i-80 Gold - Q4 2021

Transcript

Operator (participant)

Good day. My name is Jennifer, and I will be your conference operator today. At this time, I'd like to welcome everyone to the i-80 Gold Corp Q4 and year-end 2021 financial and operations 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'd like to ask a question during that time, simply press star then the number one on your telephone keypad. If you'd like to withdraw your question from the queue, please press star two. This call is being recorded. Mr. Gollat, you may begin your conference.

Matthew Gollat (EVP, Business and Corporate Development)

Thanks, Jennifer, and thanks everybody for joining us this morning. We're really excited to be here to talk to you about what our plans are for the company and to talk about what was 2021 for us. You know, it's hard to believe that it's been almost a year since we've been trading. April 13 will be the first day that i-80 made its first trade. In that time, we made several key acquisitions.

We've secured financing from several partners. What I think is very important is we've also secured a team to execute on our plan and on our growth profile in the state of Nevada. It's a very focused Nevada expertise within the company. We'll get into that next few slides.

On the call with me today, on slide two, is Ewan Downie. I'm sure most of you know, he's the Chief Executive Officer of the company. Also, with me here in the room is Matt Gili, President and Chief Operating Officer, Ryan Snow, our Chief Financial Officer, and then obviously myself will be on the call as well. Going on to slide three, I encourage everybody to read the disclaimer page. We will be making forward-looking statements about the company, and I encourage you to read this in detail.

On to slide four. Who is i-80? i-80 has been able to grow into a company with an extensive gold and silver resource in the state of Nevada, which is the third largest resource endowment in the state of Nevada. It's a low-risk jurisdiction. We have permits on most of our projects, and I think increasingly more and more with events going on in the world, having you know, mining companies in safer jurisdictions is going to become more and more important as we grow our business.

We've been able to obtain projects that will give us a pure best growth profile. We have the goal of building four mines in three years; all being processed at a centralized autoclave milling facility that will allow us to both control our own destiny and reduce our costs as we continue to grow our business. Now, going on to slide five, I'm going to pass it off to Ryan Snow, our CFO.

Ryan Snow (EVP and CFO)

Thanks, Matt, and good morning to those listening. Yesterday, the company reported our full year 2021 results, and our financial statements and MD&A can be found on SEDAR and the company's website. On slide five of the presentation, our fourth quarter highlights include completion of the Lone Tree asset swap with Nevada Gold Mines, whereby we exchanged our 40% interest in South Arturo for Lone Tree. This exchange resulted in a one-time after-tax gain of $106.7 million, resulting in $0.60 basic earnings per share.

During the quarter, the company also completed the acquisition of the Ruby Hill mine. In the fourth quarter, the company closed a private equity placement for gross proceeds of $81 million and completed the financing package with Orion and Sprott, adding an additional $60 million in cash to the company's balance sheet. In addition to these financial highlights, the company continued pre-development work at Granite Creek, including mine rehabilitation and ramp development.

Moving to slide six, the company's full year highlights included completion of $228.9 million in financings, and a further $75 million will be funded imminently under the gold prepay and silver purchase and sale agreements with Orion. The company completed three transactions in the year, positioning the company to execute an aggressive growth plan in the near term. These transactions include the previously mentioned asset swap with Nevada Gold Mines that includes an autoclave at the Lone Tree complex, the Ruby Hill acquisition in October, and the Granite Creek acquisition in April.

At Granite Creek, the exploration drill program in 2021 produced the discovery of the high-grade South Pacific Zone, and Ewan will walk through details of this zone later in the presentation. The company ended the year with a cash balance of $87.7 million and had an additional $30.8 million in restricted cash. As stated earlier, the company expects to fund the gold prepay and silver purchase and sale agreement imminently, adding $75 million to the cash balance.

On slide seven, the 2021 financial results of the company were highlighted by the one-time non-cash gain on the Lone Tree asset swap of $106.7 million net of tax, resulting in net income of $88.2 million or $0.60 per share. Included in the net income is $11.6 million in income from discontinued operations related to South Arturo. As a result of the asset swap described earlier, we've accounted for our 40% interest in South Arturo as a discontinued operation.

Net income for 2021 was driven primarily by the gain on the Lone Tree asset exchange, offset by increased exploration expenditures at Granite Creek and Ruby Hill, and the non-cash impact of revaluing the outstanding warrants of the company. During the year, the company used $22.5 million in cash flow relating to operating activities and continuing operations, and ended the year with $87.7 million in cash and $30.8 million in restricted cash.

Looking forward, as I mentioned earlier, we completed $228.9 million of financings in 2021, and a further $75 million will be funded imminently with Orion Mine Finance. The financing package also includes the ability to access an additional $100 million via accordion features. With these financing initiatives completed, the company will be well funded to advance our operating plans. With that, I'd like to turn the call over to you, Ewan Downie.

Ewan Downie (CEO and Director)

Thank you, Ryan. Moving on to our slide eight, I'd just like to introduce some of our operations team. In our first year of existence here since, as Matt said, we started trading on April 13th 2021, we've been very successful at building a Tier 1 Management Team with extensive experience in operating in Nevada.

Amongst our senior leadership team, we have Matt Gili, Brent Kristof, and Andy Cole, who have each been responsible for running the operations of one of the big three mines in Nevada that are currently operated by Nevada Gold Mines. Behind this team, we've been very successful over the last 11 months in attracting a very strong team to assist us in executing on our plan to become what we expect will be the second biggest producer in the state of Nevada.

Moving on to slide nine, the company is focused entirely on the north-central part of Nevada, the Great Basin, so to speak. This district, so to speak, with the Getchell, Carlin, and Battle Mountain Trends, is currently the world's most productive gold district. If Nevada Gold Mines itself were a separate company, I believe it would be the number four producer in the world.

Next to Nevada Gold Mines, i-80 Gold is the largest holder of gold resources in the central Nevada district, and we're targeting to become one of the biggest producers in the states. With four new mining operations being built over the next three years, feeding a central processing facility that includes the autoclave. That is why the Lone Tree acquisition was so important for our company, is we now have the ability to control our own destiny in one of the world's most favorable jurisdictions. Importantly, our land packages or our properties are all road accessible. We have grid power, water rights, and most importantly, permits to advance these projects.

On slide 10, the key to our long-term success is the acquisition of an autoclave. There are only four or five sites in Nevada and three companies now that will have the capability of processing refractory ore. That, in my opinion, is the key to a company achieving long-term success in the state. Strategically, the Lone Tree facility is located on Interstate 80, and the Nevada Central Railway is located across the street or across the highway. I believe Matt Gili will be expanding a bit on this point.

When you look at the fundamentals of the company on slide 11, Matt Gollat earlier mentioned that we are the number three holder of gold resources now in all categories in Nevada. In 2022, we have more than 50,000 meters of drilling from both underground and surface underway currently, and we're expecting or targeting a 20% increase in our resources this year through these programs.

We've been having substantial success at Granite Creek, especially with the recent discovery of the South Pacific Zone. We're also upgrading the Blackjack, that's a polymetallic deposit at Ruby Hill, and the Second Chance, which is the planned open pit at Buffalo Mountain, to resource status this year. Those will also become increases in our current resource endowment. In addition to gold, the company is one of the largest holders of gold and silver resources in the state, with more than 100 million ounces of silver in the indicated category, and more than 73 million ounces in the inferred category.

Slide 12, our company's projects offer superior gold grades. Our open pit projects rank among the highest grades that you'll find in all of the United States, especially when you compare heap leach projects and the deposit. We are pursuing development of at our Granite Creek property. All three of our underground deposits rank among the highest-grade gold deposits for underground in North America, with Granite Creek and Cove both over 10 grams per ton.

Moving to slide 13. Our company, I believe, offers superior value among our peer group. There are many means of valuing a company. One of those is enterprise value per measured and indicated ounce. On slide 13 is a comparison of M&I, a relatively new company, to some of our peer companies. These are the smaller companies growing to try to be mid-tier producers in North America. Typically, these companies can have market caps of $1 billion to nearly $2 billion when you look at Wesdome.

Our company's growth trajectory is expected to take us to over 400,000 ounces per year, which would make us the largest company in this peer group ultimately. Yet currently, we rank at the low end of the scale in terms of valuation. I believe there is truly a re-rate as we demonstrate to the market that we can execute on our plan to become a significant producer. The average enterprise value per M&I resource ounce for this peer group is almost $400 per ounce, whereas i-80 Gold is currently trading at approximately $75 per ounce.

With that, on slide 14, I'm going to pass the presentation off to Matt Gili so our President and Chief Operating Officer can explain the importance of our Lone Tree complex.

Matt Gili (President and COO)

Thanks, Ewan, and on to Operations. I'm going to repeat some things that Ewan's mentioned just because they are so strategically important to i-80. We are four mines, one facility with future open pit operation upside at Granite Creek and Ruby Hill. The Lone Tree acquisition continues to demonstrate its strategic importance and positions i-80 as one of only three companies in the U.S. with refractory processing capabilities.

Tony Carroll is leading our PFS study work here on the recommissioning of the Lone Tree complex, focused on defining the operating parameters, of course, budget and schedule. He comes to us from Barrick. He's been responsible for the autoclave rebuild program at Goldstrike and also worked for me at Cortez as my Plant Manager. Of course, Andy Cole provides his expert guidance over all matters processing related. Very pleased and fortunate to have both of these as members of the i-80 management team.

Next slide 15, further detail regarding the recommissioning study. Hatch is engaged as the study lead. They're leveraging off their previous work with Newmont on this facility. We're in the fourth week of on-the-ground study activities and remain on track. Very pleased with progress. The definition of the operating parameters for the autoclave is a key component of the work, and we will be blending ore from three mines. This is where the majority of our deep thinking is concentrated and seeing good results.

When we're thinking about the other opportunities that exist at Lone Tree, namely, do we change out the vessel? What upside exists from the flotation circuit that we currently have on site? Do we plan for an increase in throughput rate? The toll mill. We're centrally located adjacent to both Interstate 80 and the Union Pacific Railroad line. A reminder that Lone Tree continues to be a producing asset from the heap leach on site and planning and permitting continues regarding the Brooks and Buffalo pits.

Next slide 16, Granite Creek. This is our first underground operation we brought into production. We've commenced 24/7 operations and we're very pleased with progress. The team is led by Tim George and Dave Westhoff, both of them having experience in underground mining, both in Nevada and at NGM's adjacent Turquoise Ridge mine. This is demonstrated by the rapid restart. The first ore rounds have been mined, and we are advancing development both on the main decline itself and additional ore accesses into the OG zone. Thank you very much and back to Ewan.

Ewan Downie (CEO and Director)

Thank you, Matt. Staying on slide 16, I think the image you see on the right of the current slide really demonstrates how strategic this property is. The Granite Creek project is located immediately south of the Twin Creeks and Turquoise Ridge operation operated by Nevada Gold Mines. I believe this is the third largest complex of Nevada Gold Mines in Nevada, and it includes processing facilities at Twin Creeks.

Part of the agreement when we acquired the Lone Tree facility provides that Nevada Gold Mines will process up to 1,000 tons per day of material from i-80 projects until such time as we get Lone Tree up and running. It's our expectation that the current mining, that the ore that is being developed, will be trucked to Twin Creeks for processing, and that should start mid-year this year.

The property is situated on the same major fault structure as the Turquoise Ridge deposit. Turquoise Ridge is a +20 million ounce mine, that is production plus reserves and resources, and it is continuing to expand as they drill it out at depth. To the South, along the same fault, the major fault structure along the Osgood Mountain stock is called the Getchell Fault at the Turquoise Ridge mine and the Range Front fault at Granite Creek.

Both deposits occur on the hanging wall side or the east side of that fault within the favorable Comus rock unit. Essentially, the Granite Creek projects is in some ways an on strike extension of Turquoise Ridge. The recent discovery of the South Pacific Zone has our company particularly excited, given its potential to increase high-grade resources immediately to the north and below of the existing mine workings. It is currently the focus of our surface drill program and why we recently increased the drill program at Granite Creek by 50% is to maximize our drilling in that zone. By year-end, hopefully have sufficient resource drilled off in the upper parts especially such that we are driving infrastructure into that area in 2023 is the current plan.

On the next slide, the Granite Creek property is not just the underground project that we are developing. The image on the right shows the resource prior to our acquisition. It was completely open at depth and to the north. The measured and indicated grade of the deposit is 10.4 grams. The inferred grade is 13.4. On the right is the open-pit project that we are looking to permit. Over the next couple of years, in addition to the underground, we expect to move forward with the permitting and then develop an open pit project on this property.

And at that time, we will have a heap leach processing facility right on site. This will be a part of our growth trajectory over the next several years. With a grade of over 1.2 grams per ton heap leach, we expect this to be a high margin operation for our company. The balance of the pre-presentation is going to be looking at the underground project here.

On slide 18, we highlight here the location of the South Pacific Zone. The South Pacific Zone is located immediately north of what was called the Pinson Mine with the OG Zone and the Otto and Adam Peak Zones. On that image, you can see in gray the underground workings that we have rehabilitated, and we are now expanding to allow for full-time mining.

As we're proceeding with the project to rehab and drill the underground deposits, there were several very high-grade intercepts to the north, drilled more than 20 years ago by Barrick and Homestake that had not been followed up. This year, we embarked on a program to do an initial follow-up program. You can see on this slide, very high-grade results ranging anywhere from 11 grams per ton up to 25.5 grams per ton and widths of up to 10 meters.

A very strong start to the program that led us to believe that we have a very continuous high-grade deposit that occurs at the contact of both Comus rock units. That is the reason we increased our drill program, and we expect significant amounts of drill results coming out of this zone because we are proceeding with drilling it off with multiple drills, expanding it to the north, where it remains open, and expanding at depths where it remains open.

Slide 19 demonstrates where the deposit occurs. It is in some ways a bit down plunge of the. That's a long section view. Our interpretation is that the South Pacific Zone does not come to surface. It tops out at about 200-250 meters below surface, and below that, the grade picks up substantially and remains completely open at depth. It occurs approximately 100 meters below the existing workings and approximately 150 meters to the north of the existing workings. Very easy to develop once we drill sufficient resources and get the infrastructure in place. It is our expectation that we will be driving an initial drift into this zone in 2023.

The inset image on the left on slide 19 just demonstrates what the South Pacific Zone is. It is somewhat different than the other horizons that we drill at Granite Creek in that it consistently tends to occur right on the contact of the upper and lower Comus rock units. Those are the two most favorable host rocks in this region, and they are two totally different aged limestone units.

Along that contact, the fault contact, the grades and widths pick up below 200 meters. You can see in that slide, we are infilling between where there are some very wide-spaced drilling in the past and having substantial success. To date, the drilling indicates grades of well in excess of 10 grams per ton in this project.

On slide 20, this is a different view of the project. In addition to the South Pacific Zone, one of the other areas that we're having substantial success is the down-dip extension of the main mine area. The OG, Otto, and Adam Peak zones that are currently being developed for mining. We just started the mining project on the Otto, Adam Peak portion, and we're driving the decline deeper to begin in the near future, drilling, working on the OG zone.

At the end of last year, we drilled hole iGS 21-15. That currently represents one of the deepest holes drilled on the property to date, and that was drilled to test the down-dip extension of the OG zone and potentially Otto and Adam Peak, adjacent to the Range Front fault. That drill hole returned one of the best intercepts on the property to date, 7.4 grams over 73.2 meters. It was really comprised of three separate high-grade zones. 13.3 grams per ton over 13.1 meters, 20.3 grams per ton over 7.5 meters, and 10.1 grams per ton over 17.5 meters.

The deposit remains completely open down dip of that, and this area is the current focus of drilling underground. The area where this hole was drilled up dip towards OG and Adam Peak doesn't have a lot of drilling, very wide-spaced drilling. We have one to two drills going at all times infilling this area. In the future, we'll start stepping out below Hole 15. The deeper intercepts tend to have wider intercept widths than what we see closer to surface. It's our hope that the deposit continues to get wider and more continuous as we go to depth.

We have still not done any drilling that is tested below 2,000 feet, and that's important because it was below 2,000 ft where the Turquoise Ridge deposit truly expanded mineralization. We are enthusiastic about continuing to step out later this year, and hopefully, we continue to have substantial success at expanding resources on this important property.

I'll move on slide 21 to Ruby Hill. Ruby Hill was an acquisition we made in 2021, and we are actually mining. Well, we finished the mining of the open pit there, and we are producing some gold from the leaching of that project. That will continue this year and into next year, that leaching. As you can see on the current slide, though, Ruby Hill, much like Lone Tree, provides the company with pretty substantial infrastructure.

What you see in the slide here is the crushing and the plant. There is a CIL plant currently idle on-site that we are looking to maximize the value of in our future programs, either restarting the CIL plant for gold mineralization or converting it to a base metal or flotation so that we can produce a base metal concentrate given Ruby Hill has a very encouraging looking base metal or polymetallic deposit located immediately under the current pit.

On slide 22 highlights our resources here. More than 4 million ounces of gold and more than 100 million ounces of silver in the indicated category, and nearly 4 million ounces of gold and over 73 million ounces of silver in the inferred category. Ruby Hill now represents the largest gold deposit in i-80's portfolio. There are multiple opportunities here for growing our production.

The Ruby Deeps, which includes 426, is the initial focus of our program. We are drilling there right now. The Archimedes East and Blackjack are the base metal or the polymetallic area that we expect to drill from underground once we get our permits to develop the Ruby Deeps deposit. Blackjack is currently not in the resource, and it is a very exciting opportunity for us.

The largest deposit at Ruby Hill is Mineral Point. Mineral Point is being looked at as a future open pit for our company. It would be a heap leach project, and the Mineral Point deposit itself is host to more than 5 million ounces of gold. It does provide significant growth for us in the future. The Ruby Deeps project, though, is the key area for us to develop. It was acquired. The Ruby Hill property was acquired primarily to give us a third refractory deposit to be in a position to fill the autoclave at Lone Tree.

On slide 23 is a conceptual model of how we're looking to develop. We are looking to get the permits in place to drive a decline out of the Archimedes pit, where we just finished mining. That will almost immediately access the 426 Zone. That's the upper part, the yellow one on slide 23, that we look to develop early. As you go to depth, Ruby Deeps, the bottom of the yellow part, was the main reason we acquired the property. It's a refractory deposit, completely open for expansion and very good widths.

The program that we've been drilling here, one of the things that we've been really surprised, and I guess pleasantly surprised about is in the upper parts of the Ruby Deeps deposit, we've been intersecting what appears to be significant oxide mineralization. If we are able to define sufficient oxide mineralization, we may consider turning on the CIL plant sooner than what we were initially thinking.

The drill program that we're doing is going to be very important, the modeling of the deposit to assess what portion of it is refractory and what portion isn't as we look to develop here. If we were able to have a plan where the refractory mineralization is trucked to Lone Tree, the oxide processed on-site, we would be able to significantly increase our production on an annual basis.

Longer term, on the left of the image in orange, it is our expectation that we will produce a base metal concentrate from this property. The mill will ultimately be converted into a flotation plant, so it has a flotation cell, and we will mine the Blackjack deposit. Now, to get to that point, we need to do additional drilling.

That drilling will be done from underground once we get the decline going. The decline could be started as early as the fourth quarter of this year. The Blackjack deposit has very significant base metal grades. As you can see, we highlight on this top slide HC-1751. That's an old Homestake hole, again, drilled more than two decades ago. It intersected 3.2 grams per ton gold, 13 grams per ton silver, and 27% zinc.

Very high-grade zinc over an impressive 24.5 meters. We are going to complete a geological and resource model on the historic drilling for this project later this year. We are adding a couple of holes from surface, but the primary advancement of this project will be in a couple of years' time once we're underground. The second project that we are currently developing is McCoy Cove. We own 100% of McCoy Cove. It's located in the Battle Mountain Trend.

On slide 24, you can see in at the lower part of the image, our extensive land package at McCoy Cove. The McCoy Cove project is a historic mine that open-pit mine that produced more than 2.6 or more than 3 million ounces of gold and more than 100 million ounces of silver. It's located immediately south of Phoenix.

That's Nevada Gold Mines' fourth largest complex. Marigold and Lone Tree, you can see at the north end of the image where our processing facility is. The McCoy Cove property represents one of the highest grade undeveloped gold deposits in the United States, with grades of nearly 11 grams per ton. Our PEA demonstrates robust economics with low CapEx, especially given that we would construct a decline and the ore would be processed off-site. We have a large underexplored land package.

The image that you see there is the portal for the McCoy Cove project. About a month ago, we started the program here to go underground, and we are now starting to drive the portal and should be in a position to start drilling by the end of the third quarter of this year from underground.

On the next slide, you can see what the initial plan is to put in the decline, put in a platform with numerous drill bays in order to upgrade the deposit from inferred to indicated. Of our approximately 1.7 million ounces of gold in resource, 1.35 of that is currently in the inferred category. In order to complete a pre-feas or a feasibility study, we need to upgrade this deposit to entirely indicated.

That program will be completed starting at late in the third quarter of this year and completed mid to late next year, so that we are in a position to proceed. We have the permits to go underground. We have the permits to take a bulk sample, and we are aggressively pursuing the full development of this project.

In addition to the autoclave, Nevada Gold Mines has provided us with a 10-year toll processing arrangement to utilize their roaster as well. What's somewhat different at McCoy Cove is some of the mineralization is more amenable to being processed through an autoclave, and approximately half of it is more amenable to a roaster. The roaster portion, if we run through an autoclave, would get significantly lower recoveries.

As part of the arrangement we made with Nevada Gold Mines, we have signed a long-term agreement to process mineralization from McCoy Cove at their roaster facility to allow us to achieve production and maximize our recoveries from this site. Finally, the fourth project that we're looking to develop over the next three years is the Lone Tree site or the Brooks and Buffalo Mountain projects.

Brooks and Buffalo Mountain are two moderate size open pit projects located to the southwest of the Lone Tree pit that you can see in that image. On the image on slide 26 in the square, the processing area, not only do we have the autoclave and the flotation circuit, but we also have a heap leach facility, and we are continuing to residual leach gold off that facility.

It's our expectation in the second half of this year, we will resume with the mining the balance of the Brooks deposit. The mineralization from Brooks will be trucked immediately to the north to the processing site and put on our heap leach pad. Our gold production will start to increase next year from Lone Tree.

The waste rock from Brooks will be used to upgrade the road to Buffalo Mountain in order for us to proceed with Buffalo Mountain once we get the permits. We're expecting Buffalo Mountain to be permitted in 2023. That would allow us to again increase our production from this site. The Buffalo Mountain deposit is open for expansion. Starting either later in 2022 or in 2023, we are planning to do some additional drilling on a parallel zone at Buffalo Mountain so that we can start to look at extending the mine life here.

Finally, on slide 27, looking at the company's ESG strategy. We definitely make this a priority within our company. Prior to i-80, Premier Gold Mines was very successful at getting the social license to develop a project here in northwestern Ontario with full support of all communities.

It's always been important to us to ensure that our environmental impact is as minimal as can be. We try to look at constructing sites as small as we can do, as small of a footprint as we can have, ensure that all communities and all stakeholders are positive towards our projects, and that we make a positive impact on the communities in which we work. That's a strategy that will be really forced or not forced, but really encouraged amongst our entire organization as we grow our business here in Nevada.

As a summary on slide 28, prior to taking some questions, I think when you look at i-80 as a company, we have a long-term vision of growing to become what our goal is to be the second largest producer in the state of Nevada with sustainable development opportunities. We are executing on our strategy by growing our resources and our reserves through sustained exploration. As I mentioned earlier, approximately 50,000 meters of drilling is ongoing on our two primary projects that we're advancing this year.

We have a strong balance sheet once we close the Orion Mine Finance piece, including restricted cash, approximately $175 million in the treasury that is going to allow us to aggressively pursue the development of our projects. As we grow further, we're looking to continue to grow while minimizing share dilution. With that, we have the four members of our team here on the line to answer any questions that people might have.

I believe Bryce Adams is first up. I'll let our team ask the questions, and as always, at the end of this, if somebody wants some additional information, we are very accessible. Just give us a call.

Operator (participant)

Once again, if you'd like to ask a question on today's call, that is star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, that's star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We'll go first to Bryce Adams with CIBC Capital Markets.

Bryce Adams (Director of Equity Research for Metals and Mining)

Good morning, all. Thanks for hosting the call. Can you hear me okay?

Ewan Downie (CEO and Director)

Yeah. We can hear you fine.

Bryce Adams (Director of Equity Research for Metals and Mining)

A few questions for Matt Gili. Matt, I hope you're well, and I wanted to touch base on the Granite Creek ore shipments to NGM facilities. Firstly, are those on track for Q4 of this year? Then, how many tons and what grade would you be targeting for that first shipment?

Matt Gili (President and COO)

All right, Bryce. Yes. Okay. First, your first question, are we on track? Yes. We're on track for our first ore delivery to the NGM facility in the summer of this year. That first ore shipment is an approximately 10,000-ton ore shipment that is, you know, built into the toll milling agreement. It's considered the test, the study shipment. We will be progressing with a cadence of monthly shipments to NGM.

They'll just proceed through the life of our toll milling agreement. You know, I'm not making projections yet on guidance for production this year, so I'm going to be coy on the total tons in grade. That first shipment of 10,000 tons is on schedule for delivery in summer this year, and then we just continue with the monthly shipment.

Bryce Adams (Director of Equity Research for Metals and Mining)

Okay. Summer is a bit accelerated to what I had in my mind. What's changed there? Is it just the underground mining is doing better than previously thought?

Matt Gili (President and COO)

Yes. I mean, look, the underground mining is actually proceeding really well. I'm very pleased with the performance. We're into 24/7 operations with SMD as our mining contractor. We were. You know, internally, we'd always been really thinking about when would that first shipment be as soon as possible to NGM. Yes, we're on track for that 10,000-ton delivery in the summer this year.

Bryce Adams (Director of Equity Research for Metals and Mining)

Okay. That's a nice surprise. Maybe you just mentioned it, but you were saying that it was monthly shipments next year. Is there any thought to stockpiling to a certain size of shipment or the agreement is strictly a frequency-based agreement and there'll be a shipment every month?

Matt Gili (President and COO)

We're really patterning it off the way that as part of a team, we were doing it when Turquoise Ridge and Twin Creeks were a joint venture between Barrick and Newmont. The way that we did it there and the way that we want to do it in the future is that we stockpile throughout the course of a month all of our production from that month.

Then at the end of that month, we do a sample and reconciliation and declare, you know, to NGM what we're shipping. Then we ship in the next month, and then in the next month, they process. We just continue that every month so that you end up with a two-month working capital of material in either shipping or stockpile at NGM.

Bryce Adams (Director of Equity Research for Metals and Mining)

Okay. Yep. That's a good call. Thanks so much. That's it for me. Thanks. Thanks so much. Cheers.

Ewan Downie (CEO and Director)

Thanks, Bryce. Bryce, one more comment is just all I'll say is you were wondering about grade, et cetera. Obviously, the grade at Granite Creek is very good based on our resource. We haven't officially started getting into the heart of the ore body. We're still developing the fringes of the first stoping areas.

We did do Cubex drilling in advance of developing the area, and the Cubex drilling was very positive. It confirmed the grade that we were expecting to mine in that area. Next, we'll be mining the first few stoping areas and making sure that that continues. It'd be our expectation that the grade that we will be shipping in our first shipment will be very comparable to what we have in our current resource.

Bryce Adams (Director of Equity Research for Metals and Mining)

Okay. Thanks for that, Ewan. Maybe just a clarifying follow-on. Those stopes you mentioned, this is initially starting with all cut and fill. Is that correct?

Matt Gili (President and COO)

Yes. Yes, Bryce. Right now our base mine plan is all cut and fill. We're looking, always looking for the upside and long hole stoping potential or open, however you want to define it, open stopes. The work that Ewan was mentioning on South Pacific, as we go deeper into the ore body, certainly the footwall and hanging wall look much more competent, and it becomes more vertical. We see that as a real upside potential as we go deeper into the mine and extend the main decline.

Bryce Adams (Director of Equity Research for Metals and Mining)

Okay. Keep well.

Ewan Downie (CEO and Director)

Yeah. Thanks, Bryce.

Operator (participant)

And once again, to ask a question on today's call, press star one on your telephone keypad.

Ewan Downie (CEO and Director)

Looks like there's no other questions, so maybe we did a good job. Turn that a lot, I'll do our closing remarks. Thank you everybody for attending today's presentation. One thing that we did that we believe is a bit unique to the industry is earlier this year, we released a comprehensive scorecard. Anybody who's on the call who hasn't seen that, I encourage you to upload that press release.

It's really, ourselves marking ourselves, but allowing the market to mark us on how we do. The comprehensive scorecard provides for what we need to achieve this year, as we are looking to grow our production profile and really provides base timing of when we get there.

It's really, I think, unique for us as a company to show that we are keen to be transparent to our shareholders of how we're going to grow and make sure that you know when we're achieving and when we're not achieving. I'd also like to point out that the current environment we have in the world, there's never been a better time for gold, and I believe that the future prospects for an increasing gold price have never been better and that a gold company should be a core investment in everybody's portfolio.

Thank you very much for the call, and feel free to call any of our members if you have the numbers, as we're quite open to taking calls and providing additional detail. Thank you again for attending.

Operator (participant)

This does conclude today's conference. We thank you for your participation.