Eldorado Gold - Q3 2023

Transcript

Operator (participant)

Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold Q3 2023 Financial and Operational Results conference call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions. To join the question queue, you may press Star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing Star, then zero. I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations. Please go ahead, Ms. Gould.

Lynette Gould (VP of Investor Relations)

Thank you, operator, and good morning, everyone. I'd like to welcome you to our Q3 2023 results conference call. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures in our Management's Discussion and Analysis, as well as the risk factors set out in our Annual Information Form. Joining me on the call today, we have George Burns, President and Chief Executive Officer, Phil Yee, Executive Vice President and Chief Financial Officer, Joe Dick, Executive Vice President and Chief Operating Officer, and Simon Hille, Senior Vice President, Technical Services and Operations. Our release yesterday detailed our Q3 2023 financial and operating results.

This should be read in conjunction with our Q3 financial statements and Management's Discussion and Analysis, both of which are available on our website. They have also both been filed on SEDAR+ and EDGAR. All dollar figures discussed today are US dollars, unless otherwise stated. We will be speaking to the slides that accompany this webcast, and you can download a copy of these slides from our website. After the prepared remarks, we will open the call for Q&A. At this time, we will invite analysts to queue for questions. I will now turn the call over to George.

George Burns (President and CEO)

Thanks, Lynette, and good morning, everyone. Here's the outline for today's call. I'll provide a brief overview of Q3 results and highlights before passing it to Phil to go through the financials, and then Joe and Simon to review our operational performance. Then we will open the call to questions from our analysts. Turning to slide four, starting with production. Our performance continued to improve over the quarter with safe production of 121,030oz of gold. At Olympias, the mine delivered its best quarter of the year, and the trend is positive, with significant opportunity to make further improvements beyond where we are today. This is a site that is really seeing innovation and technology making a difference in productivity. In the past few months, we have energized the substation, upgraded ventilation, and added bulk emulsion blasting underground.

All of this is converging to create a positive trajectory for the site going forward. In the Q3, at Kışladağ, with the North Heap Leach Pad operational, we are seeing increased tons with three cells under leach, which should positively impact gold production in the Q4. The tons placed are record amounts compared to the past six and a half years, and a 19% increase relative to both the Q1 and Q2 of 2023. At Lamaque, Q3 production increased over both Q1 and Q2. However, it was impacted by slower than expected development in the underground due to suspended shifts in the Q2, owing to the wildfires in the region. As a result, we saw a ripple effect with reduced mining faces available for ore production during the Q3, which impacted our production relative to our expectations.

This site has consistently met its performance expectations, and I anticipate that it will maintain the trend throughout the Q4 as they access higher grade stopes. As we head into the Q4, we are updating our guidance range to narrow the ranges, reflecting our full-year expectations, given the operational and financial performance to date. We expect tightening gold production to between 475,000oz and 495,000oz versus previous guidance of 475,000oz to 515,000oz. Lowered cash operating costs to be between $730 to $780 per ounce sold, versus previous guidance of $760 to $860.

Tightening all-in sustaining costs to between $1,190 to $1,240 per ounce sold, versus previous guidance of $1,190 to $1,290. Sustaining capital guidance remains unchanged at $114 to $139 million. Growth capital for the year has been reduced to $280 to $305 million, from $394 to $437 million dollars, primarily driven by lower than expected growth capital spend at Skouries. Skouries capital is expected to be between $160 to $170 million dollars versus previous guidance of $240 to $260 million.

The reduction at Skouries is driven by a change in timing to award several contracts in order to optimize project execution, shifting of certain pre-production expenditures from 2023 to 2024 without impact to work progress or completion schedule, transitioning engineering work into Greece, an updated execution approach to major earthworks while maintaining construction schedule flexibility. In addition, the closing of the project financing in April, which was slightly delayed from our initial expectation, meant a slower ramp-up than what was expected in awarding the contracts. This lower than expected spend in growth capital at Skouries in 2023 is not impacting overall project plan, including cost and schedule, and we remain comfortable we are on track for first gold in mid-2025.

We are also pleased to issue our 2022 climate change and greenhouse gas emissions report in August, which provides a measurable progress towards our GHG mitigation target and enhancing climate resilience. This report builds on our first climate change report that was published in 2021 and focuses on our progress implementing the climate change strategy. The report included our GHG emissions target achievement pathway, in which we seek to mitigate our Scope one and Scope two emissions from operating mines by 30% on a 2020 baseline by 2030. Our GHG emissions target achievement pathway comprises four levers: operational efficiencies and continuous improvement, technologies, processes, and energy generation, grid decarbonization, and mine shutdown and operational changes. These opportunities will help mitigate our emissions, and we are already discovering these levers often provide multiple benefits that extend even further.

We are committed to continuing to assess opportunities to improve our emissions-related impacts and enhance the resilience of our business in response to climate change. In addition, we are committed to further investigating how we will incorporate Skouries' operational emissions to a climate target. I invite you to read the full report available on our website. The highlight as we entered the Q4 has been a well-attended investor and analyst mine tour that we hosted at all four of our European assets, Skouries, Olympias, Kışladağ, and Efemçukuru. Some of you on the call today were able to get a first-hand feel for how things are going on the ground, which provided a sense of confidence in terms of the abilities of each site team.

Each of you that participated was able to see firsthand how our productivity improvements are making a meaningful impact across the sites, and in addition, the opportunities that still lie ahead for us. Additionally, you're able to see directly our sustainable mining practices that we feel are best in class. I think everyone that attended the tour was impressed with our site teams and the significant achievements that we have made across the business. We plan in the future to host more investor and analyst tours as we continue to deliver our growth and value creation that is unique amongst our peers. I'll stop there and turn the call over to Phil for a review of our financial results.

Phil Yee (EVP and CFO)

Thank you, George. Good morning, everyone. Slide five provides a summary of our Q3 results. Eldorado reported a net loss attributable to shareholders from continuing operations of $6.6 million, or $0.03 loss per share in the Q3, directly impacted by the previously disclosed 5% retroactive corporate tax rate increase in Turkey, effective July 2023. After adjusting for one-time non-recurring items, adjusted net earnings were $35 million, or $0.17 per share for the quarter. These one-time non-recurring items included a one-time $22.6 million non-cash deferred tax expense and a one-time out-of-period current tax expense of $8.2 million, both the result of the retroactive corporate tax rate increase mentioned earlier.

In addition, a non-cash loss of $15.2 million on foreign exchange translation of deferred tax balances related to the weakening of the lira and the euro, and partially offset by a non-cash unrealized gain of $6 million on the revaluation of derivative instruments, primarily the gold collars. Free cash flow in the quarter was negative $19.3 million. Excluding capital investment in the Skouries project, free cash flow generation in the quarter was positive $30 million. Cash flow generated by operating activities before changes in working capital totaled $97.5 million, compared to the Q2 of 2023 of $82.4 million. Q3 cash operating costs averaged $698 per ounce sold, and all-in sustaining costs averaged $177 per ounce sold.

Our costs decreased during the quarter as we continued to see lower than expected fuel and electricity prices. This was partially offset by higher royalty expenses as a result of the higher realized gold price during the quarter. All-in sustaining costs per ounce sold in the Q3 were in line with expectations. With stronger gold production expected in the Q4, we expect to see decreasing unit costs, and as George mentioned, we have updated our cost guidance ranges. Capital expenditures were $91.1 million in the Q3, which included investment in growth projects at Kışladağ and at Skouries, where we continue to advance procurement and the project. Income tax expense of $52 million increased in the quarter compared to Q3 2022. Primarily a result of the retroactive 5% Turkish tax rate increase, as previously noted.

Current tax expense totaled $21 million in Q3 2023, an increase from Q3 2022 current tax expense of $16 million. Deferred tax expense increased to $31 million in Q3 2023, also an increase from Q3 2022 deferred tax expense of $12 million. These increases in Q3 2023 current and deferred tax expense over the comparative prior year period were due to the Turkey corporate tax rate increase previously mentioned. Turning to slide six. At quarter-end, we had unrestricted cash and cash equivalents of $476.6 million. With production expected to continue to improve over the Q4, we expect to see our cash from operations improving further.

With the closing of the Skouries project financing in April, availability under Eldorado's $250 million revolving credit facility was reduced, as Eldorado's funding commitment for the Skouries project is fully backstopped by a letter of credit under that revolving credit facility. The availability under the facility as of 30 September was $116 million. We continue to focus on maintaining a solid financial position, which provides flexibility to unlock value across our global business. With that, I will now turn it over to Joe to go through the operational highlights.

Joe Dick (EVP and COO)

Thanks, Phil, and good morning. Starting on slide seven. At Skouries, construction activity in Q3 continued to ramp up, with overall project progress at 34%, and when incorporating all prior work, Skouries progress stands at 65% complete. Mobilization continued for major earthworks, for construction haul roads needed to undertake all other major earthworks, and is progressing well with work on several fronts underway. During the quarter, the contractors for the earthworks and pilings for the primary crusher were mobilized and commenced work. General works continued to focus on site preparation, relocation of temporary facilities, recommissioning of the non-contact water reinjection well system, and the haulage of aggregates for construction purposes. The first phase of underground development continues to advance the west decline and lateral development for the test stopes to validate the underground assumptions prior to first production from the underground.

Test Stope work access will commence at the end of 2024, with expected completion by mid-2025. With year-to-date spending at Skouries at $101.3 million, we expect to ramp up our commitments during the Q4 and are comfortable achieving our updated guidance range of $160 million to $170 million. The spending is focused on completing detailed engineering and procurement. As of 30 September, detailed engineering is 56% complete and procurement is 73% complete. We continue to focus on completing key contracts with evaluations ongoing, with a view to generating cost and productivity synergies during the process. We expect to complete this process and award the remaining key contracts by the end of 2023, which include: the filter plant, including the earthworks, pilings and foundation to support the filters.

Open pit pre-stripping and construction of the ore stockpile, water management ponds, and the integrated extractive waste management facility dam embankment. Structural concrete for the primary crusher and associated process facilities, and mechanical, piping, electrical and instrumentation for the process plant. The project, both cost and schedule, remain on track for commissioning and first production in mid-2025, with commercial production expected at the end of 2025. Turning to slide eight. In the Q3, we recorded zero lost time injuries. The lost time injury frequency rate for the first nine months of the year was $0.74, a 49% decrease from the same period in 2022. We continue to take proactive steps to improve workplace safety and to ensure a safe working environment for our employees and our contractors.

On our operating results, we produced 121,030oz of gold in the Q3, with a cash operating cost of $698 per ounce sold. A solid quarter, which positions us to remain on track to meet our guidance. I'll pass it over to Simon to review the Q3 performance and operations in Turkey and Canada.

Simon Hille (SVP, Technical Services)

Thanks, Joe. Starting in Turkey on Slide nine. At Kışladağ, Q3 production was 37,219oz , and cash operating costs of $622 per ounce sold, which represents a 17% reduction in cash costs and similar production compared to Q3 2022. Production during the Q3 was driven by the successful commissioning of the agglomeration drum that was added to the crushing circuit in the Q2, and tonnes placed on the heap leach pad have continued to increase. The largest surface area of the newly commissioned North Heap Leach Pad has enabled the full capacity of the 54-inch stacking equipment to increase tonnes placed and increase the irrigation flow rates. Production is expected to increase over the course of the Q4 as we realize full effectiveness from the upgraded materials handling equipment.

In addition, we expect to continue to draw down inventory built up in Q2 as a result of the substantial rainfall that resulted in diluted leach solution. On slide 10, at Efemçukuru, Q3 gold production was 21,142oz at cash operating costs of $817 per ounce sold. Gold production throughput and average gold grade at Efemçukuru were in line with plan for the quarter. Development towards the Kokarpinar area is on track and is expected to continue to extend mine life. For 2023 at Efemçukuru, we expect to see a modest increase in Q4 production over the Q3. Additionally, during the quarter, the Efemçukuru mine was successfully certified ISO 50001 energy management standard. Now moving to Lamaque on slide 11.

Q3 gold production was 43,821oz at cash operating costs of $624 per ounce sold. Production was impacted by slower than expected development in the underground as a result of suspended shifts in the Q2 due to the wildfires in the region, which led to reduced mining phases for all production in the Q3. The Q4 is expected to be stronger, with development into high-grade stopes and continued stable processing rates. Additionally, we remain on track to complete our 2023 infill drilling program, targeting the upper two-thirds of the Ormaque deposit. Our plan is to take a bulk sample and announce Ormaque inaugural reserve during the second half of 2024. I'll hand the call back to Joe to review the Q3 results at Olympias.

Joe Dick (EVP and COO)

Thanks, Simon. Moving to Olympias on slide 12. Q3 gold production was 18,848oz , and cash operating costs were $885 per ounce sold. Mined and processed tonnes were up from prior quarter and at record levels for Olympias. Cash costs improved primarily due to productivity efficiencies resulting from recent transformation initiatives, as well as slightly lower unit costs for certain consumables, including electricity. During Q2 and early Q3, we completed a number of milestones that have resulted in our ability to increase underground development and production from the flat zone. These milestones include transitioning to mechanical loading of drilled rounds with a bulk emulsion agent, mechanical completion of a major upgrade to the ventilation system, and completion and energization of the new 150 kV substation, which enabled the ventilation system startup.

With access into the Flat Zone, we expect to improve not only our gold production, but also our byproduct metal production, which we expect to result in higher byproduct credits and in turn, lower operating costs going forward. Gold production is expected to be steady over the Q4 as the productivity initiatives continue to safely deliver increased tonnage and increased byproduct metals, reducing our overall cash costs. I'll stop there and turn it back to George for closing remarks.

George Burns (President and CEO)

Thanks, team. Our operating business has delivered a strong quarter, generating improved free cash flow, excluding capital expenditures on the Skouries project. We also delivered some fantastic improvements in our business. Both Olympias and Kışladağ reached a major turning point with the completion of key infrastructure investments. Both sites are now beginning to reap the benefits from these investments. At Lamaque, at Lamaque, we're well-positioned for the Ormaque deposit in that we've got the exploration drift and infill drilling program moving to completion this year. That sets us up for the bulk sample collection next year, which then sets us up to have our first reserve on Ormaque late next year. This site has continuously delivered or exceeded expectations, and they're set up to deliver a strong Q4. At Efemçukuru, we're also advancing our exploration and infill drilling programs to support mine life extension.

At Skouries, we're just six months past finalization of the project financing, and the project is advancing nicely towards the start of commissioning in mid-2025 to deliver commercial production on budget and on schedule by the end of 2025. We are on track to deliver our growth strategy to deliver industry-leading returns over the next couple of years. It's an exciting time to be at Eldorado. Thank you for your time. I will now turn it over to the operator for questions from our analysts.

Operator (participant)

Thank you. We will now begin the question-and-answer session. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We'll pause for a moment as callers join the queue. Our first question comes from Cosmos Chiu of CIBC. Please go ahead.

Cosmos Chiu (Executive Director of Institutional Equity Research)

Great. Thanks, George, Phil, Joe, Simon, and Lynette. Maybe my first question is on Skouries. I guess, you know, some are wondering how a change in, CapEx, at least for 2023, doesn't impact the delivery schedule. I guess my question is: Is this just really a, a shift in timing? You know, on the top end, you're lowering 2023 CapEx of Skouries by $90 million. I'm sure you're going through the budgeting process right now, George and Phil. Is that gonna show up in 2024?

George Burns (President and CEO)

Yeah. Cosmos, thanks for the question. Yeah, I mean, for Skouries, I'd say a couple of key things I'd point out. Number one, you have to remember that prior to starting the work this year, you know, we had roughly said the project was half built. So, I mean, the group that went and visited the site could see we have a tremendous amount of infrastructure already on the project site. And then the other high-level thing I'd say is, remember, we just completed project financing in the Q2. We're on a steep ramp-up curve. We have a lot of people on site doing construction now, but that's gonna accelerate over the next number of months as we get a few of these major contracts. So, yeah, the capital spend's down a bit.

Some of it's actually optimization, where we're pushing some costs off without any impact to schedule, and some of it is just simply a little bit light on a few of these contracts, none of which is affecting the critical path for the project. So, you know, overall, we remain confident that we'll get this thing into commissioning mid-2025, commercial production by the end of the year. Obviously, with a bit lower spend this year, it's gonna be a heavier lift next year. But again, when we look at critical path, we're not concerned about the schedule or overall capital costs. And, Joe, I don't know if you have a few comments you might wanna add to that.

Joe Dick (EVP and COO)

Thanks, George. Hi, Cosmos.

Cosmos Chiu (Executive Director of Institutional Equity Research)

Hi, Joe.

Joe Dick (EVP and COO)

Yeah, George, I would say that, you know, some of that confidence comes from right from the beginning, flexibility that we built into the construction schedule. So, you know, we remain continuing to project on a single shift, six-day-a-week construction schedule. So certainly, you know, we have flexibility in how to deploy resources over the remaining project time. And I also say that, you know, kind of concurrent with George's comments, that you know, some of the optimization that we have done in while in this early award stage, I think is, you know, pretty beneficial to overall project costs. And so, you know, we're comfortable with that trade-off in time versus money in the near term here.

As George said, are still confident or remain confident on being able to deliver Skouries in 2025.

Cosmos Chiu (Executive Director of Institutional Equity Research)

Perfect. And then, you know, George and Joe, as you mentioned, in your press release, you mentioned a few items that contributed to the decrease in CapEx for the year. Part of it is transitioning engineering work to Greece. Would that result in a permanent cost savings, or could you give us a bit more detail on what that entails?

George Burns (President and CEO)

Go ahead, Joe.

Joe Dick (EVP and COO)

Cosmos, this is Joe. Yeah, that's kind of what was being reflected there. As we move the engineering, the offshore engineering from Vancouver to Greece, we see a better cost structure for engineering, but also there was a bit of time in making that transition. So, improved cost and for a period as that was transitioning and ramping up, a bit slower delivery, but everything's on track now and working well, so pretty pleased with that.

Cosmos Chiu (Executive Director of Institutional Equity Research)

Great. And then, you know, going back to Q2, you had mentioned at that time that, you know, several contracts were gonna get awarded in Q3. Likely, it sounds like it didn't happen, but, you know, that's okay. But you also mentioned that, the FS, estimate will be updated to the project control budget, with some kind of update expected by the end of Q3. We're past Q3 now, but, again, should we be expecting some kind of update? Should we be, you know, looking out for some kind of update, and if that's the case, maybe when?

Joe Dick (EVP and COO)

Where we sit today. This is Joe again, Cosmos.

Cosmos Chiu (Executive Director of Institutional Equity Research)

Thanks for that.

Joe Dick (EVP and COO)

Go ahead, George.

George Burns (President and CEO)

Go ahead, Joe.

Joe Dick (EVP and COO)

Cosmos, where we sit today is that, you know, we did an update based on completion of award of contracts, and when that work is completed, we'll update, you know, should we see any type of material information that needs to be passed along. So that's where we sit today; we're not updating based on the commitment schedule. And as that completes through the end of the year, we'll update based on any material changes that we may see. And if not, then I think we'll, you know, hold where we're at.

George Burns (President and CEO)

Cosmos, let me just add a few comments to that. So I just wanna make it clear, when we said that in Q2, we're not signaling that we expect anything to come out of that necessarily. It's just an important milestone in the work. It will give us some updated information. So in the feasibility study, we obviously made assumptions on productivity, numbers of employees required to do each piece of work. And so once we get a contract negotiated, we've got improved information. And so we'll digest that. We're not expecting anything to change, but if it does, that will be a time to bring the market up to speed. So, and I would remind you again that, you know, it was roughly half built when we started.

We have the confidence in all that work that was done, that was built into the feasibility study. We've done quite a bit of work beginning last year, including putting up the building around the mill facility, the cranes, and the work that you saw on site that we've completed this year. We got a lot of confidence in our estimate. We have a lot of confidence in the work we've done. We don't have any critical equipment that we have any concern about. I mean, the filters was really the last major piece of equipment that we needed to acquire, and the filters essentially are manufactured, so we're already working on plans to put those filters together on site. That risk is essentially eliminated now.

We remain confident, and again, those things we pointed to in Q2 are gonna be additional data, additional information, a little later than planned, just due to these contracts slipping a little bit, but again, not affecting schedule. Maybe one last comment. You know, on the civil works, we had originally contemplated that as four individual contracts, and we took time to digest all the bids that came in, put a lot of work into optimizing that piece of work, and in fact, have landed with, with one contractor, and we're seeing synergies out of that work. It's a contractor we've got familiarity with, as they've done work on the Kokkinolakkas dam the last couple of years. We're taking our time to make sure we got the right partner and the optimized execution strategy.

So far, things have gone very well for us. I wouldn't be concerned about a little bit of slippage in the spend or getting these contracts. It's actually, so far, turned to be positive, to take our time and get the best possible contract to ensure the best possible outcome on this project.

Cosmos Chiu (Executive Director of Institutional Equity Research)

That's great to hear, George. Maybe one last question, switching gears a little bit to Olympias. Very good quarter in Q3, and so, you know, I guess going back, there have been a bit of, not volatility, but a bit of, difference in the quarters. Q1 was good, Q2 was not as good, Q3 now is good once again. Can we expect more stability, you know, going forward now that, you know, you've implemented, say, bulk emulsion, you've implemented... or the ventilation is now in place? You know, is the current level, what we can continue to expect in terms of production? Costs were, you know, fairly good as well, $1,390 an ounce in Q3. Is that a good level of costs, or can we expect even better?

George Burns (President and CEO)

So Cosmos, maybe I'll answer it, just some of the high level implications on Olympias results, and Joe can speak to the operational. So I mean, for Olympias, number one, I would say the infrastructure improvements we've put in place are a game changer for us. But, you know, some of the volatility on Olympias has to do with external markets. You know, we got hit with that pay ability issue a year ago. We've been clawing some of that back by finding other customers where we avoid the VAT. And even within China now, we avoid VAT at times, in that some of the contractors pay for it in order to get that concentrate. So we've got clawed back some of that.

Zinc metal price is down quite a bit, and that's had a material impact on the byproduct credit value that we get. And then overall, you know, we were late getting that infrastructure that was completed in Q2. We had planned on getting that up in Q1, and so that had a cascading impact on the quarter. So I would say at a high level, some of these external factors just add volatility to Olympias, and I think you'll see some of that continue. But overall, what we're doing on the ground with the things we have control, we're much better positioned now. And, Joe, you can add anything you want to that.

Joe Dick (EVP and COO)

I think you covered it pretty well, George. Cosmos, the only thing that I would add is that, as we go into 2020, you know, complete 2023 and 2024, we anticipate, you know, continued improvement in our underground operations, and we're running into a point where mine and mill are pretty evenly matched. There will be, you know, kind of a period, going forward, where a bit of work will be required in the mill to take advantage of additional, you know, additional production from underground. We'll keep you apprised of that as we move along. Likely to see, you know, a bit of mill debottlenecking in 2024.

Cosmos Chiu (Executive Director of Institutional Equity Research)

Great. Thanks, George and team, for answering all my questions. Congrats once again on a very solid Q3, and have a good weekend.

George Burns (President and CEO)

Thanks, Cosmos.

Joe Dick (EVP and COO)

Thanks, Cosmos.

Operator (participant)

Our next question comes from Carey MacRury of Canaccord Genuity. Please go ahead.

Carey MacRury (Equity Research Analyst)

Hey, good morning, guys. Just wondering about Kışladağ. You know, 3.6 million tons is a huge uptick in tons stacked. Obviously, the North Heap Leach Pad is open, and you've got the bigger, bigger gear in there. Just wondering how we should think about that rate on a go-forward basis?

George Burns (President and CEO)

Go ahead, Simon.

Simon Hille (SVP, Technical Services)

Hi, Carey. Yeah, thanks for the question. Yeah, I think that rate is, you know, what we are planning, moving forward. That's, you know, what we've been sort of alluding to with the bigger materials handling equipment that we have now available. You know, only caveat to that would be, you know, the summer months are our best, stacking and availability months, just due to weather effects. Typically, we do see a small, impact from, the colder months, which we really factor into our plan for Q1. But beyond that, we expect to be at those type of rates for majority of the year.

George Burns (President and CEO)

I might just supplement that. I mean, if you kind of look backwards over the Kışladağ life, you know, it was a pretty consistent performer with a number of expansions over time. Really what happened, beginning of last year, we started agglomerating the ore on the conveyor belts, and that causes some pretty big challenges, particularly last winter. And essentially, it was because we were adding essentially cement to the conveyors to do binding of the fines to support the high-pressure grinding rolls, and that caused plugging and clogging of the transfer points between conveyors. So, I mean, our production dropped off as a result of that challenge. And as Simon said, by putting in these larger conveyors and the larger stacking equipment, that impact's not gonna hit us going forward.

But we will see some seasonal impacts. Whenever we get a lot of rain, or particularly in the winter, it's tougher to get the same tonnage as you do when you got blue sky and great weather. So the run rate you saw in Q3, I think, is a good assumption going forward. We'll obviously be trying to push the open pit and the circuit for more tons, but I'd say the bigger opportunity and upside is actually in the agglomeration and how finely we crush the ore, how much gold we expose, and how effectively we can rinse that gold out of the crushed heap leach pad. That's gonna be our focus going forward. That's probably our opportunity going forward as well.

Carey MacRury (Equity Research Analyst)

Great. That's good color. Maybe just to follow up on Kışladağ, you know, obviously, the operation's still working through the rain event from May, June. I'm just wondering how you're seeing production sort of heading into Q4 here. Are you starting to see an uptick in that, sort of, that impact wear off?

Simon Hille (SVP, Technical Services)

Thanks, Carey. Yeah, we are seeing now that we're sort of beyond the Q2, Q3 sort of challenges, as you're able to see when we're out in the field, things are sort of lining out fairly nicely. Irrigation rate and flows are up where we expect them to be. And now we're, you know, working hard to draw down on that inventory created over that period.

Carey MacRury (Equity Research Analyst)

Okay, great. That's it for me. Thanks, guys.

George Burns (President and CEO)

Thanks, Carey.

Operator (participant)

Once again, if you have a question, please press star, then one. Our next question comes from Kerry Smith of Haywood Securities. Please go ahead.

Kerry Smith (Mining Analyst)

Thanks, operator. Joe, for Skouries, you know, getting the detailed engineering done is pretty critical to keeping the timetable. Is there any risk that transferring that engineering group from Vancouver to, to Greece is gonna cause any kind of delays, or are you pretty confident that that shouldn't be the case?

Joe Dick (EVP and COO)

Thanks, Kerry. We're pretty confident that should not be the case, and we're working in good cooperation with Fluor in oversight of that engineering. So essentially, we're still running the engineering schedule in concert with them, but we're doing it from site rather than afar. So in a lot of ways, it helps us in order to be, you know, kind of get time zones and other things out of that. And we paid real close attention to critical path engineering, you know, around filters and other things so that you know, we don't put schedule at risk over engineering.

And we've had good agreement with, you know, all of our vendors on production of vendor drawings and such, so we're feeling pretty good about it, as you know, as a benefit in shortening timelines for turnaround on key information and the like, being, you know, with the whole team consolidated in Greece now.

George Burns (President and CEO)

Carey, I'd say there's one additional benefit to moving some of this engineering in country early, and that is, you always have to run the filter of taking those engineering drawings and data and localizing it to regulations. So by doing that at an earlier phase, we eliminate some duplicate work, and it's a bit more efficient. And we've got confidence in the capability of these firms within Greece to be able to do this work. So I think there's some net benefits here, and we haven't really put any risk to the project from that decision.

Kerry Smith (Mining Analyst)

Okay. And are all the long-lead items now ordered? I assume they are and some are delivered to site, or what is the status of all the long-lead items?

Joe Dick (EVP and COO)

Kerry, this is Joe. So, there are no long lead items remaining on critical path. I mean, we're just cleaning up bulk items for procurement. You know, last major piece of equipment I think mentioned earlier was the filters. And the filters are packaged in shipment and receipts are started for, you know, site assembly. But it'll be all of that will be on site end of 2024, early 2025. So, no concerns on schedule and at this due to equipment. You know, and all of the work on existing equipment that was installed and review has also been completed and, you know, any kind of requirements for modifications, other things due to, you know, standby time, have been accounted for as well.

Feeling really good about lead times.

Kerry Smith (Mining Analyst)

Okay. Just maybe one last question on Skouries. Are you seeing any issues in terms of hiring skilled trades and, and laborers as you ramp up to the 900 people on site by the end of the year? And, and the second part to that is, are the productivities that you're seeing so far from the contractors sort of at or better than, than what you'd budgeted?

Joe Dick (EVP and COO)

So, to take the first part of the question, as availability to workforce, there've been no issues to date for contractors managing to mobilize and bring skilled, skilled workers on site, so pleased with that. And as far as productivities on... You know, there's not a lot of data points out there, but you know, the work performed last year around the mill building, cladding, cranes, and the rest of it was at expectation or kind of at feasibility levels. And the work ongoing to date has been similar. But you know, I think that remains you know, a watch point for us going forward. But so far, Kerry, we're pretty pleased with productivities and how they match up with feasibility.

Kerry Smith (Mining Analyst)

Okay. Okay. And just on Kışladağ, maybe Simon can answer. Are the recoveries through the agglomerating material kind of tracking with what you expected or better, or how are they tracking?

Simon Hille (SVP, Technical Services)

Thanks, Carey. Yeah, so far we're still pretty comfortable with the recoveries tracking as planned when we initiated the HPGR investment. And really, the agglomeration drum is a supplement to that to help us improve our, you know, materials handling and permeability on the pads. And so far-

Kerry Smith (Mining Analyst)

Okay. Okay, and then just one last question, if I could. How are the two electric trucks operating at Lamaque? I know you brought those two pieces of kit in, and, you know, what, what has the experience been?

Simon Hille (SVP, Technical Services)

So, we purchased two, that's correct. We only have received one so far. And right now, that one has been used pretty extensively to train and test the workforce while we're preparing for, you know, implementation in the underground activities. So we expect to see the second BEV in the Q1 of 2024. So that's the sort of plan right now. And so we'll be rolling the first one into the service through this quarter, and then the second one as it comes onto site in Q1 of 2024.

George Burns (President and CEO)

Kerry, one of the things that I heard last week that was pretty cool, so I haven't been there to see the truck that just arrived yet, but it's about two minutes to change the battery, which is, to me, pretty amazing. You know, one of the big issues for us is you gotta have an efficient truck where you're not stopped charging. And so we got spare batteries, but it takes two minutes basically to take a battery off and then get the other battery on to keep the truck moving. So they've come a long ways with making these electric trucks efficient. We can't wait to get the thing underground and see what it can do for us on productivity. They're faster, that's obviously a big win.

The ventilation impacts are pretty enormous for us, where we don't need air to deal with diesel emissions with these trucks.

Kerry Smith (Mining Analyst)

Right.

George Burns (President and CEO)

It's gonna be awesome, I think.

Kerry Smith (Mining Analyst)

And I guess the battery packs have to be changed with equipment, or can it be changed by a mechanic or an electrician? Like, how are they heavy?

Simon Hille (SVP, Technical Services)

So, there's a built-in battery changing unit. So essentially, part of the design of the truck is to actually have a removal system installed on the truck. So it's powered to lift off and drop down and then pick up a secondary battery, all without the need of a third party to put it together. So the truck driver can do that without leaving the truck.

Kerry Smith (Mining Analyst)

Okay, Okay, great. Okay, well, that's great. I appreciate it. Thanks for answering my questions.

George Burns (President and CEO)

Thanks, Kerry.

Operator (participant)

That is all the time we have for today, and this concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.