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SSR Mining inc (SSRM) Q2 2021 Earnings Call Transcript

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SSR Mining inc (NASDAQ:SSRM)
Q2 2021 Earnings Call
Aug 4, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day everyone and welcome to the SSR mining’s second quarter 2020 at this time for opening remarks and introduction, I would like to turn the call over to Allison White with SSR mining.

Alison WhiteExecutive Vice President and Chief Financial Officer

Thank you, operator and Hello everyone. Thank you for joining SSR mining second quarter 2021 conference call, during which we will provide an update on our business and a review of our financial performance. Our financial statements and management’s discussion and analysis have been filed on sedar dot ASX and are also available on our website. To accompany our call, there is an online webcast and you will find the information to access the webcast in our news release relating to this call. Please note that our figures discussed during the call are in US dollars unless otherwise indicated on references to cash costs and all sustaining costs payable out of metal sold without making any payments today, so please read the disclosures in the relevant documents. Joining us on the call today are Rodney Antal President and CEO Alison White CFO and Stewart Beckman COO.

Now I’ll turn the call over to Rod for his opening remarks.

Rodney AntalPresident and Chief Executive Officer

Thanks, Alison. Good afternoon. Good morning to you all, and thanks for joining today. I’m going to speak first to the fantastic second quarter performance. The results have reinforced the quality and consistency of our operations, as reported a number of significant production milestones at cercla. Despite a plane maintenance shutdown in quarter two, we set a record for tonnes processed in the sulfide plant and marigold were reported record material moves for both the quarter in a half year period. While at CB in Toronto, we delivered record quarterly in half EU metal production. In quarter two, we produce 200,000 Gold equivalent ounces at an all in sustaining costs of $961 per ounce.

For the first half, we produce 396,000 Gold equivalent ounces and an all in sustaining costs of $983 per ounce. With another strong quarter it is clear all four of our operations have been in continued to perform very well. is especially pleasing given we have avoided the common risks associated with post merger deterioration in operating performance as teams adjust to new leaders in priorities for SSR is now almost one year post merger. And with four quarters a really strong performance we have clearly delivered in more. This is a fantastic effort in a credit to everyone across the business. We are far from done and currently have a significant focus on the many potential growth opportunities within our portfolio. Is operational strength has sweat translated into strong cash generation, as we delivered $100 million in free cash flow in the second quarter, and $177 million in the first half, which is supporting our P leading capital returns program. In addition to our quarterly base dividend, we announced the meaningful ncib program of up to $150 million in April this year, allowing us to purchase up to 10 million shares.

I’m pleased to report that we have been executed against their ncib in the quarter we purchased 4 million shares for cancellation, returning $70 million to our shareholders. One of the key disciplines we’ve implemented at SSR is to continually review and assess our asset portfolio. As part of our ongoing reviews, we determined that substantial royalty portfolio was non core and wasn’t well recognized nor valued by the market. We successfully run a process leading to an accretive sale with total proceeds of $100 million that we announced last week that valuation will exceeded the consensus value. The size of the royalty portfolio in showcases another example of our efforts to deliver positive returns to our shareholders. From a growth perspective, a robust balance sheet continues to allow us to invest in valuating capital projects while advancing our large organic development exploration portfolio. We have a number of exploration updates coming from across the business in the coming months, which will allow you to follow our progress, too. We’ll give you a flavor of these a little later.

The primary purpose of our development and exploration program is to establish our ability to sustain seven to 800,000 ounces of gold production for at least 10 years. Turning to the next slide on ESG. pleasingly, we continue to see positive health and safety trends at our operations, reflecting our focus and efforts to improve the well being of our employees, contractors in communities, we’re accomplishing those improvements despite pervasive challenges with COVID globally, where our mitigation efforts have enabled us to avoid any COVID related shutdowns and our operations this year. Our commitment to our communities and the environment remains front of mine, as we continue to deliver against our priorities outlined in our 2020 sustainability report.

This included our commitment to begin establishing an action plan to achieve net zero greenhouse gas emissions by 2050. We have also begun to improve disclosures on Climate and Water Management by responding to the carbon Disclosure Project end aligning our reporting with the requirements of the Task Force on climate related financial disclosures. We are proud of our continuous efforts to improve in our approach to ESG. And we’ll continue to not only report on our progress, but look for new ways to further our presence as a leading and progressive ESG steward.

Moving on to the next log. As I noted our first half production of 396,000 Gold equivalent ounces, at the all in sustaining cost of $993 per ounce compares favorably to have full weed guidance as shown on this slide. With an excellent first half the outlook for the remainder of the year has as well on track to meet our guidance ranges. From a production perspective. Our larger operations are chirper americold are currently tracking to the midpoint and guidance. A tuna and CB we experienced better than expected half one, largely as a result of the excellent operating results in one off benefits which we will discuss later. From a cost perspective, or all in sustaining costs is tracking to the low end of guidance. We’re investing in several several high return growth opportunities across our business including capital projects like the triple A flotation circuit, exploration, drilling, and investing in work to complete a number of technical reports, all designed to improve both the longevity and value of SSR. She will touch on a number of these shortly.

This moving on to the next slide and our quarterly highlights. We’ve already covered some of the quarterly highlights I’m not going to spend much time on this slide, Allison is she will provide a more detailed overview in a minute. However, a few of the highlights that are relevant to consider for this quarter. Our safety performance continues to improve and operationally we’re hitting records across the business. Financially, the strong operating results delivered and adjusted APS are 46 cents per share, which generated $100 million in free cash flow where the lion’s share was used to support our ncib dividend payments and debt servicing. And after all the cash outflows, we were still able to maintain a net cash position of over $500 million, providing us with the flexibility to advance our large organic pipeline.

With that, I’ll turn the call over to Allison who will discuss our financial performance in more detail on slide number seven.

Alison WhiteExecutive Vice President and Chief Financial Officer

Thanks, Rod. And Hello, everyone. It was another outstanding quarter. And I’m pleased to speak to the results shown on slide seven, continuing our track record of success. Following last year’s merger, we produced 199,673 Gold equivalent ounces during the quarter and sold 201,504 Gold equivalent ounces for a total of $377 million in revenue for q2, delivering a solid first half of the year with 743 million in revenues. attributable net income for the quarter was 54 million or 25 cents per share.

And adjusted attributable net income was 101 million with adjusted attributable earnings per share of 46 cents. In the first six months of the year. attributable net income was 107 million for 49 cents per share and adjusted attributable net income was 203 million or 93 cents per share. On the right side of the slide. I’d like to provide some commentary on our reported 46 cents in adjusted earnings per share. That is calculated based on our definition of adjusted attributable net income per share. We start with our attributable net income of 25 cents per share and then make adjustments to exclude the after tax impacts of specific items that are not reflective of the company’s ongoing operations.

Each of those items is outlined in the waterfall The chart on the right of this slide, with the largest of the adjustments for 10 cents, due to our recent announcement of the sale of our non core royalty portfolio for 100 million, which remained accretive to our nav against analysts consensus estimates, and an adjustment for 11 cents related to the amortization of the fair value as a result of the adjustment to bump up the value of inventory and mineral properties at Shepler at the time of acquisition. Additionally, I’d also like to highlight our review on inflationary pressures across the business, particularly given our ability to manage through those headwinds in the first half of 2021. First, we find that inflation in both Turkey and Argentina, which accounts for slightly more than half of our 2021 production guidance is largely offset by the Associated currency devaluation in those countries.

This has proven true for us historically, and we anticipate that it will continue into the future. Across the business, we have been able to manage other cost pressures through our continuous improvement practices that we have ramped up since the closing of the mergers last year. We will touch on these initiatives in more detail later on. But our refreshed approach toward supply chain and procurement practices is placing us in a position to better absorb any potential inflationary increases, as we are focused on value extraction and cost savings. Turning to slide eight, we can talk about SSRS balance sheet strength, as our mining close the quarter with 908 million in consolidated cash, reinforcing our balance sheet strength as well as our significant liquidity. As noted previously, effectively 100% of our quarterly free cash flow was put toward share repurchases, dividend payments and debt servicing. We remain well positioned to continue our capital allocation policy, fully funding our portfolio of organic growth opportunities while maintaining our significant capital returns to shareholders.

Additionally, within the quarter, we amended our existing undrawn revolving credit facility, increasing the size of the facility from 75 million to 200 million with an additional 100 million accordion feature over a four year tenor. Our net cash to EBIT da ratio is point six times, again demonstrating our results and placing us in the top quartile of our peer group. As we look ahead, we will remain active on our share buyback program maximizing purchases were possible. Subsequent to the quarters and we purchased an additional 2 million shares for cancellation are share repurchases now total 6 million of the allowable 10 million shares under the ncib clearly demonstrating our commitment to deliver capital returns to our shareholders. In addition to the ncib we again declared a five cent dividend per share during q2. On slide nine we can talk more about SSRS position as a free cash flow leader and our capital returns.

Our continued track record of success has bolstered our cash flows with operating cash flows at 149 million and free cash flow of 100 million during the quarter. We have aggressively repurchase shares through our share repurchase program, buying back 70 million of shares during the quarter and an additional 2 million shares following quarter end in July. highlights for us so far this year include 177 million in free cash flow in the first half, as well as 125 million in capital returned to shareholders in the year to date period. We anticipate that our cash flows for the second half of the year will remain strong and will be equally weighted to the first half of the year. We are confident that our capital allocation program provides attractive yields for our shareholders. At this our mining is free cash flow yield of 10.9% is well above the peer group at 4.2% and SSRS.

Capital returned yield of 3.5% for your for the year to date period is already above the projected mid cap yield of 3.4% for the entire year. We are looking forward to continuing our track record and delivering consistent financial and operational results. Our capital allocation priorities include investing in growth, returning cash to shareholders, and maintaining balance sheet strength. The combination of leading returns and significant free cash flow generation differentiates SSR mining. We will continue to execute on our priorities both financially and operationally. As we move through 2021 do we’ll walk you through the operational highlights starting on page 10.

Stewart BeckmanExecutive Vice President and Chief Operating Officer

Thank you, Alison. First off ESG. The never ending drive to improve EHS and is through the business continues, with all sides showing marked improvement in poor in performance. For the first half of this year, our teams more than half the recordable injury rate when compared to 2020. With support from third party experts, we kicked off a program aimed at mapping our pathway to achieving the new commitments made in our recent sustainability report, including net zero greenhouse gas emissions by 2050. rollout of our new integrated ESG management and Information Systems is gaining momentum.

And all of the sites are now completing gap assessments against the new standards and building their compliance plans. new science standards are aligned to and meet or exceed contemporary expectations and industry standards. Recognizing the organization’s effort and performance, our writing was upgraded from double B to A in the latest ncsi ESG report. The operations are doing a great job of managing COVID each side doing so with its own talent approach, vaccination rates of our workforce has been good to excellent with over 70% having had at least one shot already, CV is it 76% marigold, 41% or 67%, and chocolate chirper and impressive 85%. Tax united.

Moving on to operations and growth. The second quarter continued the performance train from q1 was strong production numbers in good cost control. We manage the things that are in our control and so the sites are focused on operational excellence which includes productivity improvement and cost control. Now a program is in two streams the continuous improvement stream which is a foundation of reliable and optimized production and cost control. As part of the continuous improvement work, we are currently completing an opportunities baseline across all of the sides. This will identify and collate opportunities and squeeze more out of our existing assets.

The opportunities are then being built into our plans and budgets for the rest of 20 to 21 and 22. The other part of the O is an innovation stream, which is looking to step change performance of the operations by application of divergent or disruptive technologies. Our current focus in this space is on the digital opportunity, such as AI and AI. We’ve already had some wins in this area. And so we’re stepping up the resourcing. Additionally, we’re improving our resourcing and processes in the supply chain space to ensure that we continue to optimize our working capital the input cost position.

Moving on to the sites and sherpur on slide 11. The chair personified plant continued to process well above design rates and half one was another record and a half year throughput. The autoclave the shutdown of autoclave number one that had been delayed from q1 was completed as planned and with no surprises. There are no further scheduled major autoclave shutdowns is here. The flotation plant construction and operational readiness activities have now been completed on time and on budget. This fantastic achievement by the project team despite the impasse of COVID is testament to a Herculean effort by some individual individuals and the company’s ability to deliver projects. We’re still busy exploring in the chair for district with some good results.

We currently have seven drill rigs that adage and plan to issue an expiration update for the project later this month. So keep an eye out for that one. an order of magnitude study for chair for capo c two is underway. This study aims to leverage the considerable copper driven mineral value within and immediately adjacent to the reserve and resource shells that the current mined plan does not exploit. If this study is positive, we plan to request funding and move the project to a pre feasibility study to be incorporated in the chirper district technical report CDM p 21. Which will move to the reserve case and be the significant feature of the updated city and P 21. Technical Report, which we aim to complete and released by q1 next year.

Let’s move to seat let’s move to marigold on slide 12. Montana’s are another record and gold production was within 250 ounces of the previous half year record. coincidental with the warmer weather the new capacity of Tc 7000 shovels dropped in reliability in the quarter. Following what was very good performance in q1. we fully expect these issues to be resolved. work to drill and equip the watering balls continued and the water table drawdown rates look good. Overall the project is expected to be completed on time. Stripping of the five end pits to the north of the property, advanced well with easier than expected mining and first benches. expiration at marigold is mostly focused around the existing periods and is ramping up uptrend Canyon.

Overall, we drilled just over 20,000 meters for the Corps of second soil sampling program covering areas not previously tested at Trenton Canyon also needed completion. We plan to provide an exploration update release for the greater marigold project before the end of this year. Move to slide 13. CVS quarter was outstanding delivering record quarter and half year production and unexpected very high grade zone was encountered at the bottom of the santoy lower nine zone at the edge of the resource model. Mine design is being modified to re establish access to allow further exploration testing of the area and to regain access to mining operations, which we’re targeting early next year.

The CB operation is mind rate limited throughput was slowed for the CBD plant during the periods of very high grade feed. So not to overload the circuits with gold, which is a great problem to have. As a result, there’s been a build up of the mill feed stockpile which will be drawn down through the rest of 2021. Using the plant catch up capacity. pleasingly underlying mine production metrics have also been steadily improving and CB with a number of their continuous improvement projects bearing fruit exploration within the operating central mind continue drilling out of the gap hanging wall and the santoy hanging wall targets.

Looking to pull these into reserve and resource and into the mind schedules in the near term. Drilling also continued at the distal exploration site sites of Mack North joka and Fisher. Additionally, we commenced drilling at amisk. Our other active Saskatchewan exploration site I will provide an update on this in due course. And suddenly for everyone to look forward to later this quarter will release an exploration update for CB which will include work on the Fisher properties. Moving on to slide 14, Turner continue to step it up delivering production records yet again. Good production and cost control drove the all in sustaining costs down to $14 an hour or under $14 an ounce.

The change over the owner haulage from the mind plan started in April, and the performance has been much better than expectation helping to reduce operating costs. Planning subpoena is now being redone, assuming better mind performance, higher throughput rates and a lower cost base. Let’s move on to slide 50. For the exploration pipeline, I pretty much covered off everything in here with a site discussions. I just wanted to add a couple of comments on on some of the other projects. We have boots on the ground in St. Louis in Peru. Some of our teams from the Denver and Vancouver based exploration group are mapping and reinterpreting the area at copper Hill in our partner started as summer drilling program. Coffee Hill is in the Black Sea region of Turkey.

In April 2020. We released the exploration resorts results for the property for eight holes, a number of which had very clean high grade copper mineralization intercepts, close to the surface including 41 meters 2.6% copper. This current copper Hill drilling campaign is aimed at stepping out to test the extensive mineralization. Initial observations are very encouraging. And I aim to get this season’s drill results to you before the end of the year. So somebody else to look forward to. So wrapping it up, it was a good quarter for the business and the operations and growth teams.

Thank you very much. And back to you, Rod.

Rodney AntalPresident and Chief Executive Officer

Thanks Stewart and thanks, Allison, was to look forward to. To summarize the first half of 2021 has clearly demonstrated the strength of our business and our commitment to shareholder returns. Since the merger, we’ve delivered record productivity across the portfolio, reinforcing SSR mining appeal as a leading mid tier gold producer. With a robust portfolio of organic growth opportunities, we expect to provide a number of expiration updates to the market through the second half of this year. It is our belief that our strong free cash flow, pay leading capital returns and significant growth optionality will support a premium valuation more appropriately reflecting the quality of our assets in our people.

So with that, I will now pass the line over to the operator to take questions you may have. Thank you easy.

Questions and Answers:

Operator

[Operator Instructions] Your first question today comes from Tyler Langton. Please go ahead.

Tyler LangtonJPMorgan — Analyst

Yeah, good afternoon right out. And then Stuart and athletes to take my questions. I guess just to start, and you touched on the inflation and mentioned that I guess the sort of FX was kind of offsetting pressures at Prudential blur, but I guess in terms of marigold and CBD talk about I guess, seen as sort of infer what items you’re seeing inflation and sort of how much and then a little bit more details on how you’re offsetting it. And if you have any, any contracts, or hedges that might be helping as well.

Alison WhiteExecutive Vice President and Chief Financial Officer

Tyler, thanks for the question. This is Allison. So yes, we do, we do have, you know, as we stated, we do have sort of offsetting inflation at Puna and tribler, in Turkey, on setting inflation, to currency devaluation. And at CBN. marigold, you know, that’s where the part that Sue really touched on in terms of continuous improvement, and the activities that we’re working on in the business has really helped us to not see as much inflation through that, that process. And then we do have a an active hedge program within the organization, and we are constantly re evaluating, if those, you know, hedges are meaningful for the organization, and we will continue to do that.

Tyler LangtonJPMorgan — Analyst

Thanks. And then I guess, without with tubular, I guess, universities mind numbers look like the growth, capex and sustaining capex was kind of a little below, you know, sort of that, you know, annual, you know, for the for the full year, should that pick up in the second half. And then I think in the mdna, there’s also some mention about waiting for sort of permits for the flotation circuit. And then, I guess, stage four for the tailings. I don’t know if that’s related to the capex at all, but just sort of any details, that would be helpful.

Rodney AntalPresident and Chief Executive Officer

I’ll just touch on the permits first time and then I’ll pass over to Allison to talk specifically about some of the other questions that yes, we’ll agree are waiting for the the final permit cercla, for the, for the flotation. So clearly, we’ve had a long track record of success in the country of getting getting permits. And we are while the process doesn’t always equate our needs, we’ve always been able to get them, get them in the past, it’s been more perverse. Definitely with with COVID, you know, when impacting the the government and in their, their their push to get things done, but we know that the permits are, are waiting final CD to expect them soon. So that should, that should come here pretty shortly. So just on the other questions, I’ll let Sue and Alison talk about

Alison WhiteExecutive Vice President and Chief Financial Officer

Tyler, I’ll touch on the capex questions that you have. And we do anticipate that as the year continues, we will spend what we’re anticipating or what we were originally planning for and what we are anticipating, we will spend so, you know, look to see that maybe uptick a little bit as the year progresses.

Rodney AntalPresident and Chief Executive Officer

I think we’ve pretty much covered it off policy, our expectation is that we’ll spend the expiration work as well. But we’ve planned the capital, the cat, we’re finalizing all of the income and capital, we think we’ve picked and tied everything for the flotation plant now, and we won’t get any surprises out of that.

Tyler LangtonJPMorgan — Analyst

Great, thanks so much.

Rodney AntalPresident and Chief Executive Officer

Thank you.

Operator

Your next question comes from a Cosmos Chiu of CIBC. Please go ahead.

Cosmos ChiuCIBC Capital Markets — Analyst

Thanks, Rod, Allison, and Stuart and good job, Alex. First off, congrats on a very strong cue to maybe my first question is also on cercla here. You know, right on permitting, I just wanted to get a sense. You know, it sounds like there’s been a delay, but I guess, you know, my question is two parts. Number one, it sounds like you’ve already started the water runs, and also, you know, some of the community conditioning work get at the flotation. So could you maybe talk about what permitting are still needed? And, you know, when should we start, you know, getting a bit worried in terms of timing. And then the second part is, in terms of the stage for tailings. As you said, there’s been a slight delay as well. Could you talk about the capacity right now tailings capacity was stage three, and when would you need that stage or capacity?

Rodney AntalPresident and Chief Executive Officer

Because we’re gonna pause that what I would assume so there was like, I think four parts of that question, so Iwas asked to take care. Bye. With regards to the flotation plan, we are waiting for the update of the EIA for cercla. And then after that we have a, an operating permit, which normally takes a couple of weeks to get after we have the EIA, our understanding. We believe that the EIA has passed all of the bureaucratic processes through the department, and is now the ministerial office. So we hope it’s not too long.

Like everywhere, everything’s been closed down. And by COVID, and, and then we’ve just had the big religious holiday, the buyer on holidays, so everything’s sort of pretty much stopped. So we’re waiting for people to get back up to speed coming out of that. So hopefully, we’ll come soon. We’re putting a mitigation process. So we’re dealing with the blends that we’ve got in front of us that in the best way that we can with the material that we’ve got, and we believe that, you know, at a stretch we’ll make, we’ll make it into guidance, even if we didn’t get the permit. So we’re pretty confident that we’ll get there. And it’ll be it’ll be coming soon. We hope. Was the other part of the question was very long.

Cosmos ChiuCIBC Capital Markets — Analyst

Yes, no, sorry. I’ll keep my next question to one with regards.

Stewart BeckmanExecutive Vice President and Chief Operating Officer

Yep. With regards to the tailings. So we’ve got all of the requirements patient at this stage. And there’s a there’s a small piece of land in the next stage, which we require, which we require to get for the next phase. And that’s required, I’d have to go and check my notes. But it’s not I think it’s somewhere about August 23. That that’s required by so we’ve we’re working to ensure that we’ve got those in good times. We’re obviously always busy working to get those well in front of what we need.

Cosmos ChiuCIBC Capital Markets — Analyst

Stewart. I guess the other part of my question was, how much tailings capacity Do you have right now? And why would you need the capacity coming from stage?

Stewart BeckmanExecutive Vice President and Chief Operating Officer

Who knows? I said, Not until into 2023. We’re sorry, OK. We’re building we’re constantly building the time exam. So in front of us, and we’re, we’re, we’re well ahead.

Cosmos ChiuCIBC Capital Markets — Analyst

Of course, maybe switching gears a little bit to you’re coming back to CV, I noticed that, you know, the head grade and the quarter was spectacular. 13.19 grand per tonne. You know, I guess the first part of my question is, is that sustainable? And, you know, part two is, it sounds like, you know, it was a positive grade, surprised you as one, Santorum, lower nine. Could you talk about was it positive grade reconciliation to your block model? And if it was, you know, how much of that? How about how positive was it?

Stewart BeckmanExecutive Vice President and Chief Operating Officer

Yeah, so, so we had positive reconciliation, not just in that area. But in the mine, we do get these from time to time in the mind, it was very positive, and it was on the edge, the very bottom of the result. So it is positive in that we’re drilling out. And we will probably get to extend out beyond what’s in the current reserves. But we don’t know how much that’ll be yet, because that’ll be your next question. until we finish the billing, so we’re putting in a drive now to we’ve already put a few holes into it, but we’re putting in a drive now to get some more drilling into it. And then we’re gaining access and putting in another drive to gain access to get back in and do some more mining next year. But that, you know, there were areas that were spectacular, great. Generally that state came out at 15 grams a ton.

Cosmos ChiuCIBC Capital Markets — Analyst

Okay, now, could you maybe, you know, comment on the potential grade for the second half for CB or?

Rodney AntalPresident and Chief Executive Officer

Well, not not at this time. Now, I would like to speculate.

Cosmos ChiuCIBC Capital Markets — Analyst

Okay. And then, one last question, maybe on miracles here. You know, again, q2, grades were good. First half grades were good. You know, what should we expect for potentially the second half? And then on that? I believe, if I were to work out, you know, it’s always tricky with heat leeches. But looks like the first half recovery was about 81%. You know, if you are expecting potentially lower grades and the second half, could that impact recovery as well?

Rodney AntalPresident and Chief Executive Officer

Yeah, well, you’re right about the recoveries. So you know, we’re running. We’re running three heaps at the moment of various lengths. So you know, the breakthroughs range anywhere from 50 to four days. Depending on which shape we’re stacking and leaching from So, but overall the grade for this half will be the same as it was for the first half.

Cosmos ChiuCIBC Capital Markets — Analyst

Great. And then maybe, you know, one last question to kind of wrap it up. I don’t want to, you know, beat a dead horse. But, you know, the, the new AI word seems to be the new F word these days. And that’s inflation. In terms of inflation, you know, you talked about currency impact offsetting inflation. We’ve also heard from some other companies, it seems like you know, labor there’s cost, pressures, energy, there’s cost pressures, other input costs, cost pressures. You know, could you maybe comment on a different areas? What are you seeing the most potential cost pressures? At your some of your different operations here is a labor is that energy cost? What are we talking about?

Alison WhiteExecutive Vice President and Chief Financial Officer

We are seeing some cost pressures in relation to diesel. And we have not necessarily experienced some of the same labor pressures that others have talked about, that we will be continuing to reevaluate that some of our other input costs. We are currently actually in the process of renegotiating for cyanide and things that add a few of our sites. So we have not, we have not experienced some of the same inflationary pressures that some of our other companies are seeing.

Cosmos ChiuCIBC Capital Markets — Analyst

That’s good to hear. Thanks again. Those are all my questions. And congrats again on a very good, q2,

Rodney AntalPresident and Chief Executive Officer

Thanks Cosmos.

Operator

Thank you. Your next question comes from Mike Parkin with National Bank. Please go ahead.

Ivy LiewDeutsche Bank — Analyst

Thanks, operator, hi, Rod, and team and congrats on a very solid quarter. A lot of my questions have been answered already. But just maybe just wanted to see, you know, in regards to COVID. In Turkey, any any sort of impacts at Joker that you’re seeing and any kind of mitigated mitigation factors that you’re putting in this.

Rodney AntalPresident and Chief Executive Officer

Chapter have done an outstanding if it in managing and the Turkish health system is actually very good as well. For anyone that’s been there. We we have a isolation process coming on site. So we have almost immediate turnaround with our own medical staff coming into site testing people for a PCR test, and also an antibody test. If you carry enough to anybody’s and, and you’re PCR clear, you can exercise immediately. Otherwise, you go into quarantine for a week, and then we retest you before you get back on the site. And they still running that protocol, despite the fact that they’re 85% immunized across both the workforce and the and the contractors on site. So they’ve really done an outstanding and outstanding effort and have managed it very well.

Ivy LiewDeutsche Bank — Analyst

That’s great to hear. And just kind of I think, cause was going to be pushing toward, you know, looking at, you know, how CB is looking in the second half hour kind of droppers, you know, unfolding. And marigold, you said kind of mergo is going to be flattish. I would say, you know, just based on the grid, going into the second half. I mean, in terms of what you produce, to date is about 395,000 ounces, top end of guidances is is close to, let’s say, eight 800,000 ounces. You know, if CB does get some good outperformance and Chopra gets the flotation going, do you expect to kind of, you know, hit over that guidance level? Is that what why you’re being conservative to see how these things perform before you start talking about, you know, achieving over and above your guns.

Rodney AntalPresident and Chief Executive Officer

Now, I think I think is what you sort of said in the scripts survey as the, you know, for the for the larger operations, which is both marigold and chebula. We’re tracking more toward the mid quarter guidance, and while by Puna, and so we’re certainly showing Well, in the first half, it doesn’t necessarily translate that we’re going to go through the through the top. So, you know, if quarter three turns out again, to give us some positive surprises, then obviously we’ll reassess that. But at this stage where we’re saying we’ll be in that sort of, you know, that that guidance rounds that we originally put out.

Ivy LiewDeutsche Bank — Analyst

And just what you know, just moving into on the exploration side, you said that they were expecting couple of updates in terms of exploration of the next month or so. Is is rather focused Near mine exploration, you know, looking at, you know, additional satellite beds and kind of improving the, you know, the confidence in reserves and resources at TV.

Rodney AntalPresident and Chief Executive Officer

Yeah, it’s a, it’s both. So our, our main focus is, is near mine in order for us to be able to convert. So at CB, it’s it’s santoy, and the gap hanging walls because they’re the next door source. But we’re also step stepping out to extend those, one of the things that we want to do is we’re putting more resources into it, extend our horizon, our time horizon at CB so that we can plan in the longer term, you know, rather than having a sort of a rolling, shorter reserve, because, you know, the belief is everybody that has anything to do with CB is that we’ve got a much bigger resource, it’s just that we haven’t defined it. And if we have a better understanding of the extent of the mineralization, then we can, you know, we can plan for expansion of the mind and sort of longer, longer capital and look at the mind through different paradigms. So that’s pretty exciting.

Certainly a chirper. You know, we’ve got the work that we’re doing on on the copper mineralization that sits in and around the existing resource and reserve shells. This was never valued in the value of the ore coming to the plant, because at the moment, we don’t recover it, even though the plant was designed to be able to tack on a copper recovery circuit at the back end, we’re looking at that, again, through a different paradigm of what do we what happens if we recover that copper coming in. So with a flotation plant, perhaps producing a pyrite concentrate, which would then supplement the feed going to the autoclaves, and push our overall production up and produce copper from the circuit. So that’s pretty exciting. He is coming out shortly. You know, we, you know, we got to share another thing, it’s just under 200 holes, they’re both holes that were infill holes in the resource, you know, bringing up the confidence levels in the resource and the reserve for outage.

And then also step out holes where we’re extending outside what was previously published for the, for the resource there. And then, you know, we’re already working on it, those data will be included in the work that we do. And we’re updating the technical report for the cheerfully district master plan, as we call it. And we’ll roll that out at the beginning of next year. So you know, what you saw the extra million ounces, and almost $500 million in NPV should become guide to reserve groby and then make it into the base case of the valuation for the business. So we’ve got quite a lot of work going on at the moment, pushing that out. And of course, all of the work going around marigold as well. So we’ve got both immediately adjacent to the current workings. And then, you know, we’re really picking up what we’re doing down at Trent Canyon as well. stuff.

Ivy LiewDeutsche Bank — Analyst

That’s for me, Rod. And, again, congrats from a great quarter.

Operator

Thank you. Your next question comes from Mike Parkin with National Bank. Please go ahead.

Mike ParkinNational Bank — Analyst

Hi, guys, congrats on the quarter. A couple follow up questions. With Trenton Canyon, where does that stand with regards to permits? Does fact that it’s an old historic site? Does? Are those permits still intact? Or would you have to go through a permitting phase to restart operations there.

Rodney AntalPresident and Chief Executive Officer

So there are some permits there. But what we’re doing at the moment is, is is re exploring the area as well. So it’ll depend what we find and what we want to develop and what we need to what we’ve decided we want to do down there. So I can’t I can’t answer your question at the moment.

Mike ParkinNational Bank — Analyst

Okay. And then with regards to marigold as a whole, the last study back from 2018 show there’s a production dip in 2024 and 2025. But since then, you’ve picked up a couple little pieces of land within the main mine plan area, as well as ongoing exploration success and then a little bit of a change here with the water table which pushes some of the higher grade tons out into it seems 2022 2023 so the you guys see a potential where that dip could be softened, if not eliminated.

Rodney AntalPresident and Chief Executive Officer

But the answer is yes. We’re going to issue a three year guidance at the end of this year, which will, will give our updated life and mine plan across those years that you’re asking about. And we’ve started planning to do the work to do an updated Technical Report. And we’ll call it the marigold district Master Plan, which takes into account all of the things that that we think we’re going to do to develop marigold as a whole property. So that was the other thing.

Stewart BeckmanExecutive Vice President and Chief Operating Officer

The other thing we said, Mike, you know, this is this is a common theme across the portfolio, while multiple is relevant, because we, you know, we put out the the last tech report, just last year, the the other operations also need that refresh. So that’s part of the investment into these tech reports to, to refresh ourselves. And also, then also the market, obviously, about what the assets actually look like, rather than sort of talking about stuff that’s 345 years old.

Mike ParkinNational Bank — Analyst

Great, And with Trippler, so that update from the last update, we got we had some high grade ounces out at the back end of the mine plan just because of the category they sat in. Now with this update coming. Those would be coming into reserve it sounds like so we could have those properly sequence moved forward ahead of stockpile processing, is that correct? to assume?

Rodney AntalPresident and Chief Executive Officer

Yes, of course. And that’s that’s how it would be scheduled down. The reason they sat at the back end was we we didn’t want to displace reserve material with with the material from Rh some of which was only the third category because it upsets the regulators. So you know, it would it would naturally be sequenced into the plant as soon as as soon as it was available.

Mike ParkinNational Bank — Analyst

Okay. And then final question for me was CB, you’re getting some great surprise, just that, from what I recall, you actually have a massive amount of gold at that deposit that comes through free gold and comes out in the gravity circuit. Does the grade reconciliation tend to sit with that type of type of mineralization where it’s better free gold than expected? Maybe a negative effect or is it something else that kind of surprises you to the upside when that happens?

Rodney AntalPresident and Chief Executive Officer

We do get surprises to the upside at CB and it is it is a difficult to predict mine as all maggoty vine hosted gold deposits are our reconciliation in the plant is always very high. The recoveries always very high. But the reconciliation tends to be higher, positive and we tend to get positive surprises from time to time. Naturally when when you go through and do the work for the resource estimation. If you have unusual highs, they usually get smoothed out. So it’s not to overestimate.

Mike ParkinNational Bank — Analyst

That’s it for me guys. Thanks very much.

Rodney AntalPresident and Chief Executive Officer

Thanks Mike

Mike ParkinNational Bank — Analyst

Thank you. We are showing no further questions at this time.

[Operator Closing Remarks]

Duration: 49 minutes

Call participants:

Alison WhiteExecutive Vice President and Chief Financial Officer

Rodney AntalPresident and Chief Executive Officer

Stewart BeckmanExecutive Vice President and Chief Operating Officer

Tyler LangtonJPMorgan — Analyst

Cosmos ChiuCIBC Capital Markets — Analyst

Ivy LiewDeutsche Bank — Analyst

Mike ParkinNational Bank — Analyst

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