00:00John, I want to start with just the most basic of questions here when we talk about commodities,
00:03and that's the actual cost of extraction, the cost of mining. We talk about this with oil,
00:10so I'm curious about this with gold. What is the cost to you of extracting an ounce of gold? You
00:16will produce between 570,000 to 650,000 ounces of gold this year. How much does it cost per ounce?
00:25Well, right now, so the industry average, what would put you in the first quartile would be to
00:31be under, say, $1,500 per ounce. And depending on what mine we're talking about here, costs can go
00:39up as high as $2,500 to as much as $3,000 an ounce. But industry average would be probably
00:46in that
00:47$1,500, $1,600 range. We're coming in at roughly $1,400 an ounce right now. We refer to what
00:56is
00:57called all-in sustaining costs. But as we continue to ramp up our operation, particularly our flagship
01:04operation at Island Gold, and with a new mine we're bringing on in northern Manitoba, we're going to
01:11see our costs come down to about $1,100 in terms of all-in sustaining costs. And that's predicated
01:18on the fact that this is much lower cost production that we're bringing on. So the profit margins right
01:23now between our production costs and the price of gold, you just quoted gold's crossed $5,000 an
01:31ounce again. We've got pretty substantial margins. You're looking at $3,100, $4,100 margins on
01:45a $5,000 gold price. It's pretty profitable times for the gold mining industry.
01:51Yeah, it is. When we think about the variation, at least with different mines that you have,
01:57that you operate, what makes it cheaper to extract from that northern Manitoba mine?
02:03It's just a low cost operation. The two things it has going in its favor is it's got good grade.
02:10It's got a, these are open cast mines, so it has a very low order waste stripping ratio. And it
02:18has
02:18very low power costs. So we would be running our mills off the Manitoba power grid, which brought
02:27not widely known in the US, but Manitoba probably supplies most of the power for Minnesota, for
02:36example. And that's some of the lowest cost power in the US. But we'd be paying about $0.04 per
02:45kilowatt
02:45hour for power in northern Manitoba. So that makes that a very low cost operation.
02:50Hey, one of the things I'm curious about, John, too, is, I mean, you guys have been kind of
02:55minting money, it feels like if you think about the price of gold, the price of gold, I mean, up
03:01what, 109% your share price alone, 18% year to date, but as the price of gold has gone
03:07up just so
03:08much. And I'm just curious, there is some pressure maybe to figure out what's the best way? What do
03:13you do with all of that? And do something with your balance sheets? Is it about returning cash to
03:17shareholders? Is it about pursuing acquisitions? I mean, you guys have made some adjustments,
03:22you know, you eliminated some of the legacy hedges from Argonaut Gold, you've done some different
03:28things, but what is the best use of cash? And how you think about your balance sheets?
03:34That is the magic question.
03:38You're welcome.
03:40You know, it's, it's probably, you know, the biggest topic of conversation in the market these
03:48days. But what you have to appreciate is that the margins that we're enjoying today, they're fairly
03:54recent. I mean, the gold price moved dramatically. It's a, if you look at a chart, it looks like a
03:59hockey stick. So for roughly, you know, if you go back to say 2016, the gold price was $1,100
04:08per ounce. And if you go back to the end of say 2023, gold prices were around, you know, $2
04:18,000 per
04:19ounce. Well, suddenly in 24 and 25, with all the, the goings on in the world, everything from the,
04:28you know, the US election to the, this new sort of tariff policy that the Americans have been sort
04:37of introducing to the world trade, geopolitical events, everything from, you know, Ukraine, you've just
04:45mentioned Iran on your newscast. I mean, all of these things have been driving the gold price. Americans are
04:52suddenly very conscious of the fact that that the federal debt is just climbing to levels, you know, absolutely
05:01unheard of in the past. We're approaching about $38 trillion now and growing at a rate of, of roughly
05:07a trillion dollars or so, you know, every six or eight months. Right. So in other words, don't jump
05:16too fast to like doing things based on a $5,000 gold price. It sounds like what I'm, what I
05:22need to say is
05:23I don't think that the $5,000 gold price is necessarily, you know, gold at its peak. I think
05:29gold could go substantially higher from where it is. And it's going to be, you know, what would have
05:35to happen for that not to be the case? Well, everybody would have to wake up sometime in the
05:40next three months and decide to get their fiscal house in order. So John, John, we only cut costs of
05:46government and raise taxes. You really think that's going to happen? I don't think so. We only have 30
05:51seconds left, so we have to be quick here, but does it make it so you want to keep the
05:54gold on
05:55your balance sheet for a longer period of time rather than sell it? Well, we don't keep gold on
05:59our balance sheet. Would you want to do that? Why would I? I've got 16 million ounces. Because you
06:05think the price of gold could go higher? No. Well, but I, I've just said, why would I keep it
06:11sitting
06:11in a vault when I've got 16 million ounces in the ground? The gold we produce is a very small
06:17component of the gold that we own. You know, most of the gold we own is in our reserves. If
06:22you add
06:22our reserves and resources, we've got 22 million ounces. So the gold we produce, we have to sell that.
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