Aya Gold & Silver Inc

TSX:AYA

Earnings Call Transcript

[Operator]

Hello, and thank you for standing by. Welcome to Aya Gold and Silver Third Quarter 2024 Results Conference Call. [Operator Instructions].

I would now like to hand the conference over to Ruth Hanna. You may begin.

[Ruth Hanna, analyst]

Thank you, operator. Good morning, everyone, and welcome to Aya's Third Quarter 2024 Results Earnings Call. Today on the call, we have Benoit La Salle, President and CEO; Ugo Landry-Tolszczuk, CFO; Raphaël Beaudoin, Vice President, Operations; and David Lalonde, Vice President, Exploration, all calling in from Marrakesh. We will finish today's event with a Q&A session with the team. As always, please contact our IR team directly with any follow-up questions that are not addressed during the call. Before we begin, I would like to remind listeners that today's event will contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Details of the forward-looking statements are contained in our November 14 news release as well as on SEDAR+ and on www.ayagoldsilver.com.

With that, I would like to turn the conference over to Aya's President and CEO, Benoit La Salle. Benoit, please go ahead.

[Benoit La Salle, executive]

Thank you, Ruth. Good morning, everybody. Thank you for being with us this morning. Q3 2024 is a transitional quarter, but with key strategic accomplishments. We continue advancing the Zgounder mine, and it is on budget. And as we had indicated, we were a couple of weeks late from the original plan, but we've made up some of that time, and we are commissioning on a going basis. We're targeting commercial production in late Q4 2024. And for that, we have a stockpile as of the end of this quarter of 347,000 tons of ore, which is ready for commissioning of the new plant. The expansion is 99-point-something completed. You saw the video last week. You saw the press release. So, we're almost there, and we will be seeing more development in the very, very short term. It is a transitional quarter on production.

We've produced 355,927 ounces and the reason we're below our budget and below expectation is we were developing new stopes, but those were not ready for this quarter. They are ready for the Q4 quarter. So, the delay in reaching the new stopes and the fact that we have a very disciplined mining method now, we stayed in stopes that had lower grade and less tonnage, hence, the reason for a lower production. We already see this being corrected in the month of October. We generated in the quarter $11 million of revenue at an average realized selling price of $27 per ounce, which is very good considering the general market of the past few months. The net loss for the period is not significant. It's $300,000. And the adjusted cash cost is $19.93. As you can see, we're also reporting a total cash cost of $2,3.47.

However, we have to tell you that this cash cost includes nonrecurring expenses, the development of the 6 stopes that are now ready were not capitalized and were passed through as an expense in Q3, hence, increasing the cash cost by almost $3.50. So, this is nonrecurring expenses. It was a contract given outside to a contractor to develop the 6 stopes. And obviously, when you use a contractor, it's a lot more expensive than our own team, but we wanted to do this because we are getting ready for the plant to be up and running by Q4 2024. And as you know, by that time, we will be mining underground at 1,600 tons per day. So, when we talk about commissioning, very often people think of commissioning of a plant, but there's also ramp-up and commissioning of the underground mine where you have a lot of equipment, a lot of new people.

And let's recall that it used to be a 700 ton a day mine and now it will be a 2,700 ton a day mine. So, there is ramp-up at the plant, but there's also a ramp-up at the mine, mainly the underground mine. The open pit is going very smoothly. We are mining 500 tons a day, and we will be going to 1,000 tons a day. So just for you to understand the cost, in Q3, we processed 42,000 tons and the underground cost of mining was $85, which included the development of the 6 stopes. Our stockpile has a cost of $35 of mining. So, you can see that it is really a very unusual quarter with nonrecurring expenses. As I indicated, we already see big changes coming through in Q4. Due to the fact that we were a couple of weeks late and the fact that the commissioning is now starting more in Q4 and then in Q3, we will revise the guidance for this year to 1.6 million up to 1.8 million ounces for the year 2024.

As well in the quarter, we've done a spinout. So, we have created the spinout to better value our gold assets. So, we signed a term sheet with MX2, a brand-new company for the Amizmiz asset and the Tijirit asset. So, the spinout has been a very good success, and they started the new team with a financing of $7.5 million, and they ended with a financing of $15 million. So, it has been a very good success, and it's all being put together as we speak. On the exploration program, as you know, Aya is a very, very interesting exploration story. So, we've confirmed high-grade mineralization at depth and on lateral extension at Zgounder, and we'll review some of those drill results. We grew Boumadine main trend up to 5.4 kilometer. You recall last year; we were at 4.2 kilometers. And we've also shown potential for new mineralization style in one of the drill holes where we obtained close to 2% copper and 2,000 gram per ton silver.

We have also in the quarter, we are preparing ourselves for new drilling, which has started now in Q4 and to the west. We have new anomalies to the east and to the south. We're currently drilling the new anomalies to the west. So quickly, a very quick review of the spinout. MX2 is a private company for the time being. It's North Africa and West Africa because it has an asset in Mauritania. Amizmiz is a mining permit in Morocco. It has a resource that's not 43-101 that goes back many years of over 300,000 ounces at 13 gram per ton. And right now, underway, there's a 2,400-meter drill program to look at the extension and to start the understanding of the geology. The new team in MX2 is on site as we speak with our team, the Aya team, and the drill program is underway.

There's also the Tijirit asset, which you know we've done a feasibility study on. It has a resource of a little bit above 500,000 ounces. It's between 2 gram per ton and 1.6 gram per ton depending on the deposits. MX2 have an option to buy this from Aya over the next 3 years. They will be looking at fast tracking this into development or more drilling and development and construction, hopefully, in the very near future. Our positioning in MX2 after the financing will be 42% ownership for Aya. The company will have $15 million in cash, and Aya will have 2 Board members sitting in a Board of about 7 individuals. So going to Slide #5 on the presentation. Again, this is just a quick summary of where we are at the end of Q3. So, you see the silver production is a little bit lower than what we wanted, but again, due to stopes not being ready.

And because the other thing as well, as I say, we are very disciplined is historically, they would open stopes, never close them and go to the next one and then maybe come back later. We don't do that anymore. We finish the stopes. We backfill them. We have a cement backfill plant. So, we backfill them so that we can come and take the stopes that are between 2 stopes that are mineralized. So, we have a very disciplined approach. And hence, sometimes it forces us to continue into some stopes where we have lower grade material. But globally, for the company as a whole and for the project, it's the way to go to be disciplined to take all the ore that's available, do the cement backfill and then move to the next phase. So, you have on Page 5, you have the production compared to the rest of the year. You have the grade.

Again, due to the fact that we stayed in some older stopes, we were getting an average grade of about 161 gram per ton, which is absolutely too low for this deposit. But the reality is we don't want to leave it there and not take it. So currently, in October, we're already back to 190, and we expect this to continue to go back up. Mill recovery is always between 82 and 85, again, continuing smoothly. But the real important chart here is the quarterly ton processed. We are at 83,000, which is a 19% increase year-over-year. And the 2 plants that we have function extremely well, and they are older, but they will keep running even once we have the third plant up and running.

On Page 6, you have a few financial Tablo in French, I said charts, a few financial charts. You have your cash flow from operating activity, which is negative $6 million this quarter due to the fact that we've invested heavily into the development of the 6 stopes. You have the gross profit, which is again a little bit lower due to the fact that the grade was lower and profit and cost of goods sold go hand in hand. And with a little bit less production for the quarter and a little bit lower grade, you have a higher cash cost, which we saw at $23, which we have on the next slide. Therefore, with that, you have a quarter where at the end, when you look at the financial statement, we are breakeven, which I find not that bad in a transition quarter where we are ramping up the plant, ramping up the mine.

And we did hit this week 1,600 tons per day from the underground mine. So, we are there. We are where we want to be for this project to really get going. So, on the construction front, you have that on Slide #8, the Zgounder expansion, plus you saw the video last week, which is telling, but we are 99% done at the processing plant. The underground and the open pit are both operating very well, tailings, water management, very good news on water management, we are at the beginning of the rain season and all of our water reservoirs are full. So that is, again, very unique. It's the time of the year. We've had very good rainfall. And our water management system and the way we capture the water is working extremely well. So, I'm pleased to say that on the water front, we're doing extremely well. Electricity infrastructure, well, that's built. You saw some of the pictures. We have green energy coming to site. We have, as you know, 20-year PPA. It's operating extremely well, and we're pleased with that.

On the Zgounder expansion, you saw that we started the commissioning. You saw the ball mill, the lubrification system that created a few weeks delay is now all back and operational. The issue that we had, it's all been fixed. We've done all the tests. The oil is pure. The ball mill can turn, and you saw the conveyor. So, it's all working very well. We've also completed our lab. So, we have a very big lab at Zgounder, where we can do all of our samples and our preparation. So that's also been completed. Taking you to the exploration aspect of our business. As you know, we are one of the largest drill programs in Africa. We are drilling this year 160,000 meters and we have some 3 main zones, the Zgounder mine, the Boumadine project and the Zgounder regional. So, at Zgounder the mine, at the end of Q3, we had 25,000 meters done on a program of 30,000 meters.

As always tell David, David, if you need more drilling because you keep finding and you keep finding extension, just come back to us. And Zgounder mine has no limitation on the drilling that we want to do there because it's at site, it's trackable. It's something that's extremely important. Boumadine has 6900, almost 70,000 meters done of the 120,000-meter program. We should get to the end of the year to close to 120,000. We are now running at 11 rigs and one RC, and we will probably bring a second RC for the deeper holes so that we don't go core all the way. It will be less expensive and faster. But we are running 11 rigs right now. So, the first 60,000 meters was done on the main zone, and it expanded the main zone to 5.4-kilometer strike. The other 60,000 meters are being done on targets. And as I indicated at the beginning, we are currently drilling the West target, which is a very strong geophysical anomaly.

At Zgounder Regional, we're almost done. We had 10,000 meters in the program. We are at the end of the quarter at 9,800. We are finding mineralization. We need to find a pocket where it's accumulated and we can mine it. The area, as you know, is very large. We've done all the geological work, spectral imaging, satellite, Geochem. We've done stream sediment and we're looking at many targets, and we are drilling all the targets that we see. And at the same time, we have the Tijirit asset that we bought last year. So, we've completed the geophysics program because Tijirit has also a copper component to the gold and silver, and we are analyzing that as we speak. On Amizmiz, which used to be part of us directly, now is part of us indirectly through MX2, well, this year, we did mapping and we did a bit of geology, but drilling, as I indicated to you, has started being managed by the MX2 team and by our team.

At Zgounder on Page 11 of the presentation, we keep hitting some beautiful mineralization zones. To date, we've drilled 8,000 meters in Q3 of a 30,000-meter program. Look at some of the results again, 1,000 gram per ton over 13 meters, 322 over 17, 2,800 over 8 meters. So, it is, as we expected, a very nice loaf of bread, 1.4 kilometer long, 20-meter thick all the way down to the granite, which is between 600 and 700 meters. When we get down to the granite as we had expected, there's kind of an enrichment of silver at the bottom, and we're seeing that. So, this is ongoing. It's a 30,000-meter program. We did 8,000 this quarter. And as I indicated, we will drill this as we keep finding extension at depth and to the east as well.

On Page 12, you have the original geophysics of Boumadine. So Boumadine is our main exploration asset because it's got so much potential. And last year, with 94,000 meters of drilling, it gave us globally in all categories over 300 million ounces of silver equivalent at very good grade or 4.1 million ounces of gold equivalent at 5 gram per tonne. So, it's a beautiful project. As indicated, we've drilled in the quarter 27,000 meters. So, you can see it's very, very busy. We've drilled so far 69,000 meters. You see results continuously, and you're going to keep seeing more as we have 11 drills turning, and this is continuing. Throughout the year, we've added 18 new permits, which is because we're seeing the structures at surface because we did the geophysics for the whole region. We did 13,000-line kilometers of mobile empty geophysics.

So, we've done the complete district, and we have many, many geophysics anomaly and those are being looked at. We do the Geochem. We walk the ground. We do some sampling. And when we're ready, we will we drill them. So currently, as I indicated to you, we are drilling the west, which is an important system. So, on Page 13, just a few results of the quarter coming from Boumadine, 1,000 grams over 13.5 meters, 322 grams over 17.6. So, you can see we have continuous results on this 5.4-kilometer slab, which we do see over 6 kilometer in geophysics. It's continuous. It's there. We have drilled 60,000 meters into it, and we will do a resource update for Q1 of next year. But the highlight is on Page 14. It's the high conductivity anomaly. So, what you see at the top on top of the 2 potatoes or cherries is the surface.

You can see the drill results on Page 14. We've drilled Boumadine, which is the one on the right-hand side. You see on the left-hand side is a similar anomaly. And the top is mineralized. So, we know the top of Boumadine is mineralized because we already have discovered 352 million ounces of silver equivalent. But what's very interesting right now, and you see it on the bottom picture is we are drilling that long hole that is going right into the eye of the anomaly. So as of now, we are just touching the green. So, we're about 900 meters into that drill hole, and we're just beginning to enter what we hope to see in the mineralized zone, which has the same signature as what we have at surface. But this is geophysical. So is it exactly there. It's the beginning of a program.

Now why we're drilling this because we want to understand if this is a porphyry system, if this is mineralization at depth because if you look at the surface and how small it looks from where we are now, and we know that this is 5.4 kilometer long and more than 350 million because 352 million ounces was on strike of 4.2 kilometer and now, we're 5.4 and look at the system underneath. So, we will be entering the zone, I would say, in about a week to 10 days, of course, and we are watching and the GOs are giving us feedback of what kind of rock they're seeing and where we are going. So, this is Boumadine. You've got the lateral extension to the west to the east, to the south. It's still open to the north, and you have this at depth structure that looks very, very interesting.

On the ESG side, to complete this presentation on Page 15, look, we are very, very serious about health and safety. We only had 3 lost time injuries in the quarter, and they were not very, very grave. It was just some small injuries. We've given 5,000 hours of training in the quarter, which is a 90% increase year-over-year, and we take this seriously. If you are with us on LinkedIn, you do see a lot of pictures of some of our employees who put up pictures of the training, which is health and safety, it can be education, it can be emergency, all of that, you can see. I'm also very pleased to say that we've received the ISO 9001 certification. It was a team effort at the mine site. So, from geology all the way to health and safety production, we've received the ISO 9001 certification. We've also submitted all of our data for the carbon disclosure project. You know that our ESG loan with EBRD is an ESG-driven facility.

We have received all of the money in 2024 because we've met all of our ESG requirements. So that is something that we take very, very seriously. With the communities, it's also going very well. I'm pleased to say that our program in first school showed 68% increase year-over-year in the percentage of students opting for science projects or science streams. So, this is really very, very interesting. And we are now taking our program to second middle school. So primary school, high school in Morocco, they call this first school in second school, middle school, but we are very much involved with education, online education, health for the communities. We are now starting a mobile clinic pediatric. You remember last year, we had it for the eyes. We had diabetes. We've had many, many clinics. and livelihood with the Safran project with agriculture, we have water pumps, and we are really very much involved.

We've added some signal at the Safran and vegetable farms and which is just for health and safety. So globally, it's been a very, very good quarter for some of the milestones. It's been a little bit low on the production, and we agree. But we are building the future. We're not just trying to maximize 1 quarter. And we don't want to compromise the mine. So, when we need to stay in one phase and finish it so that we can backfill it with cement, we do it and knowing that it's just better times ahead. So, the takeaway is, again, at Boumadine 120,000 meters of drilling, ongoing interpretation, major, major exploration program on the west and at depth, which is very interesting, while the major strike, the main strike continues to expand. At Zgounder, 40,000 meters of drilling, you recall, 10,000 regionals, 30,000 at the mine, ongoing and again, on track, probably we will exceed the 40,000 meters.

And the Zgounder silver mine expansion, well, as indicated, it is on track. It is on budget, a budget that was prepared in 2022 that saw some inflation in transport. And today, we are within 1%, not even, less than 1% on budget. We reviewed that this week, and we can still say today we are on budget. We cannot say we're on time because we had that short delay with the plumbing of the lubrification system. But within 3 to 4 weeks, we're close to on time, but we are on budget.

So, thank you very much for your time, and I will turn it over to the operator for the question period.

[Operator]

[Operator Instructions]. Our first question comes from the line of Puneet Singh with Eight Capital.

[Puneet Singh, analyst]

I just have to get a little nitty-gritty this quarter on the modeling. Could you expand on some of those underground issues you were having on those stopes and the rework you have to do? Just trying to understand the grand scheme of things here. Those 4 stopes being rehab, are they different from the 6 stopes in development right now? What's the thinking there?

[Benoit La Salle, executive]

Thanks, Puneet. We are altogether here in Morocco. We just came back from the mine. So, we could not be better prepared to answer your question. The whole team is with me, and we have reviewed, obviously, with the Board for the past 3 days, the operation of Q3. And I will pass it over to Raphael, who is, as you know, our VP of Operations and is in charge of the team, in charge of the construction and of the operation. And I would ask Rafael to give you his view and a bit of feedback on what we saw and, on the plan, going forward.

[Raphaël Beaudoin, executive]

Yes. So, this quarter, I wouldn't say we have issues. We are ramping up the mine. We have 3 stopes in rehab. That's just as we learn more on geology and we refine our geological process. That's okay. I would say that the lower grade in Q3 came from our access drive and ore development. We are developing the new stopes. And as we do the drives, we get ore and as we do the first ore drive through the body, those tend to be the lowest grade of the stope. And as we go on higher cuts, on higher rises on the stope, we get the higher grades of the stope. We also have 3 stopes at that we did the ore access, we did the ore drive. We got the primary reserve, and we are ramping up our cement plant to backfill them. So, we have 3 stopes that are waiting just as we do the commissioning of the cement plant. We are integrating the cemented rock fill in our mining sequence, and we need to do that correctly.

So, it's going well. And as we commission the cement plant, we will be able to backfill those primary, mine the secondary and go to the upper cut. Q3 is very important and so in Q4, we need to get ready for Q1. Services are ready. We've been doing a lot of stope development in the East where we have good grade, but we need to mine it properly, and that is mostly on cement backfill. And as we fully integrate our cement fill into operation, we'll be able to continue mining the first tranche and to do the...

[Puneet Singh, analyst]

Got it. So that sounds good. It seems like you're working through it in Q4, hopefully better starting next year. I guess my second question was open pit seems like it's doing better for now, right? And could you maybe look at sequencing in more open pit ore to get better grades in the coming quarters? Or are you just going to go as is?

[Benoit La Salle, executive]

Yes. Happy to talk about the open pit. Indeed, the open pit is going very well, and we are ramping it up, and we even found some extension a bit north that wasn't originally in the pit shell. The entire team is quite excited about that. And the open pit was always there for 2 reasons. Well, the first one is obviously to recover all the tough ore that cannot be taken underground, that's obvious, but also to make sure we have the flexibility we need to do this mill and this mine ramp-up. So, with the small expansion north and south, we're still working on it, absolutely. We are above 500 tons a day in the open pit now. We're targeting 1,000 before year-end. We even reached 1,000 depending on the strip of a particular month. And we started a second shift from the open pit, and again, it's going quite well. I mean, in October, in the open pit, we had above 200 gram per tonne. The strip is as expected.

So yes, we will take one step to get as much as we can from it, especially to give us more flexibility. It will also help to drive cost down, especially in Q4 and Q1, where we are continuing the commissioning and ramp-up of the mill.

[Puneet Singh, analyst]

Okay. Got it. That sounds good. I guess my final question is just on that anomaly, Benoit, do you think you'll expect some results before year-end on that? Or it's probably Q1?

[Benoit La Salle, executive]

You mean on the big potato underneath the Boumadine trend. Is that what you're referring to?

[Puneet Singh, analyst]

Yes, 5 kilometers, yes, to the west.

[Benoit La Salle, executive]

I do call [indiscernible] 5 times a day, and we're following the drilling. We're all following the drilling. We are now, as of this morning, that told us we were at 1,000 meters. So, we're entering the zone. The rock sequence that we wanted to see is there, and we are a couple of days away, a couple of days, maybe 10 days, 15 days away. Obviously, this is going to be top, top priority at the lab because the turnaround time at the lab when you do 160,000 meters of drilling, we represent 80% of the capacity of the country. But that will have top priority that it is there. The team is there. As you understand, it's like a new theory that we're testing due to this massive geophysical anomaly. So yes, we hope to have results before year-end. You understand it's not one drill hole that's going to make it or break it, but the anomaly is strong.

And also, when you look at the math, the same anomaly or the same strength is also to the west. So, when you look at the West and we walk the west, you have the surface anomaly, but you also have the anomaly at depth which is identical, but even bigger than the one under [indiscernible]. So yes, it is a priority. The drilling to the west is also a priority because that has surfaced. And again, the Geochem when we walked the ground showed us a similar type of rocks. So yes, we're very pleased with the 1,000-meter done so far, and we are expecting results.

[Operator]

Our next question comes from the line of Kevin O'Halloran with BMO Capital Markets.

[Kevin O'Halloran, analyst]

Just wondering if you can give us a bit more color on the backfill issues that you mentioned in the press release? And are these resolved now?

[Benoit La Salle, executive]

So absolutely. Thank you for asking. And again, I'm going to pass it over to Raphael and just to give you a bit of explanation on where we are and the reason for the commissioning took a little bit more time than expected.

[Raphaël Beaudoin, executive]

Yes. So, we started commissioning, it went well. And I mean this is literally a small seal on the cement tank that was leaking. So, we fixed that. We changed a couple of elbows in the piping that a bit clocked up as we're doing the testing and we filled the first dose. We're getting the part in and we're starting back up. So, I mean, it's as far as commissioning, you commission, things work, you need to change a few parts and you're back in business. So essentially, this is already said.

[Kevin O'Halloran, analyst]

Great. And then you mentioned the grades are coming up. Just wondering if you can give a little bit more granularity in terms of what the grade profile we should expect over the next few quarters as you ramp up?

[Benoit La Salle, executive]

Well, we are not yet giving guidance for next year. But Raphael, maybe you want to comment on what we're seeing right now?

[Raphaël Beaudoin, executive]

Yes. I mean we mentioned this in the MD&A. In October, in the open pit, we had above 200 gram per ton, so which is in line with what we were expected and which is also in line with our mine plan. We have some large benches that might have a bit more dilution and a small one depending on it, but we're quite happy with the grade. As for the underground, we do see a pretty good increase in October too. And again, the stope drive and the first ore drive before we do the raises, those are always a bit lower grade. It's normal as we develop more stopes, initially the grades are lower. So, I mean to answer your question, it would be what we've been historically mining and some stopes are higher, some stopes are lower. And we have stopes right now about to 100 and we'll continue to have some.

[Operator]

[Operator Instructions]. Our next question comes from the line of Eleanor with SCP Resource Finance.

[Eleanor Magdzinski, analyst]

I just have a couple of questions, a little bit in the details on some of the operational bits here today. Some of them were already sort of covered. But the first question has to do with the rehabilitation. You had mentioned it before, but I kind of missed maybe one part of the response. Is this kind of rehabbing the browse and access points to long-hole stopes of the 4 that are kind of undergoing rehab? Or does any of it have to do with kind of fine-tuning blasting and timing to prevent hangups and things like that?

[Benoit La Salle, executive]

Thanks. Again, this is for Raphael.

[Raphaël Beaudoin, executive]

So, at Zgounder, we have lots of high-grade stopes closer to historical stopes. And when we get closer to them, we need to get the design right to make sure to mine the entire wall, and we have to be careful for historical backfill. So, when we get to the stope, we always reassess our design. And we need to make sure to have the proper pillar to improve recovery and make sure we keep it safe. So, this is why sometimes as we do the first ore drive and a stope, we always evaluate if we have backfilled decide from a historical stope, especially where these 3 stopes in particular place. So, it's just a matter of taking the time to assess the wall thickness before we can take the other cut. And if we're a bit too small, sometimes we need to push the access a bit east or a bit west to make sure to leave us further.

[Eleanor Magdzinski, analyst]

Okay. That's really helpful. And so, of all the stopes that you have currently developed or are in development and are being rehab, are these all-long-haul kind of access or planned to be long-haul stopes? Is there any cut and fill being planned for these initial stopes by chance?

[Raphaël Beaudoin, executive]

So currently, at Zgounder, we don't do long-haul stoping. We have it planned as trial next year. And I always say the same thing about long haul. Long haul is something we want to do at Zgounder. It will bring the cost down, but it's not something that we need. So currently, our entire production is only in cut and fill. And it sure would be nice to introduce long haul next year, and we're actively working on that as part of our long-term plan, but we don't need it. And when we do it, we'll make sure to success.

[Eleanor Magdzinski, analyst]

Okay. Great. So then of these current stopes that you have, there's going to be about 19 the ones that are rehab or kind of up and running. What kind of mucking rates are you kind of anticipating from these areas in general? Just I guess trying to get an idea of how many stopes you sort of need to open to achieve the projected like steady-state production basically.

[Raphaël Beaudoin, executive]

Well, we're on track for a stockpile that we have. So, the first thing to mention. And we're also on track for the mining rate of the open pit, which has further flexibility to increase. So, we're not too concerned about the underground mining rate. We need to improve what we had in Q3. Don't get me wrong. And that's well ongoing in October and November. Now if you ask me the final mining rate or what we're looking for, for the underground mining rate is something between 1,500 and 2,000 tons per day that we need to reach in underground, which we'll get to in 2025 and depending on the sequence with the open pit. So, we will remain flexible with both the open pit as we learn more about the opportunities we have there, and we will take the remainder underground to make sure both open pit and underground, we have the tons that we need.

[Eleanor Magdzinski, analyst]

Okay. And I guess also one other question on the backfill. So, it mentioned there's a backfill station that's currently underway. Is that like are all the boreholes drilled and inserts in place and kind of trunk lines and piping there? Is this just part of the commissioning that you were just sort of talking about moving through? Or is this a new backfill station for a different area that you haven't quite accessed yet? Just trying to get some more color on that statement from the MD&A.

[Raphaël Beaudoin, executive]

Yes, maybe I wasn't clear enough on that. I mean the backfill plant is all installed. We have service holes and access points for cement on every level, and we have making base to make the cement for the waste rock. So, everything is installed. I mean we're talking about commissioning. We're aggressive at Aya. We thought we'd do it in 2 days, and it turns out it takes like a bit more time, 2 days more like 1.5 months as we need to change a couple of parts. And it's all installed. We just need to get it back up, and this is happening as we speak.

[Eleanor Magdzinski, analyst]

Okay. Great. So, it's just the main backfill station. I wasn't sure -- like sometimes like if you have little substations underground, people might call them stations. I didn't know if that was something separate that you were referring to, but that makes a lot of sense. That's really helpful. And then I guess my last question, sorry for hog the line on all of the details. But for ventilation, so for the last 1925 raise to the upper levels, so that's planned to be commissioned by the end of this year with kind of stoping planned basically right afterwards. So that vent raise will kind of open up the upper levels to where a bit more of a higher grade and things are as well. I just wanted to kind of confirm that's still kind of the case. Does anything else hold up, not hold up, but is there a sequencing bit on stoping that's required ahead of accessing those upper levels? Or once the vent raise is in place, can you start of your access drives and begin stoping kind of right afterwards basically?

[Raphaël Beaudoin, executive]

Okay. So, on ventilation, most of that work was done in 2023 and early 2024. We have 2 ventilations raise, one that goes from surface to main level 2,000 and another one that goes all the way down to 1925, exhausting straight on surface. So, both our main vent rays are done, and we also have all of our secondary vent system installed all the way down to 1925. As we go down to 1900, we'll need to have the inter-level rise, which is done very quickly. And we also have the secondary ventilation. So, we never had any issues in ventilation because we are on the mountain and most upper levels, they go directly outside. But for level sub-1,000, we've completed the secondary shaft all the way to 1925, and we can use secondary ventilation to 1,900 until we get the other rig and all the engineering is done for the ramp moving down. So, all of engineering for the sublevel 1925 is complete all the way down to Granite with the electrical pumping vans, the service. So that's actually going very well and no it's not an issue. It's something that we worked out a long time ago. That's okay.

[Eleanor Magdzinski, analyst]

Okay. Great. And then I guess the last question on the -- I think I saw it in the press release, I just wanted to double check what's the current processing rate from the new plant? Like things seems to have been going really well there since the gall mill kind of adjustments and kind of recommissioning that whole spot. But just yes, I just wanted to check what the current processing rate is.

[Benoit La Salle, executive]

Well, thanks for asking, Eleanor. I mean we're all excited for mill ramp-up and nobody is asking. So, I was looking forward to talk about that a little bit. So yes, let's talk about it. I mean crushing plant is fully operational. That's been on point for a while. We have excellent milling rate. We're still commissioning. I'm just talking about the milling rate here, the rest of circuit we still need to go through. I mean we reached 100 tons per hour. The availability is improving every day. I mean on milling rate, we're above [indiscernible]. So, we've been leaching for about a week now. A couple of weeks ago, we commissioned the Merrell Pro, and we've been producing our first silver cakes for a few days now.

We hosted the Board on site last week. The mill was running, and we did silver pour. We're very excited with how the commissioning is going with the commissioning team. I mean the entire team is working day and night to get this going, and we're very excited that we started producing silver cake. And there's no real bottleneck. I mean it's just small tweaking and tuning and programming every day, and we're very excited. So, we started producing silver cake, and it was a fun week for all of us.

[Eleanor Magdzinski, analyst]

That's really great to hear. Yes, I'm glad I asked that question because it was such a quick turnaround from, I guess, the initial announcement of having to make some edits, let's call it, to the entire mill circuit. And yes, that's really great to hear. It sounds like things are going quite well there. And all the best. Look forward to talking to you next quarter.

[Operator]

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back to Benoit for closing remarks.

[Benoit La Salle, executive]

Thank you. Thank you very much for attending. Thank you for the questions. Thank you, Eleanor, for asking how the new plant is coming because at the end of the day, that is so important. And we have done this build on time except, as I mentioned at the beginning, except for this little problem with the liquification system. We did it on budget. All in all, globally to build this kind of a plant in Morocco is exceptional. The cost is below anywhere you would see around the world. And the plant is extremely robust. We have seen it. We were there this week, and it is extremely robust. And I believe that the ramp-up is ongoing, and it will be very interesting to see the power that the plant will have.

Now one element that was presented by Raphael is we have flexibility. We have 3 sources of ore. We have the open pit, which is also giving us very positive surprises. We were very careful at building a stockpile. We originally planned for 200,000 tons. At the end of the quarter, we were at 357,000 tons. So, we have a year or 100-some days of ore ready to go that's already been mining, that is in inventory. Then we have the underground mine, which, yes, is needs to ramp up like a plan, but it is being done. It is coming an increasing capacity. I did mention that we did hit day in this quarter, in Q4 of 1,600 tons per day. That's not where we are today, but we did it. The teams have been built. We now have 1,300 employees on site, and the teams are going to grow still a little bit. We discussed that this morning. We're going to grow the team, especially for the underground mine.

So, flexibility in mining is key. And the open pit is better than expected. And now some of you who have been to site, we're saying it's an open pit. It's not an open pit. We're eating up the mountain. The first 200 meters is above the base scam, so there's a mountain of 200 meters where the mineralization is in the mountain. So, we're eating up that mountain right now slowly. We're just at the very, very first level. And the grade is good. We see extension. The contractor is doing a very good job, and we will take the rate from 500 to 1,000 tons a day. We have the stockpile and the underground is moving up, and it's just getting better. And Raphael said it, we want to be disciplined in mining because that's extremely important to be disciplined. And if we do hit lower grade material, we will take it out. We're not going to run to the next stope because we want to get a better grade. Discipline in mining is the key, and we are extremely disciplined.

We are also very disciplined with health and safety. So, if something looks a little weak and we need to step back a little bit to secure the stope, we will do that. We have a very good record of health and safety. We want to continue that way. No casualty. Our LTI is extremely good, and we want to continue. So, you have a company that is well capitalized, that has a plan that's 99.999% built that is in commissioning. And take a look at the last video, it is beautiful. It's wide, it's open. It has capacity to grow, and it's just about done. And you know the big story for Aya is the exploration upside. We have between 16 and 17 drills turning. Sometimes a little RC drill is not turning, it's not powerful enough at the Boumadine, but it's extremely -- it's a very big program. David was telling us this morning that he has 18 people on his team running exploration between Boumadine and Zgounder and Zgounder regional.

So, when you have 160,000 meters of drilling on many targets and on structures, well, you do get very, very good results. So, when you see the Zgounder new plant coming to life, when you see the drilling continuing, the exploration results continuing, the stability of the country we're in, as you know, is extremely -- jurisdiction is a key component of mining these days. And we are probably one of the best jurisdictions in the world for mining. The team is extremely motivated to show you and the world how strong that project is and will continue to be. And on the corporate social responsibility side, we continue to have fantastic success. We will put out a video most likely next week on the Safran farms that we are sponsoring. You will see it's very, very nice, extremely interesting, and that's part of our social license to operate.

So that concludes this Q3 call, it's not a quarter that we're pleased. And we saw some of the notes this morning and it said, yes, there's a miss on cost and there's a miss on production and there's a miss on grade. But at the end of the day, the only miss is on grade. And if you miss on grade, if you look at the throughput at the 2 plants, it's better than last quarter. If you look at the availability of the 2 plants, it's 96%. And the cost is we've capitalized development. So, I agree that it's not a quarter that we like. And we know that it was a great issue, and we've addressed that, and I said has explained why. And we believe that going forward, things are coming back to where they should be. Thank you very much. We will see you in Q1 for the year-end call, where we'll have a full year of operation. Keep watching our little videos. There will be more to come on corporate social responsibility and, on the plan, as well, and we look forward to keep you informed. Thank you very much.

[Operator]

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.