Newcore Gold Ltd. (NCAU) Earnings Call Transcript & Summary

All right. I think that we can probably kick things off. So thanks, Luke, next time.

The Jeopardy theme song, that'd be a good one.

So thanks to everyone. Thank you for joining us today. Most of you likely already know who I'm. But for those of you who don't, my name is Mal Karwowska, and I'm the Vice President of Corporate Development and Investor Relations for Newcore Gold. I'm joined today by Newcore Gold's President and CEO, Luke Alexander; as well as Newcore's VP of Exploration, Greg Smith; and VP of Projects, Branden Fraser. So before we get started, I do want to highlight that we'll be making some forward-looking statements today. So I encourage you all to visit our website where you can find the full cautionary language. We're recording this webinar and it will be available for replay. With that, I'm really looking forward to taking this opportunity with the team to provide you with a detailed overview of the PEA results that we announced yesterday for our Enchi Gold Project in Ghana. The PEA highlights the potential for an open pit, heap leach gold mine at Enchi. And the study delivered very robust economics that showcase Enchi's significant leverage to the gold price. So we're going to do a deep dive into the details of that PEA and also why we think Enchi is one of the best undeveloped gold projects out there. It's underpinned by a robust economic study, but it also has significant upside potential from its location and district scale exploration opportunity. So we're going to kick things off with the presentation. After which, we do look forward to answering questions. So please do submit those questions in the chat button, you'll find that at the bottom right of your screen. So please do submit those throughout the presentation. And with that, I'll pass it over to Luke and the team to kick things off. Thanks.

Yes. Thanks a lot, Mal, and thanks, everyone, for joining us today. As Mal mentioned, we put out a PEA yesterday, which we're extremely excited about. We had a nice market reaction with the stock up about 15%, 16% yesterday on very strong volume. Our view from underpinning a value perspective is that this is ultimately just the start. When we look at our share price today, our market cap, our market cap in Canadian dollar terms is about $45 million. If we look at that from a U.S. dollar perspective, we're trading around USD 30 million today. So keep that $30 million in mind as we walk you through the project and outline what the project economics ultimately deliver for Newcore and for our shareholders. Our view is that there's a significant gap between where the stock is trading today and ultimately, the project value, and we'll highlight a number of those things as we walk through the presentation. So maybe just to kick things off, we've got a management team and Board who are truly aligned with shareholders. So we own 22% of Newcore, and this is money that we've invested along shareholders -- alongside shareholders over the last number of years. We're going to talk in a lot of detail about the underpinning of value that our PEA that we just released ultimately provides for shareholders. And then we're in Ghana, which is a Tier 1 jurisdiction to be operating in. And we've got huge district scale exploration potential on our project as well. So fundamental underpinning of value through the project economics and a mine that we can build and deliver, but then tremendous amount of exploration upside, which Greg will get to in some detail. I'd encourage everyone to go through our press release. We put a lot of detail in that as well as this presentation is now up on our website. So the PEA that we put out in terms of the economics, the base case was all done at an $1,850 gold price, which over the last 24 hours, a number of people have raised that in this environment, is that the right gold price. For us, our view is that with the economics of this project, we don't need to be aggressive on a gold price perspective, and we'll get into obviously some sensitivities to gold price as well. But at an $1,850 base case, we've got an after-tax NPV of $371 million, after-tax IRR of 58%. And one of the things that really helped drive the economics of this project is the fact that it's a heap leach project. So much lower capital required to build a heap leach project. So we've got a $106 million upfront capital, which includes a 20% contingency, less than a 2-year payback, 1.6 years, again at an $1,850 gold price and a very nice production profile. We've increased the production profile by about 36% from roughly 90,000 ounces to 122,000 or 120,000 ounces per year, and a very good all-in sustaining cost, which, again, is one of the real advantages we've as a heap leach project. So all of these economics, we're obviously extremely excited about. And I think we've started to just see those getting reflected in the market over the last couple of days. But as we get out and highlight these economics more broadly, our expectation is that we're just at the tip of the iceberg here and that there's an opportunity to really continue to rerate from here. And then again, Greg is going to get into the fact that we've identified over 25 targets on our project, and we've really just scratched the surface so far. When we go through these numbers in more detail, I think it's also important that you keep in mind that the consultant who we worked with on this project is Lycopodium. I'm sure, for most of you, that's a household name. But for those of you who aren't familiar with Lycopodium, I think it's really important to highlight their track record. If you look at the last dozen odd projects that they've been involved in over the last number of years that have been put into production by companies like B2, Newmont, Endeavor. You'll see that they've got an incredible track record of bringing projects in on time, on budget, under schedule, under budget. This is something that's very rare to see in most parts of the world, but Lycopodium in West Africa and across the continent has consistently been able to bring these projects in on time and at least on budget. So when you're looking at these numbers, keep in mind that it's Lycopodium, who is our lead engineer, who's ultimately put all of this work together for us. They're also important to highlight working with Newmont on their Ahafo project, so Newmont's investing another $1 billion into Ghana to expand Ahafo, and Lycopodium is one of the lead engineers who's helping with that. So obviously, all of the quotes that we're able to leverage in country is what ultimately feeds this updated PEA that we put out. I talked to you about some of the headline numbers and a few other things that really help drive the economics of this project. And I've highlighted this in the past, is the fact that we've got a low strip ratio. Anyone who's on this call, I'd encourage you if a company is not highlighting in their presentation what their strip ratio is, you better ask because you're probably going to find out it's 5 or 10:1. So one of the things that really helps drive the economics here on top of being a heap leach project is the fact that we've got low strip ratio. We're looking at a processing capacity of about 8.1 million tonnes per year, 69 million tonnes over the life of the project. Branden will get into a number of the details here and then operating costs. I touched on it, but from an operating cost perspective, we're looking at $801 per ounce. From a cash cost perspective, we're looking at about $930, and then from an all-in sustaining cost perspective, a little over $1,000 per ounce. Again, these are very attractive operating costs because it is a heap leach project for the most part that has a very low strip ratio, that's in a very mining-friendly jurisdiction. I touched on the average production of roughly 122,000 ounces per year. And then we've got a nice peak production of over 150,000 ounces in year 6. Here's the production profile over the life of the mine. All of our deposits remain open along strike, so we see the opportunity to expand the near-surface oxide transitional ounces over time as well as continue to grow the resource at depth, which Greg will get into in some detail. So our view is that 9 years is really just the start. And that as we grow the resource, we'll obviously be able to add more years of mine life. A couple of other things here, because we've got such -- or we've got 3 dig material in the first year -- first 4 years of mining within the oxide and some transitional material, one of the optimization things that we were able to do is push the expense of the crusher that will process more of the transitional and sulphide material in the later years into years 4 and 5 so that really helped in terms of the economics of the project. And then on this slide here, we can see the breakdown of the strip ratio as well as the grades, which then, as you can see here, in year 6, helps drive that 150,000 ounce plus per year production profile. From a cash flow perspective here, what we're looking at is both an $1,850 gold price, which is highlighted by the black bars in this chart. And then we've got the $2,350 gold price, which is highlighted by the gold bar. So as you can see, a very nice cash flow profile for this project, which then leads to that quick payback period as well as, obviously, the NPV of the project. We did, as we highlighted, run our base case at an $1,850 gold price. If we then wanted to, let's say, look at this at a $2,350 gold price or pick any price you want in between, we've provided all of that information for you. But at a $2,350 gold price, which is where we're trading today, as you can see, we've got very good leverage to the gold price. You're now looking at an after-tax $602 -- sorry, $630 million NPV, after-tax IRR of 92% and just over a 1-year payback. I'd encourage anyone on this call to go out and find another project or challenge you to go out and find another project that has such robust economics. And one of the things you like to highlight is, this isn't a 50,000 or 60,000 ounce a year producer. As we've highlighted, this is over 120,000 ounces of production. So this is a meaningful operation and again, I'd challenge you to go out and find similar economics for another project. One of the things we like to talk about often is the NPV to CapEx ratio. So if we look at this project at an $1,850 gold price, you're looking at an after-tax NPV of $370 million. You compare that to our upfront capital, and you're looking at an NPV to CapEx ratio of roughly 3.5x. When you now take that to a $2,350 gold price, that NPV to CapEx ratio goes to about 6x. So for every dollar of capital you're investing, you're getting 3.5 to 6x the NPV. Again, I'd challenge anyone who's on this call, and if you do find another project that has this type of economics that's at the development stage, please reach out and let us know because we'd be keen to be able to find some other projects. With all of that in mind, again, a huge amount of detail in our press release, so I'd encourage you to go and have a look at that. And I'll hand it over to Greg to touch on some of the network that we've done since 2021, which has significantly derisked the metallurgical and recoveries on this project.

Thanks, Luke. Yes. This updated PEA has a number of advancements, a recent updated mineral resource, a number of other updates that we've done to get current costings. But one of the most significant is as well a significant amount of metallurgical work. We're now up to over 390 tests that are used to do all of the estimation of the recovery factors that we used in the study. Of these 390, 350 of them have been done over the last couple of years. So as I pointed out, we've got excellent recoveries within these bottle rolls, column tests, and ultimately, the pilot heap test that we did, and we'll look at that on the next slide. We've used a conservative 81.8% recovery overall in the economics of the study. We've got good recovery curves. So we're getting the majority of that recovery in the first 40 days. As you'd expect, it slows down, but continued recovery beyond 90 days. The work that we've done has been on representative samples, so we've got samples from all of the 5 deposits. And then from the 3 material types, the oxides, the transition and the hard rock. And we do have continued testing underway. We've got additional columns and as well, we're doing quite a bit more testing on the hard rock material. So all of those tests, we used to plan a couple of bulk scale pilot heap tests. Here's the pictures of them here. We did this through the University of Mines and Technology in Tarkwa, which is just located about 2.5 hours from our project. So we've got 2 15-tonne samples, 1 from Boin, 1 from Sewum. These 2 deposits represent 76% of our overall resource. So that's where the bulk of the material life of mine is currently coming from. Again, excellent curves here, where you've got rapid recovery of the gold for the first 30, 40 days and then continued recovery out beyond, in this case, 60, but as well it continues out beyond 90 days. So real good average recoveries. Again, average recoveries here, higher than -- much higher than what we're using in the study, but certainly supports the numbers that we've, 93.5% for Sewum, 90.3% for Boin, giving us an average of 92%. So as well, good consumption levels. So as important it is to recover the gold, you also want to keep costs down. So again, we've got good low consumptions of cement, cyanide and lime, which are the primary consumables that you need to run a heap leach operation. All of that information has been used to go into our flow sheet. It is a relatively simple, straightforward operation, open pit mining, heap leach processing being the 2 main components. As I mentioned, we've got the oxides and upper transitions that are soft. So we just have a mineral sizer for our first 4, 5 years, then we do have some additional capital that we invest kind of in the middle of the project to then be able to process the hard rock material. And then on the back end, a very standard ADR recovery plant to ultimately produce the doré on site.

Yes. Thanks for that, Greg. So obviously, as Greg highlighted, a huge amount of derisking work has happened from a metallurgical test work perspective. And our view is that we're now pushing a PFS/FS type level from a network perspective. So I think we can take a huge amount of confidence in that. Infrastructure is one of the other big benefits we've got. So we're able to leverage all of the infrastructure that sits at our Enchi project to, again, really help with the capital cost. So what we're looking at here is a map of our 248 square kilometer land package. We've got a paved road that goes through the middle of it with a power line running beside that to the town of Enchi. Enchi have got about 15,000 people. So it's got high schools, it's got hospital, it's got a university campus. It's basically got all the support services we could want for our project. We can house all of our employees here in the town of Enchi. But importantly, it sits about 15 kilometers away from where our mine will ultimately be. So it's far enough away that no issues in terms of building, noise, those types of things. But obviously, close enough that we don't have to be spending tens of millions of dollars on building camps and additional facilities for our employees. This is a good example of the infrastructure. You can drive 100 kilometers an hour along this road here. You've got a power line that runs along beside it. There's a half dozen gas stations throughout the project, cell phone towers. You then drive about 15 minutes down this road and you'll be standing on top of our Boin deposit. When we look at the site layout of our project, where we're just looking at that 360 image is roughly here in this direction. So there's the road I was mentioning that you drive 15 minutes down. So we've got dirt and gravel logging roads throughout our project that we can obviously access, which, again, really helps from a capital cost perspective. And within 15 minutes, you're standing beside our Boin deposit. Where the heap leach pad is situated is tucked into a valley right in between Boin and Sewum, which again, as Greg highlighted, is about 76% of the material on our project. So very easy to truck the material from both Boin and Sewum to a central processing facility. And then from Nyam and Kwakyekrom, which are later in the mine life, you're looking at about 7 to 10 kilometers. To give you a sense of the topography, we're now right on top of our Boin deposit, so the mineralization sits underneath this hillside here. But again, it's rolling topography, so very easy to access. And then again, throughout our project, you've got, as you can see here, these dirt and gravel logging roads. So very amenable from a mine building perspective. With that, I'll hand it over to Branden Fraser, our VP of Projects, to run through some of the specifics on the facilities and the mine plan.

Thanks, Luke. And again, I appreciate the introduction. My name is Branden Fraser. I'm the new VP of Projects with Newcore Gold. I originally joined the team back in September 2023. I come from a mining and process engineering background with about 15 years of experience in mine construction, operations and study management. I specifically have extensive experience in designing, building and operating heap leaches globally. I recently built Victoria Gold's heap leach in the Yukon in 2018, and I've extensive heap leach experience in South and Central America. I also helped with the initial 2021 PEA study design. When I joined, very impressed with the Enchi project of the Newcore team. So I entered a 2 million share position and continue this tradition with Newcore of aligning with shareholders. So in front of us here right now, we've the PEA processing facility layout, where we zoomed in specifically on the heap leach, center to the drawing. We've our process ponds to the South with our process plant, ADR Plant right there. And you can see our crushing located at the top of the drawing. Now as Luke mentioned, we're located centrally between the Boin deposit. So haul traffic comes from the North as well as the Sewum deposit, which comes to the South, that accounts for 75% of our haul traffic within 2 kilometers of the heap leach facility. It helps with a heavy reduction in haulage costs in this location right here. With the heap leach design, there's 70 million tonnes of capacity we'll require throughout the life of mine. The design is currently for 75 million tonnes, so there is excess capacity involved, but there's also expansion potential both to the West and the East when it comes to heap leach expansion. The location of the heap leach also benefits from being in this isolated valley structure. So when it comes to water management and visual impact studies, we benefit from being insulated when it comes to water inflows as well as from ESG approach. We've the ability to have our structures hidden from a lot of public view within the valley, so our heap leach structure won't be visible and won't be at the top of the hill, et cetera. Diving into the mining schedule. We're looking at delivering 8.1 million tonnes of material to the heap leach annually. All mineralization and all 5 deposits come to surface. So leading -- this leads to no required preproduction waste stripping. Mining of all the pits is quite straightforward. We're looking at using a selective contract mining fleet for efficient development of these shallow surface pits. Again, like Luke mentioned, very low strip ratio. You can see right here for each of the pits, specifically in our 2 pits, Boin and Sewum. You can see right here as well, the mining schedule. It targets Boin and Sewum in the first 4 years, specifically targeting the high-grade oxides of Boin and Sewum. You do see in year 5, the 2-stage crushing come online. At that point, we reentered Boin and Sewum to target the fresh material that was left that will be went into in the next slide here. So for the PEA capital cost details here, we do have a staged approach for both the heap leach facility and for the crusher capital costs. The initial CapEx of $106 million, that allows us, all the infrastructure, to process oxide material into doré with an expected timeline for construction of 15 months. That includes a 20% contingency. And all of these quotes are built up from vendor quotes that Lycopodium provided. When looking at our sustaining capital of $92 million, the majority of that is in our heap leach phases incurred in years 3 and 6, as well as our crusher installation to handle fresh rock in years 4 and 5. When jumping into operating costs here, our mining and processing costs are separated by material type. Our mining costs do assume a contract mining fleet with our processing cost calculated using a mass balance approach, with recent quotes on all reagents and consumption rates taken from that metallurgical test program that Greg mentioned previously. All of our programs have been verified with consultant data in the region. The oxide material requires no additional crushing. But again, like I mentioned, that fresh material will undergo a full 2-stage crushing process. We'll be agglomerating all material on the project. The agglomeration blends from the material we're taking from our recent test work programs. We do include G&A costs on the project, specifically for land disturbance compensation and for achieving our ESG initiatives. And with that, I'll hand it back over to Luke.

Luke, you're just muted. So if you don't mind unmuting yourself. Thank you.

Yes. You don't want to hear me talking anyways. Yes. So listen, we've obviously done a huge amount of derisking work since 2021, and that's really reflected in this PEA as well as obviously a lot of optimization and value-accretive work has gone into this. So as we've kind of touched on and just to recap, we've increased the production profile significantly about 36% increase in the overall production profile. We've also increased the overall -- and that was ultimately driven by us increasing the overall size of the resource when we put out our resource update in 2023, which added an additional 34,000 meters. Importantly, we also converted about 47% of the contained ounces into the indicated category. So that obviously derisks it from a resource perspective. And something that we're going to look at is obviously converting additional ounces into the indicated category, which is what's required to take it from a PEA to a PFS. A lot of the other work from a met perspective, we're doing -- we've completed a social environmental baseline study, which is highlighted down here. We're doing condemnation drilling across where the heap leach pad will go. We're doing hydrological and geotech work. This is all work that we've been working on for the last number of years that ultimately isn't required for a PEA, but as we move towards a PFS, it is work that will start to feed that, and you will see a lot of that in this 2024 PEA as well. From a met perspective, Greg went through it in some detail, but we've significantly derisked the metallurgy on the project, 82% recoveries, that's backed by over 20 column tests, 2 bulk samples and hundreds of bottle roll tests. So again, we feel we're now pushing a PFS/FS type level from a metallurgical perspective. We completed a detailed engineering plan on the heap leach facility, which Branden took you through. So we've got a lot more confidence in what we'll ultimately look to be building on the project, which is another big checkmark for this 2024 PEA. And then obviously, we've seen a lot of cost inflation in all sectors globally since 2021, so we've taken a bottom-up approach and a top-down approach, gotten vendor, as Branden mentioned, vendor quotes. We've worked very closely with Lycopodium, obviously, leveraged all of the work that they've done in West Africa to come up with very credible capital and operating cost numbers that are extremely defendable and are using 2024 quotes. So that's the derisking work that we've done over the last few years. And obviously, it's produced a PEA that has a great NPV, $370 million at $1,850 gold. That jumps to $630 million at today's gold price. A very good payback period of 1.6 years and 58% IRR. So again, I challenge anyone on this call to go find us a project with economics like this. With that, I think I'll hand it over to Greg to talk about the district scale exploration that we've got on our project.

Yes. Thanks, Luke. So yes, some very impressive numbers there. And I guess for the next few slides, I'm going to share how we think that can even get bigger and better in the longer term as we unlock what we believe is a significant amount of upside exploration potential that remains on our Enchi project. So I think by now, everybody is familiar that we're in Ghana, we're in Southwest Ghana. It's an area that's got a long, long history of gold mining and production. It includes deposits like Obuasi, which is one of the largest gold deposits on the planet. The Ashanti gold belt, which is, again, very historic. We're on the parallel Sefwi-Bibiani belt, includes ourselves here in the South, our neighbors at Bibiani in Toronto. And then as been mentioned, the very large Ahafo deposit where Newmont is currently investing $1 billion. So certainly proven to be very prospective place to be. So zooming in a little bit again on the Southern end, ourselves here has been mentioned. We've got 40 kilometers of these splays coming off the main Bibiani Shear, and it's the second and third order splays that actually host the gold mineralization. We've got multiple structures, so you're multiplying that 40 kilometers across each of those different structures. We'll get into some more details of the resource in the upcoming slide. Again, almost 250 square kilometers that we've now got on the project, having recently expanded it with the Omanpe license. And we'll look to show, again, some real upside potential. We've got the existing indicated and inferred resources, but they're very shallow. And especially compared to some of our neighbors, who are mining down to depths of 4 or 5x that amount, we've really just scratched the surface. So as part of the PEA, we did include an updated mineral resource estimate, which was completed last year in 2023. So very recent. This was done in terms of the open pits at a price of $1,650, as Luke mentioned. For the first time, we've got the indicated resources, derisking the project. We've also got a small, but first pass higher-grade deeper resource below the pits. We added a fifth deposit. Each of the last number of resource estimates, we've been adding new deposits. So it's good to see those coming on stream. And again, we've got a significant amount of drilling that's been done outside of these deposits that has had good results, but need some additional work before it's actually going to be additional deposits added to the resource. So in terms of the work that we've done, and we could get into an exploration presentation that takes up all of the time we've today, but we don't have that. But yes, we've done work across the project, geochemical, geophysical work. We've advanced that to, again, a few of these projects that we've actually drill tested in a first pass, where we got some really good results at Kojina Hill and Eradi here in the North. Again, it runs the gamut of the 40 kilometers that we've on the project. We also have areas where we've just done first pass trenching on existing soil anomalies. This is work we've done over the last 12 to 18 months. And then we've got a number of high priority anomalies, where we're still in the process of evaluating them. So all of that adds up to the blue sky potential that exists for both additional oxide and near-surface transitional material. And then as we'll talk, some of the deeper material. So we've talked about our 2 main deposits, Boin and Sewum here, again, 76%. The facility that we're proposing sits in between them. So you get all of the synergies of that material there in enclosed space. When you look at Sewum, Sewum is our largest deposit and it's -- well, it's our most complex, but obviously, in terms of geology, complexity can be a good thing. There's 3 main areas. There's the Ridge zone here, Checkerboard Hill, the extension. But beyond that, and these are open for expansion in both directions, we've got our newest deposit of Tokosea here in the North, looks like it's an extension to maybe a parallel structure. We've tested this parallel structure here for the first time and actually included a small amount of material in the that most recent resource update, and then we've got our Sewum South area here. So again, the Sewum area is our biggest deposit now. And we think, again, it has probably the most potential to continue to find additional resources and test additional targets. So zooming in a little bit there. I mentioned the extension. So again, it's one of the things that we benefit from having several sort of subparallel structures in all of these zones. Here's the results that we had most recently here on the parallel structure at the Sewum extension. So real good. These are our grades right next to surface. So I think, again, essentially starting at 2 meters below surface, almost 6 grams over 6 meters and then some real nice wide zones here where you've got over 1 gram over 10 meters and 0.7 over 20. So these are the sort of numbers that will help build the resource in the future. Again, zooming in on a cross-section for that area. We've got our main structure here, where we've got the open pit, which is the bulk of our current resource. You see here the oxide zone, and we've talked a lot about the benefits of that. And ultimately, again, we'll be able to follow these things to depth and build on what is an initial underground resource that was included in the last resource update.

Yes. Thanks, Greg. So I mean, I think, obviously, we've outlined a 9-year mine life here. Our view is we'll easily be able to expand beyond that. But given the economics of the project today and how robust they're, let's focus in on building this project. And alongside building it, we can then continue to add mine life. The other thing that we've talked about over the last 2 years is the huge upside potential that we've at depth. And what we're looking at here is a long section of our Enchi project, and we're comparing it to the Chirano mine. This would look very similar at Bibiani and at Newmont's Ahafo mine. These greenstone hosted deposits, where you often start to see them increase and grow in size is as you start to get deeper and drilling into those sulphides. So the average vertical depth of the pits that constrain our resource today is only down to about 75 to 80 meters in depth. We've started to put a few deeper holes into this project, and we've had some very good success. To put that 80-meter depth in perspective, Asante today, formerly owned by Kinross, is mining down at 800 meters below surface, 1.5 to 2-gram per tonne material. So we've really just scratched the surface from a deeper perspective, and Greg and the team have started to identify some of the high-grade shoots that we see at these other deposits along trend. I'll just take you into the 3D model now. We've outlined about 135,000 ounces of underground material. That's not a mine today, but it's a proof of concept for us. About half of that comes from our Nyam deposit. So again, what we're looking at is here are the pits that constrain, that keep leachable open pit material, that has been feeding that PEA that we've presented. But as we started to drill deeper, we've hit 5.8 over 7, 5.6 over 8. This hole doesn't exist in our resource because it came out after we put the resource out, but 6.6 over 4 meters. So when you look here, you can see that high grade shoot that we think will ultimately end up continuing to plunge at depth. Sitting 500 meters to the South, we hit 3.2 over 9, 7.4 over 8, 3.5 over 9. So Greg and his team, again, think that we've hit one of these high-grade feeder zones that extended depth. When we now pull back a little bit and look at this from a bit further, we're looking at a 2-kilometer, 2.5-kilometer strike here, and we can see these high-grade feeder zones that plunge at depth. But what you also probably noticed is that there's no drilling to the South, there's limited drilling in between and limited drilling to the North and no deeper drilling to the North. So that's the opportunity for us, is to continue to expand some of these high-grade feeder zones that we've identified as well as obviously, we can keep chasing these things to depth as well. So that's some of the district scale exploration that we're obviously excited about.

And I just jump in quickly there, Luke, and just make the point that when you're talking about deeper there, we're still only about 200 meters below the surface. So these are not 2-kilometer long drill holes, as we've talked about, the ultimate depth of the pits is averaging only 75 meters. The deepest part is 120 meters. So all that material you're talking about is still relatively close to surface.

Yes. No, that's a great point, Greg, and thanks a lot for jumping in and highlighting that. So those pits there that constrain all that material, as I highlighted, 75 meters. And as Greg just pointed out, we're down to 200 to 250 meters. Chirano, again, down to 800 meters of depth. So these things typically just keep going, and that's an opportunity for us to continue to expand. Maybe I'll just quickly jump into a corporate overview and then we'll get to the questions because it's great to see that we've got a long list of questions to get to. So I think -- my background, quickly, 20 years on the investment banking side of the business, advising ASX, TSX, London listed companies. Greg Smith, he's worked around the world on these greenstone hosted deposits, discovered millions of ounces. Mal Karwowska started off on the investment banking side of the team. She then worked in private equity and has worked on the corporate side, including other projects in Africa for a number of years. She is a crucial part of our team. Branden Fraser, the most recent addition to the team. He gave you his background, but obviously, bringing in some of that construction experience directly on the heap leaches side of things has been great. And then Dan Wilson, he's a critical member of our team. Dan Wilson is our Country Manager. He's been working on this project with us for the last 10-plus years. So we obviously have very good relationships in country. And then we've got a Tier 1 Board. So these are a number of the companies that our Board has been involved in. So we've got a track record of ultimately creating value for shareholders in the mining space. From a capital structure perspective, very good tight capital structure, about 173 million shares outstanding. We do have about 17 million warrants, which are now well in the money. So about $3.3 million will come in with those warrants, assuming they're exercised by the end of June. And we've got a great institutional shareholder base. So currently 45% institutionally owned. These are deep pocketed, long-term focused, primarily mining and precious metal investors, who obviously recognize the huge exploration upside of our project, but recognize that we've got a very buildable project today with incredibly good economics, which hopefully, everyone has recognized as we work through this presentation. And then at the end of the year, we've got about $3.7 million of cash. And if you look at our previous cash balance, it was $4.9 million, so about $1 million a quarter. So obviously, we've got lots of runway to move -- to continue to run the business. With that, maybe I'll hand it back over, unless I missed anything to Mal, and we can start to dive into the long list of questions we've.

Perfect. Great job, guys. And thank you, everyone, for submitting questions. I'm going to do my best to group some of the topics. And then please do feel free to submit some additional questions if anything comes up. So I think just to kick things off. Someone did ask about the mine life. So just to reiterate the estimated life of mine that we've within this PEA is 9 years. But with the exploration potential that Greg and Luke spoke about, we do believe that there is significant potential to expand that longer term. And then sticking with the theme of mine plan, so someone did ask about, what's the cause of the low production in year 7? Can this be improved? Greg, did you want to touch on that? And I'll touch on that.

Sure. And in terms of -- I'll answer the second part first. It's -- it really flows -- do we have the potential to sort of fill that gap, if you'll. Absolutely. And this is the mine plan based on the resource that we've at the moment because, obviously, that's what we've to base it on. But when you're talking year 7, there's no doubt. We'll be doing additional exploration over the next 7 years, and we'll find some material that we'll be able to fill that in. And what it's related to is some slightly lower grades. So in terms of the mine plan, obviously, you've got -- the tonnes are relatively consistent as we've shown. We're mining and putting on the heap about 8 million, 8.1 million tonnes a year. So a lot of the fluctuations that you see in the amount of ounces that are produced are directly related to the grade. And you see there that in that year, it's -- the average grade is 0.42. You can contrast that to the year before, which is 0.78. And that's the difference in terms of that profile, 155,000 ounces versus 99. Now again, as we expanded some of these zones, bring on new zones, if we find any material that's better than 0.42, then we'll be able to bring that forward into the mine plan. And if you say, well, why aren't your mining the material that's in year 8 and 9 and 7? Certainly, the answer there is while the stuff in year 7 sits on top of the material in year 8 and 9, so you you've to mine that first. But yes, ultimately, as we continue to explore, we certainly hope to be able to fill that particular gap.

And staying on the theme of mine plan, can you provide more detail about the pit depths and how deep they go? How does strip ratio potentially get impacted longer term if you go deeper?

Yes. So the stripping ratio is pretty consistent in terms of the life of the mine, and that's shown here in the diamond shapes. So it is a little bit higher in year 1, and that's because we're chasing after some higher grade material that sits in the Boin pit, again, in the oxides because we're -- first couple of years, we're processing all oxide material. But then it is relatively flat around that 2.5:1 ratio for the life of mine. And yes, it as well goes with the gold grade. Obviously, if you've got some better grades, it can support some larger stripping ratios. But yes, it's all a function of the inputs, the grade of the blocks that you've, the cost that you're putting in, and we, again, believe that the 2.5, 2.6 for the life of mine is something that's supportable. And it is life of mine, so it stays pretty consistent as you continue to mine down these pits. They're relatively consistent angles, obviously, a little shallower in the softer material, a little steeper in the fresh rock. But yes, in order to drive these pits deeper, you're basically looking at -- well, one of the inputs would be a higher gold price. So again, we're doing this at a base case of $1,850. If we use today's gold price, then, yes, the stripping ratio should stay relatively the same, but these pits would then get driven a little bit deeper into some of that material that we're now discussing as potentially underground mineable material.

Thanks, Greg. And I think the Chirano comparison is also a good example of what these types of ore bodies and systems longer term tend to look like. So as we go deeper, we do discover that higher grade potential. You do tend to see these mines shift into underground milling operations, but that would be a longer-term potential at our project. So now shifting gears to the processing side of things. I did have a question around the process flow diagram and an exclusion of milling in that diagram. Just to be clear, there is no milling with the project. It is a heap leach operation that we're looking at. And I just think, maybe the team could give everyone a really high-level description of what a heap leach mine is, given I know a lot of people do focus in on milling specifically. So Greg or Branden, if one of you wants to jump in to give a very high level overview of what heap leach mining is?

Sure. If you'd like to go back to the process layout there, you might be able to just drive through or in the process flow sheet is fine here. You can see we do have 2 different material flows, and that is dependent on, again, the hardness of our ore. And for the first 4 years, we're targeted at turning those oxides. Now we'll have, again, a rock breaker for any oversized material, but the majority of our oxide feed we're talking, above 95% is going directly into a sizer and then directly to agglomeration. Our -- the saprolite material we've on the project is very amenable to cyanidation. And really, we're looking at minimizing fine material. Our biggest issue is ensuring that we've high percolation rates over getting that cyanidation value up. And what we do start to see that, that issue occurring and where we correct for it is in the fresh material, and that's why in years 5 plus, we do install a full secondary crushing circuit. We do get to our optimal material size for that ore, and that's where we start to see again that crushing come online. But for the oxides, we're really -- again, you can look at the current bottle roll and the current heap leach test, we're really getting great recoveries. We just want to make sure we maintain percolation and really reduction of fine material is where we're putting our focus with the oxides because we're getting great recovery. We just want to maintain that percolation.

And Greg, do you mind just explaining, because people want to know what milling operations are, what a heap leach operation is just at a very high level?

Yes, sure. So on this diagram, obviously, after you mine it and then we agglomerate it, which, again, is the process of adding cement and some other consumables to the material such that, as Branden mentioned, the main thing we're doing there is ensuring that we've got percolation on these heap leach pads. And then although the heap leach is probably the largest by size component of all of this, it's that rather small little area there on the upper right that says heap leach pad. And Mal, I don't know if you want to jump to the metallurgical slide that shows the picture of the pilot heap. And maybe the easiest way to explain what a pilot -- what a heap leach looks like is by looking at the pilot heap. So the advantages of it is you don't have a milling operation. You're not spending a lot of money with giant ball mills, processing this material before you then put it in tanks and spend more money to get it out. You're basically after the agglomeration, putting it into great big piles, and they're obviously much bigger than our 15-tonne samples here, but they kind of look like this. They're piles that are there. And in our case, we've got 10-meter stacks that are going to go life of mine. You put cyanide solution on this material. In this case, we've just got some -- obviously, again, this is a test that we're doing. We've got some garden hoses. There's much more sort of detailed engineering that goes into what the actual operation looks like. But it is putting cyanide solution on these heaps, recovering the solution on the bottom. And again, a lot of engineering goes into ensuring that that's done correctly and safely. And again, the advantage is that it's a relatively passive system that allows you to recover the gold out of this material without spending a lot of money, certainly on energy and other operating costs. And ultimately, again, in our case, giving us 81.8% recoveries, which are really good recoveries for this type of process.

Sticking with the theme on metallurgy. Can you please explain the differences in recoveries between test work and what is used in the economics?

Yes. The test work, they're ideal conditions. So you see in these images, the column tests. So first and foremost, you're starting with representative materials. So you always want to be using samples that are representative of the larger resources that you've. But in the case of the column test, you're testing anywhere from 30 to 60 kilograms of material. And in terms of the pilot heaps, we're testing 2 15-tonne samples. But obviously, we're talking about moving 70 million tonnes of material. So you do your best to make this as representative as possible. But certainly, these tests are done under ideal conditions with the available cyanide solution and the chemical components at ideal levels. And so therefore, if you're getting, as we see, 90% to 95% in the lab, real-world conditions suggest that you put a factor on that. And we've actually put a factor on that is even higher than some of the recommendations by some of our independent engineers. We've been very conservative here, ending up with a life of mine average gold recovery of 81.8%.

Yes. Maybe I'll just add to that. We've run some numbers internally that have kind of pointed to 3% to 4% between lab work and actual real world operations. So as Greg said, we're being conservative here, but there's -- that's an area for potential improvement in the future. But again, at $371 million after-tax NPV, we don't need to be aggressive with these things. So it's one of the real advantages we've from that perspective.

And what's the split between oxides, transition, fresh rock? And what are the relative recoveries?

Yes. So the split is roughly plus or minus, but 1/3, 1/3, 1/3. And in terms of the transition, you've got essentially the upper half of that, that acts very much like the oxide material. You've got the lower half of that, that acts a bit more like the fresh rock. And in terms of the recoveries, we're 85% for the oxide and transition and 75% for the fresh rock.

Yes. Maybe I'll add to that. In terms of the work that's been done, so we've got roughly 1 million ounces of oxide transitional material and kind of 350 of sulphide, just for round numbers sake. It's a little more oxide transitional, but for round numbers, let's use 1 million. The test work that we've done is a combination of oxide transition, 50-50, in some cases, 60-40, 40-60. So it's a blend of oxide and transitional material. So the transitional material for us leaches very well. And it's one of the advantages we've got here is that it's very amenable to processing on a heap leach pad. Obviously, the bulk samples, because you're digging that from surface, are purely oxide. But if you look at all this test work, keep in mind that it's a combination of oxide and transitional. So we often just refer to oxide transitional as heap leachable material, given the test work doesn't really differentiate much between the 2.

So we've a question around the infrastructure at site. How is the tailings going to be managed on site? Branden, I think that it would be a good question for you to answer.

Definitely. So talking about the difference between a heap leach and the traditional CIL or CIP plant. The benefit of a heap leach is again your ore when it's placed on to the pad, that is where it stops. So you aren't running this through again a mill, you're not doing flotation, you're not doing in this. So you don't have a pulp, which you don't have to stack as a tailings. You're basically stacking it in place with the stacking plan, you recover the gold and then it remains there. Now at the end of mine life, we've attributed around 4 years of environmental remediation. What will happen then is the heap leach material there, you see in the center of that PEA processing facility layout, it will be treated with neutralizing solution, and then we'll basically regrade all of that heap leach infrastructure. And at that point, we reseed it, and it becomes, again, back to natural topography at that point. So when it comes to handling tailings, that is one benefit of the heap leach facility, very minimal tailings. We'll look at, again, treating water, et cetera. But when it comes to actual material, that is one benefit of the heap leach process.

So now over to the capital and operating costs. The question here, what accuracy level are they calculated at?

Definitely. And one comment on there is, again, it was put together by Lycopodium. They attributed a 20%, again, contingency on that. Now for the specific AACE guidelines there, I'd refer to Lycopodium kind of in the comments in our upcoming NI43-101 report. But we were able to, again, from vendor quotations directly, we did a full mass balance. We did full design criteria, and we did get sign off again at that 20% contingency number. So again, we'll look forward at, again, confirming those AACE direct guideline requirements, but we were able to get to that 20% contingency number.

Another benefit of working in Ghana, we've got -- obviously, there's a couple of dozen mining operations there. Again, some of them are run by the biggest companies in the world, and there are suppliers, multiple suppliers for all of the consumables, and we use multiple quotes to -- for the consumables, and then there are multiple mining contractors active in the country as well and you're able to get real-time costs from that.

Yes. So maybe just to simplify that as well. So for all of our costs, we'd reach out to different service providers in country or in West Africa and get multiple quotes. Lycopodium would then take those quotes and they've obviously got a huge database of different service providers and then come up with what is the best number to use. So a lot of work goes into every one of these numbers that's provided and their direct quotes from the different service companies. So just to simplify it a little bit in case some people aren't as familiar with how the process works.

So in terms of costs, and I'll be able to answer this one. There was a question around costs are excluded in the AISC calculation, please, which costs are, so you can see the breakdown on your screen here in terms of what is included. So you've got your operating costs, which consist of mining, processing and mine site G&A, as well as your treatment and refining charges and royalties and then sustaining capital. What AISC excludes would be your closure capital, which is about USD 18 million at the end of the mine life. That does include that rehabilitation that Branden commented on as well as taxes and any corporate level G&A would not be included in that number. In terms of another question, who is Triple Flag? So this slide addresses that. In terms of royalties, there are 2 sets of royalties on the project, 2% NSR royalty payable to Triple Flag Precious Metals. It's a publicly listed royalty company. They acquired the royalty on Enchi from their acquisition of Maverix Metals. And then there is a 5% gross royalty payable to the Ghanaian government that is standard for all mining projects in the country. So I think we can pivot a little bit more to exploration now in terms of what's next. And Greg, this is a question for you. What average drill spacing will you need to convert inferred into M&I?

Yes. So that I'll preface it by saying it's somewhat dependent on the consistency of the results. If every single hole had the exact same interval, then you could do a little bit wider spacings. But in general, what we've been able to use our 50-meter spaced sections and then along each section, 25-meter spaced holes. So roughly 50 meters by 25. Keeping in mind that these are relatively wide zones, our average intercept would be 20 to 30 meters wide and again, pretty consistent between the cutoff of sort of 0.2 grams per tonne and up to 1.5 grams per tonne. So not a lot of super high-grade material such that it causes issues with nugget effects or anything like that. Really a lot of average and good grade intercepts such that for our existing indicated resources, we're basically looking at that. So in some cases, tighter spacing than that, but generally speaking, 25 by 50.

And maybe I'll just add to that, Greg. So I pulled up the resource table here. So today, we sit at 740,000 ounces of indicated material. So that's what's required to feed or to feed into a PFS in terms -- and that's the tighter drills placing of 25 meters that Greg is referring to. We'll then look at converting a portion of this 972,000 ounces that sits within the inferred category. We're still doing some of the work on it now. But roughly, we'd look to convert 500,000 to 600,000 ounces from the inferred category into that indicated category, which is what then feeds a PFS.

And the benefit we've is that we've got these 75-meter, the average deep pits. So we're able to get back in there and drill a lot, but relatively short hole. So we can go in there and with an RC, which works really well in the oxide and transition material, you get nice big samples, representative samples, get that work done efficiently and as cost effectively as possible.

So conscious of time, we're going to pivot to a couple of higher-level corporate questions before we wrap things up. So are you going to study this project for the next 3 to 4 years? Or can you follow the path of some other juniors that have fast tracked, as simple as heap leach based on a PEA? If not, why not? And perhaps Luke, with that answer, you could also talk about going straight into DFS versus doing a PFS.

Yes. So one of the big advantages of obviously having a DFS is you can then go out and get debt financing, which then helps with the overall economics of the project. So, let's say, this project, call it, $106 million for round numbers, let's say, $100 million, we can then go and raise $50 million of debt and $50 million of equity. That obviously helps in terms of the construction financing and the overall economics of the project. To get the banks and lenders comfortable, you've to take this to a DFS or a bankable feasibility study. So that's really the advantage of taking it to all the way to a DFS. One of the things that we're looking at is taking it to, let's call it, an advanced stage PFS, where we've done all of the work required for a DFS, subject to final detailed engineering. So down to the last nut and bolt in and where those will go. The advantage there of going to an advanced stage PFS, let's call it, is you can then start initiating discussions with the various lenders, banks, debt providers. And if there's any modifications at the eleventh hour that they may require, then you can still do those as you transition to completing a full DFS. So you haven't fully locked yourself in, you're giving yourself a little bit of flexibility. So that's -- yes, so that's what we're going to be moving towards, is an advanced stage PFS. And then at that point, being able to go to a DFS very quickly.

And what would that timeline look like? What is the timeline for advancing Enchi?

So one of the advantages of being in Ghana is we've got a very supportive government. So a very small example of that would be within 15 minutes of us releasing this PEA yesterday, I had an e-mail from the CEO of the Minerals Commission in Ghana, and he said, congratulations, great results, how can we help with the next stage. So it's that kind of commitment to seeing projects getting built in Ghana. Obviously, Ghana, you've got 5 million ounces of production a year. So it's a very skilled workforce in country, keen to see projects get built. Our view is that once we submit a mining lease application, we'd have that completed within 12 months. That's unheard of in North America to be able to have those types of timelines. So that's one of the big advantages we've got. So we'll be out disseminating and highlighting the great economics of this project over the next few weeks. We'll be meeting with our major shareholders, meeting with the Board and discussing, okay, next step, PFS, and then we'll come out with a plan as to how quickly we can get that done. But roughly speaking, we'd expect within 12 to 18 months, we'd be able to deliver that type of a study. And then the next stage would obviously be aggressively pushing it towards a construction decision.

And so on that theme in terms of budgets for the next 12 to 18 months, that is one of the questions along with how much cash do you currently have? How long will that cash last?

Yes. So as we highlighted in our recent financials, $3.7 million of cash, that went down by about $1 million over the quarter. So one of the things with a team that is 22% owners of the business, we want to see as much money going into the ground as possible because that's really where you create the value. So we run an extremely low G&A. So $3.7 million at roughly $1 million a quarter, everyone can do the math on that. We do have about $3.3 million of in-the-money warrants, which can be exercised by the end of June. So there's another, call it, 3 quarters of cash there. So we're in a good position in terms of -- we're not in any rush that we need to raise money. But obviously, as an exploration company and development stage company, capital is one of the requirements. We do have a very strong institutional ownership, who obviously don't want to be diluted and recognize the big upside potential of this project and want to see us push it to that construction decision.

So if you do have any questions or if we didn't get your questions, I'll make sure to follow up via e-mail after the fact. And I did throw my e-mail in the chat, but there is one great question, and I think that it would be good to end on, Luke. So what is the long-term view for this company? Single asset producer? Use the free cash flow to purchase another or sell this at the right price?

So our view on the back of, obviously, working on this PEA over the last number of months and obviously, the results that we put out yesterday, the initial feedback that we've had from the market, including a number of our major investors is that this project is too good for us to not put in production. Again, at a $1,850 gold price, you're looking at an after-tax NPV of $370 million. CapEx -- or NPV to CapEx of 3.5x, IRR of 58%, less than a 1 point -- or sorry, less than a 2-year payback at 1.6 years. So anyone who wants to follow up, my challenge is go find another project that sits within a company of our size, that has economics like this that can actually be built by a junior company. So that's what we're going to start to focus on and be laser focused on. But obviously, we can't lose fact of the reality that we've got huge district scale exploration upside. So Greg has highlighted that. We've talked about it. But for us and for a number of our major shareholders, where they see the most value being created is pushing this to a production decision. And I think the numbers in the PEA have really highlighted why that should be the focus of the company. And I think the market, over the last day or 2, we've seen the stock up on big volume, and I think the market is just starting to wake up to the fact that we've got a very attractive project. And as we kind of derisked it and move it forward, does someone come along and say, "Hey, we want to pay you a huge premium." That's something, as a management team, that it's not our decision, that's shareholder decisions. Where we sit today, I think, it would be crazy to sell it because there's so much value for us to trade by moving it to a construction decision. So Mal, happy for you to add to that or any of the other, but that's kind of, I think, the view for the team and the company.

I think if you look at the team involved here and specifically the Board, you can see a number of the successes the group has had and that spans exploration, development and production. So we definitely have the people in terms of that path forward, which is a reason I joined. So -- and I'm sure the reason why Greg, Luke and Branden are all excited to be part of the team. So.... I think with that, we're definitely over time. So again, I encourage people to reach out directly to me if there are any follow-up questions or you want to meet with the team. And I just want to say a big thank you to everyone for joining us to get the detail on the PEA today. In terms of following us, please do follow us on social media. We're going to have some great content on X, LinkedIn, Facebook coming up, given all the interviews on the back of the PEA results. So please do follow us and stay tuned for some great discussions that Luke will be having on various platforms. And with that, I hope everyone has a great weekend, given it's Friday. So thank you all for joining.

Thank you.