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» Allied Nevada Gold Corp. Q1 2010 Earnings Call Transcript
Scott CaldwellThank you, Tracy. During the quarter the company achieved outstanding performance in the health safety and environmental areas. This excellent performance is a real credit to the men and women that work at Hycroft and our other development projects in the state. Production is expected to trend upward quarter-over-quarter and our adjusted cash cost per ounce will decline quarter-over-quarter. This is the mine plan that was developed last year and refined as we gained more knowledge on our equipment deliveries, and I’ll talk a little bit about that later. Gold sales continued to lag production as metal inventories continued to build on carbon and other areas of the process stream. Obviously this build up in inventory adversely affected sales and revenue, and therefore earnings. The company is in discussions with third parties to process carbon offsite and we are also finalizing design [capper] cost estimates and we’ve begun the permitting process of our own modular onsite carbon strip circuit. This circuit could be operational in Q2 2013. Permitting is the critical path on that – it’s not equipment delivery or construction, it really is permitting. Silver production continues to exceed expectations. The mine produced about 166,000 ounces of silver during the quarter, and that works out to a silver to gold ratio of about 5:1. Costs for the quarter were essentially as expected. The mine was in a high waste stripping phase; [striperation] was approximately 3:1. And as you know we’re a US corporation and therefore Allied is required to dispense all costs associated with production waste stripping. Due to further delays with shipment of the third large hydraulic shovel, the mine was forced to operate smaller, more expensive loading units, increasing mining costs and adversely affecting our productivity of our [Hollis] fleet as well. The final large hydraulic shovel is due to arrive in Los Angeles this week and management believes the shovel will be operational in Q2 2012 – that’ll be sometime probably in June, so late in Q2 2012.
Contracted mining equipment went to work during the quarter and this equipment will ensure that production and capital development stays on track. A 2.5 million square foot leach pad expansion was completed during the quarter and we are now stacking on the new pad and intend to add solution to that ore in the very near future. This expansion of the leach pad will allow the site to increase tonnage on our leach and resulting in increased metal production.Site personnel began work on the excavation required for the installation of the [gyratory] crusher. Site personnel expects to have the excavation completed in order to begin foundation work during Q3 2012, and the excavation is going very, very well and that’s where the contractor was working last week. The Allied Nevada owner’s team in [floor] are progressing on the engineering required to construct the crushing system and the mill. Engineering is scheduled to be completed as required by equipment deliveries. Environmental permitting continues to proceed well on all fronts. Management expects receipt of all approvals to begin construction of the mill in Q2 2013. And as you’ll recall our future mill is located on private or patented mining claims. Presently we have two exploration drills working at Hycroft. The primary focus of these drills is combination drilling to the north. This area is required for future dump and leach pad construction. Upon completion of the drilling required for the engineering the drills will move on to an infield program designed to convert waste internal to the current $800 feasibility kit into oil reserves. If this infield program is successful oil reserves will increase and the waste ton [ten] strip ratio will decline associated with the $800 pit. Our Board of Directors recently approved a modest regional exploration program. Work is scheduled to resume in Hasbrouck/Three Hills later in the year. This program is designed to expand the mineral resource of the district. Management plans to begin drilling at Wildcat during the quarter. Wildcat is located about 20 miles southwest of Hycroft. Field work will begin on the company’s Pony Creek property and nearby claims. The Pony Creek claim block is approximately 60 square miles and is located near the [Rain] deposit that was mined by Newmont a few years ago. Read the rest of this transcript for free on seekingalpha.com