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Edited Transcript of ASR.TO earnings conference call or presentation 30-Apr-19 9:00pm GMT

Q1 2019 Alacer Gold Corp Earnings Call

ENGLEWOOD May 7, 2019 (Thomson StreetEvents) -- Edited Transcript of Alacer Gold Corp earnings conference call or presentation Tuesday, April 30, 2019 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Lisa Maestas

Alacer Gold Corp. - Director of IR

* Mark E. Murchison

Alacer Gold Corp. - CFO

* Rodney P. Antal

Alacer Gold Corp. - President, CEO & Executive Director

* Stewart J. Beckman

Alacer Gold Corp. - COO

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Conference Call Participants

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* Daniel McConvey

* Don DeMarco

National Bank Financial, Inc., Research Division - Associate

* Michael Slifirski

Crédit Suisse AG, Research Division - MD

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Presentation

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Operator [1]

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Thank you for standing by. This is the conference operator. Welcome to the Alacer Gold First Quarter 2019 Operating and Financial Results Conference Call. (Operator Instructions) And the conference is being recorded. (Operator Instructions) I would now like to turn the conference over to Lisa Maestas, Director of Investor Relations. Please go ahead.

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Lisa Maestas, Alacer Gold Corp. - Director of IR [2]

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Thanks, Gaylene. Welcome, everyone, and thank you for joining us today for Alacer Gold's First Quarter 2019 Operating and Financial Results Conference Call. Joining me on the call are Rod Antal, our President and Chief Executive Officer; Stewart Beckman, our Chief Operating Officer; and Mark Murchison, our Chief Financial Officer.

Alacer Gold is listed on the Toronto Stock Exchange as ASR and on the Australian Stock Exchange as AQG.

This conference call is available via webcast, and the link and slides to accompany our remarks can be found on our website at alacergold.com. All documents released today can also be found on sedar.com and asx.com.au.

This presentation include endnotes, and this call will also include forward-looking information. Please refer to the forward-looking language and the endnotes included at the end of our presentation. Additionally, all dollar amounts in this presentation are expressed in U.S. dollars and on a 100% basis, unless otherwise noted. Following today's presentation, we will open up the call for a Q&A session.

I'd now like to turn the call over to Rod Antal, and if you could please turn to Slide 2.

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Rodney P. Antal, Alacer Gold Corp. - President, CEO & Executive Director [3]

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Thanks, Lisa, and thank you all for joining us. Before we review the first quarter highlights, I'd like to spend a minute to discuss this now familiar organic growth strategy that has produced excellent results and will continue to evolve. Our strategy has always been to build a sustainable, multi-mine, cash flow-generative business that can sustain production of at least 300,000 to 400,000 ounces of gold annually.

Obviously, in 2019, we've achieved -- this objective but are firmly focused on growth to deliver more. The 3 areas that clearly demonstrate we can achieve this growth are in the short term, the incremental discoveries around the Çöpler reserve; and at Ardich, which has the potential to deliver in both the near term and the medium term and has become our highest priority target. And in the longer term, we have a pipeline of projects, including Gediktepe.

I'd like to turn your attention to the first quarter highlights before I hand the call over to Mark and Stew for a more detailed discussion on the quarter. So I'm going to turn your attention to Slide #3.

We continue to maintain our excellent safety record working over 873 days without a lost-time injury. We had a good start to the year with production of over 89,000 ounces and normalized earnings of $0.06 per share.

Until we declared commercial production for the sulfide plant, our financial reporting will continue to be difficult to decipher. Until then, the most important indicator from my perspective of our business performance is free cash flow banked onto the balance sheet. In this regard, our performance in the quarter was particularly strong in that we reduced our net debt position by $30 million to $215 million at the quarter end.

In the operations, we saw a positive trend in the sulfide plant for utilization, throughput and recovery in the quarter, and we also successfully completed the first scheduled major shutdown to inspect an autoclave in early April.

And finally, we made significant progress on our growth pipeline of both Ardich and Gediktepe.

I'll now turn the call over to Mark to provide an update on the financials, which will begin on Slide #4.

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Mark E. Murchison, Alacer Gold Corp. - CFO [4]

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Thanks, Rod, and hello, everyone. As Rod noted, the financials are a bit complex this quarter with the impact of the pre-commercial production treatment of the sulfide plant. A few key points regarding the sulfide plant accounting.

Until commercial production is declared, all of the gold sale proceeds generated from the sulfide plant and the costs to operate the plant are capitalized to the sulfide plant construction costs as required by accounting standards. In quarter 1, this resulted in the $45 million of gold sale proceeds generated from the sulfide plant and the $25 million of costs, giving rise to a net positive $20 million credit to the sulfide plant construction costs that would otherwise have been recognized in the earnings. There is also an impact of the corporation's cash flow statement as the sulfide plant proceeds and costs are not reflected in the operating cash flow, rather they are included in the investing cash flow as part of the sulfide plant construction costs. This accounting requirement to capitalize sulfide plant proceeds and costs will continue until commercial production is declared, which is expected in Q2.

Moving on to the detail for the first quarter. 91,000 ounces of gold were sold, generating $119 million in proceeds. Consolidated all-in sustaining costs for the quarter were $721 per ounce. Operating cash flow of $33 million were generated for the quarter. As mentioned, this does not include the net positive $20 million from the sulfide plant as this amount is capitalized as a credit to the construction costs.

Attributable net profit or earnings were $3 million or $0.01 per share for the quarter. However, included in the earnings is the impact of various unrealized non-cash items. In order to provide an accurate picture of the underlying earnings of the corporation, we have provided a reconciliation of the attributable earnings per share of $0.01 to a normalized earnings per share of $0.06 for the quarter on the right-hand side of the slide. The adjustments in the graph are to exclude the unrealized non-cash items impacting attributable earnings. The items being adjusted are unrealized non-cash losses arising from the devaluation of the Turkish lira during the quarter, incentive tax credits recognized from spend on eligible projects during the quarter and higher unrealized non-cash share-based compensation expense as a result of the increase in the corporation's share price. After adjusting for these items, Alacer's normalized attributable earnings per share for the quarter was $0.06 per share.

A couple of other items to note. On DD&A, there is no DD&A charge on the sulfide plant until commercial production is declared. So no sulfide plant DD&A in Q1. And as a guide, we forecast DD&A on the oxide plant going forward of around $150 per ounce of production and DD&A on the sulfide plant going forward of around $250 per ounce of production commencing from the declaration of commercial production.

Tax. We expect the accounting effective tax rate in the financial statements to normalize this year as the quantum of incentive tax credits generated will significantly reduce with the completion of the sulfide plant construction. In regard to the important effective cash tax rate, we forecast the rate to be around 5% going forward.

Finally and most importantly, cash. Underlying the complex earnings in Q1 are robust cash outcomes, including unlevered cash generation of $35 million, and this is expected to grow quarter-on-quarter as the sulfide plant continues to ramp up. The first debt repayment of $17.5 million was made, reducing the outstanding debt balance to $332 million at quarter end. The consolidated cash balance at the end of the quarter was $117 million, leaving the corporation's net debt position at the end of the quarter at $215 million, a reduction of $30 million from the start of the year.

I will now hand the call over to Stew for an overview of the operations.

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Stewart J. Beckman, Alacer Gold Corp. - COO [5]

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Thank you, Mark. We believe that HSE performance is a foundation of our business performance as is our community and employee engagement and development. We've now achieved over 20 million hours lost-time injury free, and our total recordable injury frequency rate remains in the best quartile for the mining industry. We've made great progress with the training and development of our workforce and community. Over the last year, we also developed and implemented a sustainable development fund. In Q2, we'll see the first tranche of these projects start under this new program. This is an important part of maintaining our harmonious, equitable community with sustainable and diverse livelihood opportunities.

Now please flip to Slide 5, and we will discuss the plant performance. Oxide plant performance in the last quarter was excellent, delivering over 50,000 ounces. In January, we completed treating the ore blended with previously stockpiled ore. This program was highly successful and laboratory testing is indicating that we will get better than our originally estimated recovery. Processing of the Çakmaktepe ore started in February. This development, our first satellite mine has been very successful and without any surprises or issues. Reconciliations have been good.

As a reminder, we've been mining from the shallow areas of the property that were within forestry-permitted areas. During the quarter, we received the pasture permits, which will allow us the opportunity to access a small amount of additional oxide ore.

In our 2019 production estimate, we have scheduled the inclusion of the oxide ore from the Çöpler reserve, ore that was discovered through the Çöpler in-pit exploration program and ore from Çakmaktepe. Our in-pit exploration program continues as we aim to source extra material to take advantage of our spare oxide plant capacity. We are continuing to drill exploration holes in the Çöpler mine.

We also started a process to review both Çakmaktepe and the Çöpler deposits for the potential of underground development. We are planning to develop an underground exploration strategy that will judiciously test the number of known deeper high-grade mineralizations. Detailed engineering for the 20 million-tonne heap leach expansion, which will accommodate further exploration success, progressed through the quarter. The work required for us to submit an EIA amendment for a 25 million-tonne heap leach expansion was completed, and we plan to lodge soon. We are also concurrently investigating an option to do a small expansion of the heap leach within the existing EIA conditions, which would allow us an almost immediate start on the expansion of the heap leach once engineering is complete and construction permits are received.

Now please move on to Slide 6, and we'll discuss the sulfide plant performance. Q1 2019 was the first full quarter of the sulfide plant running. It was only months 2, 3 and 4 of the full plant being online, so we were still in commissioning early ramp-up and not surprisingly, there were some commissioning challenges, including those I mentioned on our last earnings call. The team have been methodically working through the commissioning. And as you see in the result, the plant's performance has improved, and by late in the quarter, we were starting to achieve design throughput more regularly and recoveries were improving. As previously mentioned, the new sulfide plant seems to be robust, and we see no issues that require major rework or redesign.

A little bit of context. Across the industry, the timing of major autoclave shutdowns for internal access is generally driven by the need to replace agitator blades or to remove scale, which reduces volumetric capacity of the autoclave and/or faulty agitators. If the agitators don't properly disperse the oxygen or the autoclave volume is significantly reduced, then the processing performance drops away, forcing a shutdown.

In April, we completed the first scheduled major autoclave shutdown, not because we saw a deterioration in performance, but to give us some insight as to the internal condition of the autoclaves.

Given we have no specific operating history, it was also critical that we inspected the refractory brickwork and make sure that everything was good. The condition of the autoclave was outstanding. The brickwork was in perfect condition in both autoclave and flash vessels. The impingement blocks in the flash vessels had zero wear on them. The autoclave agitator blades also had practically no wear on them. Copler ore has a very low abrasivity, which is -- which is why we also see very low wear rates of crusher and mill linings and consumables. The condition of the autoclave indicates that we will be able to extend the cycle time between major shutdowns. We are already contemplating pushing the next major shutdown from July this year into 2020, but we may still need to do a shorter shutdown to change some external valving.

Reducing the frequency of major autoclave shutdowns obviously has a positive impact on production and reduces costs. For clarity, we're not indicating an increase to expected tonnage this year.

During the autoclave shutdown, the second autoclave was off-line for a short period for some unscheduled maintenance. During this time, oxide ore was treated through the sulfide plant, bypassing the pressure oxidation circuits.

Larger seats were also installed into the POX high-pressure heater pressure control valves through March and then again in the April shutdown. The originally installed smaller seats have been restricting autoclave throughput. This is no longer a bottleneck.

We have also completed modification to one of the acidulation tanks and are in the process of removing the temporary fixes from the other tank, and we'll finalize these improvements in May. This will provide further stability to the plant and improve thickener and process performance.

Recoveries are improving as the plant stability improves and we achieve tighter control of the operation. Right now, we are still smoothing out the operation as the plant returns to the stable continuous mode after the first major shutdown. The plant is now more regularly operating at designed throughput rates. Given this and the excellent outcome of the shutdown, we are confident that the plant will ramp up to design. Once we are satisfied that this operation is stable and sustainable, we will assess and declare commercial production. This is expected soon.

Now please move on to Slide 7, and we can talk about Ardich. As Rod mentioned, Ardich is our highest priority development project, and we released an updated resource in early April. Indicated resource increased by 117% to over 600,000 ounces. The Ardich deposit is adjacent to Çakmaktepe and only 6 kilometers northeast of the Çöpler mine.

As we did with Çakmaktepe, we are aiming to fast-track Ardich, leveraging off the existing infrastructure. This work is underway, and the project team, fresh from their rest after the sulfide plant construction, are now focused on this, our next step. This is an extremely exciting [development] (corrected by company after the call) deposit with a mineralized target extending over 2 kilometers. We received the permits and started step-out drilling in April on the most prospective areas to the southeast. First of these holes are complete at about 500 meters to the southeast of the previously designed mineralization.

We also have a drill in the northeast installing pizeometer holes and looking to extend the deposit to the north and the east. Since we started drilling in April, we've completed 7 holes.

Ardich is exciting because it has the potential to deliver near-term, quick-to-production gold based on a starter pit and processing at an expanded heap leach at Çöpler. Then if the deposit continues to grow to its full potential, it will provide options to sustain the oxide ore production from Çöpler District right through the medium and longer terms. We will keep you updated on Ardich exploration.

Now let's move to a brief update of the new mine exploration on Slide 8. Alacer holds a significant portfolio of highly prospective land holdings surrounding Çöpler and across Turkey. We take a very disciplined approach to our exploration, which has led to a track record of success. After extensive field mapping and data mining, we have started and/or restarted drilling in a number of the Çöpler District prospects this year. We are currently drilling in the Çöpler Saddle, which is immediately adjacent to the Çöpler Mine; Ardich, which I've already mentioned; and at Findiklidere, which is a copper/gold porphyry in the Mavialtin Porphyry Belt.

While building the road into our Findiklidere drill site, we uncovered a highly weathered stockwork zone, which we of course trenched and sampled. We will return to Mavidere, which is the southern end of the Mavialtin Porphyry Belt to restart drilling program of that copper/gold porphyry when the weather permits.

We also plan to drill a number of other Çöpler District targets over the course of 2019. We will keep you updated on the process -- progress, sorry, of the Çöpler District exploration program.

Additionally, we have been progressing several other prospects in Turkey. Our 2019 budget includes drill testing of 5 of our regional exploration properties.

In particular, we had some very encouraging results in Kazakbeli in late 2018 and now starting to mobilize for the 2019 drill season. Kazakbeli is near the Black Sea coast and at altitude, so still under snowpack. We will provide more details on this prospect soon.

We are in an enviable position. The sulfide plant ramping up to production, the oxide plant production hanging in with great prospects to extend Çöpler oxide production in the near, medium and longer term. On top of this, we have a spectacular landholding and longer-term prospects in both the Çöpler District and regional Turkey.

Now please turn to Slide 9, and I'll hand the presentation back to Rod for an overview of our 2019 guidance.

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Rodney P. Antal, Alacer Gold Corp. - President, CEO & Executive Director [6]

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Thanks, Stew, and thanks, Mark. This is a big year for us, and it was important we got off to a good start. With the ramp-up of the sulfide plant firmly underway and continuing through the remainder of the year, we expect sulfide production to increase quarter-on-quarter.

Consolidated production guidance for 2019 remains at 320,000 to 380,000 ounces at consolidated all-in sustaining costs of $675 to $725 an ounce, giving us one of the best cost profiles in the industry and generating significant free cash flows. With these cash flows, our focus is on balance sheet management for the remainder of the year where we expect net debt to continue to materially decrease.

So with that, I'll hand over the call for questions, and thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Michael Slifirski with Crédit Suisse.

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Michael Slifirski, Crédit Suisse AG, Research Division - MD [2]

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Congratulations on such a good ramp-up to date. I'm really interested in the sort of performance parameters that you've been able to assess for the few months that you've been operating. So specifically where any first bottlenecks might be and where you -- we might have thought they could be. So try to identify things like oxygen consumption compared to expectation and what it might mean longer term in terms of what capacity you get to or whether it's too early to make any of those judgments. And then secondly, with respect to that table in the bottom of Page 6 on the left, I'm trying to understand what the base numbers for each of those columns might be, like plant feed per month, what you're actually expecting, and in POX utilization.

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Rodney P. Antal, Alacer Gold Corp. - President, CEO & Executive Director [3]

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Thanks, Mike. I'm going to hand it over to Stew to touch on both of those.

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Stewart J. Beckman, Alacer Gold Corp. - COO [4]

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Okay. So good to talk to you again, Michael. So as far as the plant performance goes, when you run the period out of where we were restricted at the beginning of the things that I talked about last quarter and the things that we've been dealing with, so that we will bottleneck at the -- because of those high-pressure valves that I talked about, so that's been removed.

The issues around the acidulation tanks, we think we've mostly removed that now. And so when we're operating the autoclaves, if anything, we think we're getting slightly better than the oxygen consumption performance, efficiency, if you like. So we don't see any bottleneck there.

So what we're really focused on at the moment is just getting stability in the plant and then ramping it up and driving the utilization up, and then I guess that moves to your question around utilization.

I think if you do the numbers, the average utilization across the year is 85% if you work your way backwards in the tech report. Given that we've had to shut down and possibly pushing the other shutdown out this year, the focus of the team is really just to achieve stability of the plant and then to slowly creep it up.

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Michael Slifirski, Crédit Suisse AG, Research Division - MD [5]

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Okay. And then the shutdown that you had in April, that was 1 of the 2 autoclaves. Does the other one have the same shutdown to follow? Or is what you observed in the first one -- no?

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Stewart J. Beckman, Alacer Gold Corp. - COO [6]

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No. We're going to push that out to the beginning of next year. The inside of the autoclave was spectacular. There was -- the brickwork was unmarked. We had a team of Koch Knight in on-site, ready for any work that we might have needed to do [enter rig point], and we didn't do any work in the autoclaves. There was very, very little scale to no scale in there. We had scheduled for 16 days tool time, and we were out of there in less than 14 days as a result of the work. The agitator blades, the only wear on them was a bit of cavitation on the back of one of the bolts, but virtually nothing.

So we see no reason to go into the other autoclave. We'll monitor it. And then if we see any drop-off in performance of the autoclave because we're seeing scale or wear on the agitator blades, then we'll reconsider what we need to do. And we may need to go down to change some of the valves because they have a finite life on the outside of the autoclave, but the longer internal inspection we will, at this stage, probably push out into beginning of next year.

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Michael Slifirski, Crédit Suisse AG, Research Division - MD [7]

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Then in terms of your longer-term planning with the clave maintenance program, was it based on -- was your production guidance based on a shutdown every 6 months and losing sort of 16 days every 6 months? Is that the sort of quantum of upside you're talking about? Or is there activity that would have been also conducted in parallel during that time so the time released by deferring shutdown is significant?

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Stewart J. Beckman, Alacer Gold Corp. - COO [8]

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Yes. So you will remember that the design of the autoclaves is that -- the intent is that we ramp the second autoclave up to 150%. So you're only losing -- you're operating at 75%. So during that shutdown period, the expectation is that the plant's only slowed by 25%, not by full 50% for the shutdown. That makes sense?

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Michael Slifirski, Crédit Suisse AG, Research Division - MD [9]

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Yes. Yes, I understand that, but just to understand the shutdown period.

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Stewart J. Beckman, Alacer Gold Corp. - COO [10]

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Yes. Well, so the aim had been that we would push towards 12 months at least and then push that out to 18 months. It varies across the industry. It depends on what your process chemistry is, whether you have a significant scaling issue or whether you've got a more abrasive or at this stage, it looks very good. We're going to take the next step to -- that will be just over 12 months for the other autoclave, presuming that we make the determination to do that. And then depending on what that looks like, we'll continue to push them out as long as we can.

The other thing that I would say is it's a lot of work to do this, so it's a big distraction to the whole of the business. You have to rearrange the plant. We have to take it down. The line management and the operations guys are all focused on preparing for and managing the shutdown, taking that complexity and leaving them just to focus on just running it is probably, at this stage for us, worth as much as the saving of the downtime.

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Operator [11]

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The next question is from Don DeMarco with National Bank Financial.

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Don DeMarco, National Bank Financial, Inc., Research Division - Associate [12]

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So Rod and team, the -- first of all, focusing on the sulfide mining rates. I noticed that they're pretty low in Q1, and the stockpiles are drawn down a bit. Looking ahead at the rest of 2019, how should we model the mining rates? And if you can remind me, what's the differential in costs between moving material from the stockpile versus mining from the pits?

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Mark E. Murchison, Alacer Gold Corp. - CFO [13]

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Don, it's Mark. Yes, look, the mining rate on the sulfide specifically is just really aligned with mine plan. As you know, it's -- the oxide ore and the sulfide ore, it's not a flat transition between them, so it's just a function of where we are.

In terms of the -- so and as you know, with the stockpiles that we have, there's plenty of ore there. And it's important to be able to be drawing our first stockpiles, of course, to be able to blend the product for exactly what we'd like to go into the plant for that derisking.

In terms of the costs, the -- to move the ore off the stockpile and to the ROM just in front of the plant would charge around $0.60 a tonne. If we're mining, it's around $1.50 a tonne. So it's considerably better obviously to draw off the stockpiles, but it's really just a function, Don, of the mine plan.

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Don DeMarco, National Bank Financial, Inc., Research Division - Associate [14]

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Okay. Super. And another question, something totally different. I see that your G&A costs have edged up a little bit in Q1, and it was cited that this is associated with some strategic considerations. Can you shed any color on what those costs are related to?

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Rodney P. Antal, Alacer Gold Corp. - President, CEO & Executive Director [15]

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Don, it's Rod. I think it's important to recognize, this is not something new -- we've always been quite active looking at various opportunities, and that's everything from exploration opportunities in Turkey, where we're very active and have been a lot more active, particularly over the last 6 months, and looking at other types of assets that are for sale. So it's really just us moving into this next chapter and looking for other opportunities that might fit within the portfolio. So nothing more than that.

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Don DeMarco, National Bank Financial, Inc., Research Division - Associate [16]

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Okay. Maybe one last question, too. I see that the lira has been a little bit volatile, and it's actually weakened a little bit in 2019. Can you quantify the kind of FX tailwinds that you might expect to get as the lira continues to weaken, if it does?

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Mark E. Murchison, Alacer Gold Corp. - CFO [17]

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Yes. Don, it's Mark. So similar to what it's been in the past, we spend around $150 million at Çöpler. Approximately 1/3 to 40% of our costs are denominated in lira. So as a broad number, that USD 50 million equivalent we spent in lira, so a 10% change in the lira gives about $5 million to $6 million on the bottom line.

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Operator [18]

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The next question is from Daniel McConvey with Rossport Investments.

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Daniel McConvey, [19]

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Michael asked most of my questions, but to just -- first off, congratulations on a great startup so far. It's pretty impressive. In terms of the shutdown, I'm just wondering why not inspect -- when you do open it, why not inspect both the autoclaves and the -- when you had the first shutdown, just from a production standpoint.

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Stewart J. Beckman, Alacer Gold Corp. - COO [20]

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Yes, yes. So the idea is that we separate the shutdowns, a number of the severe service valves, so these are the large, in particular, the big ball valves and many of them are made from exotic materials with exotic coatings on them. And they have a limited service life. They're only good for so many cycles.

When we do a shutdown, we take them off. We'll put new ones on, so we did replace the valves the same with the agitator blades, and we take them out and we have them serviced and we bring them back in as rotables to go on for the next shutdown. So in order to sort of manage our spare parts inventory, we keep the shutdown separated. So that was the original reason for separating them by a bit over 3 months and also to give us -- inspect the first one at just under 6 months and then have the next one a bit further out. Given the condition of it, we expect to be able to push it right out, although we might have to change a couple of those valves before we get all the way out into next year.

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Daniel McConvey, [21]

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Okay. So just the second one is pushed out to 2020, was going to be in July, so it's been pushed out 6 months or whatever, is that right?

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Stewart J. Beckman, Alacer Gold Corp. - COO [22]

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Yes.

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Daniel McConvey, [23]

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And the first one, the schedule, the next time you were going to look at that was when? Another year down the road or...

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Stewart J. Beckman, Alacer Gold Corp. - COO [24]

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Yes, we'll be looking at another year, but again, if -- it will depend what we see when we go in presuming that we push it out. So we've been a little bit careful to say at this stage, we think we're going to push it out. We'll monitor the performance of the autoclave. And if we think we need to do it earlier, we will. But we will do the inspection in -- sorry, we'll do the shutdown on the second autoclave at the beginning of next year. And then we'll make a decision on whether or not we're going to take it from sort of 12 months out to 18 months, the autoclave that we just had down this -- in April.

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Daniel McConvey, [25]

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And just in terms of ramping it up, in your mind, what are the things you want to see kind of get ramped up the -- as to the most from this circuit?

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Stewart J. Beckman, Alacer Gold Corp. - COO [26]

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Well, now we're having a typical sort of commissioning. So we have periods where we do much less than design, and then we have other periods where we beat the design and the performance for reasonable periods. We have -- we're now operating -- getting longer periods of operating above 5,000-tonne a day. I think our record day is about 5,300 with both autoclaves on; 3,500 tonnes in a day with 1 clave on. We've had about 1,100 ounces in 1 day.

What we really need to do, and what we're driving to is, first, to get stability of the circuit. We'll get it operating in a stable state, and we'll creep it up through -- up to design and then we'll creep beyond there if we can. But first things, get it stable, get the utilization up and then creep it from there.

We don't see any bottlenecks at the moment, but when the plant's in upset, then the bottlenecks that you see when it's in upset aren't very informative. And the major ones that we run into, we've fixed, so we don't see anything that's going to hold us back from here.

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Daniel McConvey, [27]

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Great. Last question, Ardich. People are -- you're excited and the market is looking at how this develops. How expected was it that you incurred some sulfide? And as we go forward in the -- with the further drilling, are we expecting much more sulfide? Or if you can just comment on...

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Stewart J. Beckman, Alacer Gold Corp. - COO [28]

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I guess we're not surprised. It's where we normally find it at the bottom of the deposit sort of under the oxide or in particular work units. What we're seeing is predominantly oxide, much of the same.

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Operator [29]

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This concludes the question-and-answer session for today's conference call and today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.