cash flow generation and a very robust post-tax NPV of GBP 343 million. And on top of that, we see many opportunities to optimize operations and costs and also to extend mine life further for the exploration and our extensive land package. So with that, I'll pass it over to Chris Pettman, our VP Exploration, who will give a high-level overview of some of those opportunities on the exploration front.

Great. Thanks, Matt. Happy to run through the exploration opportunities that we see at the AGM. For 2023, the exploration team at AGM has 2 key focuses. So the first being adding additional ounces to our reserves and resources through evaluation and testing of our near mine targets and our existing deposits and the second on regional generative exploration with the goal of delivering new discoveries that could have a material impact on extending the life of mine. For the next few slides, I'll touch on some of the highlights of the upcoming programs briefly. I'm going to start -- first zoom down at a regional level, which you see here, where the AGM holds the largest land position on the Asanko Gold Belt. Our tenements consist of approximately 46,700 hectares of what is still largely underexplored and highly prospective ground. Asankrangwa is the least mature in terms of exploration of the 3 major gold-bearing belts in South West Ghana, the other 2 being the prolific Ashanti and Sefwi belt, which are adjacent to us on either side, and as such, it remains a really exciting exploration play for us. Goldenization at the AGM is controlled at a regional scale by a series of Northeast trending share zones. And in this image, you can see 4 of the primary known shears, along with the areas that we'll be focusing our 2023 regional exploration work. The slide summarizes the range of exploration activities that we'll be conducting throughout the year and reflects device -- a diverse nature of our target portfolio given the range of maturities of the target. The regional work is going to consist of a variety of programs, ranging from early-stage greenfield mapping, soil sampling, geophysics, all designed to identify new drill targets through to follow-up trenching and approximately 19,000 meters of drilling to be designed to test for mineralization at some of our more mature regional targets. As you can see by the distribution of work, we're looking to evaluate the entirety of the AGM tenements as we seek to deliver those new discoveries from areas that have been limited to no exploration activities in the past. A significant number of generative targets not shown here have also been identified through ongoing review of historic data, which will continue to feed our generative pipeline as we systematically prioritize and evaluate our really large number of known and emerging targets in this space. Now on this slide and beyond the regional exploration opportunities. In the near mine space, we also see potential for significant growth. And to illustrate this point, the image on this slide consists of a long section of a portion of one of the shear zone shown in the previous slide. So this is a long section through approximately 10 kilometers of the Nkran and Asuadai shear, which hosts the Nkran, Akwasiso, Dynamite and Asuadai deposits. As you can see from the image, all 4 deposits lie along linear trends, and this trend is defined by that shear zone that extends from beyond Nkran in the Southwest to Asuadai and beyond in the Northeast. As the most mature deposit and largest source of historic production at the AGM, Nkran that you see it here, is the most well-defined deposit in the belt. Despite this, it still holds potential for significant growth. Drill programs carried out in '22 successfully intercepted mineralization, remains open well below the current resource serving as proof of concept for us that the deposits on the Asankrangwa have the potential to grow significantly larger as we now know that favorable geology and mineralization do, in fact, continue with that. And as we move northeast along the shear, Akwasiso and Dynamite are also both cross producers, yet they're less well tested than Nkran as historic drilling has not extended much past the bottom of the existing as-built pits. At both of these deposits, mineralization also remains open to depth and variably along strength. Akwasiso was one of the deposits slated for further drill testing this year as part of the 2023 near-mine program. Continuing along this year, Asuadai is significantly less mature than the other deposits on this year. I've given it has much less drilling and there's no production to date. Like its neighbors though, mineralization does remain open at depth and along strike, making it a really compelling near mine exploration target that's currently under evaluation. The image shows the conceptual targets that remain untested below existing drilling in this part of the Nkran shear. But it's important to note the shear continues well beyond this 10-kilometer section and is itself open in both directions for discovery of new deposits similar to these ones. Demonstrating our leaving the most mature deposit at the AGM remains the potential for future growth. We can move on to this next slide here and look at Nkran in more detail. So we're zoomed in now, and this is a long section through Nkran, which as I just mentioned, is the most mature deposits at the AGM. And despite the fact that it's been known for more than 20 years, has produced significant amounts of golds and has been extensively drilled, it continues to demonstrate growth upside. So this is the only deposit at the AGM that has been tested for mineralization at depths below the known resource. In 2022, we reported the results of that work, and we've highlighted some of those intercepts on this slide in yellow in order to visualize where this mineralization lies. Again, this is proof of concept, but the mineralization can and does continue to depths well below the known extent of the Asankrangwa deposits, and this is key to our near-mine exploration efforts. On the back of these results, the initial evaluation of the potential for underground mining at Nkran is currently underway and could represent a real step change for not just Nkran, but all of the AGM deposits. Beyond opportunities at depth, we also see possible strike extensions to the south of the Nkran ore body as highlighted here. We're currently drilling in this zone where we think we can both increase reserves and potentially identify new mineralization that may have a positive impact on the proposed Cut 3 at Nkran. So this is just a brief snapshot of only one example of the many near-mine growth opportunities that we are currently working on, which include Miradani, Abore and Akwasiso, all of which are open to depth. And I'd like to finish just by saying that this is a really exciting time for exploration at the AGM as our exploration team is well resourced with technical capability, we have in place the personnel and the fundings to deliver on both the near mine and generative opportunities that I've briefly touched on here, and we're keenly focused on delivering results to extend the AGM life of mine. And with that, I'll turn it back to Matt Badylak to finish up.

Thanks, Chris. As I wrap up here, I want to acknowledge that independent consultants who are listed on this slide and compiled the updated MRMR and feasibility study. It has been a long 12 months completing all the drilling, test work and analysis. And in the end, we have come away with a great product. Moving on to our final slide, again showing that the life of mine production profile of 1.85 million ounces and an all-in sustaining cost of just over $1,100 per ounce. Based on the life of mine, our preliminary production outlook for 2023 is expected to be between 100,000 and 120,000 ounces derived solely from processing of stockpiles. All-in sustaining costs are expected to come in at $1,900 an ounce. I'd like to remind you that these higher costs include the investment of nearly $40 million of sustaining capital expenditure required to benefit further years of production. Finally, I'd like to reiterate that the AGM is now well positioned on the back of a completed independent feasibility study, a reinstated mineral resource reserve and has cash on hand to execute the restart of mining and return to production levels in excess of 250,000 ounces per year. I personally have confidence in the team's ability to safely deliver to the stated mine plan and generate value for the Galiano shareholders. With that, I'd like to turn the call back over to the operator and open the lines up for questions.

[Operator Instructions] Your first question comes from Rare from BMO Capital Markets.

I just wanted to start with -- during the presentation you didn't mention about some cost optimization opportunities. If you can specifically touch upon some of those key opportunities that you see and the potential impact? And the second was, I just wanted a clarification on the life of mine strip of 7.2. So when you talk about the Nkran pre-strip and also some of the deferred stripping that's been capitalized in the sustaining, I just want to make sure I'm not double counting. That 7.2 is inclusive of your operating sustaining as well as nonsustaining stripping. Is that correct? And is it possible to get a split for that strip ratio over the life of mine?

Yes. Thanks, Raj, and appreciate the question. I might start off with the first part there with regards to opportunities, and then I'll pass it on to Matt to answer the question on the stripping. Listen, Raj, you would have seen, obviously, mining makes up the large balance of costs at the AGM, and we are mining a significant tonnage here over the life of mine. And with regards to those opportunities, I think predominantly, we'll be looking at finding ways to reduce the mining cost on a go-forward basis. We have identified that I think all of these deposits, as they've grown over the course of the last 12 months, are most likely amenable to mining with larger fleet. We haven't run that analysis to ground fully yet, but we do believe that all the upfront deposits, including Abore, Miradani and then even getting into Nkran can be upside in terms of fleet sizes. And that certainly will have a positive impact on the cost going forward. So that's the main area we'll be looking at. I'll just remind you also that the optimization that we've conducted through 2023 with regards to resizing our -- resizing the manpower on site and reducing costs there are also carried forward as well. So that's been a very good project for us over the last 12 months. So with that, I'll pass it off to Matt for the other part of the question.

So with the regards to the stripping, the deferred stripping is all included within the mining costs that we quoted. So the $3.66 per tonne includes all of the deferred stripping and that 7.2 strip ratio at the life of mine also includes all of the deferred stripping. We'd have to get back to you on any split between -- of that strip ratio. What is deferred stripping vis-a-vis kind of operational mining costs and mining stripping. I don't have that split to hand at this point. But in terms of double counting your costs, yes, the mining costs include that full deferred stripping. And as you would have seen in the presentation, from an all-in sustaining cost perspective, the deferred strip is split between some development capital, which is the Nkran first ship given under the World Gold Council guidance that the shear magnitude of that project on an operating -- pre-operating mine. And all of the other stripping is considered sustaining stripping because of the deposits that you're stripping on smaller in nature scale [Indiscernible] to the project. So that difference between treatment of [Indiscernible] double count mining costs of $3.66 per tonne include all of that stripping. That answers your question.

And just a follow-up on Nkran. I understand you're still doing a lot of studies with respect to the underground potential. But is there an opportunity to lower the waste strip and tap the underground sooner? Is that something you're looking at or you don't see that potential?

Yes. Thanks, Raj. Certainly, by pushing Nkran back in the life of mine and commencing stripping in mid-2025 that becomes an opportunity for us. I mean that's something that we'll be looking at over the course of this year and basically looking at that trading off with larger mining equipment for the strip as well, reducing the costs on the open pit front as well. But yes, certainly, the timing around where Nkran comes in with regards to the commencement of stripping does afford us some time to run that to ground. But I don't want to preempt any conclusions of that work because we're still kind of in the early stages of that. Suffice to say we are looking at it.

Your next question comes from Stephen Saroki from Equinox Partners.

I've got a couple of questions. First, in the release, it said that this plan is subject to Gold Fields approval. Could you give us some more color on that and let us know if there's any reason to believe that they won't approve this plan?

Thanks, Steve. Yes, I mean, we've been clear on that. And again, the asset is managed under a JV that within the structure of that JV agreement, certain approvals are required from both partners. And that process is underway at the moment and has not yet run its course. So we're just being clear with yourselves in the market that, that process is still ongoing. And once we secure those approvals, we will obviously have the green light to get going. But at this stage, I wouldn't anticipate any issues on that front.

Also, could you walk us through -- there was just, I think, a bit of delay on this plan. And I think the hope was that this was going to be delivered sooner. So can you just walk us through difficulties you had in delivering this and sort of why it came at the time that it came?

Yes, Steve, I think we've been very clear throughout the course of the last 12 months around the timing of this, and we've been pointing to Q1 2023 as the delivery date, and we've delivered on that. So I'm not sure exactly the reference. I think we've hit the deadlines that we've described to the market, and we've always been guiding the market to Q1 2023. So yes, I'm not sure that answers your question or not. But certainly, in my view, we've met the deadlines that we've guided to.

It just wasn't -- I think is timely. I think the news is relatively speaking positive. I just think that I guess we had hopes. I mean you certainly guided to this later that this would be the case. But I think earlier on, there was an expectation that the plan would be delivered sooner. I guess that Raj asked you about the Nkran, the underground. Obviously, this is not included as part of this mine plan, but is there like a timeline for when you plan to show sort of what that could look like?

Yes. So I mean, we're looking at Nkran in 2 phases, Steve. I mean the first one is a trade-off between open pitable Cut 3 and an underground opportunity in the same volume of material. And obviously, due to the timing around getting Nkran stripping commencing in mid-2025 that first phase of the analysis needs to be underground relatively quickly, and we're advancing that over the course of the next 12 months. So that's the first stage when we talk about Nkran underground. Subsequent to that trade-off study, we believe, as Chris mentioned earlier, that there's opportunity to again look at an underground potential of Nkran, even if we were to progress with a Cut 3 open pit at Nkran because we've identified mineralization that sits significantly below the current resource. And that is going to continue to be investigated, but doesn't take the same level of priority, so to speak, as the trade-off work that we're doing with Cut 3.

That's helpful. And then just one final question, then I'll drop off. So you obviously highlighted the extension at depth for various deposits in this presentation. But in terms of exploration, both for 2023 and going forward, do you have a sense for how much you plan on devoting to other potential sort of I don't want to call it greenfield, but other potential undrilled targets on your current land package?

I'll let Chris answer that one, Steve.

Sure. Thanks for the question, Steve. Yes. Look, as I mentioned in the presentation, the team is focused -- is really focused on 2 priorities. We've purposely divided the team into both the near mine and then a generative exploration group so that we can focus on both of those things. While the near mine is obviously extremely important to us to make sure we're maximizing value of our known deposits and looking to extend the life of mine. We do have an extensive land package, and it's a great time to be exploring it. There's lots of exciting targets, and the team is really focused on that. So this year, our efforts are, generally speaking, 50-50 split between the regional generative targets that are more greenfields to the near-mine space. And I anticipate that continuing on into 2024 as well as we try and evaluate the entire tenement.

[Operator Instructions] Your next question comes from Charlie Rothbarth from Berenberg Bank.

And my first one is probably around just your guidance this year, and apologies that's been a bit a bit late during the call. Your all-in sustaining cost guidance is sort of relatively high versus I think what people are expecting alongside [Indiscernible] is this just driven by people perhaps expecting you to come into combining your [Indiscernible] a bit earlier, I think people were expecting sort of start of Q3 and then sort of just the lower grades across the stockpile now that you've run through the higher-grade region of them.

Charlie, it's Matt here. As we try to outline in the presentation, yes, we appreciate [Indiscernible] on the all-in sustaining cost is on the high end of things. But this is based upon the Life of Mine Plan that we've laid out. I mean there is some extensive capital requirements to kind of get things back into restart mode, which are falling into 2023. We have pointed at this preliminary guidance as well, and this is based upon the technical report that we've outlined today. But we will be going through, obviously, closely reviewing that as we move through how sort of more internal and GFI JV approval process over the next few months to look closer at this and see whether there's any way that this could be improved. So it's a point in time now based upon the technical report, but mainly driven by the large CapEx that's needed to really get started again. And obviously, the future years will benefit from that heavy investment in 2023 that we see as we move.

Okay. And then just on a slightly sort of more macro scale, -- have you been in -- how much conversations have you been in about sort of taking on the other half of the asset and getting the full reward for the work you do? Now the Gold Fields and if you want to see this, is that sort of -- have you filed further commentary or is that they still -- is this the commentary around whether or not this is a core asset for them?

Yes. Thanks, Charlie. Certainly, from my perspective, I feel that this asset belongs more of [indiscernible] GFI portfolio. But again, I mean, it's not solely up to us to rationalize the JV at this stage. It takes 2 to tango. And those discussions have taken place in the past that were difficult in nature because there wasn't the same level of clarity on a go-forward basis with regards to where the asset shakes out in terms of the value. Certainly, we'll be looking to reengage those discussions going forward. But I certainly wouldn't be preempting any potential outcome of those discussions.

Okay. And the last one is, do you -- when you -- it's really just through the study, do you have any inflation assumption in there?

So yes, so we've baked in various assumptions that the Q2 would come in terms of cost structure. I think obviously, the -- as I kind of -- you said you joined the presentation a little bit late. But as we walk though earlier, the main cost driver here is mining costs, and they were factored predominantly on tenders that we received as a basis for that cost with some inflationary impacts on certainly fuel and other things. So we feel pretty comfortable where those are shaking out at $3.66 a tonne, I think compares pretty well slightly elevated from the last couple of years, but I think it pretty well covers us for the inflationary impact that we've been seeing on the ground. And obviously, we're looking at life of mine view. So it's not just immediate reaction to 2022 inflationary requirements as well. G&A and processing costs again, where applicable, we factored in necessary inflation. I think the G&A side of things, as you will know, through 2022, we do a really successful restructuring and reset the cost base at the site. So we anticipate that carrying on through, but we're sort of naturally expecting some level of inflation, normal course to continue from there. And then finally, processing costs again. I mean, we've seen some inflation as all extractive companies have in the last year or so, particularly around some of the reagents. And again, that was reflected in. So the $10.80 per tonne processing costs that we've got in this Life of Mine Plan, you'll see stacks up pretty well to how previous historic performance and slightly higher than the last few years, I think, which covers off in that area.

Okay, perfect. And congratulations again on getting this up.

Your next question comes from Sean Fieler from Equinox Partners.

So on the -- so the demand FX has been kind of all over the map last year with default and everything. What FX rate do you use in your study? And does -- in [ USD ], does it account for much of any of your costs? And then the...

Sorry, Matt here. The technical report was based on U.S. dollars. The majority of spend and material expansion slightly based on USD. So we'll -- so the FX components of that haven't been -- aren't material. The majority of our spend is denominated in USD, including things like local labor, local -- and fuel, of course, is USD-based. So we haven't -- there's no material FX component to the Life of Mine Plan.

Any other impacts from the Ghanaian bankruptcy on your ability to operate in country and move forward with this plan?

Yes. No, sure. At the moment, we aren't seeing any major impacts there. Obviously, we're cognizant of the situation in the country and trying to be on the front foot there where possible. But at this point in time, we haven't seen any negative impact to our ability to operate in country through the course of the last 12 months, and we don't anticipate that changing going forward.

And you haven't been subject to any tax investigations or any -- it seems like there's a number of companies getting kind of unfunded leverage from the Ghanaian [Indiscernible] closures.

Sean, it's Matt. Matt again here or other Matt, Matt Freeman. Yes, we actually completed an audit with the GRA in 2022, and that was normal course, no adverse findings that we disclosed that in our quarterly statements through the last -- through the course of the year. So yes and no, we're quite pleased. We saw some of those quite scary things come out of some of the large tax assessments that have come out from other companies. And we say we got to an audit without any material impact. So hopefully, they'll leave us alone and won't come back with anything crazy, but we feel in a good position with the GRA, a good relationship with them, and our local team works very closely with them on all aspects of tax and VAT recoveries and things like that.

Last question. The -- any hedging that would go along with these kind of capital commitments if you go ahead as planned?

We've obviously outlined a long-term Life of Mine Plan here. We will look into price protection mechanisms from time to time on a short-term basis if the market provides an opportunity to do so, but not long-term hedging there.

Okay. So you might sell forward a quarter or 2. That's basically it.

And typically, we look for -- we're not speculating on the price of gold. We're looking for a reason in which the hedge if there's a period for a major kind of investment or a period where we know like doing stockpile pricing very low -- relatively lower margins than we would otherwise have had. And we might look to do something, but not long term and certainly not trying to speculate on the price of gold.

Okay. Well, congrats on getting a plan that works with your balance sheet and give you guys a way to move forward.

Thank you. There are no further questions at this time. You may proceed.

Thank you, operator. And again, I'd just like to congratulate the team here at Galiano and on site as well as the fact the consultants who have delivered what is, I believe, a very positive path forward for the company. And with that, I'll just close the call. And thank you, operator. Cheers.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.