Lundin Gold Inc. (LUG) Earnings Call Transcript & Summary

Hi, everyone. So thank you so much for coming today to Lundin Gold's 2023 Investor Day. Just quickly, just to give you an idea of what the agenda is going to be looking like. We have 4 presenters today. Ron, Terry Andre and Nathan. After each of their separate presentations, we'll hold a short Q&A session, where you guys in the audience and everybody who's watching at home on the webcast can ask questions. For those listening in on the webcast, please submit your questions online, and I'll ask those questions when the time is right. So with that, I'll pass it over to Ron, and we can get started. Thanks so much.

Thanks, Finlay. First of all, again, thank you, everybody, for taking the time this morning to brave the smoke outside and come on over. Some of those came inside. First thing I want to do is introduce the members on the team. I think some of you probably have met them over the years, but we do have some new faces. Terry Smith is 1 of the new faces. Terry is our COO, recently joined us from Pure Gold, has been with us now for about 3 months. I think I'll tell you some stories that things are a little different if we Fruta del Norte than they were at Pure Gold. Andre Oliveira is 1 of our other -- is not such a new face anymore. Andre has been with us now for over a year, our VP of Exploration. And Andre joined us from Yamana, and he's been a great addition to the team, and you'll see a lot of the efforts of his work, fruits of his work in terms of really refocusing our exploration programs, and he'll talk in a lot more detail on that. Now some of the -- couple of older faces and 1 new face, Nathan Monash. Nathan has been with us since April 2015. And Nathan will be doing -- give you a good presentation on sustainability. But I think also [indiscernible] started at a very high level. And we all know that there's a lot of things that have happened in Ecuador over the last little while. He's going to start at that high level. So take you through then down into the operation and end up talking about the -- what is some of the economic benefits that we've seen at Fruta del Norte. He doesn't look too old, but he an older face Chester See. Chester actually was with me on the very first meeting. So I'm Fruta del Norte. Chester is part of our due diligence team. I remember going to Ecuador in October 2014 after we announced the deal and start look at the transition and go what the hell have we got ourselves into here looking at all these labor laws and everything. Chester's currently our interim CFO, and will be setting into the position of Senior Vice President of Finance. He is here today to answer any questions on the financial side. And I'm happy to introduce Chris Kololian or as many of you know, CK, who will be joining us as CFO starting July 1. So a little less than a month. He's here today to meet a lot of the analysts. He's going to be working with Finlay and I -- a little bit more on Investor Relations. But also, as you know, Chris' background, he's going to be working with a team on -- also on some of our corp dev opportunities. So with that, I'll get started. We are using a new platform now with kudos to Verify. I think you'll see some of the great things, this has been great investment for us. You've all seen this slide before, but we thought it was really important to talk about it because these are the fundamental things you're going to see throughout the next couple of hours. As to why we are so focused on this. We all know Fruta is a great asset. Through our aspiration and activities, we are seeing that it is -- actually could be potentially a great district. With that said though, we all know [ standing good grades ] can make lazy miners. We don't allow that. It's not part of our culture. We really focus on operational excellence. We've gone from 3,500 to grade original design capacity now up to 4,400 tonnes per day, we're looking at going slightly higher for 2024. We are continuing to focus on costs. And 1 of the other big areas that we really need to focus on is recoveries and Terry will talk about that. But there we've had a lot of initiatives. We've recently engaged partners in Performance, PIP, they came last year. They're on site right now, training everyone to continue -- so the operational excellence filters shoot every aspect of -- everything at Fruta del Norte. Focusing on operational excellence. We are generating significant cash flow. And I'll talk a little bit more about what we're doing with that cash in terms of balance sheet. Chester is here to answer any questions around that. And also we're starting to returning capital to shareholders. So we've now switched to a quarterly dividend, $0.10 per share. The next 1 will be coming out a few weeks, a couple of weeks of the second quarter dividend. Even with cleaning up the balance sheet, returning capital to shareholders, we still have significant cash flow, and we're focusing on growth, organic growth and non-organic growth. You've heard us say M&A is something we definitely are looking at. The team is actually pretty busy looking at a few opportunities, but that's challenging. We're not going to grow for the sake of growing. We are going to -- we want to look at growing. We are a single project, single country. We know that. It's a great asset, but we still think there are may be opportunities. And we've got a team that thinks creative -- creatively. And by looking at things slightly different, we may be able to create opportunities that make sense. None of this, not any 1 of these things can be done without a strong ESG platform. And this isn't something that's unique to Lundin Gold. This is fundamental to the culture of the Lundin group of companies. If you were to go see Lundin mining presentation, you'll see a big part of it on ESG feeble, NGX. They've got every 1 of these companies. IPC on our oil site, ESG is a fundamental part of the culture of the Lundin Group. And I think it's a large part, we think it's a large part of -- what's enabled us to be successful at Ecuador is coming in with this culture. So Nathan will talk quite a bit about that. Just real quickly, we did have a real good Q1. Q2's -- we're 2 months through it. It's looking good going well also. We are seeing the lower grades that we had told you all about that we already see some more grades in Q2, 3, 4, just to different parts of the ore body. But Q1 went well as compared to last year and on op cost basis and all-in sustaining ASIC, it went really well in Q1. We are seeing a ramp-up, and Terry will talk a little bit about this in our sustaining CapEx, which is we have talked to you about that, that Q1 was a bit slow. The fourth raise of the [indiscernible] didn't really go until April 1. Now that was planned, but -- so that's 50% of our sustaining CapEx for 2023. So that will -- that's ramped up and there's some other projects that Terry will talk to you about as well. But we still are projecting to be in the -- 1 of the lowest cost producers in this industry throughout 2023. With the quarter, we're generating significant cash flow. You can see we started the quarter with just over $360 million, ended the quarter of $210 million but that included paying down about $270 million in debt. You have the gold prepay, $208 million; the stream, $21 million; senior debt, $42 -- almost $43 million. You combine those 3, you can see we're generating significant cash flow, and we really focused this last little bit on paying down debt and Chester can answer if anyone has any question on the gold prepay, but also returned $24 million in capital to shareholders. Fruta del Norte is a great asset, and we want to continue to make it even better. So this is our balance sheet as of the end of Q1. You can see the significant reduction in the debt levels, and those will continue to decrease. So with that cash, again, the 3 pillars here, returning capital to shareholders. Now you'll see here in a little bit. Our dividend yield is actually really good. Cleaning up the debt and organic growth, which is what organic growth is not only exploration but Terry will talk about things we're looking at from the operations standpoint and then on the M&A. So real quickly on the debt, there are 3 components. One is gone with gold prepay. What this enabled us to do now is we have 9 quarters remain, Chester? 9 quarters are roughly 10,000 ounces per quarter that now are in our genes versus being paid up to Newcrest. So I [indiscernible] especially at today's gold prices is going to be a benefit. The stream credit, the decision that's to be made in June of next year, buyback 50% of this for $150 million. So I want to ask me while we're just having a coffee or water upfront -- it seems like a no-brainer. Yes, unless we have a dramatic drop in gold price is an no-brainer that we will go ahead and do that. The latter is the senior debt facility, currently at $135 million. That's something that Chester and CK are going to be really focusing on what CK's on board about do we look at -- we think we should be restructuring that into an operating line, paying it out but keeping that flexibility in our toolkit on the balance sheet, but pay it down anyways, based on our budget, Chester, which was 16 -- originally [ 1650 ], this was payoff anyways in June of next year, right? So we got to pay down the debt and buy back the stream at [ 1650 ] gold. So we're going to be able to definitely clean up this balance sheet significantly. On the dividend side, you can see here, we are relative to our yield relative to the senior producers -- which many of you here Newmont that talked about being 1 of the best [indiscernible] in the industry. So while we're right out there. And when you compare with the medium producers, we're quite a bit higher. This is something, again, all walling we did when we looked at our dividend policy was something that was sustainable and meaningful. So that's why it was set at a fixed rate of $100 million annually. I'll speak really highlights -- I'm just going to want to do a lot more depth here. But really, we have 3 exploration programs underway. You look at these 2 ways. Conversion, improve the quality of our resources, so bring resources into reserves and a near-term impact. Near my program is add to the resources. So that's really working right around Fruta del Norte to add resources, which is a sort of a midterm impact. The regional program is finding a new Fruta del Norte. It is longer term because it's -- will be under concession. So we're talking about environmental permitting and additional work like that. So it will be a little more in the long term, but the blue sky. On that note, unless there are any questions, I'm going to hand it over to Terry now to get into more detail on the operations. Terry?

You talk about some of your M&A ambitions sort of parameters around things to reinterested in?

Yes. We're looking at primarily development-type opportunities. I would say we're -- our primary focus is on LATAM and North America. What's -- I think the things I talked about probably now it may come up later is just what's our horizon looks like. Our horizon right now is full of -- we look at it as Northern Lights, there's lots of opportunities for us. You've got a new press Newmont, which I think when we talked to Finlay and I talked to a lot of you before, it was highly likely? Well, it's happening. We see different things. We've now seen some recent presentations where we are part of -- we're not the core assets but we're not the non-core assets. We're in that middle group, which -- and we're seeing different things with regards to what does Newmont want to do -- we're not a significant and significant part of that transaction, right? Our market -- current market cap is $1 billion to $17 billion acquisition. So we're not a significant part. So it's that aspect, David, is to what's Newmont going to do. There's the other aspect to playing out what Newmont wants to do. Are we in play? Well, that's to be determined, and we'll see what happens with that, but things you're going there. That said, we're not sitting on our laurels and waiting to see what happens over here. So we are looking primarily development, primarily for South America, but we are open. We are looking at some other opportunities. There are some things that Andre has brought to us as well early stage -- looking at some things that Andre really likes from an exploration standpoint, although I would say those are probably lower priority to look at something under the development. We haven't seen anything yet from a producer side that really makes a lot of sense. For us, the challenge is by just buying another producer, we're just adding more ounces but very likely to give where we're on the cost curve is going to be higher cost. So we're not seeing much there that soon really be accretive in a longer picture -- in the bigger picture. So it's -- and actually a longer respect, David, real it's really an interesting time for us because of the Newcrest, Newmont, and Newcrest have said to us they are supportive of us doing things, and they've got full flexibility during this interim period, essentially any -- if we want to do something corporately, under their agreements with Newmont and Newcrest. It's Newcrest that makes the decision. They don't have to -- anything to do with Lundin Gold, its new quest decision between now and when the transactions close.

Do you feel as though you have anything that is actionable between now and the fourth quarter that was the deal with Newcrest likely to close in the fourth quarter.

No such things that could be actionable, yes. Possible. We definitely are looking at some things that could move quickly. I think the key is there is where masters are investing now a little bit more so. Bryce?

On the dividend policy, $100 million a year. When you introduce that, the yield was much higher. So like how flexible is the dividend policy? And what are your internal conversations about potentially increasing at above the $100 million?

Look, that's a really valid question because you're right. We said it at -- we wanted it at a higher yield than where we are now. I would say, Bryce, it's probably not much is going to happen until we get past cleaning up the rest of the balance sheet. We get that stream behind us, get the senior debt restructured ideally. And then -- and look, it also depends a little bit on what happened in the next 6 months with regards to M&A activity. But I think it's definitely something fair to say we've probably this time next year. We definitely reevaluate it. Chester, would you agree with that?

Yes. I agree with that for sure.

Any other questions? Okay. Terry, over to you.

Thanks, Ron. It's a pleasure to hear everybody. Nice meet a lot of you, and it's great to be with Lundin Gold. When I met Ron late last year, he was talking to me about 3 things. You saw [indiscernible] what a great asset the company has, a great team and the sort of emerging exploration story that was coming out. And 3 months in, I've been down to side a few times, and I can safely say that this is a world-class deposit. I think all of us understand this high-grade, big-ounce producer, lots of reserves. But beyond that, I think some of the things that Ron was touching on really struck me is that the company's done this right. The ESG elements that Nathan will talk about later are phenomenal. I think no one could really hold the candle to what we've done there and something to be really proud of. The safety performance. We'll talk about it a little bit more later, but this is unparalleled safety performance in our industry. And this is all coming from a company that's fairly young, has a single mine, but it speaks to the leadership that the runs across the company and the quality of the team that they attracted. So it's a pleasure be a part of that. For -- just curious how many people have been down to Ecuador? Okay. So I wasn't sure doing a bit of a sight overview this morning how many of you this will be redundant part of it, but it seems like half of you have been through this site. We've got some Verify slides that I think you'd probably be interested in to give you a bit of a flavor of what Fruta del Norte is all about. So here's a view of Southern Ecuador. And I'll point out a few things here. Here is a project for Fruta del Norte and also pointed out [indiscernible], which is a 140 kilometers from our site. So when I'm meeting in Vancouver, I fly into Quito and [ Los ] is an hour flight from Quito, few hours later, I'm at site. So this is 140 kilometers and mostly asphalt highways twisting through the Ecuadorian mountains and then we've got a 20 kilometer access road from there. The other thing I'll point out is Guayaquil up here. This is where all of our concentrate is shipped out, and it's also where all of our goods coming in to support the operation. So that's the label and Nathan will go in more depth on sort of local picture there. Here's a bit of closer view, but I'll skip right through to this view. This is -- the green line is our site access road. This is about a 20-kilometer access road up to the plateau that the mine sits on. This is 1 of the most amazing access roads I've ever seen, developed through saprolite if you're new engineer like me, you find some of the slopes and the work that was done there, pretty amazing. There's also a 50 kilometer power line that's in blue here that is connecting the site with a 230-kilovolt line. Moving into the site itself. I'm going to step through all of these items here. I'm going to start by sort of over here, we're going to be looking east -- so this is a view of the site looking east. And 1 of the things that I noticed right away is how lush -- this is a lot of forest, a very bio-diverse place. And the development has really taken that into consideration. This is a very light touch from a footprint perspective. There's been a lot of consideration in terms of how do we minimize footprint and even some of the disturbance that was generated, we were talking last week a lot of it's already been reclaimed. So there's a lot of thought that goes into preserving the biodiversity that we're working in down here. I was talking about the access road earlier. This is it just coming in to site here. And this and I'll sort of step through the -- sorry, getting used to the Verify technology here. I'll step through things from the process plant to the paste plant and then over to the Las Penas camp you can see on the horizon there. So here's our process facility. This is a really conventional gold circuit and nothing really that special here that we're doing, which is a good thing. Just looking at sort of how our ore runs into the process facility. Here we have our stockpile, it's fed into our crusher and then run through crushing and grinding circuit. There's a gravity circuit that recovers some of our gold, a flotation circuit that covers the bulk of our gold. We generate a concentrate that's then shipped to [ required kilos ], as I mentioned earlier, and we reached the tail from all of that, and generate pace tailings and conventional tailings at our tailings facility. As Ron mentioned, this is a 3,500 tonne a day nameplate. It's been ramped up to 4,400 tonnes a day. And I'll be talking about a little later how we're looking at optimizing that a bit further. There's a few other facilities I'll point out here. This is -- so our lab and our main water treatment plants -- as you look down the stretch here, that's where we'll be talking about portals and our avenue facility a little later. This is our paste plant. About 60%, 65% of our tailings go underground is paste backfill. And this is a great little plant, very conventional, but it has the capacity to really match our mill capacity for the most part. You'll notice that up in the hill here photos taken last year, while the self ventilation rate is still under construction. That's why you can see a structure out there. But that self ventilation rate has just recently completed, and that's allowed us to really open up the mine a lot better. So that's been a big key piece of infrastructure for us. Here's a shot of our camp. Obviously, soccer pitch features pretty prominently here. Our Ecuadorian team loves that soccer pitch, I don't think I've ever seen it with somebody running around in there, kicking a ball around. I like to run around this track. I mean I don't know which soccer players that's what I do -- this is a 1,700 person camp, really nice, quiet camp. You can open your window at night and have a nice fresh breeze blowing through your door. The cafeteria, this is honestly, I've been to a lot of mines. This is the best food I've ever had at a mine. So it's a fantastic place to visit. If you get a chance, come down and see us. It also has the best coffee that I ever had at a mine site. So this is important for me to be functional. One more thing I'll point out here is -- we have a nursery. This is the first mine site. I've been at which has a plant nursery. This isn't for babies, this is to hatch plants and help with our reforestation projects, which is pretty interesting. So back out to a view of the project. We're just going to spend a bit of time looking at the mine. You can see that it's sort of ghosted here as it's heading underground, we'll have a look at the portal area. This is looking away from the portal. So this is our admin facility for where our dry is, our mine operations, tech services sits in here just to the right is our mobile equipment shop. We're actually building a mobile equipment shop underground as well that will help give us some capacity. I'll talk about that more in a minute. Our fuel bay obviously for keeping our equipment fueled. And if we do a 180 here, you can see our Kuri and K'isa declines. So this is -- these were 3 declines that were driven to start of the project. And if you enter these portals with 3 kilometers later, you're in the production areas. So to zoom back out. Now we're going to take a closer look at the underground itself. So these are the declines that we were just looking at up here. And as I was describing about 3 kilometers later, you're into the heart of the mine. The south ventilation raise, that was something that I mentioned earlier that's been recently completed. That's been a big benefit production-wise and just cleaning up our ventilation. If you zoom in here, well, 1 more thing before I zoom in, this 1170 level, this is something that Andre is going to be putting to good use from a drilling platform perspective. We're seeing a lot of exploration growth to the south. I'll talk about that a little bit more later. From an annuity mine engineering perspective, this is a dry mine. I would call a rock quality fair. It's not fantastic rock, but it's also not terrible rock. I'm used to working in places like Nevada, which is a very terrible rock for most part of it. But this is pretty good quality rock. You can get a sense as we look across the orebody all of these cross cuts are between 50 to 75, or even a 100 meters long, that's the width of this deposit. So this is a bulky transverse long-hole project. This is about 600 meters, 700 meters long strike and 350 meters high. So that gives you a sense of what we're working with here from a mine infrastructure perspective. All right. Now we're going sort of head back to where we started, looking east over the project, and now we'll head off to the tailings facility, which is just behind us here. It's just here and I'll speak about that briefly. This photo was taken last year as we were completing our Stage 3 lift. And you can see some of the equipment that's building the downstream embankment here. This is a saprolite permeable area that's basically got rockfill placed on the downstream edge. There's a liner on the upstream side. On the right side here, you can see our main diversion channel that keeps water out of this facility and diverted around the project. So it's noncontact water -- as we look -- as we look down the toe here, it gives you a sense of the scale of the embankment and then we've got our polishing pond at the toe. We're just completing our Stage 4 lift now, and that's about 30% of the way done. As Ron mentioned, that's a good chunk of our capital this year, about half of our capital is being spent on that lift. It's going well. It's -- we mine the material for this embankment from Macquarie that's actually about it -- is it wrong, maybe 5, 10 kilometers away. So it's a bit of a haul-back and forth to build this embankment. All right. Getting back to slides here. From a health and safety perspective, any company would look at this TRIFR and be quite jealous. I mean to have anything below 1 in this industry is very difficult, to be really next to zero is quite an incredible accomplishment. I really compliment Ron. Ron leads, when he's on-site safety is the first thing that's out of his note. It's the first thing that is out of my mouth. All of our leadership is super committed and experienced. They brought a lot of different ideas and tools, and we've sort of built from all of our different perspectives, the best safety system that I've seen. I go underground. I grew up just north of Toronto here, I went to school in Sudbury, one of the first times I worked underground was working for Inco. And I learned about what a 5-point inspection card is. And we have a 5-point inspection card that is basically the same philosophical tool. It helps you understand the risks before you get to work and really sort of gets here your day set from a safety perspective. We've got excellent training programs to have an Ecuadorian workforce that's working this safely. That's still a relatively inexperienced workforce is again a huge accomplishment. And there's a continuous improvement element that I've seen. Every time there's an incident. It's investigated. We learned from it, we do better, and we figure out how to continually improve, which I think is important. Our problem is with this kind of safety performance, we cannot rest on our laurels, right? You have to keep doing what you're doing and stay focused on continuing this great performance. We passed 4 million hours without its reportable injury. That's a great accomplishment. We only get to 5, 6, 7. We want to push that as far as we can. Our goal is to have zero injuries. Ron touched on this earlier, but we've had a great start to the year. Obviously, Q1 was a record production quarter, great cost to boot. We're maintaining our guidance. Our grades are expected to be lower through the year. We talked a little bit a bit about this on our Q1 earnings call just the line sequencing aspects and the soft file aspects that led to such a strong grade in the first quarter, and while I hope that will persist. And so I'm happy to talk about that later, if anybody is interested -- we are seeing some cost improvements. Things like our cement consumption. I'll talk -- touch on this later, but we're seeing lower cement consumption as a result of some of the operational excellence things that we put in place. We're seeing lower concentrates, shipping cost, and we're shipping a higher grade concentrate. So we're seeing some cost synergy there. And then our diesel prices are a little lower this year than we had planned for assessment, been great to see. From a capital perspective, I touched on the tailwinds facility, we're 30% of the way through that. That's about half of our CapEx. And then there's a number of small projects that were slow to start. We're getting ourselves organized and to execute all of those through the year. From a 3-year plant perspective, you don't have to rub your eyes when you're looking at cash costs are always the same costs. There is no 1 in front of these numbers. This is a low cost, great cash flowing operations. You can see that next year, we're assuming that we'll be spending a little less capital. We want tailings facility raised next year. So that's why that's a little lower. What we will have to raise in '25. So that's what's driving that up a little bit. But the production profile is solid. And I'll go into a little bit more detail on Verify where we're mining and why the [indiscernible] profile is just so solid for the next few years. So here we are back underground. And what I'll do here is bring up this -- this is a 10-gram per tonne wire frame. So we're showing all of the blocks that are better than 10-gram per tonne in our resource model. And you can see out to the south here, this is a new area that was add to our reserves as a result of some of the drilling that we did that was included in our in our latest tech report. So that's nice to see, and we'll continue to add to that. But I want to skip to the next, which is a 20-gram per tonne wire frame that's getting very high grade. And what I'm going to do now is step through the next 3 years of areas where we're mining -- and really, you can see that we're sticking to what has already been working, but you're not going to see any wild development out to these extents. This is just mining through a pretty standard long-hole sequence. One thing I'll mention, that's '24 and years '25. One thing I'll mention at the bottom of the mine here, this area. This is a drift and fill area. This is something that we had plan to -- just because of ground conditions, planned to use drift-and-fill. We've done some evaluations here, and we're pretty confident that that's going to also translate into some transverse long hole stoping, which is great. It's a lower cost higher production mining method. So that gives you a flavor for our 3-year plan and where we're going to be mining. From a drilling perspective, taking this project from a -- an exploration development project into production is required an immense amount of drilling to derisk the project. And you can see that it's translated into what is a 5 million-ounce reserve now. This 3.6 and 3.2 of measured and indicated has converted into 5 million ounces of reserves. You do the math, there's about 1.8 million ounces of resource that we haven't converted. And so something that...

3.5 million -- 1.8 million inferred and 1.7 of -- sorry sort 1.8 of indicated 1.7 of inferred. So 3.5 million ounces.

Yes. The -- My 43-101training doesn't let me add those 2 together. But Ron is right, there's a good chunk of reserves that -- or sorry, resource that we have plans to convert. So it's what we'll be talking about, and Andre will touch on that a little bit later. And the proof is in the pudding. We've mined 1.4 million ounces. We replaced that with the conversion programs that the company has completed -- and so this is, again, a hallmark of a great deposit that will just continue to extend the mine life. From an ops excellence perspective, it's a -- this is really a process of taking a great mine and making it excellent. And as Ron was pointing out, this is 1 of the pillars of our strategy is to not just sit back and let sort of the gravy train continue to deliver here. We want to get better. And this is a way of quantifying ideas and then implementing them. And we've got a bunch of ideas that the company has already implemented. So this is not new. And -- but this is a process that we're introducing to cast a wider net and really get everybody in the company contributing to the ops excellence piece. So it really helps us quantify and then prioritize the ideas and then bring them through to an implantation and start up and locked in process, and we'll be able to report more regularly on how we're doing in this in this way, we're saving $2 million a year as a result of these 3 projects. And so I look forward to talking more about that as we get this implemented. But some of the things that we've already implemented, this is ventilation on demand. With the South ventilation raise now developed, the team tied in the main fans and the auxillary fans, so that we can shut fans off, we can vary their speeds and it really saves power. There's nothing too fancy about it other than that, but it's a great simple little project that's saving us money. This is a cross-section of a stope for those of you that aren't used to looking at engineering prints. And this is a really basic project. What we're doing here is we're just building a bigger barricade. It's as simple as that to allow us to pour these stopes in a single pour. And that allows us to not add so much cement to the initial pour that we would normally stop at this point to let it cure and then fill the rest of the stope. So we've implemented this and now using a little less cement in all of our stopes and that's saving us money. I'll touch on a few of the projects that we have on the mine site. These are things that are in the pipeline. This is a picture on the right here of our underground truck shop that's partially finished. This is really moving our mechanics closer to the working phase -- so we can turn around equipment faster, we can do more work on the equipment from the preventative side as opposed to the breakdown side. So that will save us some maintenance dollars, and it will also improve the availability of the equipment. So that's a project that we'll implement in Q3. We're planning on building a dispatch system and dispatch is nothing more than taking the fleet that you have and optimizing its use. So shutting out equipment that's not needed, sending trucks and loaders to the important areas that they're needed to meet our metrics. And so that will really improve our efficiency from a mining perspective.

Is that going to be an automated system or that will be manned by somebody?

No, it will be a manned dispatch system, yes. The next stage of dispatches is to take it through to some automation, which we're thinking about yes. And we've got a subtle thing, but it's if you've been underground before, you've seen sort of soft ducting. This gets mangled by equipment. It gets damaged by explosives -- so we're putting in hardline ducting, and this is -- it's not hard in the sense that it's a hard aluminum piece of ducting. It's still a flexible piece of plastic. But it will be there and it's a lot more durable than the material that we've been putting in. So that will make the ducting a lot more efficient, a little less friction, and we will have to repair this often. From a mill perspective, these are all projects, as Ron touched on earlier. Recovery is 1 of the big things that we're focused on from an ops excellence perspective. And so all of these projects that I'll talk about are really aimed at improving our recovery. This cell on the right is called the Jameson cell. This is GlenCore technology, and it's a flotation technology that facilitates better extraction of fine mineral particles, in our case, fine gold particles. So we've installed this. We're just commissioning it. We're going to test it. We're also evaluating Woodgrove, which maybe some of you have heard of. It's a similar technology we're looking at its benefits as well. Geometallurgy, this is a term that's kicked around a lot. Really what this is, is it's understanding the geological units underground and the metallurgical performance and then figuring out how you want to blend those materials to feed the mill to maximize your recovery performance. And there's been a lot of good work done by the team so far to progress. And we understand that sulfides, hardness, oxidation, all sort of are key elements that we need to think about and as we develop our stockpile strategy. So that's going to be something that we're working on. We've already implemented a smart tag system. So we put these RFID tags in stope and there's a scanner in our conveyor belt so as the materials processed. We know which stope that material is coming from. So it helps us decode sort of the geometallurgy puzzle with that kind of data.

You should mention the warehouse [indiscernible].

Yes, that's a good point, Ron. So the -- we just did a new warehouse. We were just walking through it last week, all the shelves are full and it's -- the old warehouse is really sitting next to our core source stockpile. And so by decommissioning that old warehouse and getting it out of the way, it will open up the real estate that we had to work with to facilitate better stockpiling strategy. We're a bit hand to mouth on stockpile because of the small footprint that we have. By opening that up, we'll be able to have 2, 3, 4 stockpiles and be able to blend with a little bit more liberty. Thanks, Ron. That's a good point. From other things that we're doing in the mill, we're testing different reagents and I'll be talking about a mill expansion here in a minute. But part of that project is a control systems upgrade to facilitate more instrumentation and automation in the plant. So we're looking at a debottlenecking project that will take us from our current throughput up to 5,000 tonnes per day. And really, this is a bunch of small projects. This is not a big -- I'm not anticipating this to be a large CapEx project, but it is complex in the sense that there's a number of small elements. And we've listed all the different parts of the mill facility that are going to be impacted from crushing to the float circuit to our pre-leach thickening. And I just mentioned the mill automation. On the right here, I'm just showing an example of 1 of the things that we're looking at is the tails pump box is a limitation on our throughput at the moment. And it's because we can't send or we can't run at such a high throughput when the paste plant is shut down. So we're looking at implementing a splitter box and some dark valves that will allow us to push all of our tailings outs in the tailings facility when the paste plant isn't operating. And so we'll just be able to maintain a higher throughput despite sort of those operational variances. So the basic engineering is already underway. We're going to be completing that a little later in the year. And this will likely have a very high return. So the permitting aspect of this is still in flux. We could be completing this as early as next year, but that remains to be seen as we look at sort of the net impacts of this from an environmental perspective and then run that through the Ecuadorian process.

What is your expectation on how long it might take to permit the expansion? Or what kind of permit would you need?

Yes. Well, there's a -- Ecuador has an environmental assessment process, just like we do here in Canada. And so if we evaluate this expansion, and we see that it's a significant deviation from our already permitted EA thresholds, and then we'll have to run that through EA, which will take a couple of years.

When would you know if you need one is the question?

Later this year. Yes. From a strategic development perspective.

Could you complete everything you need for the expansion in the current footprint from an EA perspective?

Yes. Yes, there's no additional disturbance. It's more an emissions question. Is there enough dust and water use, gases, these types of things that we need to evaluate, but there's no additional surface disturbance, yes.

Do you have a current cap on annual throughput?

Well, our cap is sort of where we're running at the moment.

From like a regulatory perspective.

We're [indiscernible] for 4,500 tonnes a day at the moment. Yes. Thanks, Ron. Yes, to feed the mill, you obviously need the mine to -- be turning out the same. We've actually run the mine at 5,000 tonnes a day for several long periods already, and it doesn't appear that we need any additional capital there. We've got the personnel and equipment that we need -- to feed the mill at this new rate. Okay. Any other questions? I'll just wrap up with this last slide here.

What sort of ballpark CapEx are you looking at? Is it just tens of millions of dollars upfront you think?

Yes. All right. From a strategic development perspective, it's really about taking the mine life that we have and extending it and enhancing it. So imagine Fruta del Norte with a lower operating cost, better recovery, longer mine life, like all these things to me are -- is my job to make this project as big of an NPV as possible. And so that's what I'm trying to do with our resource conversion, the integration of everything that Andre is working on from an exploration perspective, and we'll just have a better platform over the mine life if we have lower operating costs, better recoveries, higher throughput. These are all things that we're working on. But we have to bear in mind that the facilities are also -- need to be taken into consideration here. Our tailings facility is good for the current life of mine, but we'll need to evaluate what that tailings facility looks like beyond that. Mine ventilation, as we move further to the south, how do we ventilate that part of the mine. Will we need another ventilation raise. Will we need some other piece of infrastructure to make that possible. And then from a quarry perspective, we're good up until 2027 to continue lifting that tailings facility, but we'll need to expand our current quarry or find a new location for our quarry. So that's something we're also evaluating. So that gives you a perspective of what's going to keep me busy from a strategic development perspective.

But you say the tailings is adequate for the current reserve. Does that mean 5 million ounces and that's it? Or it's 5 million plus 20%? Or how many tonnes can you actually put in that current design?

Yes. We're permitted up to -- I'm going to get this wrong. Stage 8, Ron?

Yes.

And there is additional capacity in that basin that we were looking.

1491.

Up to 1491 elevation.

1471 -- 1477 is the new [indiscernible].

So it's 20 meters higher basically?

Yes. And as you know, in the valley widens out, right? So you got more tonnage behind that.

Yes. So there is room for another lift and that's something we'll do.

About the throughput expansion you mentioned before the conversion of [indiscernible] filter long haul. Was that -- were you talking about converting all of that or a portion of it or?

All of that, yes. The team has done some geotech drilling down there, it's looking pretty positive.

Right now, Bryce, the only drift and fill we have left is actually up on the top of the recovery of the crown pillar. That's it. We've gone from -- in the feasibility study was 60-40, now to, I think, 90-10 [indiscernible].

And then on CapEx, I thought the tailings lift this year. It was going to go for most of the year. In your comments, I think you mentioned that was pretty much finished now?

No. No, we're only about 30% of the way down. So it's still on track for completing later this year.

On the -- sorry, 1 last one, sorry, just throughput expansions. That's something that I think the team has been talking about since the construction business, what we in the third or fourth expansion now. Longer term, it looks like the bottleneck or cap on that will be the underground. So you said that you've run at 5,000 tonnes per day already for an extended period. But with a short haul twin declines, and I guess, 40 tonne trucks, like how hard can you push down the [indiscernible]. Can you go above the 5,000?

Yes. I think -- and Ron, again, I'll have to lean on here. [indiscernible] under my belt, but I think the throughput is going to be starting to get limited by the SAG ball mill. So we're trying to push the mill so that that's our limit. I think that, that line could push well beyond that. From a mining perspective, there's nothing really holding us back.

On the recovery front, you're currently around about 90%. With the improvements, are you looking to go to 92%? Or are you're more ambitious to go up to a 95% or better. Where do you see the range going?

We be able to be consistently above 90%. We're still -- we're seeing issues. We had some issues just this past month where we're into some different ore types, lots of markets, which is giving us some real issues, David. So it's being able to be consistently above 90% not see some of these deviations below. Good question.

Okay. Well, with that, that I'll pass it off to Andre.

Can I just quickly remind we've got quite a lot of people watching online. If anybody wants to send in a question or anything. There's a messaging icon in the portal. So please feel free to ask questions as well, and I can pass them on.

So good morning, everyone. It's a great pleasure to be here as part of the Lundin Gold management's team. And also a great pleasure to talk about [Technical Difficulty]. I guess one of the greater [Technical Difficulty] in the next 20 years in the world and as a geologist as a unique opportunity for me technically seen. And we'll start to start speaking about the geological context of FDA. For some of you that don't know about Fruta. So Fruta del Norte is located in the Cordillera del Cóndor. It is located to East from the Cordillera del Cóndor. This is in the central where most of the [Technical Difficulty] deposits in the lands are located. They are mostly [Technical Difficulty] sequence of volcanic rocks, most of them from [indiscernible] volcanic rocks. And Fruta del Norte is located in the Fruta del Ecuador, right here. It's hosted by our [Technical Difficulty], a great environment for copper gold and also [Technical Difficulty]. And this is a new frontier for exploration has been just recently explored, more systematically in the last 15 years. Specifically, Fruta del Norte is located along the Zamora Copper Belt, it's a zoological environment where several [Technical Difficulty] has been done in the last 20 years. Some greater examples are the copper-gold porphyry like Mirador, it lies further north. [Technical Difficulty] systems like Fruta del Norte and [Technical Difficulty] that has been developed by [Technical Difficulty]. Just to note that most of those deposits are in a little bit more, Northeast trains. So they are located over our major [Technical Difficulty]. And this sort of environment causes -- I mean, [Technical Difficulty] all place around the world. And as I said, very seasonally to explore. This is -- yes, this is all the [Technical Difficulty] concessions over the [Technical Difficulty] we can see that had a very strategic cultural of this highly [Technical Difficulty] environment. It contains around [Technical Difficulty] concessions that totaled around 64,000 acres.

Just for clarification, that map does not show [indiscernible], Andre.

Yes.

Did not show 2 concessions to the north and the 6 concessions to the south, which are part of the Newcrest JV. So yes, once in [Technical Difficulty] did not show mostly.

Yes. And before Lundin Gold, most of the [Technical Difficulty]. Moving on Fruta del Norte. So pivotal market sublimed gold, silver [Technical Difficulty] the season, it's possibly -- it's considered one of the best examples in terms of season. It contains all the class [Technical Difficulty] that we should expect in this kind of the deposit and the reason is Fruta del Norte has a really high degree of reservation. Fruta del Norte is [Technical Difficulty] by segmental sequence that belongs to the [Technical Difficulty]. I'm going to show you, right? So this is Fruta del Norte deposit. Fruta del Norte sorted by the volcanic rocks of the Santiago Formation. And during the development of the deposit, it was covered by significant sequencing. At the same time, this is the main sequence covered between 200 and 300 meters depth over the top of the deposit. And this is special geological conditions allow the formation of the large mineral [Technical Difficulty]. We're talking about when we can see the above zero cutoff [Technical Difficulty] talk about more than 10 million ounces, over 1.3 kilometers long. It's possibly one of the highest concentration of [Technical Difficulty] in the world and possibly -- and one of the [Technical Difficulty] in the last 50 years. Fruta del Norte can [Technical Difficulty] in 2 main domains, the Northeast Central domain represented mainly by [Technical Difficulty] and that's where most of our cooling reserves are located and the [Technical Difficulty] extension domain where most of our [Technical Difficulty] resources are located. This part of the deposit are represented by [Technical Difficulty] rocks and branches. So we have a really large [Technical Difficulty] research base [Technical Difficulty]. We have maintained a [Technical Difficulty] 80 million ounces since the start of the operation at Fruta del Norte. And this incredible one sits on a highly prospective exploration [Technical Difficulty] a very short [Technical Difficulty] in terms of explanation. As I have mentioned [Technical Difficulty], most of the [Technical Difficulty] has been done over FDM. The scoring delineation and in terms of the construction, few explorations has recurred outside FDM. An example, by June '22, we had less than 5% of the new [Technical Difficulty] environment that poses Fruta del Norte. It's an exploratory with [Technical Difficulty] fine. It's also important to mention that the thermal systems always are together. They always occur in process. And this is a unique first mover opportunity for Lundin Gold because we control the entire geological environment that close to Fruta del Norte. Apart from this, we have already made 5 [indiscernible] in the last years all the critical aspects for additional high quality deposits added to the [indiscernible] province. For example, the major structures that hosts FDN, think that these are key -- they are key components in the acquisition of [indiscernible]. There had been [indiscernible] for more than 25 kilometers long. The [indiscernible] structures, they cross-curve, the favorable lithologies that host Fruta del Norte [indiscernible] Santiago sequence and both structures [indiscernible] rename preserved below the Suarez Basin. The Suarez Basin has 16 kilometers of the [indiscernible] direction and 4 kilometers along the East MS direction. 7 targets are alliance along those major faults, some of them are represented by hydrothermal alteration over the conglomerate which is pretty similar to [indiscernible] that's drilling this quarter of FDN. Whilst [indiscernible] with similar signatures that we can find on the top of the [ cost ]. And what's our exploration strategy? What is the company's strategy to explore this highly potential environment? So we have been finding an exploration strategy, and we have -- we started to focus on large under explored areas around the mine. We have started near mine program August-September of [indiscernible]. And we also have the 5 year plan with short, medium and long-term plan to unlock our district to district potential. We have seen [indiscernible] part of this strategy, first is our team. It's important to remember that we have the scientists group appointed by our successful operating model that resulted on the Fruta del Norte Discovery. So we have implemented operating model in terms of exploration. The same group of the Fruta del Norte Discovery Group [ audit ] have 15 geologists that brought fresh blood into the group. Several internationals structural, geophysics, exploration technologies consultants were being the high expertise to our group. Investments, we are looking in to invest around $24 million deposits in 2023, mostly in near mine, but we still had a reasonable exposition in regional exploration. In our land position, I think that this is a critical aspect in our strategy. We have a high prospectivity lands were over [indiscernible] has already been defined. An important aspect of our strategy is the drilling program. We have increased our drilling program systematically since 2021. In 2022, we started with the -- we started with near mine drilling program, and in 2023, we have added additional 7,500 meters based on the first near mine drilling results. Actually, we have 7 rigs turning and another one should be added soon. And this is the largest drilling program since the Fruta del Norte Discovery, when most of the drilling was located at FDN. We can say that this is the largest exploratory drilling program FDN, replacing the entire geological environment that holds FDN. Our strategy, as Ron had already mentioned, is very simple. At first, continue to replace the depleted ounces by our conversion program. We still have 1.7 million ounces to be converted in our drilling conversion program. Grow on inferred resources base, potential in [ inferred ] resources base through the extension of Frutal del Norte, but mainly exploring all the tested sectors -- untested sectors that are part of FDN. And in the regional program to develop our strategy in order to find another large deposits like FDN in the regional concessions. Let me start talking about our conversion drilling program. So we have replaced all the mining reserves with our conversion drilling program since the start of the operation. There are around 1.7 million ounces that are a great opportunity for further categorization. We have started in 2023 an additional drilling program. In fact, we had started a [indiscernible] that move over most of those key inferred resources remaining, the white lines that you are seeing is [indiscernible] 2023, 2024 drilling conversion program. Just in few months, drilling results confirmed continuity. We can see -- but high grades in the drilling areas, all of them looking outside the mineral reserves. I would like to highlight some results that have been confirmed. The first one is, 26.65 meters over 10.18 grams per tonne, 45.6 meters over 7.8 grams per tonne, both located in the North-Central sector along the downdip extension. But is it even very important to highlight all the results that were referred along the South extension of FDN because most of those results are of cadence, are part of this large base that should be converted in the next 2 years, giving towards -- shown to us high quality of those increase in [indiscernible] in our base. I would like to highlight 160.2 meters over 4.27 grams per tonne, so we're talking about 160 meters continued mineralization over the [indiscernible] reserve cut off rate and of the great results that was returned, 40.9 meters over 12.12 grams per tonne inside the Southern extension. So it's really a high-grade core and possibly moving [indiscernible] mineral reserves in the year end and this is just few months [indiscernible].

Some of slides showed on the last slide that is there any conversion section of the discussion with some of them [indiscernible] as well, that was like an extension of conversion...

They are conversion holes, but what we are looking -- yes, there are some commercial holes -- possibly -- I guess, some of those holes are located right here.

Right. The blue is still the inferred block [indiscernible] resources on the low price.

Talking about our near mine program, based on our near mine program is grow mineral reserves by extending the Fruta del Norte Fault where increases remains only and testing new sectors closer to the Fruta del Norte. We have started our exploration program testing to the South Extension of Fruta Del Norte where we have high grade intercepts three minerals -- three piece mineralized zone, FDNS, Castillo, and Bonza Sur. And at the same time, our [indiscernible] extension of the drilling continued to several areas of the [indiscernible]. Hence we have also [indiscernible] very close to the deposit lab Fruta del Norte East. We have already seen the drilling program in this [indiscernible]. This is just a quick review of the exploration guidance. So this is the South extension, Fruta Del Norte East, Fruta Del Norte West. So all of them are our high priority targets in our near-mine program. I'm going to start to talk about the South extension results. So we have...

How far is the exploration [indiscernible] come up?

Yes. That's right. So we have just [indiscernible] we saw between [indiscernible]. We saw between [indiscernible]. We have around 16 [indiscernible] in the Southern extension of FDN. And we can say 16 meter per ounce [indiscernible] intercept hydrothermal image. Some of them relate to the far zone [Technical Difficulty] of advance veins [Technical Difficulty]. I would like to start talking about the [Technical Difficulty] mineralization also located to West to East Fault. We had -- we returned -- it was [indiscernible] over 41.8 meters over 51.6 grams per tonne, [Technical Difficulty] with a high-grade [Technical Difficulty] 18 meters over 8.56 grams per tonne. I'm not going to [indiscernible] to the [indiscernible] over by 5.11 grams per tonne, including on a higher grade intercepts level of 14 meters over 9.79 grams per tonne. What is it seems to be start this [Technical Difficulty]. They cannot lie this is Southern extension which shows slower [indiscernible] that was part of [Technical Difficulty]. This is [indiscernible] open on the north side and the south side [Technical Difficulty] and as soon we move from FDN to the South is still the same [Technical Difficulty] 2 meters over 12.14 grams per tonne [indiscernible]. And then we started with a Bonza Sur. Bonza Sur is a low to large [indiscernible]. This is far [indiscernible] years ago. [indiscernible] extension you can see, it is important to know how high is the [indiscernible]. This is the difficulty [indiscernible]. And the side as at the moment, is we go in the [indiscernible] and intercept 39 meters over 8.27 grams per tonne, which is a very high range mineral. And then we decided to systematically [indiscernible]. Another [indiscernible] in a sense to 3 meters over 46.98 grams per tonne with a high grade interval and several [Technical Difficulty] Some of them -- most of them had [indiscernible] increasing [indiscernible]. We are seeing the first half of the [indiscernible] just a part [indiscernible] operating model [indiscernible]. And then I'm starting to follow up with higher grade in [Technical Difficulty] .

On the eastern side of the other [indiscernible].

Yes, Yes, that is all in. Now is that we needed to do more carefully [indiscernible] important to us because even your side and [indiscernible] the most important parts to be [indiscernible]. [Technical Difficulty]. I would say that 8%, 5% of [indiscernible] over these Fault. [indiscernible], we acquired in the last 7 months. So [indiscernible]. At first, on this [indiscernible] much wider mineralization footprint that could have thought. Actually, we are exploring -- around 1.52 meters [indiscernible] mineral reserves per unit. I'm going to show now [indiscernible] that give us a better idea about the meaning of close vessels. So, I guess, just to [indiscernible] this exploration of the plan, the south exploration [indiscernible] that will allow us possible to cover part of the results. So we are already considering to use this. This is the intercept of Castillo. So we believe that there is a significant potential to develop from Bonza Sur along with the South strength. This is in the other side of the fault that is Bonza Sur. No, I guess, a better overview to answer your question. Yes. Bonza Sur in this side of the fault, both Fruta del Norte, Fruta del Norte South and Castillo are in the west side, all of them as to open, as I said, most of them are key [indiscernible] are looking above in both sides of these structures. And what we are plan now is to -- we have 4 weeks turning to start to delineate the best results that we have had, but we will still keep running along this fault because we cannot lose our focus and we [indiscernible] that, the real [indiscernible] a large one, even in your mind is to have significant areas to explore and so...

On the [indiscernible] program finding as well to help with [Technical Difficulty] structures...

Yes. So yes, that's a good point on that was not even considered. This is the East fault, and this is the West fault, right? We are considering some seismic products sooner as we have the license covering these 2 trees in different parts. So they need to have a better idea about the geometry in their technic of the relationship [indiscernible] and the [indiscernible] from the [indiscernible] Santiago Formation for [indiscernible] rocks. Yes. And this is a quick overview where we have our mineralization trend for almost 1.5 kilometers with a [indiscernible] initial zones already identified should be [indiscernible] up. In parallel to this, we are also exploring the downdip extension of FDN. We do have several intercepts that show the deposits to remain open. So we are really accelerating this problem because this is important because through the added resources and reserves in the short-term for FDN. And the Fruta del Norte East and Fruta del Norte West, as I mentioned, these 2 faults are key controlling structures for FDN and very few exploration has been in the East and the West. So a few explanations has been done beyond the limits of the Fruta del Norte to East and to West. This is a critical part of our problem should be starting soon. As you can see, we have almost no do hold in the Fruta del Norte East and Fruta del Norte West so these are the areas. Just besides the Fruta del Norte, a few hundred meters besides Fruta del Norte remains completely unexplored. These [indiscernible] holes intercept the stop -- the personal [indiscernible] operation mark aside, with both the intercept 80 meters almost [indiscernible]. We know that this is not the name that [indiscernible] that we're looking for. There is a space between almost [indiscernible] meters between those holes and FDN. So there is a significant potential to test both the [indiscernible] also in the U.S. side. And a quick story of our near mine programs. So we have to find out -- we have really defined a specific program for resources and reserves growth replacing reserves for our conversion drilling program, adding new resources by our near-mine program. And also continue to explore for measures covers like Fruta del Norte East and Fruta del Norte West part and also keep exploring the east fault in both sides. Our long-term program, the regional exploration, the main objective of the regional exploration is really defined by new epithermal system. We are exploring the north -- the south concessions of the South extension up to Suarez Basin in our regional concessions. We also do understand that's a different exploration environment, geologically speaking, but in terms of exploration environment, we have a harder topography that covers thickness and post-mineral lithologies. So we are still in the early stage of the exploration process. Our first -- the first step is the 5 major geological structures that we have already done successfully at Quebrada La Negra for example. As well identified new targets in some unexplored areas in the Suarez basin. At Quebrada La Negra, we have completed 2 new holes last year that intercept a wide hydrothermal alteration zone more than 50 meters with breccias and quartz veins, [indiscernible] zinc and lead results showing to us that's important hydrothermal alteration to be formally up. We are now drilling the continuity of these zones, but not trying to target the quartz zone and we are also looking in more longer term, again, less than 25% of our concessions have been explored. They are all over large belt that has more than 20 million ounces defined last quarter. So we are not developing -- generating problem to really try to define new areas, large areas for -- to explore that could be hosting additional deposits. And just to finalize, right? So I see that you have already seen this slide before, but I think that what has changed is that we are starting to add new targets to the innovation phase. And this is creates [indiscernible] FDN South Bonza Sur. Those are new targets that we are being able to move up into the triangle. Again, we do have several exploration opportunities in this unexplored [indiscernible] environment. We have already defined world-class deposits, so we do understand the danger controlling structures. The near mine executed exploration program for resource growing and in the regional significant upside to be developed. Our strategy built on knowledge, teamwork and investments, all the Fruta del Norte [indiscernible] to discover [indiscernible] that's a key aspect of our strategy team in drilling in continued expansion, and we also internally we recognized that the initial results are start to show to much larger in system that we had recognized. The results come earlier that we have considered. Yes. And I think that it makes us very confident that the exploration problem should be able to extend the life of the mine at Fruta del Norte years ahead.

So that's why it has to talk about it.

It's on the East West targets. Are they all drilled from underground? Or is there some components of drilling there?

From the -- in the East, we are drilling from surface and the West, underground.

The east and west [indiscernible] rebuild from underground [indiscernible].

This side of FDN, we are drilling from surface. The West side, we use the underground.

Is there an advantage going underground? It looks like it's kind of down the priority a little bit.

The West?

The West.

The West, probably the West is that this two currently needs to be better defining by us. And at the same time, the results have taken us to East side today's fault, right? So we have more than 5 kilometers long of this fault are right defined. We have already a drilling plan ready to be completed and this fault. It is important, but the West fault is important, but this fault, we were much more stronger hydrothermal alteration. So that's why we just have focus so far, but at least to cover both structues.

Do you think those East and West FDN as parallel structures?

Yes, we do. At West, we're Fruta Del Norte East, right? The border that this fault we can organize for several kilometers because it's also the border between the Suarez basin in the [indiscernible]. It's not the case for West fault. West fault -- is just a displacement, there is abrupt displacement of the block of the [indiscernible] and we have just met along the extension of FDN. So the South extension of the West fault is still new, but it's part of our exploration target, it's part of our exploration plan.

Just [indiscernible] completement. You know when that...

Yes. No, we believe that's a strike some fault. We -- like a [indiscernible] in this interpretation, partly, as we are not [indiscernible] environment, so we still have to improve in terms of structural geology, especially on the West Fault. And that's important because we believe that there's a potential to find another slice of FDN on the West block because in the case of the West block, there was the margin, it [indiscernible] a sharp contact. We just use the mineralization. This does not have the inclusive mine? The [indiscernible] increases are little but we don't know what kind to the other side as well.

Just quickly, just because we have you here. If Ron gave you $5 million, $10 million, you've got a lot of targets at different stages. What excites you the most being the exploration guy, whether what would you think when you spend more money, whether it's paying for your buck, more potential upside out of the stuff you have.

Honestly, in the short term, I think that we should continue to explore extension of FDN, especially to North, right? So actually [indiscernible] by environmental analysis that should be the reason so. So the [ stick ] the cost of the margin is still continues to march as well. And we have recognized this with soil [indiscernible] and things like this, similar as we are starting to see results. For example, we started to understand that maybe Bonza Sur has new system, different than for the new market, but it's also a new system, the less homes that we are starting to interpret and to understand shows that soon it will be utilized Bonza Sur. But this -- and this structures continue to solve. So I think that we need to focus on this fault, whatever happens. I think that's our future in terms of exploration.

I think one would agree that we don't limit on risk budget.

We just have 1 question online from Don DeMarco at National Bank. Andre, what's the approximate drilling cost per meter for near-mine versus regional?

Near-mine, our average cost per drilling in the near-mine is around $390 per meter. In the regional, it's like $500 per meter.

All right. Good morning, everyone. Up until now, we have heard what a fantastic story. There's [indiscernible] on the exploration side as well. I think we all recognize that where we operate is also critically important. So over the next few minutes, I'd like to take a step away from Fruta del Norte and to share with you all a bit more about the context in Ecuador at the national level and also at the local level. So we'll start with a little bit of political, economic and mining-specific landscape. And so I think most of you who follow Ecuador will have known that over the past few weeks, the President has taken a fairly drastic action, something called Muerte Cruzada in Spanish, so it's cross death. It is a fairly dramatic move. It is constitutional. It has never been used before. What it means is that both the Presidency and the National Assembly have been dissolved. So what that advise is that there are new elections coming. There will be elections on August 20 for the Presidency and for the National Assembly. There would then be a second round in October for the Presidency if required. As you can see in one of the boxes with the number of candidates that has already declared, there was 8 when we prepared this slide, there are several more now. There is very likely to be a second round for the Presidency. These new authorities will be taking over their work in November of this year and will serve out the existing term. So it's about 1.5 years that we will have a new president because President Lasso is not running nor is his party. And so the new President, a new National Assembly, it is difficult to know at this point what the composition of the National Assembly will be, but they will serve for 18 months. We will then go through the whole process again in May of 2025.

And why did they do that because that's when they would normally have an election.

That's a normal time for the election. Now this was not a total surprise. Leading into the declaration of Muerte Cruzada from President Lasso, there was concern that there would be a national strike that there would be, again, disruptions on the street that has not happened. Some of you may recall, 2019 or even more recently last year, the CONAIE, which is the indigenous organization at the national level. They did cause significant disruption to the national economy through their protests. They have threatened to do the same if the President called for Muerte Cruzada. He did. They have not come out on to the street. And that's really because they themselves as a movement are fragmented. They have multiple leaders that are looking to stand for the Presidency. They have not yet determined which they will formally put forward. And so as a divided movements, they have lost some influence and ability to influence the direction of policy in Ecuador. In the meantime, our President, Lasso will be ruling by decree. He has retained his full cabinets. The cabinet is in place. The check on his power is a constitutional court. So he has already started the process. This will run until the next president takes office in November of issuing the decree. It's called a law decree in Spanish, and it goes to the constitutional court for approval, assuming it's approved, it then becomes law. There, of course, is no National Assembly to pass any laws currently.

And sorry, [indiscernible] the courts -- is there a constitutional court elected? Or are they appointed by the...

They are appointed. No, well, in multiple previous governments.

How is it for the new government -- sorry, November to overturn anything in that aspect.

It could happen. Those of you who follow Ecuador will know who Rafael Correa is the former President currently based out at Belgium. He has been saying that he will be overturning some of the current government's decrees. I think some of the things that Guillermo Lasso is doing right now will prove to be popular, like lowering taxes, increasing competitiveness. And so I think that we'll have to see to what degree it's possible to reverse some of these actions but that will go through a national assemble, not by decree. And so we will have to see what the National Assembly's composition is as of November. At the economic landscape. If we could only look at macroeconomics, if we look at macroeconomics Guillermo Lasso would be much more popular than he is. The macroeconomic picture in Ecuador is actually quite positive. The GDP is up, public deficit is down. This is due to increased oil prices over the recent past, increased tax revenues, partially driven by mining. And so the macroeconomic indicators are really quite positive. The government has also prioritized free trade agreements there in the final stages of those with China and with South Korea in earlier stages with Panama, Canada, other countries as well. His problems are really in that third box right there. He has focused on macroeconomic stability that is less tangible to people in local communities. And so investments in key areas such as health, education, infrastructure has really lacked. And so he struggles to point to successes that impact people's lives on a daily basis. His first decrees have already shown a bit of what he plans to do in these next 6 months, focusing on lowering taxes and promoting free trade areas. He's also moved forward some more innovative financing, long multiple administrations in Ecuador have focused upon a debt for nature swap. This government actually completed it with a focus on the Galápagos region. They have suffered a number of natural disasters, flooding is ongoing on the northern part of the Costa. It does not impact our exports but still is costing significant money to the government in terms of emergency response. And there are some emerging and maybe less emerging areas of significant concern that need to be focused, both for this government and the government that comes in the future. Public safety, the security situation in Ecuador as a whole has deteriorated more so in some of the coastal regions is linked to narco trafficking. Unemployment is a long-standing issue unappointed underemployment and is linked to the previous point, a deterioration in public service. So in part to address this, the President has declared the narco traffickers as terrorists. This is a legal maneuver. It allows the army to get more involved in responding to public security crisis. That's not yet reflected or maybe it is reflected, but his efforts to address this are not yet reflected in the current risk rating of the country at approximately 1,900 basis points. We turn to the mining industry. More broadly, both Lundin Gold and the Chamber of Mining of Ecuador, the CME, we're in regular contact with the President, with his ministers. This is the most open government we've seen in Ecuador for quite some time with respect to mining investment. There's also a core group of ambassadors from mining countries that seek to promote the development of the industry in Ecuador. We have regular contact with them, and they are promoting the development of the industry on their side. Prior to the muerte cruzada, we were quite engaged with the different parties in the National Assembly as well. Addressing key policies that they were promoting at that level. Of course, not a lot to talk about right now at the National Assembly, but that will resume once the new assembly is in place. At the elections, there will be 2 natural resource focused referendum. One is focus on oil extraction in the Amazon region. The other is an anti-mining referendum in the municipality of Quito. And so Quito in terms of areas, a huge municipality well beyond the confines of the city for those of you that know it, this won't have any impact on the industry per se, but it is a precedent, and so it is concerning both for the industry as a whole. And through the chamber of mines, we are actively trying to address this, but it is on the balance and I think many of you know how those balance initiatives tend to go once the vote takes place. So we will continue to watch that. In spite of its fragmentation and reduced level of influence of CONAIE continues to be adequately anti-mining on indigenous land. Those of you follow through also known that the mining cadastre is closed as of 2017. The mining cadastre is a priority for the industry to get that reopened. We'll also open the door to new investments. The government has made clear that they will not be reopening the cadastre until such a time that there's a free prior and informed consultation law in place. It is still consultation in Ecuador in a legal sense, not consent as it would be in other countries. The prospect of that especially without a National assembly is a bit more distant. So the mining cadastre is very likely to remain closed for the coming foreseeable future.

Does CONAIE share similar clinical views as Yaku Pérez's party? Are they connected in some way or...

They used to be. So they have split. Yaku Pérez is -- he's an indigenous leader. He is running a pre-candidate because they can't formally register yet. So he is running almost surely for President. As are 2 other indigenous leaders were more closely linked to CONAIE. So their political wing is called Pachakutik as a political party. And so they will be formally nominating their candidate soon. But that link that more formally in the last election, he was running under the flag of Pachakutik, that formally linkage back to CONAIE is much more tenuous now.

And how did this -- these 2 referendums get on to the ballot. What is the process for doing that? Is that just Lasso decides to do that or a...

No, no. It's his people. Lasso is not behind us. So there's 2 very different ways. The oil referendum in Northern Amazon has actually been sitting for 7 years. And it was pending a constitutional court review, they finally got to the review, and they have proved that the question could be asked. And so that's been sitting in the background since the Correa administration. The Quito referendum was a citizen-led initiative. They needed a certain number of signatures which they validly got. And so now it's on the ballot.

And everyone gets to vote right now, just people living in the Amazon Basin whether they can let oil exploration.

No, these are local focused referendum depends. So it does depend. So the Quito referendum, the oil one is national. I believe, I'd have to check on that one. But pretty much more close to into the Quito one, that is for people who reside in [indiscernible].

But voting is mandatory?

Yes. voting is mandatory in Ecuador. So in spite of some of those challenges, as many of you know, there are 2 large-scale mines currently operating in Ecuador ourselves in the [indiscernible] of 35 kilometers to the north of west. Between those 2, primarily mining continues to make an increasing impact to the national economy. For the first time ever, mining products have become the third most exported product in the country, displacing bananas only behind oil and shrimp. So the impact of mining at a larger level has certainly being felt. There is though quite a bit of illegal mining and an increasing level of illegal mining going on around the country. And this has become a national security concern in some parts of the country for the government and for the military. So you've seen this picture before. But what I did just want to highlight here very quickly are the rings. Those of you who follow have seen reference in many of our publications to the different concentric rings. And this is -- it focuses our efforts in terms of community investments, local procurement, local employment, on who specifically is being prioritized and in what order. So we have a first ring immediately around FDN. This is the Parish of Los Encuentros, I will go into a bit more detail on the next slide on this. We then have a second ring, which is the rest of the municipality, which you see in blue here, that is the municipality of Yantzaza. And finally, we have a third ring, which is the entire province of Zamora Chinchipe, about 110,000 people live in the entire province, so fairly sparsely populated area of the country. We do include ring 4, but that's the entire country. And so if I spend a moment talking about the most local area, ring 1. It's important to note that just by the luck of geology and how Ecuador was settled in our direct area of influence, there are no people. Reason #2, we did a formal IFC resettlement for those 2 people even though they asked us to be reset. There are no people living around that yet. And so when we talk about ring 1, we are talking about our area of indirect influence as legally defined in our environmental license. This is the Parish of Los Encuentros, which has a [indiscernible]. I'll show you some pictures in a moment but it's 22 other communities in the Parish, along with 2 others, you can see on the screen here. So just right here, you have El Playón and you have Río Blanco. These are not in the parish of Los Encuentros, but the only way to get to them is through the parish. So they are incorporated into our area of indirect influence and therefore, part of our ring 1. And so I'll talk just briefly about the local political landscape as well. Subnational elections were held earlier this year. And in May, at the provincial, municipal and parish levels, all new sets of authorities came in. They took office about 3 weeks ago. We will continue to work very closely with all levels of local government. I met them for the first time last week when I was on site, and we will continue that. We also incorporate into ring 1 on the Shuar federation of Zamora Chinchipe from the entire province. The reason we do that is because they have historical links to the land in ring 1. Not to the land, the operational area of FDN. But if we talk about ring 1, they do have a link to it. And so in recognition of that, the Shuar nation is incorporated into the first ring. We have a very strong relationship with them. I will get to that in a moment. Illegal mining and lack of security is a national issue, but is a local issue as well and has become the top priority in the recent elections for local people. Since 2016, we have engaged in the process of participatory dialogue with local government and local stakeholders. Lundin Gold has not invented participatory dialogue but we do this proactively. Normally, this kind of dialogue is undertaken in the face of a crisis. And we -- someone tries to find a solution at that moment. We did this upon arrival, building up a system with local government, local communities and we have met every 6 weeks to talk about issues of priority for local communities since 2016. The local government traditionally has run this over the past few years with the changeover. We are now working with the new local government to understand their views and how they wish to push forward on this process. Key issues that we will be discussing in this dialogue process as they relate back to FDN include things around heavy transport contracting, for example. This is a pretty hot topic around mining in many different jurisdictions, but definitely in Ecuador as well. Local procurement, local employment, this is an agriculturally driven economy around us. So our investments and what we can do with partners to address agricultural development is key as is infrastructure. Another point I'll get to in a moment is just how do we know how we're doing. We undertake a number of surveys throughout the year and this is one of them. So some of you who follow the space will know that there is actually a formal academic methodology to measure social license to operate to Canadian academics have been doing this for years. There is a Colombian-based organization that measures social license to operate for the mining industry in every country of Latin America. You can see here in this diamond-shaped figure, the model that is used and it really ranges from down here where there is no social license to acceptance or even up to approval. And just a couple of quick things to highlight. Ecuador is not doing very well at the national level with respect to social license for the mining industry. It is in the last place. It is really on the threshold between having no license whatsoever and moving towards at least someone accepting the legitimacy of the industry. It's not even there yet. But I will also highlight where Yantzaza is. Again, Yantzaza is in municipality where we are operating. We, the Colombian group does not go into Yantzaza. We take their methodology, and we replicate it through a third-party survey. And what we have found, this is not the first year we've done this. What we have found is that Yantzaza is at the approval level. It is -- has a higher level of social license than any country as a whole, in Latin America, and that includes jurisdictions with a long-standing mining industry. We also saw this improved significantly between 2021 and 2022. So the key point here is that whereas social license is decreasing across the region, even in places with a strong mining industry, we are finding a very different situation in both in Los Encuentros and Yantzaza.

Sorry, if you go back to that slide, if you ran that's 2022, if you run that survey [ intending ] with the new Parish governments and the municipal governments, do you think it would be similar, better, worse?

I think it would be similar, and we will run this again. We do this every year in the November, December timeframe. So this is December 2022, what you're looking at here, in 6 months, we'll have new numbers.

And also, Terry, this is across all citizens. This isn't just pulling the government [indiscernible] .

Yes. No, I'm just saying, has anything changed with the new credential in this new government .

They're only in place for a few weeks, so.

I think on the illegal mining, when you said that's a priority locally. Is that a general objection to it happening because of environmental concern? Or is it ingrain like it's desired.

So I think it's distinguished between illegal and informal. So informal mining that is in a strict sense of a word it is illegal. There are no environmental licenses, there are no taxes being paid, there's no oversight. That's been going on in Zamora Chinchipe forever , basically. What has changed is the illegal mining, which in that sense, it means the infiltration of narco trafficking gangs into the area and using that mining activity to launder money. What that has done is brought a very different type of illegality [ to here ], something that's never been seen before. And so this is in Zamora Chinchipe fairly distant from where we are, but it is a political issue as well. They have some of the insecurity issues are being seen in the insights.

It's a similar to what the dynamic is in the Columbia [indiscernible] informal being ingrained in the culture, but do you think the illegal activity sort of in the trade.

Prior to working [indiscernible] I spent a number of years in Columbia. And I would say that, unfortunately, Ecuador is moving down that path. So we look at this and then the question is, why do we see such a drastic difference locally or we see nationally or regionally. And I think it has a lot to do with what we've been -- what we've put in place since our arrival. So Lundin Gold has currently a 5-year sustainability strategy, 2021 and 2025 was put in place to -- for the transition from construction to operations and for those first 5 years, we had a different strategy focused on construction. I'm not going to walk you through all of this. The key is that we have 8 pillars that cover quite a bit of ground. You'll see that there are a number of aspects to our sustainability strategy, not within my team, not managed by me. This is a company strategy, and it is taken on by the full senior executive team. We also have a number of pillars -- sorry, enablers of success that I'll go through a couple of them quite briefly. You all have seen this slide in our corporate presentation. Ron's gives me side a number of different occasions. I'm not going to walk you through all of this either. The key point is that for every 1 of the pillars, we have a set of KPIs. We are measuring progress, and we are ensuring that we are seeing the kind of progress that we want to see for each 1 of these critical areas. I will walk you through a couple of them, but I can give you a sense of what we're doing. I'll start with client. So what you can see here in the graphic is 2021 data. This represents 152 publicly reporting gold mines around the world. It is their greenhouse gas emissions intensity on a per ounce produced basis. This graph shows is the Fruta del Norte is the lowest emitting line on that intensity basis in the world. 2021 data, that is a 0.07 tons of CO2 equivalent per ounce produced in 2021. In 2022, that 0.07 came down to 0.06. So I can't replicate this yet for 2022. I can say with confidence that FDN remains one of the lowest emitting mines in the world on a per ounce produced basis. So this is a fantastic result. It's a fantastic story is based upon the hydro-based grid that we operate on and also the efficiencies, some of the things that Terry mentioned in his presentation. We do those still need to move forward. And even in this context of being such a little emitting mine, we need to move forward and be clear about what our targets are. So very recently, we issued our most updated climate change report where we talk about our specific target. We will be carbon neutral by 2030 with respect to our Scope 1 and 2 emissions, and that is based upon our current life of mine plan. With that commitment in place, we now need a credible pathway to get there. And so again, Terry mentioned some of the decarbonization initiatives Terry presented in a different context, but they do have an emission reduction impact as well. We will, though, especially given where we're located on this curve, we will be looking at an offset strategy. And certainly, we all recognize some of the controversies around offsets. We will be looking to have a very robust top quality asset offset program, and we are doing this in partnership with the Lundin Foundation. And so again, you've seen versions of this map in the past. You can see where Los Encuentros is here versus [ Loja ], which Terry mentioned Zamora, which is a major -- the closest major city of the capital of the province. But I do want to show you what it looks like, not on a map. And so this Los Encuentros any of you I'll scan around here a little bit. Any of you who have been to Los Encuentros you maybe came just 1 of the early visits. You may think or you may notice that this town doesn't look the same anymore. The level of the development, the infrastructure that has gone into Los Encuentros directly driven by legal and also with the local government is incredible. When I compare to this picture through my first visit in early 2015, it's likely a different [indiscernible]. But that's the [indiscernible] . That's the town in Los Encuentros. There are 22 units in that [ base ]. And as you can see here, especially by zoom in, this is the [indiscernible] community, which is along the North Access Road, much less to [indiscernible] and so we have not single handedly eradicated poverty in the past 8 years. We've made significant inroads and there is still quite a bit of the work to be done. So what kind of work are we doing? There's a couple of examples here for you. One is this is [indiscernible] program. We are connected -- this was a response to some of the challenges faced by a local school system during the pandemic. We put in place together with a coalition of the partners, including banks, including legal firms here in [indiscernible]. Many of the companies that have worked with us on the development of FDN contributed to this and this will provide Internet connectivity to every one of those rural communities. Today, Los Encuentros was, I believe, still is the only rural parish in all of Ecuador that is 100% connected to the intent. And I must say all that we've done to visit some of these far-flung communities, and we have streamed a soccer game. In these local community [indiscernible]. It is very high-quality connectivity. And in all seriousness, what that allows is for these communities to connect back to the school. We are training teachers with the mobile university made use of this infrastructure and we are ensuring that teachers and students are mainly connected, which is the real problem in a rural Ecuador. That only works if the [indiscernible] are also connected. So a key part of this initiative was to donate tablets to every student in the Parish. When we started this program, one of the big challenges we identified was that in many families, there is 1 device. It's a phone sharing amongst to many children and that phone is not normally at home. It's with the mother or the father, when they are working. And so there's -- the only way to make this work with a solution of every child had their own -- build their own way to connect to the internet. This continues on, it's a significant investment, and this will continue on with our partners. There's a useful video if you're interested when you download the presentation you can take all of these very nice demonstration. So [indiscernible] and what we're looking at right here is the Yantzaza hospital. This was also a fairly new infrastructure. And this is about 25 kilometers away from Los Encuentros. This is relatively new infrastructure built since the arrival of the mining industry. But what it did not have was an ICU. And so again, in partnership with a number of key other parties in this case were SolGold and with Newcrest, the initial impetus for this was the pandemic to address some of the -- so the inability of the local hospital to address some of the pandemic-related illnesses. We built this with, the government -- with the Ministry of Public Health. And so this is a $1.3 million investment. It does, of course, serve our interest as well prior to the construction of this ICU any serious case at FDN would have had to go to Loja. Now there's something much closer with this kind of capability. And now the pandemic is over. We're seeing this, of course, this emergency room is being used for a whole range of other issues and is primarily benefiting local people. People from far outside the area are also coming into the city for critical care. The work we do around health care is not limited to infrastructure. In Los Encuentros, there are a number of [indiscernible], number far-flung communities, and they struggle to get access to the state-run health care system. Vulnerable communities, vulnerable people, the elderly indigenous groups, they are unable to get to the centralized health care areas. And so we work with the ministry to ensure that doctors are getting out to these communities. Again, it's a fairly simple project. We provide the logistics. It has a huge impact in terms of ensuring the rural vulnerable people have access to health care. And you can see we're reaching a lot of people. These doctors are treating on average 1,000 people a month. I mentioned agriculture. I'm not going to spend a lot of time here, but this is not philanthropy. This is strategic for Lundin Gold. Why would I say that? It's because there's an incredible expectation that Fruta del Norte will create local jobs, which we are, but we can't create a job for every person in the province, which when I arrived was explicitly stated as the expectation. So we don't take action to further develop the local economy that preexisted us. We will create tension and we will have problems. So we do invest outside of our area of direct impact, outside of our local procurement in the existing economy, which is agriculture. And we have a whole series of different initiatives here. There's not a few of them, Takataii is giving local farmers integrated into the catering system, catering company and the catering processes we have at FDN. We're integrating -- we're developing integrated model farms to ensure better farming practices in the local level. We have a long-standing program around vaccination of livestock that was previously impeding the ability of any of the local products to reach a national [indiscernible] international market. And then we work with cooperatives, one of which is APEOSAE, [ long acronym ], they produce coffee, plantains, cocoa, and [indiscernible] they are selling internationally now. And so it's, again, an effort to try to ensure that the benefits of our presence go well beyond our direct areas of impact. This is Shuar cultural center. And so really, we haven't seen this. This is in a favorable location outside the city of Zamora. You can just get a sense of what the territory there looks like. This is the project that was initiated by Kinross but not completed when they decided to leave Ecuador. So we have completed this and greatly expanded. This is all part of how we wish to engage within business people around us. This is the Shuar initiatives. Our other indigenous groups in Zamora Chinchipe but they're not from Zamora Chinchipe. They have to come there over the past 20 to 30 years. So we don't have a central land, we are talking about Shuar. From our arrival, we developed a framework agreement with Shuar that has been renewed on multiple occasions that has set us out how we will engage with them and it lays out the framework for us to specific investments. Really, the Shuar, in Zamora Chinchipe they want everything that every other community wants as well. They want economic development, jobs, education, but they also wants to protect their culture and their language. And so again, we work on that project that Kinross has started. It is now [indiscernible], it is a meeting center. There is a [indiscernible] , and they are selling tourist packages to domestic and international tourist that go to and to experience the Shuar culture and so the number of tourist to Zamora Chinchipe normally. So this is a fairly challenging business to get off the ground, but it has shown good signs of growth over the past few years. They have some shorter duration on the basic challenge. No place to work, no offices, no computers, no ability to really act as the indigenous government that they are in it to be. So we worked with them on a number of infrastructure issues, specifically within the Shuar Federation. You see the picture there have recently refurnished office floor. And we work with their farmers. They are traditionally farming communities. We do have Shuar that work at FDN but many of those people in the Shuar community continues to work in agriculture. And so we provide technical and financial support especially around cocoa which is a traditional product. And I mentioned, we were working outside where we have the direct impact. But of course, we're also working where we do that direct impact as well. So local procurement is an area where we can make a huge difference relative to [indiscernible]. You see here some numbers for local procurement over the past few years in the province of Zamora Chinchipe, 90% of these numbers are on the municipality of Yantzaza. Just to put these numbers in context, prior to entering into construction, Yantzaza's annual GDP was $60 million. So when we [indiscernible] comparable $37 million of local procurement in a year in a GDP of $60 million is a huge impact. But this is not an exercise to going into the community and just finding the [ community ] that we aspire. If we had started the process by saying who in Los Encuentros and Yantzaza is followed like a [indiscernible] supplier, it would have been an extraordinarily short list. We have to create confidence to become our suppliers. And so it is something we do in the Lundin Foundation. It has been ongoing for a important number of years you've had up here 3 examples just from 2022 so a company was created. This was a number of women, on the one end in that company that were in sewing machines. So they were put together into cooperative, they all the [indiscernible] structure and this company is now producing our shirt [ to size ], or jeans, towels, sheet, signaling those lines, they have used all that [indiscernible] in Los Encuentros . They have a company does cleaning, pest control, sanitizing. The company does fire extinguisher maintenance, which is proven to be a very attractive business for a local company in Los Encuentros. We also have a specific focus on women and women entrepreneurs. So initially, this was a 2 program. We are working to ally with U.S. embassy in Ecuador and separately with [indiscernible] foundation something called Soy Emprendedora, which means I am an entrepreneur, a woman entrepreneur. And so each of these lists ongoing. We have since combined them. And so 2022, a second addition of these programs was now combined and was launched [ 27 ] within [ 20-day ] all day training program. Again, I talk about the U.S. embassy and the [indiscernible] Chamber of Commerce [indiscernible] Soy Emprendedora with the foundation, which continues to train, but also provide seed financing to the most promising of these businesses, and you can see some of the AWE Graduates in the picture. Yes. Thank you, [indiscernible] . And so the Soy Emprendedora program was just recognized as 1 of the leading examples meeting 1 of the UN Central Government goals in Ecuador by UN [indiscernible] . We have a whole pillar of our strategy around our human rights . And I'm not going to go into a great detail on that other than what mentioned that we do have an ISC compliant [indiscernible] in place since 2016 at FDN. We received complaints from individuals, from organizations, institutions it can be given [indiscernible] and it can be given in English, Spanish or [indiscernible]. And if you can cover anything to ourselves or contractors or our subcontractors. And any good [indiscernible] is an early warning system. It is ability for us to understand what is going on with the local communities and have a credible way to address it prior to what rolling out into something more significant. This has been a quite successful program over the past few years, you've had 100 of complaints at 99% is in a very low level that we will address through this. But that's what we want. We want all the complaints to be addressed before they become something more significant. And I talk a little bit about participatory dialogue and what we've done with the local government. Again, what participatory dialogue exists and it tends to be very reactive. That's not what we wanted in Los Encuentros put in place processes as proactive. It has a neutral third-party facilitator and it is truly a multistable. It is a local government, national government, ministry representatives participate in these dialogue roundtables. NGOs, universities, indigenous groups, local leaders. We don't run this as another key characteristic. We do not control this process. We participate in it. And so each 1 of these roundtables, you can see pictures of what it looks like, has a roadmap and people are coming together to address a very specific issue. Critically, it also includes our senior managers at site. And so what we are addressing issue is a credible person from at the end, it is addressing with the community. And in spite of pandemic, those people [indiscernible] , several bridge issues in Los Encuentros, several actions. This structure has proven quite resilient. So for more than 7 years, we've been doing this when I had with the global government last week, they confirmed they want to continue on with the process. So just to give a sense of what we're talking about here, we've convened 7x in 2022 and we had another 147 participants even across 5 roundtables. So the very small video [indiscernible] in Los Encuentros at a quite a significant level of participation. And everything I talked about could not be achieved without our partners. To state the obvious we are mining company, we do not have the expertise to be addressing all of these different issues on our own. And so we do this through. This is just a portion of the partnerships that we have as we go with the national government, with the local governments, with universities, with NGOs, with industry organizations among others. And communication to all of you, is a key enabler of our success as well. We have just recently issued our seventh sustainability report and our second climate change report. You can find both of these on our website. But that's not the only way we communicate with key stakeholders. We have a very significant social media presence as well. We have over 100,000 followers in Ecuador on our Facebook account posted as on our LinkedIn. In the context of the Ecuadorian market, that's a very significant level of engagement through social media with a key stakeholders. So I didn't know also to want to talk about economic and social impacts due to our presence in Ecuador. We undertake an annual economic study and we've also, we did an initial [ census ] level, social baseline in 2015, which we updated. And so what does that mean? That means we can follow a specific family. From our arrival in 2015 through this day and we can identify what has changed for a specific family. But I'm going to start with somewhat a higher level or more macro level statistics. What you're seeing here is our contribution through our local procurement at the national, provincial and at the municipal level. And these are very significant numbers. So including context of the Ecuadorian economy, which is approximately $100 billion economy. And I mentioned the Yantzaza's Economy at $60 million prior to doing construction, these numbers aren't quite impactful. Zamora Chinchipe was 1 of the first provinces in the country to recover from the pandemic if we speak about sales. And this is not 1 or 2 companies that somehow have gained huge contracts. We have 30 different economic sectors at these levels [indiscernible] to our operations at the end. In the province of Zamora Chinchipe, there are hundreds of local companies that have had a commercial relationship with us. And we project that total length of the mine, we will be having a $1.1 billion impact through our local procurement in the province of Zamora Chinchipe. We talk about GDP, our 2021 last region. This is our 2022 study, our 2023 study will be coming out in a few months. Look, 0.5% impact on national GDP is not as significant. But with the 0.5% impact, we may not be changing the lives of every citizen in Ecuador. We are, although changing the lives of the citizen [indiscernible] Zamora Chinchipe and Yantzaza. We represented 37% of provincial GDP and 85% of the municipal GDP. Our presence has fundamentally changed these economies. We projected our [indiscernible] GDP be between almost $8 billion and almost $9 billion. And this translates directly into government, gain resources to address some of the issues we've mentioned previously. So our contribution to the states, again, this is a 2021 number, in terms of the reporting because some of these [indiscernible] were actually made in early 2022 and we will have the updated numbers in a few months. But our 2021 contribution was approximately $130 million. A very significant amount of resources provided to different levels of government. Lundin Gold was in the top 7 nationally in terms of the private company as a contribution in terms of tax basis in 2021. We project between $1.3 billion and $1.5 billion of royalties and assets when we paid over light of the month. And this according to existing and the current legal framework will have very significant impact globally as well to $120 million and $142 million will come back to Yantzaza and that's over and above the $40 million to $44 million, again like [indiscernible] my numbers that we will pay [indiscernible] directly. Okay. So in terms of the social impact, how has the lives of individual people in Los Encuentros changed. You can measure already by different systems. One is just income-based, what are family income level in Los Encuentros. Another is by unmet basic needs, which is a much broader definition of poverty. Look at the income base, over just 3 years, 8% reduction locally. So again, there is plenty still needs to be done, but that's kind of a change in just a few years, is rarely seen. And over that time period, only 5 of those 24 provinces in the country had any reduction and the other 4 had reductions of 0.1%, 0.2%, 0.3%. To have this kind of 8% reduction is unprecedented. And we see a similar type of dynamic when we talk about basic needs. At the same timeframe for 2019 to 2022, a 7% approximately reduction. And we think about the Amazon region, which is the whole Eastern part of the country, traditionally, one of the poorest, least developed areas of Ecuador, Zamora Chinchipe now has the lowest level of poverty measured on unmet basic needs in the [ hire ] Amazon region. To put it in a way, Zamora Chinchipe traditionally has been second poorest province in the country only by another Amazon [indiscernible] . And about 5 years, it has become an average province. I mean that kind of a huge progress in such a short amount of time is really unprecedented, driven in part by significantly investment that we are making with our partners, $31 million over a 6-year period and crucial work we're doing with Lundin Foundation. And very concretely this means more employment for local people with us and with the kind of economic activity we are generating. [indiscernible] in specific household and then again, directly [indiscernible] activity. We're seeing increases in the level of education very short period of time significantly involved in the average level of education in local communities. We view strong at us, an incredible increase in the level of access to university. Greater access to the base of services that are infrastructure surprisingly very little in migration. We are not seeing population increase around the mine other than natural population growth. And as I mentioned, local indicators are closing the gap with national averages. So with that, I hand over to Ron.

What is [indiscernible] parish?

Parish [indiscernible] by [ 5,000 ], but that's the entire 22 communities. The [indiscernible] about [ 1,400 ] and then Yantzaza and the next rig, including with include rig 1, it is about [ 25 ].

And then the whole province?

[ $110 , $115 million ]. Yes.

How many people around your team over to see the top of that?

So I have a team of 30 people, but not only working at this. So we call business sustainability that is external affairs and a number of other things. So starting for government relations, external communications, artisanal mining and community engagement. The biggest of those community engagements that probably happens.

Come back to you first. One of your first slide anyway on GHGs and then GHG curve. Given where you are in that curve could you become a neutral sooner than 2030?

Well, our limit is the carbon neutral by 2030. If we can do before, we will be looking at that. It's -- we do have to establish a very strong offset program because given where we are on that curve, we have some emission reduction opportunities through the work that Terry is doing with our client resilience group at the end. But that's so to be fairly limited because you can do lots of things, but when we already at low, you're not getting a lot of emission reductions from those activities. So we do need to have offset the program that need to be robust. It need to be credible and that take a little bit of time to build up.

And the 0.06 tons per ounce, is that a mainly from the mobile equipment -- mobile fleet?

Mostly [indiscernible] 100%.

Just going back to the election. It seems like it's at a national level, probably [indiscernible] party is set to take over. Is there any indication on what desideration of this party is kind of looking at mining from a policy perspective?

Yes. So it has not been a key area of what [indiscernible] has been speaking about right now. Money has become more [indiscernible] at national natural level, but as you've seen these numbers, it also become a key export product in dollarized economy. Exports are essential to bring those dollars to the country. I think that there is a -- in terms of existing mining, any part of the [ administrator ] included, we'll need to work with the industry. And create a real and he was in office had a real change of heart for our mine. When he started in 2007, he was really more [indiscernible] and then over the 10-year period, he put in place a number of policy changes, he modified the taxation regime and allow the industries as they are. And so he came to [indiscernible] he saw the Fruta del Norte in construction. And so I think that really was impactful. I would hope that his position would remain the same.

And we would [indiscernible] party likely to be run again in '25?

[indiscernible] [ '25 ]. Yes, there are not running in this [indiscernible] . This is a reflection of reality, the chances of anyone associated with us are getting reelected in November or in August and then October in 2 rounds is extraordinarily small. And so I think [indiscernible] is just looking to protect his legacy and a longer-term legacy of his party. You can do a lot in the next 6 months. And hopefully, that will bear fruit in time for 2025.

Well, going closer coming back to the 4 pillars you've really been able around today to hear from each member of our team as to what we're doing in a lot more detail in each of the 4 pillars to make, I think Lundin Gold great opportunity for investors. There's a lot of upside yet. And this is -- Ecuador is exciting. The exploration we've got, the work that we're doing on the social front shows that why we think Lundin Gold is a great investment. And on closing, I think part of the things is to think about Lucas and the vision he had in 2014 when we went to Ecuador for the very first time. [ Adam Harris ] here. And he had a vision. I remember the first meetings we had with [indiscernible]. And he's explained what mining can do for an economy. It was like oil? No. Mining can have a much broader impact than oil. Oil can generate more revenue for the national government. But mining will have a much larger impact in all levels of government. And I think what our team has been able to do is bring Lucas' vision to reality and to show in other jurisdictions where responsible mining can really mean. It was interesting, [ Nathan's Son ] yesterday asked what was that chat.

ChatGPT.

ChatGPT about responsible mining at Lundin Gold. And it was scary. Actually, what ChatGPT came back with was bang on. But I think the team here has done a great job, the operations team, exploration, we're firing in all cylinders, which still got a long ways to go. We're really excited about the future for Lundin Gold. And I want to thank all of you for taking the time to spend a couple of hours with us here today. And we're obviously, as you know, very transparent, always open to questions at any time. So again, thank you very much.

So I know that obviously you've all been asking questions throughout the whole session. But I guess this is an opportunity to ask any more questions, if any of you have them. If not, obviously, we'll be sticking around afterwards to have a chat with anybody who wants to. So are there any questions?

Just on throughput. I think at the beginning, Ron, you mentioned there's upside to the 4,400 tonne per day and that you'd be going out with something a bit more than that next year. And then we kind of jump straight to the 5,000 tonnes per day, which looks maybe longer dated. What are the internal targets for throughput in 2024? Is it somewhere between 4,400 and 5000?

We're looking probably closer to, say, [ 4,500 ] for 2024 is where we're looking at right now. We're just starting our budget cycle price, and that's where we think we can get there. We're -- we keep pushing the limits, we keep pushing everyone keeps trying to see what more can we do, but that's kind of where we feel we can probably run through in '24 easily.

Let me touch on it just very topical right now is the Newcrest block. Can you maybe elaborate on sort of some different potential outcomes you see there?

Yes. It's look, it's we've seen more and more information coming out from Newmont as to all the assets that they're going to have and they're stable after. And we kind of sit in that middle block, we're not core, we're not noncore. We're kind of not sure yet where we sit. Look, we've got to just keep charging forward in doing that. So we're looking at M&A opportunities. We're obviously pushing the growth in what Ron said is when they've had more budget. Don't worry, we're the ones actually pushing him to add rates on a rate basis. And then in terms of what happens with that block, again, it all comes back to we have to focus on shareholder value, so that we control the things that we can do, keep trying to do things, whether it's operations, exploration or things that Nathan is doing that we've got strong community support. Because whatever happens with the Newcrest, with that block, whether it's up for sale or Newmont says you're going to buy us. We want to make sure that for all shareholders, they're going to pay maximum dollar. That's really for us, that's what we focus on.

And then I think you addressed this in the beginning, but do you think that you -- if you found something you wanted to buy, Newcrest might make you wait until the deal is closed? Do you think based on the relationship and the understanding of the pending [indiscernible] Newcrest does that be okay to approve something because in day it's not that big to Newmont.

That's a great question. And the answer that we've specifically asked that, and they said they are not going to get in our way.

And there supposedly is a clause directly in the agreement that Newcrest has to say with regards to anything that happens within Lundin Gold until the transaction is closed. Newmont can't come in and say, hold, that's not business as usual, there's a specific clause in the agreement.

Take the grade decline in Q2 to Q4. Will it sort of drive the decline quarter-over-quarter and the lowest grade quarter will be Q4? Or does it kind of just drop down and runs flat for the last...

It's projected to be pretty flat over the year.

For Q4. Okay. Thank you.

Andre mentioned 1 of his favorite targets is north of FDN to the deposit that is in licensed right now, but none of the timeline on getting licenses? And is that obviously stalled with everything that's happened?

No, that has continued to move ahead. We've kept moving that forward, and we've got that -- as showed me a whole consultation process we're just approved, right? So now it's essentially the paperwork. And that's something new because I can remember back to the original due diligence and everything like that, we've always had this philosophy and I'm sure [ Jorge ] will talk to Andre about it that there is a fault there food and our taste cut off to the north. That's always been the thought. But Andre and the team are relooking at it and thinking, no, that's maybe not necessarily the case.

And so in terms be clear timeline that you can be drilling it maybe by the end of this year?

Yes, we would like. We are planning for this because it's part of our explorative targets as well. As I said, our player in the next because, in fact, we do have a 3-year plan for the near line, right? What we expect is to define the most potential targets in the first year. So by the year-end, in 2024, then start to define inferred resources and starts to convert this maybe by the year-on-year towards 2025. But it was addressed exactly when we would convert most of the inferred resources that we have in our current basis. So what we do expect, honestly, I personally, I do expect to be able to start to deliver new reserves, for example, in 2025 from new targets outside FDN. Of course, we also have opportunities, for example, extend FDN if that's close to the mining fee structure. So we can also keep adding new reserves and resources inside FDN. But we have a very obvious plan where maybe next year, end of the year after, we're going to have resources and reserves coming from Lundin. Of course, if the research and reserves are there, [indiscernible] strategic plan.

I was just going to ask if Newcrest -- going back to Newcrest again. But has the exploration spend on the earning properties or packages change at all as a result of Newmont or is it?

No. They have -- they are completing their budget that they had, right. Chester that they had for this year, which will put them at the point they will met the earnings obligations that they can take 25%. Is that right?

From a cash perspective, they've been it. There's a notice requirement that they've sat on intentionally just because it's a fact the timing of the start of Stage 3. So they've got the benefit of time to not formally complete Stage 2, although financially, from a cash contribution perspective, they've met that requirement. So their earning behavior hasn't changed at all.

Chester, what is the timetable to start talking to the banking syndicate about restructuring netting some sort of corporate facility? Like is that something that will happen this year or next year or how will that play out?

We have had preliminary conversations already. Ideally, while there's a substantial amount that remains outstanding and they're still obligated as part of that. With a larger amount, there are more intent devices to sit down and have conversations as opposed to when it's starting to get quite low and they tend to see the exit right there. So it's something that CK and I will start working on with them largely -- potentially in conjunction with any sort of possible M&A that we might be doing and then looking at sort of the cash needs associated with that as well.

And that's the existing set?

Correct Yes.

Maybe for Terry, when do you see the Southern extension getting sequenced into the [indiscernible].

That's a good question. It's been -- I didn't really get into it in my discussion, but the South exploration decline that Andre highlighted, that's something that based on results, we'll do water and rehab and get some rigs down there. And we're already starting to evaluate how we would connect that to the rest of FDN. There's some ramps and there's some different combinations that the teams already looked at. So we'll just stay nimble. And as the exploration story comes together, we'll just look at how that looks. And we have to extend that 1 level off to the south further.

Does that touch the ore yet? Is that driven or is it just system footwall drive?

Yes. Yes.

But we'll have some of the southern extension on the reserves in the next life of mine plan, right? It's just that's for the blue sky that Terry is talking about with regards to that round. We did do 1 of that ramp in 2016, I think it was. And but then we determined, once we made the decision we were going with a double decline, then we stop.

So that was the Kinross exploration?

Correct.

That was in pretty bad ground wasn't it?

Yes. So great ground. Yes. When we dewatered it, it wasn't looking great. So it will take some work.

So the conversion drilling, I think, was $11 million or $12 million budget this year. This probably the near mine program?

Yes.

How much of that is expansion versus conversion?

0 conversion. They're 2 totally different programs.

Okay. So how much is being spent this year on conversion of resource?

$1.8 million. $1.8 million.

$1.8 million.

That's within sustaining capital.

That's in sustaining.

Ron, you just mentioned new mine plan. What's your thinking on planning for that because there's lots of things that could be incorporated into it including [indiscernible].

Well, we normally work in the -- we've started our budget cycle now, so that will be part of our -- we do our 2024 detailed mine plan and then a new life of mine plan. So that will all be Q4 started.

So we might see it early next year then.

Possibly, yes.

So the Southern extension has always been thought of as a lower grade, some of the more recent drill results look better. Is there a reason that the [ drivers ] also look better? Do you still think of it as lower grade?

Yes. No, I do think so. I think that some is because [indiscernible] 2 different deposits, the North and Central that's like bridge [indiscernible] . And I've shown you move to the south and will start to enter in a typical [indiscernible] system paying by 10/60 meters rig inside hidden mineralization on the control. Nevertheless, when I presented about the [indiscernible] North, I said that the other extension had kind of mineralize rocks and branches and things. And that's the point. The problem is that the entire deposit was defined by 150 meters. It will work for the North and Central parts. But for the north and central part. But for the South, it's too much wide. As we are starting to increase the density of drilling, we have been able, for example, to define higher-grade ones inside which is lower grade in general. And now, honestly, we are now starting to evaluate the entire south extension because we believe that we can start to define higher grades as well as inside the south extension. It could be mining or maybe higher than the [indiscernible] grade. That's [indiscernible] per tonne. We think that there is an opportunity even to work inside in [indiscernible] research and start to define higher grades. This is what I would expect from an experience in [indiscernible] because it gets real [indiscernible] , especially in the south extension, starting to see things better define it while the north only [indiscernible] margin pressures.

It will continue. You think it's going to continue to get better than [indiscernible] .

Yes, I think so. And I honestly -- in my opinion think that we'll be able even to define some things inside greenfield and start to extend this [indiscernible] as we are doing with the FTDS. I think that continue to find things to [indiscernible] the west direction.

Any other questions?

Just last 1 for me. Just it's for Nathan, are you. On the political front, just like how does the -- how do you and the business community kind of thinking about this whole reelection process. You kind of touched it all in the presentation. But I mean we can just put it up to $300 million. This was well telegraphed. It seems like we had relationships career changing kind of the environment in general, but sometimes generalists or headlines can see company that grow up. Just maybe quickly, when you guys think about this process, how it might affect you or not affect you going forward.

High-level consumer knows who's going to win and whatnot.

Yes. I don't think we see much of an impact as we're doing as Nathan said, there's still a lot of support for the mining industry. And Nathan and his team have a plan in place to actually I think you're going down next week and we actually get started on the meeting with some of the presidential candidates, start meeting with the leaders of parties, not sort of things rather than waiting until the election happens, we're actually going to get out and start telling people what we are doing and what mining means to Ecuador. So that they come when they -- if and when they get elected if they get elected, then we're not coming to them then when everyone else is coming to them. I think the 1 thing is, as Nathan hit upon, it's actually, everyone is saying [indiscernible], oh my gosh, it's going to throw the country into chaos. Actually just being down there last week or last something now since then. It's actually probably the most tranquil, quite, calm has been in a little while, actually. I think people feel a sense of calm been more certainty now with what seems so important. Nathan, I don't know, do you have any more?

I think that the main dynamic over the past 2 years has been the opposition parties trying to get rid of the President. And that has consumed the entire political discourse. And now that, to a certain extent, they've achieved their objectives, but they're also out of a job. And so it offers the President 6-month window to move things forward. And I think that just the political bickering has really been toned down because we have to see what comes next, but it has definitely been a calmer period politically now since a [indiscernible] leading into it.

How many decrees has he has since [indiscernible].

There are 2 in front of the Constitutional Court now and we hear that there are several more that are basically ready to go.

But he's also been smart in the decrees he's put forward, which have been generally pretty popular.

And good for the country.

In some respects, [indiscernible] has an opportunity now to -- it's been a really tough presidency for it, right, because he never had control the national assembly and he has the opportunity now to kind of put his fingerprints on his history, when he should be looked at with back.

Any other questions?

And thank you, everybody. Really appreciate you taking the time and there's some box lunches outside of there. So you stick around, we'll be here. The full team will be here if you have any questions, we're on you. Thank you very much.