Eldorado Gold Corp
TSX:ELD
Earnings Call Analysis
Q4-2023 Analysis
Eldorado Gold Corp
In 2023, Eldorado showcased its resilient and effective business strategy by boosting its gold production by 7% to 485,139 ounces compared to the prior year, encapsulating the company's commitment to growth. The final quarter stood out as the strongest, with production climbing to 143,166 ounces. Despite a rise in the overall industry cost base, Eldorado successfully reduced its cash costs and all-in sustaining costs by 6% and 4% respectively, thanks to key operational improvements and favorable currency impacts in countries like Turkey.
Safety indicators improved significantly with the Lost Time Injury Frequency Rate (LTIFR) reporting a remarkable 45% improvement over the year. The company also garnered accolades, ranking first in the materials sector for governance practices and received honors for ESG Producer of the Year, underlining its commitment to safety, governance, and sustainability.
Looking ahead to 2024, Eldorado aims for an approximate 9% increase in gold production, envisioning a total yield between 505,000 and 555,000 ounces, a testament to the success of its productivity measures and strategic investments.
The company forecasts total cash costs ranging from $840 to $943 per ounce and expects all-in sustaining costs to fall between $1,190 and $1,290 per ounce. Capital investment plans outline a sustaining capital band between $135 million and $160 million and growth capital between $122 million and $144 million. Specifically, Skouries' growth capital is projected to be $375 million to $425 million, indicating a peak in construction activity.
Eldorado remains well-funded to complete the Skouries project with a solid financial standing, signaling strong execution potential. The Skouries project's first production is now anticipated in Q3 2025, slightly delayed from previous guidance with commercial production targeted by the end of 2025. For 2025, gold production estimates at Skouries have been adjusted to 50,000 to 60,000 ounces, and copper production is projected between 15 million and 20 million pounds.
Eldorado concluded the year with strong financials, revealing net earnings of $106 million, vastly improved from a net loss in the previous year. Adjusted net earnings amounted to $111 million for the year, and free cash flow stood positive at $113 million when excluding Skouries project costs. The company entered 2024 with a total liquidity of $652 million, ensuring financial flexibility and readiness for future growth and investment opportunities.
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Thank you for standing by. This is the conference operator. Thank you for standing by. This is the conference operator. Welcome to the Eldorado Gold 2023 Q4 and Full Year Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Lynette Gould, Vice President, Investor Relations. Please go ahead Ms. Gould.
Thank you, operator, and good morning, everyone. I'd like to welcome you to our fourth quarter and year-end 2023 results conference call. Before we begin, I would like to remind you that we will be making forward-looking statements and referring to non-IFRS measures during the call. Please refer to the cautionary statements included in the presentation and the disclosure on non-IFRS measures and risk factors in our management's discussion and analysis. Joining me on the call today, we have George Burns, President and Chief Executive Officer; Paul Ferneyhough, Executive Vice President and Chief Financial Officer; Joe Dick, Executive Vice President and Chief Operating Officer; and Simon Hille, Executive Vice President, Technical Services and Operations. Our release yesterday details our fourth quarter and year-end 2023 financial and operating results. This should be read in conjunction with our year-end 2023 financial statements and management's discussion and analysis, both of which are available on our website. They have also both been filed on SEDAR+ and EDGAR. All dollar figures discussed today are U.S. dollars, unless otherwise stated. We will be speaking to the slides that accompany this webcast. You can download a copy of these slides from our website. After the prepared remarks, we will open the call for Q&A.At this time, we will invite analysts to queue for questions. I will now turn the call over to George.
Thanks, Lynette, and good morning, everyone. First, we'd like to pass on our condolences to everyone affected by the SSR tragedy in Turkiye. Our in-country team provided services to the response efforts, and we await key findings from the investigation. We are pleased to have Paul Ferneyhough, our recently appointed Executive Vice President and Chief Financial Officer, step into the role following Philip Yee's retirement. Paul joined us in 2021 as part of our CFO succession plan and was key in negotiating the project financing on the Skouries project and worked closely with Phil and the finance team since joining Eldorado. The transition has gone smoothly, and for those who have not yet met Paul, I'm sure over the coming months, you will have the opportunity to do so. I would also like to take this opportunity to acknowledge Joe Dick, as this will be his last formal conference call with us. At the end of March, he will retire his role as COO and move into a consultant role to support us in delivering the Skouries project. Joe, I would like to thank you for everything you've contributed to the organization. And on behalf of everyone at Eldorado, we wish you all the best in your semi-retirement. As Joe moves into this new role, we have welcomed Louw Smith as the Executive Vice President, Development, Greece. Louw is responsible for our Greek assets, including Skouries and Olympias. He will join us on our first quarter call for 2024 and April to review the Greek assets. Louw brings to the role over 30 years of international experience in the industry. We are pleased to have him join Eldorado. Here's the outline for today's call. I'll provide a brief overview of Q4 and 2023 results and highlights, updated 2024 production and cost guidance and our 4-year production outlook. I will then pass the call over to Paul to go through our financials and then Joe and Simon to review our operational performance. Then we'll open the call to questions from our analysts. Turning to Slide 4. 2023 was a successful year as Eldorado merged with many accomplishments. We delivered increasing production while lowering our cost profile over 2022, resulting in a very strong financial year. This accomplishment demonstrates our team's dedication and hard work. Fourth quarter was the strongest quarter of the year with safe production of 143,166 ounces. We finished the year with gold production of 485,139 ounces, in line with our guidance range and a 7% increase over 2022. The Production benefited from Olympias' infrastructure and productivity improvements and Kışladağ from our upgraded materials handling systems and the commissioning of the North Heap Leach Pad. On the cost side, our cash costs and our all-in sustaining costs decreased by 6% and 4%, respectively, compared to 2022 in an environment where the industry cost base is rising. We saw slightly lower unit cost per key consumables, including energy and fuel and lower sustaining capital expenditures. Also in Turkiye, we benefited from the depreciating Lira to more than offset inflation. In addition, our continuous improvement initiatives across the sites also contributed to declining costs. Our full year 2023 cash costs and all-in sustaining costs were in line with our guidance range as we issued in October. Paul will touch on the cost in more detail later in the call. Turning to Slide 5. In the fourth quarter, we recorded 1 lost-time injuries with a frequency rate of 0.42, which was consistent with the LTIFR in Q4 2022. In 2023, the LTIFR was 0.65, a 45% improvement over 1.19 in 2022. While we are proud of our safety performance and our employees' commitment to safe operations, we know there's a lot more to be done. Our safety and the health journey will continue in 2024 with a focus on preventing high potential incidents and further environment of our employees to promote a positive health and safety culture. On sustainability, we take pride in our consistently strong performance and are pleased to have been recently recognized for our continued efforts. We ranked first in the materials sector and 27th overall in the Globe & Mail's 2023 Board Games, which rate Canadian corporate boards on the S&P and TSX Composite Index for the quality of their governance practice and disclosure. In addition, at the Resourcing Tomorrow conference in London, we took home the Project Financing of the Year Award for the Skouries Project Financing. We also received an honorable mention for ESG Producer of the Year. Moving to Slide 6. In conjunction with our financial release yesterday, we published our 2024 guidance and 4-year production outlook. Looking forward towards 2024, we expect a 9% increase in gold production over 2023 with gold production expected to be between 505,000 and 555,000 ounces. The increase in gold production over 2023 will be primarily driven by higher expected production at Kışladağ and Olympias following the productivity improvements that were implemented last year. As in previous years, production is expected to be second half weighted. Production in Q1 and Q2 of this year is expected to be lower than Q4 2023 as a result of winter conditions at Kışladağ and planned or grade variability at Kışladağ, Lamaque and Efemçukuru. Total cash costs are expected to be between $840 and $943 per ounce sold. All-in sustaining costs are expected to be between $1,190 and $1,290 per ounce sold. Both total cash costs and all-in sustaining costs are expected to be in line compared to 2023. Sustaining capital in our operations is expected to be between $135 million and $160 million. The increase over 2023 is primarily the result of an increase at Lamaque for underground development and tailing storage facility upgrades and Olympias for underground development and infrastructure. Growth capital of our operating mines is expected to be between $122 million and $144 million, which has increased over 2023, primarily the result of an increase at Lamaque for the planned or Ormaque bulk sample development and at Olympias as we take a phased approach to increasing throughput to 650,000 tonnes per annum, which is expected in 2026. Growth capital at Skouries is expected to be $375 million to $425 million. Skouries Capital has significantly increased over 2023 as we are in the peak of the construction. Due to delays in finalizing key contracts and some of the 2023 spend was moved into 2024, as we previously indicated. Our 4-year outlook is a compelling story of near-term, high-quality production growth. The primary growth engine is Skouries, which is expected to be commissioning in the third quarter of next year. Our gold production is expected to increase 45% from 2023 through 2027. In addition to the gold production, copper becomes a significant component of Eldorado's overall production and revenue profile. Within our guidance this year, we have included the copper production at Skouries starting in 2025. Moving to Slide 7. We announced in yesterday's release a 9% or $75 million increase in the capital estimate at Skouries. -- higher capital estimate was a result of increased labor cost. During 2023, negotiated contracts finalized were consistent with the feasibility study. The recent bids in 2024 that are being finalized or will be finalized in the first half of 2024, are associated with the mill facility and the tailings filtration plant that are coming in above the feasibility study estimate. The largest factor is higher labor rates for trade workers and, to a lesser degree, slightly lower productivity assumed and to an even lesser degree, an increase in quantity of work being recognized from detailed engineering versus the feasibility study engineering. These new market and engineering realities are being included in the remaining contracts still being finalized. As a result, we believe the updated cost estimate is largely derisked in terms of labor cost, procurement risk and engineering risk. We also believe this modest 9% increase in capital cost estimate in light of the global inflationary pressure since the December 2021 feasibility study is a positive outcome. Our focus as we finalize these remaining contracts turns to mobilization of contractors and safe execution of the work to deliver start of commissioning in Q3 2025 and operational readiness to deliver commercial production by the end of 2025. With solid project financing and a robust balance sheet, we remain fully funded to complete the construction at Skouries. Time we invested in diligently in negotiating these key contracts has increased our execution confidence with a modest effect on the production schedule. First production of the high-quality copper gold concentrate is now expected in Q3 of 2025 from prior guidance of mid-2025, and we remain on track for commercial production at the end of 2025. The back-end weighted operations ramp-up curve, we have lowered the Skouries 2025 gold production range to between 50,000 and 60,000 ounces of preproduction ounces from the prior guidance of 80,000 to 90,000 ounces. In 2025, we also have guided on copper production and expect to produce between 15 million and 20 million pounds that year. For the subsequent years 2026 and 2027, we are maintaining the previous gold production guidance ranges and have provided copper production. We are assessing our plans with the goal of increasing our 2026 production profile at Skouries. I'll stop there and turn the call over to Paul for a review of our financial results.
Thank you, George, and good morning, everyone. Slide 8 provides a summary of our fourth quarter and full year results. 2023 was a strong year for us. As George mentioned, we delivered in line with our production guidance and in line with our guidance range on operating costs. Increasing production and lowering costs compared to 2022 have resulted in strong financial results for the full year. Eldorado reported net earnings attributable to shareholders from continuing operations of $92 million or $0.45 per share in the fourth quarter; positively impacted by higher revenue and a higher income tax recovery over the comparative period in 2022. For the full year, net earnings attributable to shareholders from continuing operations was $106 million or $0.55 per share compared to a net loss of $49 million or $0.27 loss per share in 2022. Net earnings increased in 2023, primarily due to higher revenue and lower mine standby costs, lower write-downs of assets and lower income taxes. After adjusting for onetime nonrecurring items, adjusted net earnings were $49 million or $0.24 per share for the quarter and $111 million or $0.57 per share for the year. Within adjusted net income, we've reversed the one-off $59 million deferred income tax recovery due to a mandatory Turkiye hyperinflationary tax basis adjustment. The deferred income tax recovery applied to all of our nonmonetary Turkiye balance sheet items. Our free cash flow in the quarter was $29 million or $82 million, excluding capital investment in the Skouries project. For the full year, free cash flow was negative $47 million or $113 million positive, excluding the Skouries project, a significant improvement over 2022, which was negative $69 million. Cash flow generated by operating activities before changes in working capital in the quarter was $135 -- sorry, $138 million and for 2023 was $411 million compared to $240 million in 2022. Fourth quarter cash operating cost was $716 per ounce sold and all-in sustaining cost was $1,207 per ounce sold. For the full year on a per ounce sold basis, cash operating costs was $743, total cash cost was $850 and all-in sustaining cost was $1,220 per ounce. Our costs decreased compared to the prior year as a result of higher production and slightly lower unit costs for key consumables, including energy and fuel. Capital expenditures were $137 million in the fourth quarter, including investment in growth projects at Kışladağ focused on the waste stripping, North Heap Leach Pad and upgraded materials handling systems and at Skouries where we continue to advance construction and procurement for the project. Overall, 2023 capital expenditures were $411 million. Current tax expense of $22 million for the fourth quarter increased from $10 million compared to the same period in 2022. Current tax expense totaled $86 million for the full year, an increase from $70 million in 2022. The increase in 2023 was primarily related to the operations in Turkiye. The increase reflects higher sales volumes combined with a tax rate increase in Turkiye from 20% to 25% that was enacted on July 15 that was retroactive to the beginning of the year. This was partially offset by Turkish investment tax credits. Third, income tax recoveries of $68 million in the fourth quarter and $28 million for the full year compared to recoveries of $34 million and $8.5 million, respectively, in 2022. Turning to Slide 9. Our financial position remains robust as we move into 2024. We ended the year with total liquidity of $652 million, including $542 million of cash, cash equivalents and term deposits and $110 million of available capacity on our revolving credit facility. We continue to focus on maintaining a solid financial position, which provides flexibility to respond to opportunities and fund our growth strategy to unlock value across our global business. With that, I'll now turn the call over to Joe to go through the operational highlights.
Thanks, Paul, and good morning. Starting on Slide 10 at Skouries. We have made significant progress since restarting construction. Activity has continued to ramp up on site with project progress at 38% at the end of December 2023. Overall project progress stands at 70%, including work completed before putting the project into care and maintenance in 2017. Since giving the last update, detailed engineering has progressed to 61% from 56% and procurement is 82% complete, up from 73%. Mobilization of the earthworks contractor for embankment facility within the integrated extractive waste management facility, the IEWMF started in the second quarter along with critical underground power service updates. Additionally, the construction team made positive headway on the crusher building, mill and flotation building and underground development. We have some more detailed photos to share in the coming slides. Moving to Slide 11. As we continue to ramp up construction activities, our 2024 capital is expected to be between $375 million and $425 million. The capital will be focused on continuing to advance construction of the major earthworks, including haul roads, IEWMF construction, low-grade stockpile, water management and process facilities and the crusher and filter buildings. In addition, work will focus on underground development to support the test stopping program scheduled for 2025. Mechanical, piping and electrical installations will progress in in process and infrastructure areas. On the critical path is the filter plant, which continues to advance with the piling work having commenced. We expect to award the filter building contract early in Q2 with; the contract will include the building structure, assembly of equipment within the building, including air compressors, conveyors, filter presses and other ancillary equipment in addition to the piping and electrical work. The filter plates arrived on site in January, with the remaining components, assemblies and fabricated frames expected to ship in the second quarter. Preassembly is expected to start following delivery. Work for the Mill/ Flotation building is in progress with commissioning on overhead cranes, installation of construction lighting and scaffolding and the commencement of structural steel work. Mechanical, piping and electrical work for the process plant are mobilizing with work commencing this quarter. By the end of 2024, we expect to have completed the IEWMF Coffer dam and significantly advance the IEWMF earthworks, water management facilities and the process and filter plants. The next set of slides show how much work is already underway on 3 critical areas. Since we hosted a contingent of analysts and investors on the site in October, you may be impressed by how fast things have advanced through the winter months, specifically on the Crusher plant foundation and preparation of the filter plant area. On Slide 12, the top photo gives you a good view of the amount of pre-stripping that has already been completed in the pit. In the bottom photo, you can see the trucks on site that are employed on the open pit pre-stripping to support construction of the haul roads and water management pond. On Slide 13, you can see the area for the Crusher building. The piles have been driven and poured and the next stage of civil construction has begun. Over at the filter plant on Slide 14, this shows the significant amount of excavation work that has been done with the piling work underway. Shown on Slide 15 are the first 4 company-owned 45 tonne CAT 745 trucks. These trucks will be used once Skouries is in operation to build the lift we acquired on the dry stack embankment -- during construction of the civil works, these trucks will be used as part of an integrated fleet with the earthworks contractor for construction of the IEWMF facilities. We expect to take delivery of 15 additional trucks through the end of Q2 2024. The photo on the right shows the first phase of the underground development, advancing the West Decline and access to the test stopes. The second underground development contract proposals are in the final evaluation stage and awarding of the contract is planned for the second quarter. This contract includes test to work as well as additional development and services work to support the development Phase 1 of the underground mine. We expect to complete about 2,200 meters of underground development by the end of 2024. As a reminder, is it expected that Skouries will be mined predominantly via open pit for the first 9 years in conjunction with the ramp-up of the underground. We look forward to providing updates as progress continues. I'll turn it over to Simon for a review of operations.
Thanks, Joe. Starting in Turkiye on Slide 16. Kışladağ fourth quarter production was 46,291 ounces with cash operating costs of $623 per ounce sold, which represents a 24% increase in production on a similar cash operating costs compared to the prior quarter. Production during the quarter was driven by continued optimization of the material handling systems and the commissioning of the North Heap Leach Pad, which has increased the ore tonnes placed and increased irrigation flow rates. Overall, in 2023, production was below guidance due to slower-than-expected inventory drawdown of the North Heap Leach Pad. Cash operating costs were significantly lower than guidance as a result of the lower prices of fuel and electricity. Looking ahead to 2024, Kışladağ production guidance is between 180,000 and 195,000 ounces of gold to achieve this Kışladağ as expected to mine and place North Heap Leach Pad approximately 13.2 million to 13.7 million tons of gold at an average gold grade of between 0.7 and 0.8 grams per tonne. The production range has been revised from the guidance issued in 2023, and this is primarily due to inventory buildup within the ore state in the leach facility following the residual impacts of the high precipitation event 2023. We continue to optimize our on-belt agglomeration process and stacking processes to improve quality and consistency of the stack or along with focused activities to enhance the inventory drawdown. On Slide 17, at Efemçukuru, Fourth quarter gold production was 22,374 ounces at a cash operating cost of $816 sold. Gold production throughput and average gold grade at FMG group were in line with plan for the quarter. Overall, 2023 production and cash costs were in line with guidance. For the year ahead, Efemçukuru is between 75,000 and 85,000 ounces of gold and the site is expected to process approximately 530,000 to 550,000 tonnes of ore at an average gold grade of between 5 and 5.5 grams per tonne. Production is expected to be relatively consistent quarter-over-quarter with the first quarter expected to be the lowest. And now moving to the Lamaque Complex on Slide 18. Lamaque Complex delivered record gold production, both in the fourth quarter and for the year. Fourth quarter gold production was 56,619 ounces, a 29% increase over the prior quarter, driven by productivity improvements in the triangle mine and higher grade, which allowed the mill to perform at capacity. As operating costs were $580 per ounce sold. Additionally, in 2023, we announced the conversion of a portion of the inferred resources into indicated resources at the Ormaque deposit. During 2024, we will continue to advance infill drilling program targeting the upper 2/3 of the Ormaque deposits, and we remain on track to take the bulk sample. With a pre-feasibility study, we'll announce the Ormaque inaugural reserves by the end of 2024. For the year, Lamaque's production guidance is between 175,000 and 190,000 ounces of gold, and this is expected to the site is expected to mine and process approximately 870,000 to 910,000 tonnes of ore at an average gold grade between 6.3 and 6.8 grams per tonne. The production range has been widened slightly compared to the guidance issued in 2023 to reflect an updated mine plan that supports mine sequencing optionality and optimization as we move lower in the deposit. I'll hand the call back to Joe to review the fourth quarter results for Olympias.
Thanks, Simon. Moving to Olympias on Slide 19. The mine delivered record annual production and the mill delivered record throughput by leveraging operating initiatives implemented during the year. Fourth quarter gold production was 17,882 ounces and cash operating costs were $1,224 per ounce sold. Overall, 2023 production was in line with guidance. Costs were higher than expected because of a delay in the completion of the bulk emulsion and ventilation projects scheduled for early Q1 2023 completion and were commissioned midyear. That affected mine plan sequence and delayed lower mine development, both of which contributed to the byproduct and grade variances which in turn affected unit costs. At Olympias, in 2024, we expect to see continued improvement as we advance the underground development and increased metal production from the flat zone. Production is expected to be relatively steady through the year, delivering between 75,000 and 85,000 ounces of gold. Total cash costs are expected to benefit from the increased byproduct metal production within the flats zone, which is expected to result in higher byproduct credits driving down the operating costs. Total cash costs are expected to be between $980 and $1,080 per ounce sold and all-in sustaining costs are expected to be between $1280 and $1,380 per ounce sold. Timing of byproduct shipments and subsequent recognition of sales per quarter may result in quarter-over-quarter total cost variability over the course of the year. I'll stop there and turn it back to George for closing remarks.
Thanks, team. In summary, 2023 was a fantastic year operationally and financially, and I would like to acknowledge the dedication and hard work of our teams across the sites. We were able to deliver increasing production, getting annual production records at both Ormaque and Olympias while lowering our cost profile over 2022, a testament to the strength and commitment across the organization. We are in solid shape with a lot of momentum going forward. We are fully funded to execute on Skouries and bring into production next year. Additionally, each of our sites have ongoing and continuous improvement initiatives with the assets expected to provide growing safe production year-over-year and a disciplined management in addition to Skouries bringing on high-quality copper gold production, we expect to generate significant free cash flow generation. It's an amazing time to be at Eldorado. Thank you for your time. I will now turn it over to the operator for questions from our analysts.
Thank you [Operator Instructions] First question comes from Cosmos Chiu with CIBC.
Thanks, George and Simon. Congrats, Paul and all the best, Joe. Maybe my first question is on Skouries, the CapEx increase. As you mentioned, a lot of it is due to labor costs. A part of it is due to productivity and certainly, productivity was a point of discussion where we're on site back in October. But can you give us a bit more color in terms of productivity? What kind of assumptions did you make previously? What kind of assumptions are you making today in terms of productivity? Maybe is it relative to, say, Turkey or Canada or other parts of the world as well.
Thanks for the question, Cosmos. And maybe I'll take a review of it and pass it on to Joe. I mean, the way I would describe it overall when you look at last year's work, we -- well, given the year before, we put up the frame around the mill and the pebble pressure building, installed the cranes, put the cladding on the building and all that work came in consistent with our productivity assumptions. And overall, that work came in line with the feasibility study. We've been doing additional work last year in getting the primary crusher moving some preliminary work around the filter building for the tailings and some preliminary work inside the mill building. And again, all that work was consistent with our estimates. And then we moved into the civil works, which is roads, open pit mining and beginning to put the infrastructure in for the tailings and bank. And again, those bids and that work has come in consistent with the FS. So as we moved into this year, we're really talking about trade work. These are electricians, pipe fitters, sort of higher-end labor. And what we found in the bids that we're just now finalizing and have projected into the remaining bids for that type of work is the rates have gone up. And I guess not a big surprise relative to what's happening globally, but higher than the other type of work that we've been conducting so far. So I'd tell you, we're feeling confident now that we've got the right estimates for labor as we move forward to finish this project, and I think that largely derisks us -- and I'll pass it over to Joe to maybe give you a little color on the various components that led to this $75 million increase, all labor-related.
Thanks, George. First, Cosmos, maybe I'll give you a little reminder on the FS side. We use the Gulf Coast factor labor rate or for productivity of 0.35. And as George said, that held consistently through 2022, 2023 as we've gotten into the trades. It -- in the proposals and contracts that we have entered into, that's closer to 1.5%, slightly under 1.5 is where the productivity factor would calculate. So it's up a bit. We also had a modest increase in quantities moving from feasibility level engineering to detail engineering, and that's a smaller factor than productivity. But as George said, we're feeling pretty comfortable that through diligent work through these contracts or these proposals and working to contract with the contractors, we are doing diligent review of their work plans, making certain their solid understanding and that we understand where they've gotten to their productivities. -- how they've gotten to their labor, how they expect to deliver. So we're quite confident that the time taken and doing that leads us to an executable plan. So I just echo what George said, where our confidence level is up for execution moving forward, albeit at a higher labor rate.
Great. And maybe if you can help me with the numbers here. I just want to make sure my numbers are correct. As you said, CapEx has increased to a total of $920 million. I know you said you spent $153.8 million in 2023, an additional $375 million to $425 million in 2024. I'm just trying to figure out how much has been spent so far at Skouries and how much of the $920 million is going to be spent in 2024? And how much of that is going to be spent in 2025?
Yes, Cosmos. So the new total is $920. Through the end of last year, we've spent $184 million, and we have $735 to spend against that $920 million, and then we've given you a guidance range for this year.
Understood. Great. Maybe one last question, George, to start off the presentation today, you mentioned the unfortunate event that happened at SSR Mining at the heap leach, the split. Your operations are in a separate part of the country. So I fully understand that. I'm just wondering if you've seen any kind of indirect impact to your operations. I don't at least there's an indirect impact to your share price, but other than that, any other indirect impacts. And have you seen any kind of changes in the overall sort of regulatory environment...
Thanks for that question. Yes, I mean, as you would expect when a tragedy of this sort occurs, the regulators are going to be paying attention. So we get regular inspections at both of our operations throughout the year. And there's been a step-up in those reviews since the tragedy. We've had no impacts from our operations. I would tell you; I take great comfort and pride in the oversight and the way we operate and maintain our facilities. Regarding the heap leach itself, we've been operating for 15 years. Our operators and maintenance employees do routine inspections throughout the day as we operate and maintain the facility. We do routine inspections throughout the year. Our engineering firms that provide us with designs to reviews each year. And we've got a very capable technical services group here at head office. And so we do our own reviews overall, the technical and operating risk that you face in a mining business like ours. And so -- and I'd say one other thing that we do, we have an independent technical group, and these are the engineers that design and kind of look over our operations, but an independent group that comes through periodically and does an independent review. And so we have a lot of layers of protection to manage the critical risks that any mining operation face. And so I feel like we're in good shape here. We stand ready to understand any key learnings that will come out of this strategy; and deploy the appropriate reactions if there are any pertinent to our business. So no impact on our business to date. The regulators, as you expect, are taking a look at all the mines, and we don't expect any impact to our business.
Great. That perfectly answers my questions. And have a good weekend. That's all I have.
The next question comes from Tanya Jakusconek with Scotiabank.
Maybe just someone can help me on the progression of the year first. I think Simon gave us some details on -- and George was solid on the first half is going to be weaker. Q1 is going to be weaker at Efemçukuru. I understood. I think Olympias is even. So can we just get an idea on Lamaque and Kışladağ. And then just overall, am I looking at that 48% in the first half, 52% in the second half. I know it's not a science...
Yes. Thanks for that question, Tanya. Yes. I mean at a high level, we're softer in the first half with Kışladağ just due to winter issues that impact the heap leach as you would expect. And then the bulk of the rest of the variability has to do with [ gold ] rates. And I'll see if Simon can provide you some details on...
Yes. Thanks, George. The -- yes, we typically have -- with winter conditions, slightly slow additions at Kışladağ sort of in the first quarter. As we said, Efemçukuru generally fairly steady through the year, the first quarter will be it our lowest. We are back half weighted in terms of grades coming into Lamaque, we are sort of a fourth quarter being at the higher end of our range that we said in the sort of 6.5% to 7% range where the first part of the year is in the 6% to 6.5% range. So does that help?
Yes, it does help. I just was just thinking from an overall perspective, without having done all of these numbers, are we looking at that 48-52 -- or am I not getting that right?
Yes. We're probably more like a -- it's probably up 45% in the first half to 55% in the second half. Tanya, that's what we're probably seeing on a portfolio basis if that helps to balance your books.
Yes. No, just thank you for that, Simon. It's just trying to get this right because as you know, divided by for is and how most of these mines are going through this year because of grade variability and weather and other. So that's very helpful. My second question is maybe to George. I just wanted to understand, you've got -- just to do with Skouries, you mentioned that we've got these contracts too outstanding that are going to be finalized in Q2. So my question is, how comfortable are you updating the capital in Q1 when you haven't really finalized these contracts until Q2, I wondered why you did it now and not waited until these contracts were done.
I'd just say we have really good confidence in estimating the contracts that aren't finalized, but we have all the bids in. We've been having questions with the various contractors. And we do understand through all of the bids submitted so far that these trades associated work is at a higher cost than we assumed in the FS. And I don't know. I think part of that may be driven on there's an uptick in work happening in Greece period. And so the availability of people, the contractors are having to pay a bit higher rates than we assumed 3 years ago when we put this estimate together for that type of work. So our confidence is basically we're through negotiations on a few of the contracts and the remaining contracts, we've got good visibility from the bids. And we still have to finalize which contractor and [ will close the deal ], but we've got good visibility of where we're going to land.
Okay. And those are the 2 major contractors, and you're 80% -- you secured 80% of that spend, right?
Yes, we have. And maybe, just a little bit clearer. So the bids that we have that we're basing this estimate are firm bids. We haven't signed the contracts and necessarily awarded it. But that's why we're feeling confident these are firm bids.
Okay. And maybe just to come back to Joe, then thank you for giving us the productivity numbers and for a layman like myself, I just I'm trying to understand that 1.35 going to close to 1.5%. That's an 11% increase. So should I be thinking that your productivity has declined by you've assumed a 10% decline in productivity in the numbers going forward? I'm just trying to understand how to use that information you provided me.
That 10% is not unreasonable, Tanya. As George stated, for the overall project, it's less than that because of the earthworks and early awards were more in line with feasibility assumptions. But the later work and the crafts are a bit lower productivity than we saw. But I think generally, we're comfortable that execution within those productivities is quite reasonable. And we're working as well around performance management through target prices and productivity incentives. So I think there are -- we're quite comfortable that will come in. And I also would just mention that we do have good price protection in the contracts that we have and will have in the -- those to be awarded as well. So there's no escalation of labor of any kind in the -- for the duration of the project.
Okay. So if we were to -- would we be assuming correctly, if we said, okay, so you're comfortable in these contracts because these are sort of final bids, price protected on these 2 larger ones. And then the assumptions on the productivity is something less, you've declined if I reduce it by something just slightly under 10%. That be...
That would be reasonably accurate.
Okay. And can I ask just one final question before I let someone else ask. I'm interested in how you're progressing on -- you've got to increase the employment on site from now until you go into production. Can I just ask how that is going? And I know I asked that on site. -- when I was there in October, but I'm just trying to see how that is going and how labor costs are looking on that front as well.
Go ahead, Joe?
Thanks, Tanya. So where we stand today, Tanya we have mobilized the leadership team for Skouries operations. We have about 40 people onboarded to date, and we'll continue with that progress. We basically broke it into 4 phases in the first phase to be completed by the end of '23 was to get the leadership team on board. We've completed that. Through Q2, we will be bringing in the second level of management and, let's call it, key technical people and we're advancing on that front as well, and that's in the range of another 30, 35 people. Phase III starts us into supervision. And that's about another 50. And then we'll begin the direct hire process in Phase IV. And we have about right now 500 applicants on file and working through those each and every day. So we're feeling reasonably good about that. We have also completed a good operational readiness review, and we're looking to kind of turnover assets sequentially as available. So the open pit and underground works, we anticipate those operationalizing in 2024, taking a bit of pressure off. And as far as labor and the labor available for open pit is good, we'll be contracting the underground. And then as we move into 2025, we'll be hiring remaining step for process facilities built to plan the rest of it. And that is about in the range of 200. So feeling pretty good about all of it as far as costs, -- we don't anticipate it to be materially different in any way from what our current labor rates for operations are in Greece.
Okay. And so Joe, it's about maybe 100 people from now until you have to hire the additional 200 people starting in 2025. So maybe another 100 people or so in 2024.
That's reasonable.
Thank you so much for explaining it to me. Appreciate it.
If there are no more questions in the queue, I'd like to send the call to the presenters for closing remarks.
Yes. Thanks, everybody, for joining the call. We look forward to giving you an update at the end of Q1. Have a great weekend.
This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.