Wesdome Gold Mines Ltd. (WDO) Earnings Call Transcript & Summary

Good morning, and welcome to Wesdome Gold Mines Kiena Preliminary Economic Assessment Conference Call. I will now turn the call over to Heather Laxton to begin today.

Thank you, operator. Good morning, everyone. We hope you're all keeping well, and we thank you for joining us today. I'll just cover off a few housekeeping matters here before we begin. First off, during this presentation, we'll discuss our business outlook and make forward-looking statements. These comments are based on our predictions and expectations as of today. Actual events or results could cause outcomes to differ materially due to a number of risks and uncertainties, including those mentioned in the detailed cautionary note contained in yesterday's press release. Please note that the preliminary economic assessment for the Kiena Complex is based on the updated mineral resource estimate prepared as of September 25, 2019, and filed on SEDAR on November 8, 2019. The PEA is intended to provide an initial high-level review of the project potential and design options and the economic model at mine plan include numerous assumptions, including the use of inferred mineral resources as permitted in National Instrument 43-101 for PEA studies. There is no guarantee that inferred mineral resources can be converted to indicated or measured mineral resources. And as such, there is no guarantee that the project economics described in the PEA and during this call can be achieved. Please note that all figures discussed on this call are in Canadian dollars unless otherwise stated. The full PEA will be filed on SEDAR and posted to the company's website within 45 days of yesterday's news release. And finally, the slides used for this presentation and a recording of this call will be posted on the company's website. I will now turn over to you, Duncan.

Great. Well, welcome, everybody. As we go to Slide #4, what we see here is the company's strategy. And really, the company's strategy is quite simple. First and foremost, expand production sustainably from the Eagle River mine, increase our reserves and resources through an aggressive exploration program, optimize the operations in order to drive value and produce at a minimum rate of 100,000 ounces per annum and continue on our trend of incremental increases. The second pillar of our strategy is to bring the Kiena mine back into production and establish a high-grade, low-cost operation capable of producing at 100,000 ounces per annum. This independent PEA indicates at a high level, those criteria have been met. We believe the preproduction cap that's required for a potential restart is entirely self-funded with free cash flow from the company's operating asset, the Eagle River Mine. Additionally, the company's balance sheet is strong with $49 million in cash and equivalents as of March 31, 2020, and an available $45 million revolving line of credit associated with no debt. The results of this PEA are very supportive to our strategy. The Wesdome has the ability to become Canada's next mid-tier gold producer. Our focus continues on the next steps. And despite COVID-19 setbacks and challenges, the company intends to deliver an updated resource in Q4 and start work immediately on our next phase, which is the pre-feasibility study, which is intended to provide us with a construction decision. The assets I mentioned, both of them are in world-class mining jurisdictions, Ontario and Québec. The company's third asset is the Moss Lake property, which is also located in mining-friendly Ontario. However, the company's focus so far has remained on the assets was to quickly deliver value. The company has not suspended production guidance and currently intends to produce 90,000 to 100,000 ounces through extremely challenging times. This will also serve to bolster our balance sheet, especially in the gold market we are currently experiencing. I take this opportunity to thank our employees and contractors for working safely to the COVID-19 pandemic, challenging to say the least. Now let's get into Kiena. As we know, Kiena mine was a great past producer with a great address, 10 kilometers outside of Val d’Or, 12.5 million tonnes at a grade of 4.5 grams or 1.75 million ounces produced. All the required infrastructure is in place, a 2,000 tonne per day mill, the 930-meter deep shaft, the ramp system moving down now to nearly 1,100 meters below surface and the tailings management facility, all operational. The mine has never been flooded despite being put on suspension since September of 2013. Additionally, all permits are in place to conduct our advanced exploration program and the resumption of productions. Looking at the resources considered for the PEA, the company took the decision to include only those resources proximal to the mine infrastructure. Since resuming underground exploration in 2016, our focus has been exactly that and an emphasis, of course, on the high-grade A Zone. Since our last resource update on Kiena, we have been very focused on the A Zone plunge extensions and the conversion of the inferred resources up into the indicated resource category. Since the upcoming PFS can only consider measured and indicated resources, we wanted to ensure there would be no disjoint with the inclusion of the remaining resources on Kiena property. Our intent is to come to a restart decision and become an established producer, meanwhile commencing a systematic evaluation of the remaining resources. What we see here are those resources, you can see the model wireframes within the Kiena mine, and you see the proximity to existing mine infrastructure, which have been considered for this PEA. And with that, we'll hand it over to Marc-Andre. Marc-Andre, go ahead.

Thank you, Duncan. Good morning, everyone. Slide #10 -- Slide #9 shows a short summary of the 43-101 PEA. The price of gold used for this PEA was USD 1,532 at an exchange of 0.76 US/Canadian, which represents CAD 2,016. The price of gold, Wesdome decided to engage an independent firm called CPM Group to provide the long-term price projections for the PEA. CPM group is based in Brooklyn, in New York. The discount rates for this PEA was 5%. You see a quick snapshot of the mineral reserves -- resource, sorry, indicated an inferred to over 850,000 ounces, grade caps between 20 to 200 grams. And you see the technical information for the indicated inferred based on the drill spacing. Of course, the majority of these resources are from the Kiena Deep. So the total of ounces from the Kiena Deep were 737,000 ounces, which represents 87% of our mineral resources. Stope shapes for the PEA were done with a software called Deswik, DSO. Deswik Stope Optimizer software generates optimum configuration of stopes for underground mining and an extraction factor -- mining extraction factor of 90% was used for the Kiena Deep and 80% for the other zones. The 90% for the Kiena Deep is higher, mainly because of the good continuity of the zone. You see the breakdown of the dilution for each zone. The dilution grade was used for 0.0 gram per tonne and higher dilution factor was applied to the Kiena Deep, mainly due to the presence of the shift in some of the zones. The main recovery used for the PEA was, of course, based on the historical mill recovery for the other zones, and part of the PEA, we've done some metallurgical testing with SGS lab located in Lakefield for the A Zone. The metallurgical testing has demonstrated the current mill circuit, which is a basic cyanide and CIP circuit, is very well positioned to maximize the gold recovery for the Kiena Deep. So we use a mill recovery of 97% for the PEA. Total life of mine for the project with the current resource statement is 8 years. All right. Next slide. This picture shows the Kiena Deep. As you see, the -- we have about 600 meters of vertical ramp to develop. What you see on top in gray is the current development ongoing at the Kiena Deep below 1,050 level. So development is underway. Development -- underground development is going to be the main capital expenses for the project, mainly in the Kiena Deep and in the VC zone as well. The Kiena Deep zone has been divided in 35 -- in 7 zones, 5 level each for a total of 35 levels. Each mining front would be coming into production as the ramp goes down. The development rate used in the Kiena Deep is 11 meters a day. A ventilation raise will be developed from top-down as the ramp goes down to sustain production. Next slide. A quick look on the Life of Mine production. So what you see on this table, you see the production tonnes, grades, ounces -- and mine ounces, sorry, for each zones for each years. So as per the PEA, development starts in 2021. And the production basically ramp up from a low tonnage, about -- up to 800 tonnes per day over the years. The first 4 years of production is 2022. And at the beginning, we see the contribution from the other zones, and it ends in 2026, when the production comes from 100% from the Kiena Deep at this time. The daily tonnes from the Kiena Deep vary from 250 tonnes per day at the start, up to 720 tonnes per day near the end. Next, this is -- shows the production tonnes per year. The blue bars are the ore from the Kiena Deep. And the other color is the contribution from the other zones. As you can see, 80% of the tonnes are coming from the Kiena Deep. The average tonnage to the life of mine is 684 tonnes per day with a peak of 870 tonnes per day for 310,000 tonnes per year. Future mining with basically longhole mining. This mining method has been used in the past at Kiena in the S50 with success. We are also using the same mining method at Eagle. So we believe we have a pretty good handle on this mining method. All the ore in the Kiena Deep will be hauled by truck to the shaft -- to the existing shaft ore passes already established in the mine. All the waste rock generated from the development will be used for backfill underground. We also have a backfill system on surface, which will allow us to send the tailings material back into the underground voids. The overall strategy is to maximize throughput from the high grade of the Kiena Deep zone and to augment the production with the other zones. Next slide, production forecast. So this slide shows the ounce mine over the year. So of course, again, Kiena Deep is 91% of the ounces -- mine ounces come from the Kiena Deep. The ounce per tonne increased over the year, as -- of course, as the production increased from the Kiena Deep. And the grade actually increases as the production from the other zones declines. So to eventually reach a mine production over 100,000 ounces a year with the contribution of the Kiena Deep zone. A quick look at the operating cost. You see here the breakdown for each department; mine, mill, surface and G&A. So the operating cost used for the PEA was $163 a tonne, which includes definition drilling. I'd like to note there's no royalty cost in the -- at all at the Kiena -- for the Kiena Deep. So the operating cost was basically based on the historical information and also on our knowledge of -- our good knowledge of the operations since we've been there for a long time. There is an additional cost related to the tailings management of $275 a tonne, which will come from -- with the new tailing facility that would commission eventually in 2024. Let's have a look at the capital cost. As Duncan mentioned, it's a fairly low capital cost, preproduction and sustaining. So the preproduction cost for the Kiena Gold Project is estimated at near $44 million, and there are some -- and that includes the indirect and the contingency cost. The contingency cost was applied on some items where additional study is required. The preproduction capital expenditure includes refurbishment in the mine, the process plant, mine development, mining equipment, engineering and field programs. There are $8.9 million sunk cost, includes in the preproduction, which basically be spent in 2020. So that money is going to be spent this year as we are doing some underground work in the main ramps in the Kiena Deep, and also in one of our main exhaust raise. Site reclamation cost, which is $3 million, is on top of this existing $7 million obligation. So if we remove the sunk cost and the site reclamation cost, we come with preproduction costs of about $35 million, $36 million. The total sustaining cost for the project is estimated at $121 million, which includes $5.6 million contingency. There is no exploration cost as it is in the capital cost. The mine sustaining cost of near $93 million, which consist the bulk of our capital costs, includes underground development, equipment purchase and construction work. As I mentioned, a new tailing storage capacity -- area will be required for the long term and a new water treatment facility will be built as well. The cumulative life of mine expenditure costs include preproduction and sustaining of $165 million. The cumulative Life of Mine Forecast to Spend amount, which includes reclamation and closure bond and excludes sunk cost is estimated at $158.7 million. The mine capital cost, as I explained, is the main -- major capital cost for the project. Development, of course, is the key in the Kiena Deep and in the VC. It's mostly ramps and ventilation raises. As you know at Kiena, we do not have a lot of equipment. So in the PEA, we included the new equipment fleet, which will be composed of jumbos, scoop, haulage trucks, buckets and drills. Construction work, basically, as you know, we have an existing mine. We have a shaft -- we have current infrastructure, but as we go down, we have to develop an escape point. And eventually, as we get deeper, we will need another shaft facility in the Kiena Deep. Let's talk a bit about the mill and the TMA facility. The last time the mill was in operation was in 2013. The mine has been put in care and maintenance properly at that time. In the PEA, there is only $4 million of repairs to put the mill back in operation, which consists mainly of electrical upgrades and some repairs on the CIP tanks. And of course, purchasing of the equipment and supplies. A detailed plan restart audit was achieved during the PEA process. And we are, at this stage, to do the planning and the engineering to recommission the mill. We had the remaining capacity in our existing storage facility, which consists of the North and the South Basin, and a polishing pond. It is expected to reach the capacity in about 4 years after the restart of the operation. Of course, it all depends how much tailings we are going to send back on the ground for backfill. So in the PEA, we -- as shown there was 38% of the tails going back to underground. In 2024, a new facility will be required to store tailings that would be generative for the future. This tailing, what we're looking at, is a dry stacking facility comparable to what we have at the Eagle mine, which will allow us to store tailings with cyanide free. We are working at the moment with a consultant on the permitting of this facility. Next is the sensitivity analysis after tax 5% discount. Of course, as you can see, the price of gold has the most significant influence on the NPV compared to the other parameters based on the range of values evaluated. After the price of gold, the NPV is mostly impacted by changes of the exchange rate, USD:CAD as we sold -- as we sell our gold in Canadian dollars, and then to a lesser extent, by variations in operating and capital cost. What is interesting is the economic viability of the project will not be significantly impacted by the variation in the capital and operating cost, within the margin of error associated with the PEA cost estimates. At current gold price today, the NPV is more than CAD 425 -- sorry, CAD 525 million, at current gold price. I will now turn the call to Mike to talk a bit about the next steps.

The next step is really for the project. We want to continue on with the drilling, of course, and the conversion of inferred to indicated resources. And we want to proceed to the prefeasibility study. But as you know, we've been -- a lot of parts of the PEA have been done to almost a prefeasibility level, but there is a lot of work still to do on the metallurgical test work, some geotechnical work, which is going to involve some drilling and some geotech logging, some hydrogeology, some additional environmental permitting, particularly around the new tailings facility. And then we're going to update the resource estimate. So really, I think on the exploration slide, I think that we're happy -- as happy as we've ever been. Certainly, we resumed drilling now as of May 11. And prior to the suspension in March, 7 underground drills were in operation, really tasked with infill and the up and down plunge extension drilling of the Kiena Deep A Zone. This drilling has continued to confirm the overall continuity of the A Zone and successfully identified additional mineralization outside of the most recent resource estimate, which was used in the PEA. The A Zone now extends down plunge in excess of 830 meters. Since the September 2019 resource estimate used in the PEA, a total of 47,800 meters and 164 new holes have been drilled. As you can see from the recent press releases, this drilling is expected to expand the September 29 resource space. As such, we plan to use this drilling as well as the current drilling we are doing to update the mineral resources in Q4. In addition, 2 of the 7 drills have been positioned in the new 79 level exploration ramp. And are now following up on several encouraging drill results in the potential up plunge extension of the A Zone as well as the down dip extension of the VC zones between the 67 level and the 105 level. It is interpreted that the VC zones are folded as they extend down plunge to and possibly could connect with the A Zone. The 79 level exploration map could also serve as a hall strip for any future production from this area as it access the main shaft level dump pocket. Over the past several years, our primary focus has been the Kiena Deep A Zone. Although it remains the focus of the drilling to add additional mineralization, we have also started to work on the remaining 8 historic zones on the property that have returned positive results from limited exploration. In total, on the Kiena property, the resources altogether totaled 2.83 million tonnes at 8.7 grams per tonne for 790,000 ounces in the measured and indicated an additional 798,000 ounces in the inferred category. In addition, we have commenced our property wide exploration campaign, which includes updating the geologic interpretation, which is really important, given that the A Zone represents a new style of gold mineralization on the property. Our regional magnetocaloric geophysical survey has been completed on the lake ice covering the Kiena deposit and the immediately surrounding volcanic rocks. The survey was designed to identify deep structures up to 1.5 kilometers below surface. This data combined with the airborne mag and historical information, has identified a number of new and exciting exploration targets and will be the testing that will be done later from surface drilling. Over to you, Duncan.

Great. Thanks, Mike. In summary, I think what we can see here is that it's quite compelling currently with the parameters that we've used. I think that in retrospect, because we have been operating the Kiena mine for a number of years now, we really do have a good confidence in the parameters that we've used. There's always going to be some unknown, and of course, we're going to definitely address those areas and get some comfort around that within the PFS process. I think overall, I would have to say that this assessment has been conservatively done. However, again, I emphasize that our operating experience, at Kiena mine certainly does give us some confidence in moving forward here into the next phases of the resource update and the PFS. So I think with that, I'd open it up to some questions and answers.

Operator, can you please remind everybody how to ask the question?

[Operator Instructions] And your first question comes from the line of George Topping with Industrial Alliance.

Marc, Andre, just a couple of questions for you here. The 3-meter minimum thickness, I saw that in the slide. But do you know -- roughly ballpark, what's the average over the 8 years for the average mining thickness?

You mean in the past, George?

Well, no in this -- in the PEA plan.

Yes. I believe it was the average overall. It varies from basically 3 meters to 8 meters. But -- so the average is probably around on 4 or 5 meters.

All right. Great. So no real changes there. Good. Next, just on the long haul, the dilution that was settled on for the PEA for the grade dilution. And are you getting grades coming in from that dilution or are you continue it at 0?

I think what we put in the PEA, George, is very conservative. You cannot go lower than 0. So 0 is fairly conservative. One thing we misses, George, is in those DSO shapes, there is actually internal dilution included as well. So I mean, as we progress through the project with more detailed design, we believe that we can improve on that, for sure, at maximizing the ore recovery and minimizing the mine dilution.

Yes. So the dilution used was it in -- I didn't see it. Maybe I missed it.

21% for the Kiena Deep.

Got it. And then lastly. If you want, I hand it over. Just on the mine -- in the mine plan, how far ahead of production will you run the ore reserve development? Will you be able to get a year ahead when you're starting up?

What has been done George is very high level mine planning and mine design. So of course, that's something that is going to be optimized in -- at the PFS level. What it is now? It's based on development productivity assumptions and the key asset is the main ramp. So as the main ramp goes down, and I believe the productivity used in the PEA for the main ramp is about 150, 160 meters a month. So that is kind of the bottleneck, if I can say that as the main ramp goes down, it will allow to open more mining fund, more mining stopes. So the key is definitively the ramp and we believe in our current PEA, there's lots of potential to optimize and maximize the production from the Kiena Deep.

And your next question comes from the line of Don DeMarco with National Bank Financial.

Just had some questions about your rationale for the throughput. So I see that the throughput commences around 350 tonnes per day and then it gets up to about 850 tonnes per day. Are there any constraints that are stopping you from getting to greater than 1,000 tonnes per day. I mean, maybe just mentioning about the main ramp. But if you could just add any more color on constraints getting throughput high?

Well, it's all based on assumptions, Don. So the main ramp is one. And it's all about productivities and the mining cycle. So that's something, again that we believe we can surely optimize and improve. Our overall strategy, Don, is going to maximize throughput from the higher grade Kiena Deep zone. So that's going to be our main focus. And that's what we're going to be working on. If you look at the table in detail, you see that the production goes much higher in the Kiena Deep, once the development is completed. So there's probably some optimization work to do there to maximize the development productivity, the usage of waste rock for backfill, to short the hauling distance for trucks. So those kind of things that we'll be looking at in detail in the PFS. But we definitively see opportunities to increase the throughput.

And just to sort of highlight that AISC, I see less than mine average, just over $500 an ounce, pretty remarkable. Can you tell me a little bit about how the AISC varies in the early years of the mine plan? I think you got lower grade then versus later years?

I'm not sure if I understand your question, Don?

Yes. I can take that. Yes, I can take that, Marc. Yes. No, definitely, Don, as obviously, production rates are lower and the ounce production is lower. Our all-in sustaining will be higher. I don't have it in front of me right now. I mean the full report is, of course, going to come out probably in June, I would think. However, yes, I would totally expect that. Obviously, when we sort of hit our mark of over 100,000 ounces. I think the thing to emphasize here, though, really is this is a conservative base case. I got to tell you that the team at Kiena is salivating to get their hands on scope optimization and actually carve out the mining shapes within the data mine. As Marc mentioned before, the Deswik Stope Optimizer is a good tool on a preliminary basis, I would say, but that's never how you would -- I don't think we do a production plan and go right into mining like that. So we do see a lot of opportunities within this. The other opportunity, of course, is exploration, okay? So I think that by the time we come to do the PFS, any sort of additions we have above the 10, 50-meter level, I think are just going to be so additive to what we are, and especially in the early days of this. So I'd look for that in the upcoming resource estimate.

And your next question comes from the line of Phil Ker with PI Financial.

Most of my questions were already answered, but if you just maybe follow-up and elaborate on the potential optimization of the ramp in bringing in some of the Deep A or early on in the mine life, that would be great?

The key, I mean, it's all -- it's to get to cycle development heading every single shift every single day as you get deeper. We're working with our contractor at the moment to -- we are in the ramp at the moment. So we are improving our systems development productivity. Moving the waste, gas clearing. It's our work that is ongoing as we speak and as we're trying to improve the productivity as it is. I think the key -- and I don't want to repeat myself, but the key is going to be to keep the waste underground. So reduce the haulage, speed up the mucking cycle -- the development cycle and also allowed us to continue mining as we are going to backfill the stope with waste. So I think that is definitively a key. Ventilation is important as it is with the current cancelation system, we do have enough error. However, we will need some upgrade. On the long run, electric equipment could be used. It's not considered in the PEA. That's something that we'll be look at the PFS level. But the electric equipment will allow us to use, obviously, more equipment in the Kiena Deep with the same amount of [ pressure ]. So that start, I think, it's something that we really need to look at to maximize the development going down in the Kiena Deep.

And then just touching on the limitations of the production volumes, particularly coming from Kiena Deep. What limitations just given the likelihood of large-sized stopes down there, what's limiting the volume from increasing and to better utilize the 2,000 tonne per day capacity at the mill?

It's the ramp, the haulage distance, basically. And it's something we are experiencing at the Eagle mine. It's the same thing. It's with every single mine. As the ore gets deeper, the haulage distance gets longer. So you really have to optimize your haulage production activity.

And what about with the ongoing exploration success, both testing up plunge and even down plunge, you're getting obviously deeper in the system. Is there -- based on the time line of receiving some of the results, is there an opportunity to evaluate perhaps internal wins or something to increase those volumes and reduce the dependency on that ramp to bring up that deeper or faster and more effectively?

The up plunge -- the discovery in the up plunge, which would make a significant change in the production of the mine. We actually have resources in the VC zones from 67 level down to almost 100 level. The addition of the up plunge from the Kiena Deep will be located in the same area of the VC zone. So we will have the existing ramp already in place with more additional ore to mine. So that would be significant. That would be a game changer for the project. Maybe Mike can talk a bit more of that.

Certainly, it's -- with the completion of the exploration ramp on 79 level, we have 2 drills there now, which are chasing the VC down and also going to be testing the potential up plunge of A Zone. So I would like to think that in the next several months that we could hopefully get on to some new mineralization in this area and really drill away at that at a good pace. So we could include that in the next resource update. So we're going to be updating the Kiena Deep resource sometime in Q4, that's our current plan. And if we could find any mineralization in that plunge area, we certainly would like to include that in the resource as well before going into the PFS, because obviously, that could have a very positive impact. So we're hopeful we're going to find more mineralization there. We have a good geological model. And now it's really about drilling the hole. So that's what we're doing now with 7 -- to 7 rigs.

Okay. Great. And then just final question, I guess, would be related to the mill and turning that on? Are you looking at the latter half of 2021, more like processing a bulk sample and working out the tweaks in the mill?

So where we are now at the mill. So we are actually at the engineering timing level. So the mill is in fairly good shape, and we believe we can get that mill start-up fairly quick. Our main -- our key priority now on the ground is to develop exploration accesses and establish ramp bases. So we -- that's our current plan. We're not going to be that far away from the ore. So it's something that as it is, we do not plan, but we could certainly access the ore in a fairly close future. Maybe Duncan can add something on that.

Yes. I think, Phil, there's definitely merit to us getting into some of this deep ore. We definitely want to examine the geotechnical. I know -- you know, we'd love to have a look at the geology, really see what we have. Of course, the processing of that could be the final phase, more or less for, I suppose, mill test and just basically grade confirmation, however, we don't look at the mill as being a bottleneck. We're quite convinced the mill is in really pretty good shape. And so I think that as Marc Andre alluded to, the fact that we're doing the engineering on it, really only identified very really relatively minor rehabilitation or restart things to focus on. I don't believe it's going to be an issue.

And your next question comes from the line of Barry Allan with Laurentian Bank Security.

Mike, you've already touched on it to a certain extent, but I'd like to get a little bit more specific and what I'm trying to really visualize is the vertical plunge of the resource that was used in the September estimate compared to where you are now, where you say you have about 830 odd meters of vertical plunge and where you will be at the time you have a cutoff date for the updated resource. Could you kind of walk me through those 3 steps?

Certainly. I would say in the September, resource. Since that time, we've probably added about 100 meters down plunge with the drilling. And really, we've had some pretty spectacular results down there that we've seen, and we're infilling that because what we'd like to do in this resource, really it was about 50-50 indicated inferred with the 5 drills we've had underground. We did do the extension drilling on the A zone. We know it's there. And then we sort of pulled back a little bit from expansion to more infill drilling because we'd like to take that 700,000 ounces of indicated inferred that was used in the PEA. We're going to add to that, for sure, with the drilling that we've done. But what we'd really like to do is get enough infill drilling done, so we can take all the numbers in the PEA, get them into indicated status so that when we go to PFS, then we can use all that to convert into a reserve. That's really our goal now for the next 5 or 6 months of drilling, with those 5 rigs. And on the other end, the 2 drills are really the up plunge. So I think we're probably going to add some ounces on BC compared to what we had before, which is good. And we're certainly testing in that up plunge area of the A Zone, where we had some good hits, but it's a little bit -- it's a little bit more complicated than what we found on the A Zone. But the A Zone was complicated too when we first got in there. Now we understand it [ isn’t easy as thought ]. So hopefully with more drilling we'll get this all settled and add to the resource base on both ends. I mean really it's a lot of drilling that we've got on the books now. So we're going to see definitely increased proportion of indicated and more ounces, I'm pretty sure about.

Right. And could you just remind me, Mike, the gap between kind of where you think the VC bottoms out at than the top of the deep A Zone?

Yes. So right now, I think in the resource, we were maybe 100 meters deeper or so than the 67 level. And of course, our exploration ramp is on the 105 level. So that's about 400 vertical meters or so. I would say for the PEA, we maybe down about 100 meters since then. Let's see from the some of the drilling results we've had. We've extended it down past the 79% level. Now we're kind of down around 100 level. So we've actually brought that down say 250, 300 meters now. And we're still drilling in there right now. And so that's going to be an ad. But the really high-grade A Zone stuff we brought up above the 105 level, maybe to around the 100-meter level. Now if we could connect those 2 or if they're parallel zones, but in between the 400 -- sorry, the 67 level and the 100 and 105 level, then -- yes, that would really be great, because then we'd be buying more zones of 1 particular horizon between 67, 105 and our ounces per vertical meter which starts to go up because now we're mining 2 zones off the same level. So I think that could be really positive. But we're really just getting that drilling going now. And it's going to go pretty fast because that 79 level exploration ramp we put in was really going to help us not for drilling that because the holes are shorter, they're in good angle, so they're not going to get stuck in any ultramafics in the area and stuff. So I think that 2 or 3 months back, we'll have a pretty good idea for what -- I think we're -- we've got in front of us. So then a couple of months of infill drilling that, and we could add that on to the resource as well.

Okay. And just finally, are there any real deep pulls planned in this program before the next resource? Or you going to largely keep it to the infill when it comes to the deep zone?

It's -- right now, we're really concentrating on the infill, but it's hard to keep off some of that stuff at depth there. And we've got some good ideas about where it's going down plunge and the intersection with the B Zone. They're all kind of ideas that we have if we're in the right position. Certainly, as we put this exploration ramp further down because right now, we're coming down to 105, down to the 109 and 111 areas. And that's all we've done in the mafics. It is a great area to drill from. So I think if we can maybe get a rig in there, just to take a couple of shots and some deep stuff, I think we probably will. But really, the focus is on infill, for sure.

And there are no further questions. Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.