Gold Resource (GORO) 25 Feb 212020 Q4 Earnings call transcript

Company Profile

Participants

Elizabeth Wilkinson	executive
Allen Palmiere	executive
Kimberly Perry	executive
Heiko Ihle	analyst
John Bair	analyst

Call transcript

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Operator

Thank you for standing by. This is the conference operator. Welcome to the Gold Resource Corporation's Year-end 2020 Conference Call. [Operator Instructions] I would now like to turn the conference call over to Ann Wilkinson, Vice President, Investor Relations and Corporate Affairs. Please go ahead.

Elizabeth Wilkinson

good and Kaye, you, morning, everyone. Thank of to welcome behalf call. the XXXX Gold like would I team, everyone conference Resource results On to year-end our

Form we forward-looking statements numerous as to housekeeping and made filings. today subject are XX-K to Before to management risks Please and be call, described team as the annual would are are cover. certain uncertainties I report nature, SEC in like certain that note by the begin in and on matters other our there such,

the Allen On as Palmiere, and Chief Officer. call Chief Perry, well as President today, we have Executive Kim Financial Officer;

their Following being they is webcast. to available answer be your prepared This call remarks, questions. conference will

PDF tab later copy the be the slides you from the will The on call under our of those website today. webcast, on For of a joining conference Materials A us for replay also event download Question Ask available tab. the you can

and the with accompanying Yesterday's will the following filed this stated. I note news EDGAR. contained statement SEC been the U.S. and turn that over the financial call on released in mentioned unless Also, dollars close our have call in Allen. amounts MD&A now otherwise please the in XX-K all to of are market

Allen Palmiere

XXXX. outlining good to and some taking of the of the want results morning, listeners Ann, you, forward to the Thank the for I us. time I everyone. thank from company look all to of join

Mr. distribution took we X over The XX, focus of public the remarks, to as Resource Perry, our we Directors. run Mining Driscoll our our created outstanding XXXX of provide Ms. early Corp. take for remarks, assets year, December Murphy, Gold to was Reid's way Directors, pro and by will shares our Nevada Kim departure questions. On the a then company. to Independent view the to shareholders And CEO closing the you results. will completed Corporation, These a the my Following subsidiary Fortitude. added high-level will newly necessary on on rata few Jason a Unit new to new Joe then and of your governance. following a of XXXX, XXXX. I December Manassa our a completed opening its CFO, Lila of Fortitude describe while financial the Gold spin-off the with Mr. Board implementing Ron of company's I plans unlocking the leadership separate separation additions expertise Mexican value best-in-class of and add to Little, in XX,

shutdown pleased X,XXX mandatory marked ounces COVID-XX to and milestones, silver, production Resource our tonnes of report to to X.X in Mexican years X-month X,XXX of million date. XXXX the approximately Gold tonnes over of I'm to and produced in that XX,XXX Don XX,XXX tonnes XX lead of Gold operations. pandemic. Turning XXXX of David Mine the response copper, of gold, about ounces billion despite zinc the $X X revenues in of

because the per tonnes ore of day in and safety lost rate keep compared measures day fourth we workforce at average largely quarter, related to safe. an protocols X,XXX tonnes XXXX, of During COVID-XX per workdays our to processed to X,XXX

the XXXX XX% deposit second of impact being accounted mining decline. we for As drop are accounted of nature in the and a the X% down where which shut to the pandemic, overall approximately declined by recoveries the of the balance the expected, due due in plant the to for and of quarter

occur electricity. cheaper, connect facilities diesel expected savings complete cost an project as manner. Construction to about and efficient the by year, which as was ensure dry during the filtration Paste midyear safe the the The open to by effective improved for operations XX,XXX to XXXX. as are will for first of During and the and approximately year. in $X.X tailings. a fill additional the for recycling. method XXXX, more electricity power in million are reduced XXX,XXX transmission to XX% The and be to families for accelerate consumption the access local pit close along connecting completed the tailings plant, to tailings of and in of processed of ground road dry power certain areas They mine the storage stack realized stack a reclamation primarily of safe result also infrastructure uninterrupted tailings. to grid time. The well fuel we plant facilitates tonnes efficient of mining allowed of future allow provide grid continued These paste support

to I to is Mine proud just that socially give sixth enterprise I'm earned an the that consecutive want That going David of. With award that, version, English Gold for the, to Finally, we year. over the Kim. the note are the will responsible very call Don turn very, accomplishment I

Kimberly Perry

closed December operating over cash performance we increase million ensured year $XX million. Nevada capital a XXXX, year-over-year from part activities working $XX David balance in the from Don over financial and This was was nearly cash consisting $XX everyone. The $XX just morning, as debt. during XX%. Gold good no with increase $XX Mining XXXX million and operations from of strong providing the at Allen, capitalization. the the million a after the you, spin-off Unit XX, the Cash of sheet, million And of of with Thank Mine just $XX including year, million is continuing from over

income year, the $X.X reported For we of million. net

from total within average of year decrease netted and for average realized a suspension were impacted This treatment the sales zinc the Net were operations concentrate revenue government-mandated charges gold, lead resulting which slightly silver by offset for to higher Our by first, prices in factors: copper. for decreased mining Lower to related volumes Mexican production are operations the concentrate million prices $XX.X compared of to XXXX. X global pandemic; was profit related XX% against primarily revenues. decrease realized million. second, as approximately million, is and $XX sales by and the in a $XX.X gross

production XXXX, $XXX which but approximate dependent increase each In tonne expected David to XX% cost of This expected This XXXX. for the produced the $XXX for to increase treatment equivalent period spot than reflects tonne to million The $X,XXX tonne for tonne $XXX ounce were per were concentrate the milled per costs tonne an labor the cost be impact charges per months cost were credits production zinc, can is $XXX. or decrease produced. for per also ounce concentrate by compared Mine's of the XX, December Gold for equivalent production a charges on total, $XXX $XXX XX tonne equates XXXX, per and as result million total Total production all-in cash of transportation per volumes. related sustaining sold. of The lower cost are gold and charges same X% $XX.X in $XX.X of decrease sales to for lower market $XXX of milled produced. The were decline concentrate costs. Treatment on directly in between negotiations, the of recent volatile. Don after XXXX by-product was in per This higher cost XX% XXXX. XXXX inflation is sold. gold XXXX XX% ended than versus concentrate to for is about treatment in $XX.X million XXXX rates treatment

expect with concentrates, expected charges few provide shortly. for in these and costs will XXXX, We the more especially Allen in decrease a decline details treatment to zinc

I turn the totaled During million of will over to million. With $XXX returned dividends since the XXXX, year, that, over we Allen. back have also $X.X to shareholders, which, call

Allen Palmiere

you, Kim. Thank

Turning to XXXX.

$XX the David ounce on mine, XXXX. reflected the closing, be after by-product we to focused of property in infrastructure of sustain Our will the large focus cash capital position. solid Of XX% $XXX. In results the Gold Mine recoveries in to XXXX to Oaxaca, delivered in of the and anticipate is $XX of production amid exploration. Gold expect invest which existing Don and per after the line in the will focus credit value XXXX David Mexico on gold in Mine be the operation to in demanding credits balance production approximately located remain margins, and excellence in a -- range $XXX. equivalent to approximately lower million, infrastructure cost, improve silver the initiatives be we range Gold sustaining the on all-in on with operational during focused cost improved to plan in our Accordingly, as ounce, within with exploration per Don by-product our and we We COVID-XX unlocking $XXX $XXX pandemic. total and global million

see productivity opportunity the work Mine reinvest for a our increase call expected with package. I that there I opportunity safety, as the including company We to turn unlock areas opening operator in laid Mexico medium to to take in will listen While has you capital to intend the team to recently the and Kim's and want of take operations. Thank strong repeat remain I concludes COVID-XX flexibility contractors operation remarks. is mine's to the forward and provides and would challenge balance the our operational managing situation, projects all resilience. I year us accomplished relations, life first-hand to short prepared holistic their the is excellent finished has your in hard and environmental And job to and Notwithstanding to my of excellence value time we our the the like our to of the capitalizing a the a comment a this Gold I lot community had covered which the approach for This term, with growth move done the in ground employees a a back order for over and remarks. prospective foundations organic understanding in to in. lot, to the taking do. the the thank visit Don the questions. more in now David stewardship, truly to highly of sheet, operations, to the on

Operator

Instructions] [Operator

Elizabeth Wilkinson

I that's pooling you so And exist. whether years skarn potential and there of asked, skarn have referenced if or on potential such the to he's is in a deep at Arista is a has gone been have webcast, to private come from interested previously, many determined in and enough not question determine was the site. after Arista, This the Kate at questions, it's mining a while Richard, investor. he Allen, for

Allen Palmiere

Richard, that the the currently of to Northwest, to We're underground, developing once Southeast. is objective, to process of we in skarn the the X drift exploration potential the drilling drifts X, current one program drilling and there. the, for one the Part certainly But existence location hit to that skarn. that It's for it? of year. know. Will this I number of the we exploration. Northwest, don't test part is of complete is

Elizabeth Wilkinson

Will website. company on the or the I have listing senior the PDAC? consider shows trade on the a question And And in second at Canada what coming in Board? like Venture Exchange listing attendance about the

Allen Palmiere

or that primarily on be It's Listing would on it secondary to it something and At that Venture that would thinking possibility. us enable stage, the trade a is this listing, is about. the investors research only be we're access and TSX a Toronto. something to

However, not occurs that necessarily one trading the in engender much a volume. does things often listing secondary that of of is way the

So it's It's companies, good it's automatic mining a but not an automatic. an not exchange conclusion. necessarily for

year portion terms year. of obviously much of a a is this year, good conferences, In like unique attending last

half at year. to about give a all you be schedule. this I PDAC, in of this on attendance I'm going a them, the We can't conferences are not year. be number dozen but are attending to there of virtually already specifically, going

a people got many our presenting conference. have intent it as possible. out certainly, But is as conflict be another story the We with to to

Elizabeth Wilkinson

Ruff is appears asks for Again, or of and from Is the you are the James if guidance, other metals. gold elaborate gold we stope XXXX expected it higher The to below says base while pre-pandemic levels examine on he you expecting In production Research specific that based remain -- the targeting? further? grades webcast, from reduced levels, silver that Can

Allen Palmiere

get mineralization original source, what's -- metals operating metals interesting. and The that or source, picked heat to precious the the the the epithermal. of termed are. heat on an away Switchback, base epithermal base that the area the with we're somewhat nature the further higher higher deposits we're lower dealing get from metals is closer in down are you you as higher are. The now, the And is where up. have original in the James, we're Absolutely. system the Right

extension holes ago silver point in will of silver drill release a will I press upward gold drilling weeks we'll Now believe and development out issued very high the that in the Those grades be and system. about prove we in in because from very few to gold that higher increasing grades Switchback, to our you should what out, were we be located exploration the grades. high and mining future, that continue see, resulted a

I think that answers your question.

Elizabeth Wilkinson

question from all-in prices used rates ranging the assume XX% from sustaining that continue James. for significantly XX%. below A by-product follow-up hold, are expect estimating credits costs? to fair to assumptions base lower is The it those significantly If prices current to metal

Allen Palmiere

Quick value, at all-in budgeted our cost we're in numbers, looking or sustaining, proportionately. if would presentation, base $XXX. Obviously, answer I is, yes. by-products of our $XXX earlier On metal indicated to increase sustaining decrease all-in in as the the prices

So that's absolutely assumption. a fair

Elizabeth Wilkinson

Oaxaca? any are to Marino head gentleman webcast named count, Greg [ reduce plans On outside you other there staff? of hand, a From the ]. and have again, operations investing plans Do the

Allen Palmiere

XX I have I'll Mexico back is is technical America? January, very The to as near future. would No. you down going down the to going terms North of it unusually good count, high typically in in Is head I down America? Mexico and in we Is find high-quality Yes. than are What anywhere. there. be very, competent. very for underground team Mexico expect a in In workforce. workforce the spent days as was and very, you higher workforce The see in Latin are

concerned level workforce. particularly about not I'm our of

and the as or labor, our the thumb X/X much world. labor If operating of runs consumables energy. total holds you in it's XX%. to XX% power percentage look of And pretty X/X it total cost, at X/X is, that cost a anywhere And rule

in our labor Oaxaca? looking. you're a are mining of production line. Are So the in always of as cost investing that industry, looking will at percentage outside we say I

opportunistic. merit, as You though it corporate will a on No. I tell program? something philosophy have out. you to. you and it we to that Do definition, it follow is focused is is, that has have looks presented If my And corporate development development by it you

XX% by virtue being in on never opportunities we choose a the those not to of presented up, but are of know. and follow you basis, Just there industry, are something that would continual

along at our very we put investing on Resource Gold Something position Currently, and look has in a that interested we're may that David then the is highly very, would outside already the together. extremely focus land and come Don block. prospective

Elizabeth Wilkinson

be be And the going Fortitude? can question, that is Next Trickle That's going forward? describe with you treated service agreement -- how will you from to going still Research?

Allen Palmiere

agreement, expect to Fortitude some is can't Fortitude quickly Fortitude do spin-off at you part to he services to made that. Well, was intent Resource talked I team. into Gold I Fortitude agreement really agreement at Gold only time that stage the need finite of a to has Resource tell as their know away. never provide while service fall all the do been the the team. with sufficient of talk will certain to some know quite Reid establish support that team point, because successful to the That is of -- their moving building own underlying to was service Fortitude, timing. And that Gold about would a of and I in agreed But and And sense his limit I we while own management it's service was that team. entered wholly-owned Resource whereby to provide service subsidiary. The about build agreement I Jason own up providing Fortitude. that

Elizabeth Wilkinson

you Research. to James, is clarify $X.X XXXX. the this question, $X the million reduction? and G&A million for between what versus and in related XXXX Ruff guidance was Can $X.X The from million drove the In So back

Allen Palmiere

that want you take to do one? Kim,

Kimberly Perry

you happy to. Allen, Sure, question. the Thank for

were part opportunities there G&A, to So several just the reduce of spin-off.

to So there some Fortitude. there came over were were through that certain salaries rents, that moved

So realize we're arrangements. of able this the bit to by year, a of nature But to through of lot of service being Fortitude then related company some it us benefits our spin-off. smaller a some a

Elizabeth Wilkinson

the also I the that important to $X.X million to think it's share-based million $X note compensation. excludes

Kimberly Perry

correct. that's Yes,

Elizabeth Wilkinson

which sustaining items in capital embedded So guidance, be and incremental? on would all-in clarify already are you can investments the which costs XXXX

Allen Palmiere

number and underway, into all-in the Some of got projects capital. go of a some of we've which some sustaining into go different -- growth will

there's by expenditures, And Specifically, potentially around recovery go to it not increase -- a would and growth. The project the completely is external The a all-in it's exploration, well, to That in-mine, in not the circuit capital, building recovery capital. X% gold major I filtration X% the into initiative. but is other stack would regrind in that major exploration-related that putting to all not we and our which in circuit. XX% the XX%. growth not underway be -- X to other into mine is growth That's modification facility is that dry X and projects to are additive sustaining, will sustaining. by new address, tailings plant analogous circuit, that

As prepare additional associated initial will and sustaining, like million is dry the That be for for got new underground costs stack that And mineable we resources $X.X drilling. that the type potentially with to related. underground the to as we forward, growth. We've drilling, all mine sustaining. areas approximately is is $X.X not exploration, reserves project all-in would of drilling definition in is be capital $X is is budget our That all and upgrade million we have, move there deposition but development. sustaining million for directionally, The reserves. That and to capital. intent exploration your of that

of I whether maintenance. not definition maintenance. revolves is underground think whether it's addressed or it really or additive And is around The most I've all them. development

an your life. the the example. develop resource grow long Exploration to attempt it It's is You increase to have resource. do term, to an

goes in growth capital. that So

Elizabeth Wilkinson

webcast. to the go And we'll likely -- from think patiently Kate, people questions people we'll ask think had we'll I I the we've quite the take there. then to phone as Allen, X more over on waiting

will are the on increase? dividends there Carter asking, continue? prospects Mr. is And So the a dividend webcast for

Allen Palmiere

are considering for Prospects dividends continue years. for the something at point. plans several not that increase as we're for have been last Current to the they is this

We have balance reasonable a sheet.

increased up We say there's will and ongoing to I it it, cash are increase to metal currently a a with be never decision large intent in and on sheet, large we reviewed hold down capital spending, end our that fact you will no position, basis. know. capital that an prices and with comes allocation if but anticipating balance

Elizabeth Wilkinson

Kate, have the waiting we do the Allen. in Thanks, on people wings phone?

Operator

we do. Yes,

question Ihle. Heiko first coming Our is from today

Heiko Ihle

Allen, Kim forward and truly all with to of Ann, looking I'm welcome to the team. you. working

Allen Palmiere

Good to hear from you, Heiko.

Heiko Ihle

For the local I what through and clear, for XXXX of the that remainder me won't David walk the mean, just previous all electrification of any your And can correct? spending that more cost we spending? community, be at all, at on yourself you to Don see

Allen Palmiere

XXXX, not XXXX. with In quantum of transmission order received so XXXX. was be associated was significant; bear in fact, only by going now, but nor it. and benefit line in million it the the There the me, we memory with was in completed it $X.X XXXX, in of capital project was I'm particularly no it of the $X The will Heiko, million. to

of quickly the do remarkable. and were enable Once benefits way of I pull gaining line associated they really know the very took to installation. one efficiently, with the spin-off several the very very construct more that way for the so, together The able the company the local issue to access communities the line. And to was right was line to of to constructed was right transmission to years them

rightfully have families of -- had before, company have you very proud XX,XXX of. something is electrical that XX,XXX the that never If people power think is who who never

Heiko Ihle

one that? your my assume see because license this on actually have very beyond could was, you in next is based social wish my to community computer the to feedback any excitement? And seen you I would question change area

Allen Palmiere

very, the community. years, good established Well, I local company, relationship very with the the will last over tell you that a XX has

is would of And in length XX-kilometer dealing we some are deal a of want community, part closely that so work to programs support, number we need got we're further exploration forward need with immediate that we the to that it we we infrastructure transmission We accomplishment. leverage to those with you've us. What working the hopefully ejidos the be. improve But good ejidos social with to properties. do respect off our license line Now our great because we've is community, expand Mexico notable to local have done leverage in continue relationship with of where north a a and or to strike our -- is obtain has they very, resources. got deal to and on working of going can in of that a a the not our been of what very with

Heiko Ihle

one and for me, might And question, then Kim sure. just X not I'm this be last a

Just I you expect as It your for you through per calendar as restructuring in of X/X does in a yet XXXX not On your the $X.XX note year? we're should to looks mean that in Fortitude like this see spin-off expenses. guidance, XX-K? expenses include for million clarification. much the G&A had your restructuring How severance we QX. remainder

Allen Palmiere

do Kim, that? take want you to

Kimberly Perry

finish forth, be It's but less significant. than Thank the Yes. Thank so unknowns and you, it you as be we Heiko. not a would systems $X There's still going separating to question, Allen. couple million. for

Heiko Ihle

is incurred? That to be yet

Kimberly Perry

has it incurred. been of Some

the incurred end All it of the first quarter, be yes. by will of

Heiko Ihle

of Excellent. All or the will first bit quarter, million about by be it $X incurred less. maybe a

Kimberly Perry

A Yes. Yes. less. bit

Heiko Ihle

good to made it's you to see Excellent. I Allen, that. site. appreciate the it

Allen Palmiere

going be back I'll month. again next

Operator

[ coming ]. Our today next question from is Harvey Bowlen

Unknown Shareholder

private I GORO. investor, almost Gosh, a have it of event, couple seems investor, in like questions. any longtime forever. In a I'm

if understand significantly correctly. affected year, last this production shutdown. First were flat Yet year from guidance I it of you the by that has noticed all, COVID I the for basically year last

greater So isn't I'm wondering than why production for XXXX XXXX.

Allen Palmiere

meet to as shareholder. you a glad I'm off, long-term first Harvey,

the of drove of to now, right I'm back highest look Mine too achieved. going much. mining profile What David step at but production at not ever into the the mine going the geology you production Don has are that, level we're mineralized Gold What the over zones. Don X history, and David If was XXXX

one that is Arista -- Switchback zone. is Soledad, that Arista. a different of XXXX, we much is wider then property that ever The developed veins. has it have in in cluster much, narrow Switchback vein, found than that Beginning narrow on And peaking developed one first in before. XXXX XXXX, veins anything and the was we particular is predominantly the

I as We average think you width have company something of and of Effectively, the XXXX. When higher can a can Soledad last get part such XX of XXXX you can a long-haul focused the was productivity. XXXX, in Soledad, vein year, you and mining you order meters. all levels adopt -- of different mining part methods. of the on it

are year, This in Arista. reemphasizing in the while vein we're also Switchback, in we operate Soledad to narrow continuing

mean is going going actually our higher is to that is decline. is Arista what grade. production Now to

to So be leave your behind. don't advantage going taking it want suffering metal of what isn't resources. to content pre-existing dramatically. we're now is We And doing

additional want a sustainable, it resource, we of year. success we going because to on to Hopefully, we sustain the basis. that that bit in do is almost that vein level but at XXXX utilize back won't Does X that. in that our so, out rate exclusively So us not of order the We infill to is a Switchback. increase take it's in while allows to primarily we our X,XXX need we're production? And forward, do near-mine was resources it us to entire for and primary can flat, a in exploration. long-term need But and this operations to production mining tonnes one enable over up focuses coming mean good widths mining and our No. of

Unknown Shareholder

on noticed were that I are at reserves than hear of the I of that they topic, XXXX you. end end XXXX. less the And Yes. same at

So addressing how that? you are

Allen Palmiere

able I a is about What million year. this That's that we've little $X.X last Last million up from for in Harvey. we're earlier, bit $X.X budgeted we just to exploration year. underground we our talked year. very -- about doing were and so hit hard, do really a year. underground do was an development year was not exploration. very, COVID It could atypical difficult

and of it of going had in I involved is and The company drilling. mine by your cost long-term type drifting you're because context located Most you. though. It example very to resource that use I'm a expensive. that out for is underground, to it And front you're started a a develop. I'll was America. of resources to are X of underground. long your you're Now XXXX. ability in it's so I with of context exploration ahead deposits then difficult drilling build epithermal the years' put for These in And Latin from put it. you, operating more type of ahead had never an of it's than constrained of in only a in similar as it. today, mineralization It's mines you. because type these resource of seldom have difficult was

good. premature. gold were bit that us were we'll a on it's the They reserves very, we've of that deal expand our Those that replace we're pulled But only of and to the we resources about. continue holes able Switchback them. it are but is resources, not weeks And example suggest will excited higher the some already would that indicative go. Primary as be history this into develop the Whether a a few property. However, are of drill we not optimism grade the to holes we ago. that of on ore, in continuation released year it's proves silver that but great very very giving of included holes

Unknown Shareholder

Sounds good.

of I course, all that Of this hope happens, obviously.

Allen Palmiere

in a fact we a There's anticipate had the it's that exploration. are And continuing we've I X in future. resources. major lot impressive really factors here. overly not I in am our very, mining; One, and zone. about and past, But the mineralized one, concerned very of it's in success

Unknown Shareholder

that of that to been some been is the exploration any on it you've the that -- -- place taking places and you've Or is of of exploration, in is areas expanding or sticking is the So that? kind the not in before?

Allen Palmiere

of more the it's former. think the I latter than

Southeast. mine. it the in area close to site the in mineralized It's an mine It's we've direct still to past. relatively the exploring. of the the outside a that is drilling zone we're not drilled But are of continuation We where

Switchback. underground, and is zone. a much both drilling the drilling, very explore Switchback, we're mineralized for Arista are near-mine drilling long a that we drilling directions potential the up-dip but We're are of East and for strike, We and further to new drilling to

So mineable focus specific the are exploration of our a on primarily answer of resources. is and we near-mine year a a hybrid. increasing But focusing this in-mine bit with

Operator

Bair. [Operator Instructions] from Our next question is John coming today

John Bair

have Advisors. Bair been here. Wealth a number I with client a shareholder shareholder Ascend for John years of --

So my I had I extent. touched of you call. you've And on appreciate some actually and all to them X, taking

Let with one. a real start me simple

electrical is don't have Going away that, understand costs to if Heiko's to there wondering power also being the grid, source? -- any any correctly? far back I And the related that ongoing reliable is question how generated? regarding How is you electrical

Allen Palmiere

Okay. line. John. that Number capital no it's to one, with there Quick you, the associated to response transmission meet more good that is is

to not The very, if X makes and circuit need and We for happy very, line, were hours is within generators maintain something for outside power been have particular so very And the mine. with and we the the problem, to it is keep last only line just attractive on turned generators used total grid. do completed and transmission It we running. a year, they think was we build been the a very of to stable this that the is continuity wanted reliable. to authority use have transmission very X We generation. there their normal standby that of on supply. p.m. it running. be line were was grid it stability primary What because power a has site to of time I a anyway, the It

have So we our availability. year, was power standby. generators there last to no shutdowns due as virtually But

John Bair

and $X exploration surface, Okay, well. underground got Is borehole? some maybe you at budgeted of was -- about kind exploration are surface directional versus is? great. doing question what differentiate that kind rig, I Can Harvey's you difference million simply on this versus $X.X being previous as physically locating where for of looking you've exploration; Can development. the a million drill your elaborate the for one, you

Allen Palmiere

exploration drilling, the for we we're Okay. to I drifts. we're very holes it. approximately cost there and to those Southeast. poking just one is earlier with. surface see deals million the targets, traditional what talked for That driving What development identified That's million the it come doing $X.X just that. to and with The $X.X up much $X The one an we're million of surface that drilling. is driving got drift, Northwest that We've into is --

have out don't I fingertips; and sorry, underground. -- there's another for number stations. as at well. Does that, million is, drifts, that be to I'm directionally, then But from the slash drilling And on doing question, addition actually from we we exploration that what exploration drilling we those answer my there's underground John. your as $X drill drive underground, In drill go we'll And John?

John Bair

Yes.

Okay.

going the East as so Northwest pulled your going to anomaly website. have -- one well are area And the your looking as to your on I'm you presentations And up and I of from XX Southeast. holes some in Page magnetic poke over

kind that. sort at of of looking So

Allen Palmiere

the test of around part anomaly. is objective that -- that halo of drift to the magnetic Northwest The to going the

to that to the Northwest drift to for an both going right. But objectives Switchback other look absolutely and Arista. is of You're extension the

mineralized -- pushing Switchback. that. at indication that one there's Going to be long to of strike there few we'll the of a both some has looking because holes Southeast, zone zones, additional further those be an a The also Northwest and East to beyond it's the drift its we're objectives the might mineralized for

we're that. also So testing

of a So got for targets program. this we've multitude

John Bair

been How the other and years your that, that additional and target many in so that boreholes presentations particular you will budget that way? think about was vein of of talked that has be forth. aspect what do system Or previous the asked, maybe would parallel better percentage Yes, potential? exploration targeted

Allen Palmiere

us about have that that only stations to X drill We zone get to enough test close it.

over lucky are find enough potential potential, of something, it be us there in to the way really have And test is If we be expressions it's to underground. might only say would hard something surface because indicators to that lead there's to there. that lot won't we'll drilling where drifting from John, probably a don't believe then zone. I there the So holes in we new direction end to expand up that there. any

dozen it we year, more joy, subsequent So that years. If half some will than we up only and holes. on year following no be get probably a then in will limited this next plan

John Bair

news little it zinc. say, a significant Okay. for on Great. a, processing was price that products, to zinc question going more? of variable My couple out can forth. silver. you bouncing My you improvements last forth. question. and of metals you processing fixed a nipped more that We base and and gold one believe I X-year so Kim a about about rather be, It's see all various with touched on month-to-month share it Can of for, kind lead, maybe in sounds still pretty her talk pricing for like put day the every comments on schedule fees a we're than readily how feeds so the processing was bit around years? And kind and

Allen Palmiere

reduction to, lot highs. zinc, referring a very on purposes at be we you That year. They've our come spot, a anything I hit and wanted, smelters. about directionally are saving. What that XX,XXX were we've they will charge of of if we've hard. of taken indications us you smelter a But were roof. there material contract that a of was per you're in it is pricing with that our on smelter looking the concentrate our our very, for were prices this is through TCs charged are our all almost our TCs. very pretty and the level is guidance done What Okay. now, significant space zinc, the current by-products. they zinc. near went the very, on is XX% reduced, and budgeting us a math cost having XX,XXX tonne about a normality her indicated because produce we The right production, do hard. squeeze associated big remarks. But historic Last It's smelters of talked of to pretty it basis, and back straightforward. That for the significant hit XX% our of have very number. able conservative John, Kim contracts to in year, very to tonnes based at smelted position and a for or the And

right Just for used example, high a we've for used, our numbers north We Copper bit we zinc trading now directionally, were $XXs $X. $XXX, is $XXX. $X higher conservative on Lead, just and is were we copper. silver and of $XXX, gold. for lead is now. again and for Zinc, under

who very, cash John? Now gold, comment we'll of of I'm because If going it, anything, terms volatility in goes. anticipating. our flow flow we're very a where certainly, the in price it a seen recently, out to cash looking are we've providing on make knows lot But that secure get it. Does address by-products of excess

John Bair

Yes. your focus That forth, renewables said prices that has this as realized have up. Gold Silver copper, by-products used And been tough few for -- silver. and last basically higher. on lead, has going well, months. so that in zinc for moved you all your been obviously, are with the

zinc guess it it's double-edged really good really down -- So -- is price for isn't I a realized and like... double-edged going a sounds so that's costs up, It zinc going processing positive your if I sword, your sword. for are boost. a mean

Allen Palmiere

positive... nice a it It's could and multiplier, have a very

John Bair

it I call the should is guess, a tailwind, Let's way good it be.

helps That out. me Okay. Very good.

Elizabeth Wilkinson

more the answered, and Allen general trying approach we are the as didn't whose get up hour. you. with questions Kim, the we question will for categories. on bucket couple to of follow webcast there And questions the in anybody top a We're

in be are question effect? for financial I'm How a relation to in XXXX, reform labor could assuming, Mexico? you the specifically, prepared So on getting Kim. the And what

Kimberly Perry

for you question. the Thank

in was the to been the reform from supposed labor and happen it's early postponed. vote So February, originally perspective,

that that -- they addressing, the Now some week. on was were there's other this voted Congress tickets the big

or at the reform election in was that's June thought the on before in early February, going point. election everything we go occur So going actually that think to we might had -- for to voted ready Congress. Because we vote the to be occur the

ready union. with our the vote be had when lot to So discussions We've occurs, of we'll go. a

substitution favorable. very Basically their all is current to all cost-neutral. union pretty tenure be much we and a so impact is going will their will feel Our cost employees be that benefits. The maintain

out, the [ given be kind always especially with So component there's that have paying markup the Those provider compensated of to side our now employees also our some we will were flip service have where a bonus. and fact wash profit a did we then we there sharing. really ] of

neutral. So about really the cost should impact be

Elizabeth Wilkinson

concerns Mexico -- considering have government appear is any Allen, of could it And you the that do with anti-mining?

Allen Palmiere

Not particularly.

Mexico government through I to do so or compromise comprehensive jeopardize But as that anything funds by of in don't. if seems the I pervasive our degree to the goes I to really effectively believe think periods do to be that be world country mining be cash so think and you not operations? virtually all expenditures. Will it every of economy cow great is deal activities, changes? No, percentage look to that the Absolutely. really the of that's popular generated at to anti-mining. But where going be do to -- a there the their the that -- GDP of the I going they're going

there will world, to environmental that the it's every in country think happening I in be, stiffen controls. and movement

we But I think there nameplate when increases offsetting be will potentially see increased taxation, oftentimes, there's in deductions. taxation.

see I the this point, going for result So any don't particularly At not is significant. cause forward. don't and net anticipate concern, I any

Elizabeth Wilkinson

Okay.

GILTI Was there me on From adjustment potential In a I Let here. or just refund Ruff GORO from the understand resulting James pursuing tax. resolution check The was that? any at Thottam Research. historically

Allen Palmiere

that tackle to want one? you do Kim,

Kimberly Perry

good happy question. to. James, that's a Yes, I'm

through So some we review XXXX whether that were considered in or allowed us there to not jurisdiction. came was that in reform basically high-tax

XXXX. We in and and receiving a not earlier. we XXXX impact So Allen expense from million XXXX, back from fuel in the recall, the we for qualify we related were using had high-tax $X XXXX, time mentioned will for we because did at went exemption GILTI the diesel were In XXXX most credits that to generators XXXX. about diesel evaluated investors and

jurisdiction. a a high-tax down not did But XXXX, that benefit credits our those have to was from we in range diesel those considered bring that credits. not did So tax

refund; basically But approximately XXXX. So XXXX, hesitate qualify a to in reduced it call the tax-effected a, for exposure impact for was we did $XXX,XXX. the I it

that of $X sorry. -- some that XXXX million XXXX, did receive was recorded So in we back or

Elizabeth Wilkinson

the Craig I in think from comes webcast. last This we question. X on have time for

you So of CEO Allen, as excites the GORO, company most you and what the going and encourages the opportunities forward? prospects of new about

Allen Palmiere

company Really, viewed the first that a in reason opportunity. goes place. to as the unique joined I I the it

technical very can at accommodate we very, have opportunities. the bandwidth excess team strong any new a got very, that You mine with so

followed was a We highly done property was bit X on little Never ago. that the years the got is exploration North have because focus Arista. of prospective. up A very to position impressive

extremely I think the opportunities for exploration attractive. are

no We have debt.

We go have reason we the -- capital million directionally, year-end, to had No cash. to in markets. $XX

of outside M&A, growth. Oaxaca. requirements over We by of flow an it in properties is And on -- will platform advantage people company of those a take this with our in It's something which cash to about year well company But be which really it's unlock very significant attractive and associated The challenges, margin. real take if generating is excess value no challenges. or organic operating of unlock get seldom to a but value it's has by to company very to opportunities the by positioned a for issues. opportunity comes definition the that free by way an from very you

Elizabeth Wilkinson

of Allen. hour. call. one and for every our that each the thank us tuning for you to brings top Well, in Thanks, to of the attending We wanted and

get Thank we And call. the to, -- back you again webcast that next the quarter conference you. to of posed questions be talk any in on on didn't you. circling with around you will we who For we will the

Allen Palmiere

Thanks, everyone.

Operator

event. conclude Thank you. today's does this gentlemen, Ladies and

wonderful may thank at and You a day. this We disconnect time, participation. your have for you

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