i-80 Gold - Q3 2023

Transcript

Operator (participant)

Good morning. My name is Ina, and I will be your conference operator today. At this time, I would like to welcome everyone to the i-80 Gold Corp Q3 2023 financial and operational results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you. Mr. Gollat, you may begin your conference.

Matt Gollat (EVP)

Thanks, Ina, and welcome everybody, and thank you for joining us for our quarterly conference call this morning. We're pretty excited to talk to you about the past quarter and the past year, about all the things we've accomplished and our plans going forward. So I'm Matt Gollat. On slide two, I'm Matt Gollat, I'm the Executive Vice President. With me on the call is Ewan Downie, CEO, Matt Gili, President and Chief Operating Officer, as well as Ryan Snow, Chief Financial Officer. Moving on to slide three is our disclaimer page. We will be making forward-looking statements, so I encourage everybody to take some time to read this slide and understand it, as several of the statements we'll be making are certainly forward-looking.

With that, I'm going to turn it over to slide four, and Ryan Snow will take us through the financial results. Thanks.

Ryan Snow (CFO)

Thanks, Matt. Good morning, all. The company reported our financial statements in MD&A for the third quarter and first nine months of 2023 yesterday after market. They can be found on SEDAR, EDGAR, and our website. On slide four of the presentation, we provide a graph of our production and sales by quarter for the year. This production is from the residual leaching activities at both Ruby Hill and Lone Tree, and the oxide material on leach from Granite Creek that we have produced and sold. The third quarter production was 4,585 ounces, and year-to-date production was 11,263 ounces.

In addition to the gold ounces sold, the company sold 16,059 tons of mineralized material under the ore purchase agreement in the third quarter, bringing the year-to-date total to 22,710 tons of mineralized material sold. Note also that the 10,000 ton test parcel under the sulfide toll milling agreement has been shipped to Nevada Gold Mines, and we expect to finalize the results of the test parcel and to commence regular sulfide shipments to NGM in the fourth quarter, leading to a significant increase in our gold production and sales. Additional Q3 highlights on slide five of the presentation show our revenue for the quarter of $13.2 million, bringing year-to-date revenue to $29.1 million.

The company generated a mine operating loss of $0.5 million for the quarter and $7.5 million year to date. The mine operating losses year to date were primarily the result of write-downs of leach pad inventory at both Ruby Hill and Lone Tree, totaling $8.5 million. The company reported a net loss for the quarter of $4.2 million, or $0.01 per share. When adjusted for the impact of mark-to-market gains on the company's convertible debt, outstanding warrants, gold prepay modification, gold prepay, and silver purchase and sale agreement, the loss was $26 million or $0.09 per share. For the year, the company is in a loss position of $33.3 million or $0.13 per share, and when adjusted for the items previously mentioned, reported adjusted loss for the year of $65.5 million or $0.25 per share.

The company continued to invest in exploration, evaluation, and pre-development in the third quarter of 2023, with $10 million invested, bringing the 2023 total to $30.1 million. This investment continued to produce many great assay results in the third quarter, a summary of which was provided in our press release yesterday and will be touched on later in this call. Slide six of our presentation highlights the company's liquidity position. During the quarter, we completed the bought deal private placement and an amendment to the gold prepay, adding $46.6 million to the treasury. The company ended the quarter with $37.7 million in cash and had an inventory balance of $19.1 million.

Current assets were $67.6 million, while accounts payable and accrued liabilities were $19.3 million, and total current liabilities were $60.3 million, resulting in a current ratio for the company of 1.1 to 1. Subsequent to the end of the quarter, the company repaid the third and fourth milestone payment related to the purchase of Ruby Hill for $10 million in cash and $10 million of shares in the company. This payment satisfies the final payment obligations with regards to Ruby Hill. Finally, I want to highlight that the company does have $44 million in restricted cash and ended the quarter with total net assets of $448 million. Now I'd like to turn the call over to Ewan Downie.

Ewan Downie (CEO)

Thank you, Ryan, and I will provide a quarterly update for how our projects have been advancing and talk more about the company's strategy. As you can see on slide seven, the company is entirely a U.S.-focused gold producer. In terms of pure-play gold companies, we are currently the largest U.S. gold producer, and our projects are located 100% in Nevada, what is considered to be one of, or if not the most favorable mining jurisdiction anywhere in the world. We are a company with one of the largest holdings of gold and silver resources in the United States. Our M&I resources are 6.46 million ounces of gold and 104 million ounces of silver, plus inferred resources of 8.15 million ounces of gold and 76.4 million ounces of silver.

Our company's goal since we started as a company about two and half years ago, is to become the second-largest gold producer in all of the United States... We have one mine that is currently commencing its initial production, and we have three projects in development and or permitting. We have been very successful at building a very strong and accredited management team with a strong history of building and managing operations in Nevada. On slide eight of the presentation, this is a graph of the pure-play U.S. gold companies. There are only three pure-play U.S. gold producers, of which we are one, and several development or exploration companies. Our five year plan is to grow our production to be in excess of 400,000 ounces of gold equivalent per year, and we are achieving our first production at the Granite Creek operation here in 2023.

On slide nine, why do we work just in Nevada? Nevada is currently ranked as the world's number one most favorable jurisdiction for both policy, perception, and investment attractiveness by the Fraser Institute. There is strong security of land ownership, stable government, and a very strong history of mine development and production. In fact, if Nevada were a country, it would rank amongst the world's top five largest producing gold nations. The bulk of that production, as you can see on slide 10, comes from North Central Nevada. In North Central Nevada, approximate to the towns of Carlin, Elko, Battle Mountain, Winnemucca, are two structural trends called the Carlin and Battle Mountain Trend.

Within these trends, there are multiple producing mines and Nevada Gold Mines, which is a producer that is being created by Newmont and Barrick, the world's two largest gold producing companies, combining their assets to create what is called Nevada Gold Mines. The blue dots that you see in this image are the operations and projects of Nevada Gold Mines. Nevada Gold Mines currently produces approximately 3 million ounces a year, all of that production coming from this image. In terms of our projects, you can see from the highlighted icons in the image, we have five project sites within the state, all centrally located, proximal, often proximal to Nevada Gold Mines' operations. With these various projects, we are currently the second-largest holder of gold and silver resources in North Central Nevada.

In addition, as you can see on slide seven, 11, the company has two processing facilities. The Lone Tree processing site, that sits right on Interstate 80, has a refractory processing facility. It does include an autoclave, making it one of only five processing facilities in all of Nevada that has this capability. It's our goal over the next several years to start this facility by feeding it mineralization from our Ruby Hill, Granite Creek, and Cove projects. We also have a processing facility at the Ruby Hill site that we are actively looking to convert to a base metal processing plant.

The exploration work that we're doing at Ruby Hill right now is largely focused on defining the polymetallic resources on that project, and subsequent to that, once we complete the underground work at site, we would expect to convert the processing site and become a diversified producer with both gold and base metals. In the interim period, we have secured an oxide and sulfide processing agreements. The sulfide processing agreements are with Nevada Gold Mines and provide for us to process up to 1,000 tons a day through their autoclaves and 750 tons per day through the roaster. The next slide, on slide 12, is one that shows the gold holdings of the major companies in the United States, most particularly in Nevada. Most of the gold resources that companies hold in the United States would be in Nevada.

Currently, our company ranks number three in terms of total gold resources. With the additional drilling we're doing at various sites and the upgrading of the polymetallic deposits, we expect that we will be moving into the number two slot next to Nevada Gold Mines as we do our NI 43-101 resource updates following the 2023 drill program campaigns. Slide 13 is one of the primary fundamentals when you look at i-80 as a company and who we are in Nevada. We are a company that has some of the highest grade open pit and underground operation deposits that you'll find anywhere in North America.

In fact, the Granite Creek and Cove projects both have grades in excess of 10 grams per ton, and our drill campaigns that we have underway right now are demonstrating that those grades are very real with the success we've been having. The Hilltop polymetallic deposit and the Blackjack and FAD polymetallic projects that we have at Ruby Hill are not yet part of our company's resource base. With the current drill campaigns that will be going until the end of this year, at the end of these projects, we will be completing 43-101 compliant gold resource resource estimates for all three of the deposits. Slide 14 is a slide that demonstrates our larger plan in an image. The Lone Tree complex is expected to be our central processing facility for gold.

The mineralization from Granite Creek, Ruby Hill, and Cove, essentially constructing three identical underground ramp access gold mines, will feed that complex for the ultimate startup of Lone Tree. In the lower left is an image of the Ruby Hill complex. Ruby Hill is currently a gold plant that is not being used, so is an idle gold plant, and we have completed initial work to convert that plant to a base metal flotation plant that we will produce both a zinc and lead silver concentrates that would be moved to market. As Ruby Hill has very significant base metal deposits, or polymetallic deposits, as we like to call them, because of their gold and silver component, and also has gold mining operations. Slide 15 is an image of the Lone Tree processing site.

Lone Tree, as you can see in the background there, is an active heap leach, so we are completing residual leach on the previously mined mineralization there, but the heap leach is now nearing the end of its life. The complex that you see here includes not only an autoclave facility, also the heap leach, and there is a 1.8 million tonne a year flotation circuit also included in this complex. This is our central, core logging and splitting facilities. We have our own and active assay lab, and the majority of our operations in Nevada are based out of the Lone Tree site. It's difficult to see, but in the background, going up the hill with the white dots on it, are transport trucks on Interstate 80.

In terms of its strategic location, situated right on the highway, this is perhaps the most strategically located processing facility in the state. Moving on to the projects, Granite Creek on slide 16 is the company's most advanced asset. On the image, on the right side of the pit, we have two portals to access the underground high-grade mineralization that is currently being mined out of this project. That processing, as shown on slide 17, the mineralization that we're mining at Granite Creek is being trucked up the road to the north to Twin Creeks. So the Granite Creek project is geologically on strike from the Turquoise Ridge Mine, the third largest of Nevada Gold Mines operations, along the same large fault structure that we call the Range Front Fault, and is called the Granite...

the Getchell Fault up at Turquoise Ridge, and the mineralization is hosted Comus rock units, which is the limestone rock units that you find here. So the interim processing agreements have allowed us to start the mining here, trucking the mineralization to where it says, "Twin Creeks" in that image for processing. As Ryan mentioned earlier, we have been stockpiling the refractory mineralization to date, and during the quarter, we started shipping the first refractory ore to Twin Creeks, and we expect to start shipping regularly in the coming month or month or two, that we will be mining and trucking the refractory mineralization on a regular basis. The mine, when we first acquired this operation, we rehabilitated the underground workings.

We performed test mining in several zones, and of those, we deemed that the Ogee Zone had the best rock qualities. So in the first half of 2023, we constructed five levels. We extended the underground workings by five levels to have multiple zones to mine in the Ogee Zone. And we also this year began drilling again on the South Pacific Zone. The South Pacific Zone on the lower image on the left is on strike from the mine workings, headed to the north towards Turquoise Ridge. It is geologically a bit of a different deposit compared to what you see in the area where the mine workings are. It's a zone that appears to have significant continuity along strike and down dip. Also, it has very high grades. The grades that we're drilling here are very comparable to our current M&I and inferred resources.

And in the third quarter, early in the third quarter here, we started drilling in the South Pacific Zone in order to convert what would be inferred mineral resources to measured and indicated, so that they could be used in future technical studies. When you look at the project on slide 16, the Ogee Zone is the down dip extension of what was previously mined here in the, what we call the upper mine, and the deposit is open at depth. Some of the drilling we have completed down dip from where the mine workings are have intersected very good grades and very good widths, often in excess of 10 grams per tonne and up to 20 grams per tonne....

But more importantly, we have discovered that in following up some historic Barrick and Homestake holes that were drilled to the north, we were able to establish that along the contact of the upper Comus rock units, was a fault structure that starts at about 200-250 meters below surface, where the grades and the widths pick up substantially. And we have been drilling that from surface to infill the mineralization so that we can move this into our mine plan, and we have started the decline in order to access this mineralization. And we are expecting to have our first stopes on the South Pacific Zone in the first half of 2024. As shown on slide 19, we have done some grade reconciliation on the first four levels that we've mined in the Ogee Zone.

These assays are based on company grade control sampling, and every single level that we have mined out so far has been in excess of 10 grams per tonne, with between 3,000 and 4,700 ounces per level. Those are. We now have five active levels. We are constructing a sixth level, and from that sixth level, the decline will be advanced to the north to provide the initial access to the South Pacific Zone, that you can see has a much larger strike length than what we have in the Ogee Zone. In order to facilitate that work, we are doing underground drilling in the upper southern part of the South Pacific Zone from the underground workings of the Ogee Zone to complete some of the definition drilling.

The balance is, has been that we've restarted drilling from surface here. The first three holes that we have released assays for of the definition drill program have assayed 26.1 grams per tonne over 5.7 meters, 14.1 grams per tonne over 10.6 meters, and our deepest hole drilled so far, 15.5 grams over an impressive nearly 20 meters. The graph on the left shows our development rates throughout the year, and you can see we've made steady progress at increasing both our development and mining rates at Granite Creek.

We believe we are setting up Granite Creek to have a very strong year in 2024, and it will be one of the cornerstone assets for the company's plans to become a much larger producer over the next several years, with Granite Creek being the first operation for the company. On slide 20 is an introduction to the company's flagship project, Ruby Hill. Ruby Hill is one of Nevada's largest deposits, with both gold and polymetallic mineralization being defined in multiple zones at this site. Much like at Lone Tree, we do have very significant infrastructure existing on site.

In the background of the image is, again, an active heap leach, where we are completing residual leaching of previously mined ore, and the processing site in the foreground is what we are currently doing work on and drilling of the polymetallic deposits that we believe will justify the restart of this facility, but not as a gold plant, as a sulfide flotation plant, producing two concentrates. On slide 21, the Eureka District has a very long history of production. In fact, the first production in the Eureka District, which is where the Ruby Hill project sits, has a 150-year history of mining. Much of the historic mining was CRD, or carbonate replacement deposits. The early mining, which was 100 years, resulted in some of the highest grade CRD mines that you'll find anywhere in the world.

In the late 1960s, the last of the CRD mines shut down, and the district went dormant for almost two decades until Homestake came in and started looking for Carlin-type gold mineralization. That program was very successful, and they defined the Archimedes deposit and the Archimedes open pit that was subsequently mined. That mine was shut down in the early 2000s, and the district again went idle until we acquired the project from Waterton a couple of years ago. We also, earlier in 2023, acquired the next door neighbor project, the FAD deposit, through the acquisition of Paycore. Paycore is a very high-grade CRD deposit that was being drilled out by Paycore, and we are now drilling that deposit to resource status as we speak.

But the project has what we call the ultimate optionality. Not only do we have the CRD mineralization, but there is refractory gold mineralization. There are actually four known Carlin-type gold mineralized zones on the property. They all occur proximal to the Archimedes pit or below the Archimedes pit in the Ruby Deeps, 426, 428, and what we call the Lower Jack Zone. We have a very large oxide open pit deposit here, that is the Mineral Point Deposit, that is host to over 5 million ounces of gold and 170 million ounces of silver. We have polymetallic CRD deposits at Blackjack, at Hilltop and FAD. We have skarn base metal mineralization that we are drilling both at the Blackjack deposit, immediately under the Archimedes pit, and at East Hilltop to the south.

And finally, we have intersected gold-silver sulfide mineralization in what we call the Tyche Zone, and historically, some intercepts in what we call Tyche South. The on-site processing facility is what we're looking to advance over the next couple of years to achieve polymetallic production from this site. Our key initiatives are completing the underground program that is currently being permitted, and updating resources and economic analysis for the Ruby Deeps, and in the future, the polymetallic deposits. We expect to release the new resource in the first half of 2024 for this project, including Blackjack, Hilltop, and FAD, that we believe will be a very material increase in our company's overall resources. Slide 22 is an image that shows how all of these deposits are very closely associated with each other. Ruby Deeps and 426 are the gold deposits.

We have had some very impressive intercepts so far in the 2023 program, up to 6.9 grams over 50.7 meters in step-out drilling to the south in Ruby Deeps, and 7.3 grams over 10.2 meters in the southernmost hole drilled into that structure to date. The Blackjack deposit is returning assays that are very impressive. The deposit remains completely open to the north and to the south. The north-most hole that we've drilled into the deposit assayed an impressive 17.8% zinc, 0.8% lead, 59.8 grams silver, and 0.9 grams gold over 16.4 meters. A recently released hole, 23-41 from this year, intersected both skarn and CRD mineralization. The skarn intercept was 48 meters of over 10% zinc and 37 grams silver.

The CRD intercept was 40.4 meters of 15.6% zinc, 8.7% lead, 420 grams per tonne silver, and 0.6 grams gold. To the south, we are intersecting in multiple zones along the Hilltop fault structure, both skarn and CRD mineralization in what we call the Hilltop Zones, comprised of three primary horizons: the lower, the upper, and the East Hilltop mineralization. This Hilltop zone is wide open for expansion, much like the Blackjack deposit. The 428 Zone is a target underneath the Ruby Deeps deposit that is being tested only by two intercepts. Our intercept in late 2022 returned 12.3 grams over 10.7 meters when following up a historic intercept of over 15 grams per tonne.

This represents a very significant high-grade target for us to add resources and, what we expect may be resources higher grade- actually, that would be higher grade than Ruby Deeps. We are currently planning a program to continue definition of that zone. On slide 23 is an image of our longer-term plan here. We are permitting, as you can see in the lower left, to put two declines out of this pit, exactly like we have at Granite Creek, to access multiple deposits. The ramp here would access, early on 426, which is refractory mineralization, Blackjack mineralization immediately under the pit, and CRD mineralization to the south of the pit in what are called the, the Hilltop Zones. So we would be mining three types of mineralization, comprising gold and polymetallic deposits out of the same underground workings.

Our expectation is that this project will be fully permitted in the first half of 2024. Finally, we'll move on to our Cove project on slide 24. Cove is a project that was a reinterpretation by Premier prior to the creation of i-80. We successfully defined a Carlin-type deposit that is now host to, in all categories, approximately 1.7 million ounces of high-grade gold. We permitted the project for underground development, but didn't proceed with the underground program at Premier because of our inability to process refractory mineralization. With the acquisition of Lone Tree and the toll processing arrangements that we have with Nevada Gold Mines, our companies embarked on this underground program in 2022.

We have completed the first phase of the underground work, so you can see the portal on slide 24, and we are now completing the underground drill campaign from that exploration platform as we speak. That's shown on slide 25. From that exploration drift that we have constructed, we are doing a significant definition drill program throughout 2023 and into at least the first half of 2024, in order to upgrade the inferred resource at McCoy-Cove, this is the Helen Cove deposit, and upgrading this resource to M&I to complete a feasibility study. We have also put in multiple piezometer wells and larger diameter water wells in order to start the first 40-day pump test that is currently underway, that will be used for our final hydrological model and dewatering strategy in order to move to full permitting for mine development.

The 40,000-meter drill program, as I mentioned, is underway, and we are advancing the permitting of a full mining operation here. The exploration drill campaign has been highly successful to date. On slide 26, the results that are highlighted on the left of the image, the numerous intercepts you see there are from the first 16 holes that we drilled into what we call the Gap Deposit, part of the Ruby Deeps operation. Sorry, not Ruby Deeps, the Cove Deposit. There are multiple lenses along the Cove anticline that achieve very significant widths in the heart of it. We have seen intercepts up to 38.8 meters in this drill campaign, and that would be close to true width.

This drill campaign has demonstrated exceptional continuity of mineralization, and as you can see, the grades are consistently in the 10-20-gram range. We believe that Cove represents one of the highest grade development stage deposits in all of North America, and we are advancing it for full mine development. That larger plan is shown on slide 27. We have constructed the initial portal and decline and exploration drift. In the future, following this campaign and the completion of the Feasibility Study, we will just complete the extension of this decline into mineralization and will be in a position to begin mining at this project. Because of the widths and the extensive mineralization we have here, the Cove Mine is expected to be our anchor project in terms of gold.

The upside opportunities that we see here are that the Gap Deposit remains completely open down plunge. The Cove South Deep, or the CSD, and the 2201 zones were not included in our previous PEA, nor our upcoming planned feasibility study. This is also a very large property, and we believe it offers very significant exploration upside. So, as a summary, we are advancing the three projects. We have had, despite the trying market that we've seen in 2023, I believe that our company has had a highly successful year with multiple successful exploration campaigns and multiple successful permitting operations. And finally, we have the first gold mining and processing of mineralization taking place from the Granite Creek operation that is only expected to increase quarter-over-quarter for the next several years.

The last slide 28 that we'll talk about here in the presentation is that our company has a very active ESG program, and we have a very significant outreach to local communities to ensure that we are seen as a valued contributor to the communities in which we work. Finally, on slide 29 is a summary. Our company has an organic growth platform with a goal of becoming Nevada's second-largest gold producer with sustainable development opportunities. We are currently successfully executing our strategy by growing reserves, resources, production, and in the future, we expect significant cash flow. In terms of capital allocation, we're prioritizing reserve increases and mine development to achieve our longer-term goal of being a self-sustaining gold producer. With that, I'll thank everybody for sitting in on today's conference, and I think we will be open to a couple of calls.

We have external calls starting at about 10:45 my time, which would be 10:45 Eastern. So we'll open for a couple of calls. We have Matt Gili to talk about operations, Matt Gollat to talk about corporate growth, and Ryan Snow to answer any financial questions. Thank you very much.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. You will hear a three tone prompt acknowledging your request. Questions will be taken in the order received, and should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please leave your handset before pressing any keys. Once again, that is star and one to ask a question. There are no question at this time. Please proceed.

Matt Gollat (EVP)

Well, thank you-

Ewan Downie (CEO)

I'd like to thank-

Matt Gollat (EVP)

For joining the call this morning. Oh, sorry, sorry. You want to go ahead.

Ewan Downie (CEO)

No, you go ahead, Matt. Thanks.

Matt Gollat (EVP)

Thanks, everybody, for joining the call this morning. As Ewan mentioned, we are all available today to speak to anyone about the quarter, about our plans, about the company. So feel free to reach out to Matt, Ryan, myself, or Ewan, and we'd be happy to chat with you. Thanks again for your time.

Operator (participant)

Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect.