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Pretium Resources Inc (PVG) Q1 2019 Earnings Call Transcript

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Pretium Resources Inc  (NYSE: PVG)
Q1 2019 Earnings Call
May. 03, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

All participants please stand by your conference is ready to begin. Thank you all for joining us this morning. Welcome to the Pretium Resources First Quarter 2019 Conference Call. As a reminder all participants are in listen-only mode and the conference is being recorded.

After the presentation, there will be an opportunity to ask questions. The conference call today is being webcast live and available along with the presentation slides on Pretium's website at pretivm.com.

I will now turn the call over to Mr. Joseph Ovsenek, Pretium's, President and CEO. Please go ahead.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Good morning, everyone. Welcome to our first quarter 2019 operating and financial results call. Participating on the call with me today is our CFO, Tom Yip. On today's call, I will comment on operational highlights for the quarter and we'll then turn the call over to Tom, who will comment on our first quarter 2019 financial performance.

I will close-off with a summary of our updated life of mine plan and reserve estimate, and look ahead to our 2019 strategy and objectives, before opening up the call to your questions. Before we begin, I refer you to the cautionary language included in our news release issued yesterday, as well as the management's discussion and analysis for the same periods. These are available on our website and have been filed on SEDAR.

Please note all dollar amounts mentioned on this call are in U.S. dollars unless otherwise noted. In the first quarter, the Brucejack mine produced 79,180 ounces of gold at an all in sustaining costs of $868 per ounce of gold sold. With 81,434 ounces sold, we generated $103.1 million in revenue for the quarter, resulting in $16.5 million in adjusted earnings, equivalent to $0.09 per share, generating almost $40 million in cash from operations. This continued cash build allowed us to reduce our debt by $20 million ahead of schedule.

We ended the quarter with a cash balance of $50.9 million. In December of last year we received the amended permits from the province of British Columbia, allowing us to increase our production rate 40% from 2,700 tonnes per day to 3,800 tonnes per day. The most significant modification to the mill is the shift from bagging flotation concentrate to bulk loading flotation concentrate. The bulk loading system is now installed in its permanent location and completely integrated.

The remaining modifications required in the mills process ore increased production rate of 3,800 tonnes per day, are on schedule and will continue throughout the year, during regularly scheduled shutdowns. In order to operate sustainably and supply order the mill at a rate of 3,800 tonnes per day. The production ramp up requires the expansion of the underground. As a result, we have increased our development rate from 700 meters per month to 1,000 meters per month, to provide access to more stopes. In March, we reached a development rate of 928 meters per month. We expect to achieve a development rate of 1,000 meters per month in the near future. For 2019, Brucejack is expected to produce in the range of 390,000 ounces to 420,000 ounces of gold. Production is expected to average 3,500 tonnes per day in 2019, ramping up to 3,800 tonnes per day by year-end.

Gold grade is expected to average 10.4 grams per tonne over the course of 2019. The lower grade in 2019, reflects the sequencing of stopes in the mine plan to achieve the development ramp up production rate. The average gold grade is representative of the areas to be mined in 2019, and is not representative of the estimated life of mine grade. We made significant progress in the quarter toward achieving our 3,800 tonnes per day production rate target at Brucejack. As the mine plan continues to sequence through a lower grade area the Valley of the Kings, all stopes above cut-off grade of approximately 5 grams per tonne gold, are being mined as they become available for production.

As a result of this sequence, in the first quarter 2019, we produced 79,180 ounces of gold at a grade of 8.7 grams per tonne gold. In line with our expectations for the quarter, both grade and tonnes are expected to be higher in the second half of the year. And we make, we remain on track to achieve full year production guidance. All-in sustaining costs for 2019 is expected in the range of $775 to $875 per ounce of gold sold. At $868 per ounce of gold sold during this quarter, our all-in sustaining costs was within our full year guidance.

Even at the outset of this ramp up period, we continue to have substantial cash margin. When you combine our low costs with our significant gold production, we generate substantial cash flow. During the first quarter, we continued our track record of positive cash flows and profitability, as we have every quarter since achieving commercial production on July 1, 2017.

Now I'll turn the call over to Tom to review our financial performance for the first quarter of 2019.

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Thanks Joe and good morning everybody. Turning to Slide 9, as we continue to ramp up mine and mill operations, during the quarter we sold 81,434 ounces of gold at an average price of $1,257 per ounce for total revenues of $103 million, compared to 68,651 ounces of gold, sold at an average price of $1,271 per ounce for total revenues of $89 million in Q1 of 2018, an increase in revenues of 15%. Included in our revenues were TC/RCs related to our concentrate sales which impacted our revenues by approximately $62 per ounce for the first quarter of this year and $57 per ounce in the first quarter of 2018.

Factoring in the TC/RCs, we realized $1,319 per ounce for the quarter versus $1,328 per ounce in the first quarter of last year. On a cost per tonne basis, we processed 3,279 tonnes per day in the quarter, compared to 2,905 tonnes per day, in Q1 of 2018. This result in cost per tonne mill of $180 for the quarter compared to $211 per tonne in Q1 of last year, a reduction of 15% primarily reflecting the higher mill throughput.

The total cash cost per ounce sold averaged $686 for the quarter, compared to $841 in the first quarter of 2018, and an improvement of 18% over the last year, reflecting more ounces sold this year over last. Our cost of sales which includes production costs, depreciation and depletion, relating to selling costs averaged $908 per ounce sold for the quarter, the $1,057 per ounce sold in the first quarter of 2018. This yields an earnings from mine operations of $29.2 million for the quarter compared to $16.8 million for Q1 last year.

We continue to show robust earnings from mine operations this quarter, deducting our corporate administrative costs of $4 million, we generate an operating earnings of $25.2 million compared to $14.3 million in Q1 of 2018. The higher corporate G&A costs are primarily due to higher share prices, increase in the valuation of share based compensation this quarter compared to Q1 of last year. There are two significant non-operating items on our P&L. The first was the interest expense of $9.4 million for the quarter compared to $15.6 million for Q1 2018.

Our effect of interest rates decreased from 15% to 5.9%, due to the refinancing completed at the end of 2018, replacing the project construction debt with syndicated bank debt. The second item is a loss on financial instruments at fair value. The fair value of the offtake obligation is based on future gold prices, interest rates and production profiles. That adjustment was a loss of $7.5 million for the quarter. This marked the market adjustment has been significant since September of 2015, and continues to cause volatility in our reported earnings due to the off-take obligation. Lastly we incurred $4.1 million of taxes, consisting of $900,000 for the current BC Mineral Tax and $3.1 million related to deferred taxes. Of note we only pay BC Mineral Tax at the minimum rate of 2%, not the 13%, as we draw down our significant tax rules for the next several years.

As well based on the updated life of mine and current gold prices, we do not anticipate any cash taxes for federal and provincial income taxes until 2023. Net earnings for the quarter were $4.2 million or $0.02 per share. We adjust our earnings for items that we believe are not reflective of the underlying operations of the Company. These are non-cash items consisting primarily on the loss of financial instruments at fair value and deferred income taxes. The adjusted earnings were $16.5 million or $0.09 per share for the quarter compared to $5.8 million or $0.03 per share in the first quarter of 2018.

Turning to Slide 14, for the quarter we generated $39.9 million of cash flow from operations. And as Joe has mentioned, this continues a record of positive cash flow for the seven quarters since start-up in mid-2017. The $39.9 million of operating cash flow generated this quarter enable us to repay $20 million on the revolver. In addition we spent a total of $5 million on CapEx, $8.4 million on the interest and we ended the quarter with $50.9 million in cash.

In December of last year, we simplified our balance sheet by replacing our project construction debt with syndicated bank debt, totaling $480 million. This consists of a term-facility of $250 million which we will repay in 15 quarterly installments, commencing June of 2019 and a $230 million revolver. We are required to reduce the revolver by $30 million by the end of June. And during the quarter we've repaid $20 million of the $30 million. The remaining revolver, a $200 million is due in December of 2022. For the quarter our all-in sustaining costs totaled $868 per ounce sold. This is within our guidance range for the fiscal year. Our AISC spending totals $71 million for the quarter, similar to Q1 of 2018. The lower all-in sustaining cost for ounce reflects the increase in ounces sold in Q1 of this year. So to sum-up, the first quarter of 2019 saw the mine focus on underground development and ramping up the 3,800 tonnes per day. We generated operating cash flows of $40 million, putting half or $20 million against the revolving facility. But for the remainder of 2019, with higher production, we will continue to generate significant cash to enable debt repayments ahead of schedule. Now back to you, Joe.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Thanks, Tom. In April we announced an updated life of mine plan and reserve estimates for the mine. At the new production rate of 3,800 tonnes per day, Brucejack has a 14 year mine life with proven and probable gold reserves of $6.4 million ounces, grading 12.6 grams per tonne gold.

Using $1,300 gold, the mine has an after tax estimated net present value at a 5% discount rate of $2.6 billion. Over the next 10 years, we are expecting production to average well over 500,000 ounces of gold per year. All-in sustaining costs in the first 5 years are estimated to be in the low $600 per ounce sold. And in the remaining five years, in the mid $500 per ounce sold.

Looking at cash flow at $1,300 gold, Brucejack is expected to generate cash flows in the next five years of over $1.7 billion, averaging $350 million per year. As we ramp up production to 3,800 tonnes per day, we are also looking to optimize our mining operations.

Turning to Slide 20, it is a planned view of the 1,260 meter level of the Valley of the Kings zone at Brucejack. The red disks represent drill intercepts of greater than 20 grams per tonne gold. The yellow stars represent visible gold that has been identified underground. The purple shapes are what we refer to as Silcap's which are part of the structural fabric at the Valley of the Kings, above the 1,200 meter level. Finally, the grey shaded areas represent our underground development on the 1,260 level to-date. As mining has progressed at the Valley of the Kings we have observed that the high grade gold occurs in corridors 10 to 15 meters wide within the quartz stockwork.

With an improved understanding of geology and controls and gold mineralization, we are now evaluating longitudinal long-hold stoping. Mining along the direction of the mineralization rather than perpendicular to the mineralization. Looking at the lower left side of the slide, you can see a mineralized corridor we have identified where a longitudinal long-hold test stopes has been established. We have completed four tests stopes and are in the process of testing two more. If this approach is successful, we expect to reduce the amount of internal dilution in our stopes and smooth out our great variability. We also expect to reduce our development costs, as we will be developing an ore, as opposed to waste. This is still a testing phase, however. Once we've completed additional test stoping this quarter, we will make a decision on its effectiveness. If we do proceed with longitudinal longhole stoping, you should expect to see an updated resource, reserve and life of mine plan in the first quarter of next year. Reserve and resource expansion drilling over the remainder of the year is expected to add ounces to the life of mine.

Turning to Slide 22, this is a section view of the Brucejack mine property, looking to the north with the Valley of the Kings in the top left corner. The Valley of the Kings remains open at depth to the west and to the east for resource and reserve expansions. The 70,000 meter 2019 underground drill program started early in the first quarter, with the intent to increase confidence in the indicating inferred resources to convert them to proven and probable reserves.

Drilling in the early part of the program is targeting mineralization below the 1,200 meter level of the mine, and westward toward the Brucejack fault. Drilling will continue through the year and is expected to include zones prospective for additional reserve expansion to the east and below the currently defined mineral reserves. In the middle of the slide, 1,000 meters to the east of the Valley of the Kings, exploration drilling intersected the high grade gold below the Flow Dome Zone.

Later in the year, we plan to drive underground roughly 200 meters to the east and start resource expansion drilling. The 2019 underground drill program also includes two deep holes to further test for the source porphyry. The first of the two holes was completed at 2,000 meters downhole. Multiple Valley of the Kings-style carbonate stockworks were visible in parts of the drill core.

The second hole oriented toward the north-east, is currently being drilled. An update will be provided following receipt of assay results and evaluation, which is expected mid-year. Later this spring, we will also resume our grassroots exploration drill program on claims surrounding the Brucejack mine to follow up on progress made last year.

Let me conclude with a summary, and a look ahead at the remainder of 2019. We posted a solid performance in Q1, with profitable production and cash generation, that allowed us to pay down $20 million of debt, ahead of schedule. Our production and grade were in line with our expectations for the quarter. We are firmly on track to meet guidance. Both tonnes and grade are expected to be higher in the second half of the year, even though we are at the outset of our ramp up to 3,800 tonnes per day, our all-in sustaining costs are within our full year guidance range.

We will continue to build cash from ongoing operations, and we plan to continue to use the cash generated to pay down debt. Our primary focus however remains on the operational execution required to deliver on guidance. And we are confident that with the strong start to the year we will succeed.

Thank you. That concludes the formal presentation. I will now turn the call over to the operator who will open the lines for questions. Operator?

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Ovais Habib of Scotiabank.

Ovais Habib -- Scotiabank -- Analyst

Hi Joe. Hi Tom. How are you doing?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Great. How are you, Ovais?

Ovais Habib -- Scotiabank -- Analyst

Good. Good. Just a couple of questions from me. So just number one, you have guided toward grid and throughput improving in the second half. Are you expecting or noticing any improvement going into Q2 or we should be expect similar kind of grades and throughput in Q2 as well?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Hi, Ovais, a good question. We're continuing to work through this lower grade sequence in the mine. So we'll look forward to the higher grades and tonnes in the second half of the year.

Ovais Habib -- Scotiabank -- Analyst

Okay. And then second question is on costs. Obviously, cost came in significantly better than we were expecting. This was, you guys were I guess around that $180 per tonne in Q1. Now this is compared to over $200 per tonne in the previous quarters. Is this cost profile sustainable going into second half or was this specific to Q1? Can you give me a little bit color on the costs?

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Hi, Ovais. I would say that if you look toward our guidance, we will have a few of our costs on the second half of the year. So when you look at the overall cost return, we're closer to $200 million to $205 million, average for the year, based on the total spend profile.

Ovais Habib -- Scotiabank -- Analyst

Okay. Because I was just looking at the cost that you had, total cash cost, it was about $55.8 million and you're looking for a guidance somewhere around $255 million to $265 million. So just -- I was just analyzing, so it was coming in cheaper, that's -- so that makes sense. And then just another question on my end is on underground development work. In Q1, I believe you spent about $3.6 million similar to Q4, are you expecting this spend to increase as you prepare for the underground for 3,800 tonnes per day or should we kind of expect similar costs on sustaining over the next couple of quarters?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Ovais, I think that's right. It will increase just a little bit, as we wrap up to that 3,800 tonne a day level.

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Yeah, we're looking to target closer to 1,000 meters a month for development as we go through Q2, Ovais.

Ovais Habib -- Scotiabank -- Analyst

So that, that kind of run rate is going to remain throughout the year then?

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Yeah, through 2019 and into 2020.

Ovais Habib -- Scotiabank -- Analyst

Okay. And in terms of the test works that you're doing for (inaudible) mining when should we start expecting any sort of updates from you guys?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well, you should get an update by the time of our next quarterly.

Ovais Habib -- Scotiabank -- Analyst

Okay. Sounds good. So I'll keep it. I'll leave it at there and let other people take questions. Thanks. Thanks guys.

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Thanks Ovais.

Operator

Our next question comes from Joseph Reagor of Roth Capital Partners.

Joseph Reagor -- Roth Capital Partners -- Analyst

Good morning guys. Thanks for taking the questions.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Good morning, Joe.

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Hello.

Joseph Reagor -- Roth Capital Partners -- Analyst

So just two questions from me. First one, on the test stopes that you guys have completed so far, have you guys got any initial data back on those, on what dilution looks like on them?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

We're still analyzing, the stopes in progress, Joe, so a little ways to go yet.

Joseph Reagor -- Roth Capital Partners -- Analyst

Okay. And just kind of a follow-up on that, if you were going to switch to a method, these updated resource next year would probably be a positive reflection. Is that fair to say? Because you'd only switch if it was reducing dilution.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well, couple of things there Joe. First off, we'll have our 70,000 meter drill program, should have a good chunk of that completed and incorporated into the updated resource estimate. And then on the reserve side you would expect if we can cut down dilution, if we're successful in reducing dilution insider stopes, that should help us with grade somewhat.

Joseph Reagor -- Roth Capital Partners -- Analyst

Okay. One final one if I could. On the grade in the first quarter, do you guys have a concept of how that reconciles against the revised reserve numbers that we've put out?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well, the first quarter was in line with our expectations. We're comfortable with how things are progressing.

Joseph Reagor -- Roth Capital Partners -- Analyst

Okay, thanks for the time.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

You're welcome.

Operator

Our next question comes from Heiko Ihle with H.C. Wainwright.

Heiko Ihle -- H.C. Wainwright -- Analyst

Hey guys. Thanks for taking my questions.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Go ahead, Heiko.

Heiko Ihle -- H.C. Wainwright -- Analyst

Perfect. I'll just pre-emptively think Bob Quartermain for all the services to the Company, as well, I mean, it's fascinating how far the company has gotten in such a short period of time.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Yes. Absolutely.

Heiko Ihle -- H.C. Wainwright -- Analyst

Yeah. So following up on the first question regarding the grades, assuming the second half has the higher grades as you're anticipating, I'm just modeling out your life or mine grades what the second half needs to come in. Should we expect Q4 and then also Q1 2020 to be higher than the remainder of 2020? I mean, in other words is there some slack in the out year figures, given that you're -- I'm putting this in quotation marks. It's only 12 grams for next year, that's obviously a very high number, but it insinuates 1.5 grams of slack, if I did the math correctly.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

For next year, you're looking at our life of mine, plan, we're in that 12 grams is what we're calling for. But if we see how these tests doping has gone, test doping goes on the launch during a long-haul stoping. So as I say, if we're successful with that, we're going to be coming out with an updated life of mine plan, early next year which will take into account this longitudinal Longbow stoping in the newer areas of the mine, that we open up. So it's hard to really talk about that 12 grams. Did we stick with transverse

longhole stoping? Sure, but I don't -- personally I don't think we'll be there next year, I think we will have switched over.

Heiko Ihle -- H.C. Wainwright -- Analyst

Fair. Okay. I understand you guys, I just went through the MD&A earlier today, I understand you guys have the working cap deficit, and you talk about it. I mean that's your actual cash on hand numbers are quite high. At what point in time does it maybe make sense to tender for some of the debts, given that you're sitting on 50 plus million in cash and therefore you're not collecting a whole lot of interest on that.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Good question. That's something we are absolutely looking at. And so as we go through this quarter we'll make some decisions there, but that's a good point.

Heiko Ihle -- H.C. Wainwright -- Analyst

I appreciate you guys. Thank you very much. And Bob, thank you for everything yet again.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Thanks, Heiko, I'll pass that along to Bob.

Operator

Our next question comes from Bhakti Pavani of Alliance Global Partners.

Bhakti Pavani -- Alliance Global Partners -- Analyst

Good morning, guys. Thanks for taking my questions.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Good morning, Bhakti.

Bhakti Pavani -- Alliance Global Partners -- Analyst

Just wanted to get a sense around, what kind of -- or what level of stope inventory are you guys currently sitting at? And moving along to the development of 3,800 tonnes, -- 1,000 meters, I'm sorry to 3,800 tonnes per day, what level of stope inventory do you think you will like to have to make you guys comfortable?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well, right now, we're mining we're mucking out of about six stopes on a consistent basis, have a few stopes in reserve, as we're --. Our focus right now is opening up the underground and actually, so pushing on the development for the levels in that. As we get into the second half of the year, you should see our stope inventory build to be comfortable, transverse long-haul stoping or probably want to be in that, I don't know 14 to 16 stope range -- total stopes in the queue there. However with longitudinal longhole stoping if we do proceed in that direction -- wait and come up with some numbers for you -- for next year. But as of now that's where we're at.

Bhakti Pavani -- Alliance Global Partners -- Analyst

Okay, perfect. Thank you. Just curious to know about the longitudinal longhole stoping. I know you guys are still in the testing phase but just kind of from the cost perspective, could you maybe provide some color or any guidance on what are your expectations regarding the cost? I mean, how much do you think would it further reduce your cost from what you are at now?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

That's a tough one to get into right now, Bhakti. We need to do some more work and come up with our mine plan, incorporating that mining method before we can really get into costs. But that is something we will provide once we get there.

Bhakti Pavani -- Alliance Global Partners -- Analyst

Okay. Just last one, with regards to the capital spending, I mean what kind of CapEx should we be modeling for remaining of the quarters, for this year? Just to get a better sense of the all-in sustaining cost?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well, we generally like to do our capitals during -- the bulk of it during the summer months, so I would weight it little more heavier, second-third quarters and then maybe tail-off in the fourth quarter.

Bhakti Pavani -- Alliance Global Partners -- Analyst

Okay. Perfect. That's it from my side. Thank you very much.

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Thanks Bhakti.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Thank you.

Operator

Our next question comes from Anita Soni of CIBC.

Anita Soni -- CIBC Capital Markets -- Analyst

Good morning, guys. Can I ask a question with regards to some of those, a little bit more color into the cost equation that Ovais had asked previously, which specifically I was wondering when you're talking about additional costs coming through in the -- later in the year. Could you just elaborate on that? And I noticed the site services cost has posted a significant improvement from the prior year. And could you just talk about whether or not that reverts back up to the sort of $56 per tonne over the course of the year, later on?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Hi, Anita. I'll address the, on the costs versus Q1 and then Tom will answer your other question there. So on the cost side from Q1, that's we've taken over self performing a number of the operations in support of the mine and that's what really brought the costs down there. So that is expected to continue at the current rate.

Anita Soni -- CIBC Capital Markets -- Analyst

Sorry. So, Tom had originally said that 00:31:02] that 205 to 200 is sort of the number to continue to go with. So -- and you're saying probably closer to 180 instead?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

What I'm saying is the site services cost in this first quarter of this year versus Q1 of ext year, should stay at that level. Tom's referring to that overall...

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Yeah, so overall, Anita, we're forecasting on a per tonne basis, the 200 the 205 level for the average for the year. We had some -- we have costs in the first quarter that didn't occur and we basically are going to pick that up in the second, third and fourth quarters. So overall for the year, we're still pretty -- pretty happy with the guidance level, where you see that we're in the $255 million to $265 million range. And then if you use the 3,500 tonne per day average on tonnage for the year, that's where we get it, the 200 to 205 per tonne basis.

Anita Soni -- CIBC Capital Markets -- Analyst

Okay. So could you give me an idea of what those costs that you didn't incur in the Q1 were, and so I get an idea from my math (ph).

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well they were primarily consulting type costs and study costs related to some permit compliance that we would have pushed, that have not got started yet, and they'll pick up this because we have to do those types of` studies.

Anita Soni -- CIBC Capital Markets -- Analyst

And that flows through to the mine G&A, is that what it is?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

It's all in these services, at the bottom of the...

Anita Soni -- CIBC Capital Markets -- Analyst

Okay sir.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

It will be so, fairly fixed type cost, but timing wise we just didn't start them, as we anticipate in the first quarter.

Anita Soni -- CIBC Capital Markets -- Analyst

Okay. And then second question would be on the tonnage. So you've got a pretty good start to the year, I think originally you said you started around 3,100 tonnes per day, I guess that was the start point and you're sort of at 3,300 tonne per day on mining rate. And building up to 38, can we get an idea of how that transition over -- transitions is a steady build or is there some kind of a dip in Q2 or anything that we should be aware of?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

We expect to have a steady build up through the year to hit that 3,800 by the end of the year. We're pushing on things as they say we have our our bulk flotation concentrate loading in. But we (technical difficulty) items like that. So I would just model that as a steady build through the year.

Anita Soni -- CIBC Capital Markets -- Analyst

I guess what caused me to ask that question is that, I think originally in all the terminology you guys are citing from 2,700 tonne per day, and I guess that just means from the level you were at last year rather than at some some point this year you might dip down there?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Correct.

Anita Soni -- CIBC Capital Markets -- Analyst

Okay. All right. Thank you.

Joseph Reagor -- Roth Capital Partners -- Analyst

Thanks Anita.

Operator

Our next question comes from Andrew Kaip of BMO.

Andrew Kaip -- BMO Capital Markets -- Analyst

Hi guys, thanks for taking the call, but Anita asked all the questions I was looking for.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Okay. Thanks Andrew.

Operator

Our next question comes from Mark Magarian of Wells Fargo.

Mark Magarian -- Wells Fargo -- Analyst

Hi guys. Well done Joe on a good start to the year.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Thanks, Mark.

Mark Magarian -- Wells Fargo -- Analyst

Just a couple of small things. I know the test question has been asked a few times already but you said you'd already completed a handful. Were those stopes fed in for the Q1 production or that held -- the results of that being held separate for the moment?

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

They're within, they're within our production numbers.

Mark Magarian -- Wells Fargo -- Analyst

Okay. The next thing is on the, I know you have that clause with your -- when you refinance your debt for a $40 million allocation to dividends or buybacks that you're going to look at, end of this year. Have you -- is that limits based on both the term and the revolving facility or if one is cleared and that limit goes away, was is -- is it based on the whole thing?

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

It's based on the whole thing, but as we get down in getting that, I assume there is some opportunity to renegotiate, but it is there on the whole thing. So that would cover-off over the term of the -- current term if we don't pay down things ahead of schedules, December 2022. However we're looking to advance that.

Mark Magarian -- Wells Fargo -- Analyst

Right. Absolutely. All right. Well, thanks and well done again.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Thank you very much, Mark.

Operator

Thank you. This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Ovsenek for any closing remarks.

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Well, thank you everyone for dialing into our earnings call this morning. We appreciate all the comments and questions. Have a good weekend everyone. Bye-bye.

Operator

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Duration: 37 minutes

Call participants:

Joseph J. Ovsenek -- President, Chief Executive Officer and Director

Tom S.Q. Yip -- Executive Vice President and Chief Financial Officer

Ovais Habib -- Scotiabank -- Analyst

Joseph Reagor -- Roth Capital Partners -- Analyst

Heiko Ihle -- H.C. Wainwright -- Analyst

Bhakti Pavani -- Alliance Global Partners -- Analyst

Anita Soni -- CIBC Capital Markets -- Analyst

Andrew Kaip -- BMO Capital Markets -- Analyst

Mark Magarian -- Wells Fargo -- Analyst

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