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Ladies and gentlemen, welcome to the Centamin Q3 2020 Quarterly Report and Updated Outlook Call. My name is Ruby, and I will be your moderator for today's call. [Operator Instructions] I will now hand over to your host, Martin Horgan, CEO, to begin. Martin, please go ahead.
Thank you, Ruby. Good afternoon, everybody, and thank you for joining this Q&A session in respect to the third quarter reports and updated outlook. I'm Martin Horgan, CEO. I'm joined today by Ross Jerrard, Chief Financial Officer, and we're both dialing in from site in Egypt. And Alex Carse, Investor Relations, who's in London. And I will open up with a short introduction and overview of the Q3 report, and then we'll step into Q&A. So to start, a brief comment on the third quarter performance, which to my mind was good across the key areas of safety, production and costs. The operating team continues to navigate COVID delivery results, and it was a quarter of compliance with plan, which will remain a key focus for management as we go forward. The fourth quarter forecast has now been confirmed over the last weeks. We have a plan to address the area of instability in the West wall, as highlighted previously, through a combination of mining and dewatering. We are being supported by our external consultants, [ Mike Pesonen ] on hydrogeology and geotech issue. [indiscernible] of the area will begin later in Q4 and continuing to 2021.Of the balance of this year, mill feed will come from a combination of the lower grade Stage 5 North area open pit, underground and stockpile materials, as has previously been identified. With spare mining capacity in the open pit, we're looking to get on the front foot in respect to the open-pit stripping that has been neglected for too long. Over the back of this quarter this year, we'll have a strip ratio of over 30:1 in November, December as we start to prep for next year and beyond. And this really is a microcosm of the operation today and leading to the outlook for 2021.The open pit has been somewhat paced into a corner for some time now. A short-term planning cycle led to medium to longer-term considerations be in part in favor of nearer-term production goals. If I look back to the 2015 43-101 technical report, this calls for life of mine strip ratio of 6:1. Sukari has operated an average ratio of 3.7:1 since 2015. This has led us to the point where the open pit have absolutely -- has very limited flexibility for all mining and need a concerted well-stripping campaign over the next 3 to 4 years to play catch-up. This will provide access to better and medium high-grade ore feed, while simultaneously offering greater operating flexibility. 2021 meant to represent the first step of a stage recovery towards previous production levels over the next 3 years. As we look at '21 and into '22, all will come primarily from the Stage 5 North area of the open pit, which is at about 0.7 to 0.9 grams per tonne, with some benefit of the blended in Stage 4 wet area that is being recovered. Underground operations and focus on the Ptah Zone. This is a bulk tonnage target that sits about 5 grams per tonne, and there is not the possibility or opportunity to make up any shortfall from the open pit from higher grade underground material at this time. We are faced, therefore, with the situation of a reduced production profile. At the same time, we are required to invest in an increased stripping ratio that will allow recovery production into the future. However, despite this situation, as we move to our reset planning, it is important to note that the operations remain resilient in terms of cash flow generation, which will support not only operations increased stripping, but also our planned exploration and capital projects. While I come back to review this, we're focused not only on the physical schedule required to reset Sukari, but also a series of costs and efficiency initiatives. None of those have been laid into the costs associated with this '21 outlook. We believe there are a number of opportunities to reduce the cost base and well advanced in terms of their valuation and will form part of the life of asset updates to be given early December. Our focus on costs, and hence, margin generation is a key focus as we look to the future and the opportunity to push the operating costs toward the bottom of the cost curve will remain a focus for management. We retain a strong and flexible balance sheet and clearly with $50 million of cash and liquids are there today with no debt and no hedging. I believe we have the technical, operating and financial capacity to implement our Phase 2 reset plan, which seeks to take sense through the decade and beyond with a focus on long-term planning cycle, which based on good data and engineering, which supports short-term budget. We will apply the compliance with plan approach to management, and our focus will be on -- sorry, excuse me, the planning cycle will seek to embed both resilience and flexibility into our operations to enable us to deliver both predictable and sustainable cash flows.We remain cognizant to the report for the dividend policy, and it's relevant to the sense of investment case. [indiscernible] decision for the Board, we believe that we can continue to deliver these reset plans while recognizing the importance of the dividend policy. Longer-term business sentiment remains unchanged and will be presented in early detail in December. But after this period of repositioning, I believe that over the longer term, the idea is to have Sukari as an asset consistently meeting its production targets based on our safety value of the volume strategy while leveraging off our experience and infrastructure to explore the full potential of the Arabian Nubian Shield across Egypt and other jurisdictions, including West Africa and beyond. I'll now open up to question-and-answer session, and myself and Ross are available to take any questions you may have. Thank you. Ruby, over to you for the Q&A, please.
[Operator Instructions] Our first question is from Kevin Kerdoudi of BoA.
So you announced a lower 2021 production guidance and a higher cost guidance than previously communicated by Centamin. The mine used to produce 550,000 ounces of gold a year a few years ago. You are going to communicate a 3-year production guidance in early December. Are you about to tell us today what you're trying to work towards? Should we see Centamin targeting 500,000 tonnes through the year in the next 2 years or targeting the 550,000 that could produce in the past? And I have the same question for costs.
Thank you. So maybe I'll answer the first question as part of the target for the production profile, then I'll pass across to Ross to talk about the costs. In terms of the snow and life of asset review, which I picked up in April when I joined, the value at -- the part of the life of asset was to assess the operations as they stand, identify areas of data efficiency and identify areas of opportunity, and to seek to return the asset to previous production levels of circa 500,000 ounces per annum based on the current infrastructure we have. So in terms of the first phase, if you like, of the life of asset that we're looking at, the plan derived and devised is taking us on that steps journey back towards 500,000 over the next 3 years. So that will be a step during -- as we move up from this current level next year, which I believe and hope will be the first step, if you like, and as we step up toward that 500,000 level. Now beyond that, the sort of the Phase 2 of the life of asset, which we'll talk through next year once we've collected the data, the efficient work to all the potential optimization scenarios, is that, that may well look slightly different. And that we'll be assessing the sort of value over volume approach to understand, is there a smarter and better way to mine Sukari that leads to a longer sustainable outlook for us as we focus on cash flow generation as well. Now that may well bring us back to the 500,000 level. It may well change in that as well. But certainly, this first phase is designed to step us back towards that 500,000 ounces, and that's what we'll be talking in a bit more detail in early December, and the longer-term plan may well look at a change in strategy. But that will be communicated at that time. Ross, on the costs?
Thanks, Martin. Yes. Certainly, over the next 3 years, we'll be focusing on the cost overlay. As Martin mentioned, these costs that have been put in the guidance are very much the base case costs as we stand today, and we're giving more color on that as part of the life of asset review. There are a number of initiatives, some of which have been mentioned previously. So the outlay of solar project and possible alternate power sources. But there are a number of initiatives across the organization, including loading, tires, maintenance, a whole suite of initiatives that we'll be giving you more color on. But the underlying principle is all around free cash flow. We recognize the importance of the dividend policies and generating free cash flow. And even though we've taken a step back on the ounce profile, we believe that there's a significant chunk of cost that we can take out of the business and still underpin the free cash flow generation, which aligns with the dividend policy.
Our next question is from Alan Spence of Jefferies.
I've got a couple, so I'll just take them one at a time. The first one around 2021 production. The implied quarterly run rate is a decent step-up from the implication for the fourth quarter of 2020. What quarter in 2021 should be beginning to see that uplift? Or how roughly should we be thinking about first half versus second half split?
Sure, sure. Well, maybe we will talk to this in more detail on the 2nd December, Alan. But I would say that in terms of 2021, back end of this year, we'll be looking to open up Stage 5 North with that stripping that I mentioned earlier. And that will provide that area as a primary sort of all source from the open pit. There's a little bit of material to come from Stage 4 North. And then with the rehabilitation of Stage 4 West, that should come into the second half of the year. So as you think about it, if you like, Stage 5 will provide a base load across the full year, a little bit of Stage 4 North to come in the first half of the year and the Stage 4 West material to come in the second half of the year as currently scheduled. So I think that's probably a good way to think of it for now, and we'll certainly provide some more clarity and color on that on the 2nd of December as we step into that life-of-asset plan.
Okay. That's helpful. And then turning to the underground. In the reported notes on improved mine planning and the use of backfill, which is giving you better dilution neutral. Can you just put a few numbers to that? I don't know whether you want it -- if it's easier to say, total underground or focus on its certain areas. But how has that -- those dilution numbers trended over, say, 3 to 4 quarters?
I probably -- an easy way, we had a 2-hour mine planning meeting yesterday, Alan. And I think we were talking about next year and around dilution control and good grade control ahead of the production, which allows a better planning, better operational control with backfill. So for example, in the Qatar stockworks area, which will form the bulk of underground phase, the next 2 or 3 years, that is a bulk area. And historically, mine planning would attribute around about a 30% dilution to sort of bulk mining in Qatar. And the -- this year-to-date, mining in similar areas, we've actually achieved more like 10% to 12% of dilution. So a planning factor for next year will be based on 15%. So as you can see, sort of on an underground basis where you're relatively constrained on tramming capacity to get material from underground, moving from 30% dilution assumption over break on the mining down to 15% of the planning target, but actually achieving 10% to 12% is a significant benefit. So grade up tonnes hold down as well. So that's the sort of thing that we're looking at underground as we go forward to really sort of design stopes of good grade control data and then good execution in terms of looking to maximize that grade, minimized tonnes with a fixed storage capacity.
Perfect. And then my last one is around the CapEx reduction for this year, $30 million to $40 million. That was pushed in 2021. What was the reason for the delay in the spend? Were there certain activities that because of COVID-19, you're just not going to be able to do? Or why not do them this year?
The primary one was obviously the solar project, and that was really around the COVID and managing sites and making sure that footfall on site was limited as much as possible. So whilst the project was still going ahead with a lot of the groundworks and some of the high-voltage integration systems and the like, we really wanted to limit the number of, I guess, foreign manpower and our labor force on site. So a lot of that was pushed to the right. There were also a number of other initiatives that we've pushed to the right. We haven't deferred completely. They will need to be done, but it was all around managing headcount and people on the site. The primary one was solar.
Okay. Maybe I might have read it wrong in the report. I took that as being a reduction as of today, but I thought we already knew about solar. But perhaps that was my mistake there.
And our next question is from Hunter Hillcoat of Investec.
Just a few questions from me, some of which would be follow-up. The actions that you'll be taking to remediate the pit and get access to Stage 4 strikes me. It's going to take about 9 to 12 months to do this. Why is it going to take so long given it's a reasonably localized issue? Or is there a lot more work to it than I'm expecting?
No, no. I think -- look, the area itself is not particularly extensive. And it does form part of the Stage 6 -- sorry, Stage 5 pushback. And so it’s part of the strategy to get on with that Stage 5 stripping and unload that area of stability from the top. It's also a localized area of dewatering by 4 holes and pumps. So in terms of rather just sort of focusing on the localized areas to unload that, it's part of that Stage 5 pushback. So we might as well get on with the entire stage, do that as part of the normal course of mine scheduling and sequencing, and that will then allow us to sort of fit the area to come back in. So rather than going and campaign a small area to make Stage 4 West available earlier in the year and then have to go back and then carry on with a broader Stage 5 pushback in the West wall that the plan is to move it all as part of the Stage 5 pushback, that will actually unload the area of instability, carry on with the dewatering, and then once that's completed, allow us to -- well, we will complete the full Stage 5 pushback for that area, then go back in and mine it. So the plan is to bring that material into the second half of the year, and that's all just around that waste sequencing of the West wall.
Got you. You'd mentioned when you first talked about a geotech issue, that you expected to be free cash flow neutral in the fourth quarter, assuming no changes to CapEx. Now you have pushed out $30 million of CapEx, and you're still free cash flow neutral. Was that -- was there an unexpected costs involved in all of this?
Well, there have been some of the COVID costs that have come through. But in terms of the CapEx profile, it was back-end weighted. We have got a few big swing numbers that are sitting there. The prime one sits with the 2 excavators that we've ordered and when they actually sort of [indiscernible], there's a $10 million swing that is sitting that whether it comes through and has delivered before Christmas or its early in the new year. And then there was a bit of CapEx on the ventilation system that might not drop on that. So it's somewhat conservative, and it's also driven by, I guess, the ultimate realized gold price as we go through. But it's basically neutral or pushing as hard as we can that we will be positive, but it's not going to be a material change in the fourth quarter.
Okay. Good. And if I can just ask one last one. Within your guidance of 400 to 430 next year, what contribution should we be expecting from underground where operations continue as normal? Is it sort of the same level as this year?
So look, I think, yes, a sort of an easy or a good way to think about the underground is that we have clearly fixed underground capacity of 1.2 million tonnes per annum of total material move. So that kind of fixes that for us. And then when we then look at the sort of the area we're mining in Qatar, that's about sort of 5 to 6 grams as well. So in terms of the underground ore mine next year, it will be plus/minus 1 million tonnes material. And then when we look at sort of a combination of development tonnes and stoping tonnes, stoping tonnes in and around the sort of 5-gram type material, and then development turns probably more like sort of 3.5, something like that. Then sort of that 1 million tonnes of material move will sit around, say, 4 grams plus/minus next year. So that will be consistent. We had a -- just -- we're planning for just over 100,000 ounces this year from the underground. That's coming on budget. And then next year, we might be slightly up on that, maybe sort of 105,000 to 110,000, so that really moves forward until we can get into the top of Horus, and Horus where grades appear to improve by potentially a couple of 3 grams is that Ptah will form the majority of our underground feed. And as I mentioned before, that is a bulk tonnage comparison to amount of bulk tonnage lower grade area as we go forward. So yes, consistent with this year as we roll forward.
Our next question is from [ Sharik El Havard ] of Harman Capital.
I wanted to first understand what happened with the waste. So I've read that you've detected movement in some of the waste. Is this normal for a miner to go through that? Or is this for waste management from the, I don't know, previous management or the company?
Sure, sure. Well, I think there's 2 parts to this issue that sort of we flagged up earlier in the month. So firstly, just talking to the guys at site over the last week, 10 days around that is that one always tries to design open pit slopes, not too conservatively because you're moving too much waste and not overly aggressive because it fails. So one is always looking to have a balanced approach to pit slope sort of development. Localized small areas of movement in a venture too are not uncommon in open pit operations and are often dealt with just as part of normal course of business. And talking to the team down here, since 2015, small areas of instability are encountered from time to time across the open pit in its entirety. And I think that's literally not a surprise of Sukari. And in my experience, fairly common across all open pits around the world. So I think the team has historically encountered small localized areas of either small failures or instability. And at that time, they've obviously dealt with them by stabilizing them. And if there's any sort of risk to production, they were able to move to a different part of the pit, continue mining ore while they did the rehabilitation. So I think sort of the localizing stability, not uncommon at Sukari, certainly dated back to 2015 as a sort of regular course of business and sort of dealt within that manner.The real issue for the 2020 guidance was that, once we had this area of instability, it's the fact that it coincided with the only really available ore source. And it's back to this issue around scheduling that, given a historical sort of lagging or lacking on strip ratio is that the ore -- sort of the open pits haven't been developed with multiple or was at delivered stage that didn't have multiple open sort of working areas available. So once we have this area of instability that's impacted on the Stage 4 West high-grade zone is that we couldn't move our equipment to another area and carry on mining while we rehabilitate it. Once that area was temporarily sterilized or deferred, then we have nowhere else to go. And that is a function of that sort of lack of historical stripping that I mentioned earlier. So to answer your question, not an unusual occurrence in open pits globally. Certainly not an unusual occurrence in Sukari over 2015. However, it became a guidance issue given the lack of operational flexibility in the pit, given that lack of historical sort of long-term planning in the open pit sequencing.
Yes. So would -- should we factor in a recurrence of these issues going forward? Is this something that we might have in a few years?
I think that as the operations team run forward now, is that when we look at sort of overall geotechnical evaluation of the pit, we'll continue to look to optimize our pit slopes such that we're not over-stripping or indeed under-stripping in terms of angles. In terms of having response to localized issues that's always important, we do look at the plan and we do risk-adjusted plan. So we anticipate that whatever the sort of maximum open pit production might be, it is derated somewhat on a risk adjusted basis to account for the inevitable lumps and bumps along the way. So certainly, the plans that they laid out do allow for small localized issues from time to time. We're not always running at 110% and pushing as hard as we can. We'll have to have a natural element of float in the plan. Not too significant that's in there. But no, I would like to think that while these issues will occur in the future, it's part of mining. But I'd like to think that the planning going forward will allow flexibility such that we can in the future, hopefully, smooth them out without that material impact on guidance.
Okay. So the current issue you haven't had, how long would that take to resolve?
The -- so the overall stripping issue within the pit, did you mean? Or the localized area of instability?
So the localized area, for instance.
Yes, no problem. As I said to the previous question is that we will rehabilitate that area over the first half of next year as part of the normal course of operations, if you like, in terms of waste stripping and perform the dewatering. So that high-grade material should be available second half or we're planning for that to be available second half of next year. If we desperately wanted that ore, we could push it harder and bring it forward, but we'd be sort of moving equipment around the pit unnecessarily or in an optimal way. So mine that Stage 5 West pushback area is part of the waste stripping, de-weighted from the top, dewater from pumps and then bring it in second half of the year.
So...
I would add that -- questions have been asked around what's the additional cost for this rehabilitation? I think it's important to note that the unweighting of the stripping associated with this rehabilitation is part of the normal course of business at the pushback of Stage 5 was. So it's not any additional cost to it. It's just part of the OpEx as we continue to strip and push the wall back.
Yes. So the high-grade operations, when do you think you'll be able to tap more into that? So you're basically saying 2022 is where we'll feel the -- maybe the cost per ounce of gold will drop and as you're accessing more and more of this high-grade gold.
Yes. So clearly, as we progress down through the open pit and open up additional areas, make them available, that will allow us to access more medium and high-grade material as we roll forward. So there's going to be a period where we sort of live on a fairly thin Stage 5 North material for 12, 18, possibly 24 months that will contribute to, but then obviously starting to bring in medium and high-grade. So certainly, we'll start to see that high-grade coming through in '22 and into '23. And as I mentioned before, stepping back towards that 500 over 3 years is the target. I think then in terms of paying both catch-up with the stripping and then sort of offering operational flexibility, we're talking about a 3- to 4-year stripping campaign to allow us to get back to that level of compliance with plan as we move forward as well. So there will be this period. But once we're through that, with the current plan, as envisage of this move back there, we should see ourselves returning in the medium term to a more sort of steady state sort of production profile and stripping profile on the current plan.
And in terms of the cash cost per ounce, do you see that coming through also, all of the cost savings to more normalized levels by 2022.
Yes. I think, as Ross mentioned before, the life of asset has been going on now for a little while, and we've got a number of opportunities that we'll talk to more on the 2nd of December. But as Ross talked to, I view there's a bucket of, if you like, operating efficiencies that we can layer in. These might individually be potentially smaller numbers, but cumulatively, can make quite a difference. So whether it's truck dispatch systems, automated dispatch systems, looking to extend tire life from 3,000 historic hours per trip to 6,000 hours, for example, looking at things like dual gas blend where we're putting gas into the -- blending that with diesel to trucks, which gives us lower operating costs, longer life between services. We're using sort of a lightweight, large volume trays on the back of the trucks that allow additional payload and reduce fuel use because they're lighter. So a number of sort of technological advancements that we can layer into Sukari that in their own right individually are nice benefits. But when you layer in a number of these opportunities across the business, you start seeing cumulatively some nice changes. So I think there's a number of opportunities there. And these are things we're thinking about. For example, the dual gas blend, we actually got 4 trucks, 3 or 4?
We have 3.
Three then. Three trucks currently on trial, and 3 trays. So these are actually on trial now effectively. And then to their kind of, if you like, operating efficiencies, and they will be layered in, say, from late '21 into '22 onwards whilst committing to them. Solar, that will come on board sort of early '22. That's not in the current cost, and that would see power generation diesel reduced by about 30%. We're looking at gas potentially as a power source for generation there as well. And there's some quite significant savings there, if we can get gas into the site, the medium to large producer of it and start producing power using natural gas over diesel. And then obviously, the carbon emission benefits there as well. So we feel that the cost base has sort of rolled forward at this stage, and the current cost base hasn't been fully laid into that. And I think there's a number of things -- and these are sort of aspirational targets. These are real targets that are being either implemented and studied right now or like solar, for example, have been committed to, we brought in due course as well. So we feel there's a lot opportunity in the cost base to take this asset down from where it -- currently at these levels and take some costs out of the business that way.
So even with your aspirational cost, so assuming all things go the way you want it to go in terms of reducing costs and operational efficiencies, would you have guidance on the cash cost level from 2022? Or are we waiting for the September 2 -- December 2 release?
Yes. Yes, look, so as part of that capital markets or the light asset update on the 2nd of December, we will go into more detail around at that time. I'm sure there's lots of questions around future production profiles, costs and CapEx and so on. So we will get more into that detail at that time. And I'm just conscious that, today, there's probably a number of people, lots of questions. So if it's okay, I'd like to sort of, if you like, park that. I'm happy to engage in early December around some more of the detail around those initiatives.
Our next question is from [ Sayid Patel ] of KRN-22 plc.
You've not mentioned about pits in West Africa. I'm just wondering if you could shed some light in terms of how the drilling and exploration is going. And following the disappointment at Sukari is -- where do you see the opportunities in terms of adding value to Centamin going forward?
Absolutely, no problem at all. Well, Batie West, we have completed an additional desktop study, a kind of bridging study, if you like. That was completed through August and September. We're looking to evaluate the sort of opportunities for Batie. We're also looking at the licensing situation there that we need to address around permit expiry. But certainly, Batie West is moving into the next iteration of evaluation. And I would hope that sort of this side of Christmas, we'll have a better handle on what the actual development opportunity is associated with Batie, scale of resource reserve at this stage, potential production, live forecast, CapEx and costs. So I think that will be coming through, and that work is actively ongoing now. Suffice to say, I think we have a good handle on both capital and operating costs in West Africa. And I think once we have that study out, that will give us a good steer on where Batie sit. And whether Batie makes sense for a company of Centamin scale is an opportunity that sort of is value accretive for us, both in terms of cash flow generation, but importantly, management focus, or does that look better sort of elsewhere, but we won't front on that question. But suffice to say that we'll have a careful look at that as a development opportunity and make a decision. I think, Doropo, we've just finished drilling for the season. That work has been completed now. We are basically currently packaging at that database. We'll be handing that over to our resource consultants. We expect to see a minimal resource estimate sort of over the balance of the year, maybe just coming out early part of next year. And once we have that resource update, very keen to run a ruler over Doropo and really look at -- we've got a large mineral inventory there of resource ounces. I'm more interested in reserve ounces, can we see the emergence of a project at Doropo that would sort of warrant development? And ideally from my perspective, my Christmas wish list came early, something in the order of a 2-gram ore body, supporting an 8- to 10-year mine life with a conventional sort of CIL-type approach. Something like that, we believe, would work in terms of giving us an announced profile and a cost profile that would work for us. So I think there's a lot of resource to tackle. It is somewhat spread out across the geographical area. But in terms of the sort of the action there is that's certainly keen to get an engineering study across Doropo during the first quarter. ABC is a little bit early in the piece. It will be an exploration review of ABC. I don't think that will be at a point of having an engineering review passed over it. But certainly, we'll be having a careful look at it. So I think the key thing is that with our new exploration manager, how it builds, he joined us, how it's been really getting into the weeds on West Africa and really making sure that we're getting bang for our book on expenditure, but also future paths forward. We've got Russell White, who joined as Projects Engineer. He's got a lot of West African experience and helping to run those bridging studies as well. So I think a very careful and thorough look at across the West African portfolio to make some decisions around next steps. And they'll be flowing through end of this year into next. I would note as well, you talked about sort of value creation in West Africa. We did mention probably slightly locked in the Q3 announcement that we did actually submit a number of bids as part of the recent Egyptian exploration bid round. I met the Minister of Petroleum while in Cairo last week and also EMRA and had some good discussions around sort of sentiments commitment to Egypt and our desire to work with the government to develop the hard rock sector in Egypt as well. And I certainly see that, if we're looking enough to be awarded or win the bid, will be awarded some ground and can sort of iron out the final bits and ounce of negotiation we'll have is that I think that's a really exciting opportunity because the sort of the potential of the Arabian Nubian Shield here in Egypt is significant. They've really been explored with modern exploration techniques. And I think that would be a really interesting sort of situation, of course, of having the sort of Sukari infrastructure in cash flow over the longer-term, supporting the strategic land package in Egypt. I think it's quite an exciting opportunity. So outside of Sukari and getting that right, I still see sort of good opportunity to -- certainly in West Africa, to realize value in one shape or another and also really look to hopefully get stuck into some exploration across Egypt as well.
Yes. And with regards to the bids that you put forward for the exploration licenses, are you able to share how many blocks that you've actually put a bid for? And when do you expect to see -- what are your time scales in terms of getting an outcome back from the mineral resources?
So I won't share specific commercial details around that because it's slightly commercial sense. What I would say is that if we look at our strategy across Egypt in terms of exploration with an existing mill and infrastructure here at Sukari, you can probably appreciate that, looking for satellite feed that could feed directly into our mill is first prize. If we can find ounces that can be brought to our existing infrastructure, they're clearly the highest NPV. So you can probably imagine that we're looking within a radius of the mill. No real commercial sensitivity there. That would be quite straightforward. And then there are a number of areas that we've looked at which are a distant from Sukari that we believe are interesting. They would likely necessitate sort of the development of stand-alone operations. But obviously, I'm not -- we're not prepared to talk about those. That's proprietary and potentially sensitive information. So suffice to say, looking at satellite Sukari and then other areas further from that. In terms of the response in the bid round, EMRA -- sort of the Chairman of EMRA, we met. He indicated that received some good interest, that they were working through the technical qualification of the submitted bids. And then we're looking on the commercial stage thereafter. And I think we would hope, but I can't commit to that this side of Christmas that we might be able to get some indication of the feedback from that -- there as well.
Our next question is from Tyler Broda of RBC.
Can I ask you, that as you're moving through the underground planning process, I guess, and I don't want to front-run the December update. But I guess just in engineering, how comfortable is your level of understanding of the resource or the reserves, I guess, for it? And I guess, what other the resources in terms of potentially to expand the underground going forward? Is that sort of your thought process?
Yes. No, look, absolutely. It's a really good question, Tyler. Thank you for that. No, look, I think that when we look at the underground clearly on a reserve basis, we've always got a couple of years ahead of ourselves, sort of 2, 3 years ahead. We're looking at that. And that rolls forward. And that, as you probably appreciate, is just a function of having exploration drill drives in place and then sort of drilling off that to prove up. So we're always looking to sort of roll ahead. One of the things I'm keen to look at is that, can we sort of break the cycle where we've got to get away from a development tonne, we shouldn't take away from a stoping tonne, we should be able to do both. So we can break that cycle, and we're looking at that. Getting ahead of development certainly as we move down towards Horus and then importantly drill drives will be important for us. And then we look at the sort of the long-term planning that we've got laid out and based -- we've done conceptual plans out 10 years based on measured, indicated, inferred in some areas where we've got 3 or 4 drill holes. So very limited, but at least we recognize the normalization there that looks interesting. We can develop out to it. But within that long section, when we look at it, if you like, is that there's large areas of no stopes or development plan. And sort of talking to the geos the last couple of days, we've been looking, is that based on drill data, and therefore, we can't -- we know it's there. No, it's based on lack of drill data, and therefore, we have no idea. So certainly, my sense is that the underground is certainly not geologically constrained. We haven't found the edges. We're not out of ore. It really is drill constrained. We haven't sort of had the opportunity in the last while to really sort of feel our way down the ore body and extend what happens to Horus to depth, what happens to be a serious threat, what happens along strike. So there's plenty to go at to my mind. And then -- and certainly, there's 1 or 2 sort of hits that sort of sit slightly randomly out in the middle of nowhere, but it's 1 hit. I think it's at 50 centimeters wide, so that's narrow, but running at almost 3 ounces, maybe 4 ounces a tonne, so 120-gram type material. So -- and that sits many hundreds of meters from anywhere else and just sits there in the serious sort of contact trust on. So certainly, I think the underground, certainly not geologically constrained, definitely drill constrained. And I think the sort of the excitement for us is, how do we sort of get ourselves across that. And I think with Craig Barker, who's just joined as Group Mineral Resource manager, that's one of the tasks for him now, is to really work with the guys and unravel that geological model to depth and really start to map out where this can go from there as well. So I think, certainly, not geologically constraint at this stage, and my fitting will be looking at it. More to come for sure, but we've got to basically get the work done to prove that up and take it from there.
Got it. So that's very helpful. If I could ask as well, the new bid round, the new big blocks, those already have a different -- you mentioned a different tax and royalty regimes. Will there be any potential for you to change Sukari's license into that regime, do you think?
If you could just see Ross Jerrard win over a telephone call, that would have been quite a visual side there. No, look, I think -- no, look, that's under law 222, and that's an Act of Parliament. And I think sort of we attempted to sort of open up that. I think sort of all sorts of trouble lives that way. So I think that in terms of the Sukari concession is that we are it is as is. We have no intention, won't be enough to change it. And the current bid round doesn't impact on Sukari at this stage. I think the new terms, speaking to the Minister last week it was his aim to basically sort of, if you like, sort of modernize the mining code to make it attractive to foreign investment. And I think this -- with support of Wood Mackenzie, I think this is a huge step in moving away from that sort of production share in oil and gas type mentality historically to open up from there as well. So no, that will be interesting for us once we work through that, if we are awarded satellite feed in the new regime and how that interacts with Sukari. But in the event of that happy incident, then we'll have that discussion at that time.
We currently have no questions left. [Operator Instructions] We have no further questions, so I will hand back to our host.
Well, thank you, Ruby, for handing back. And thank you, everybody, for dialing in today. We look forward to updating you on the 2nd of December. If there are any sort of further follow-up questions or post-call thoughts, please feel free to contact our Alex of Investor Relations, and then we'll talk. Otherwise, we'll keep you updated in the interim. I look forward to that discussion in the 2nd of December. Thank you.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.