Aya Gold & Silver

So Benoit, maybe to kick this off, I mean, one of the differentiating aspects that Aya offers investors is its jurisdiction. And, and of course Morocco still may be under-owned by some generalist investors, but what would you tell a fund that has never looked at the country? Well, Morocco is, is absolutely unique. And if you think of a country which has got more tourists than Egypt, it's got better surfing and sailing than all of Europe, it's got camel rides like nowhere else in the world, it's got fantastic food, and it's got the best party town in the world called Marrakesh, and that is where you work. You know, you're not in Val d'Or, you're not in Ouagadougou, you are in Marrakesh, going up the mountains to your sites, coming back. And it's a country that's been in mining for two thousand years and more, 'cause our first mine was discovered two thousand years ago by the Roman. They have the largest phosphate production in the world, and they still have seven hundred years of mine life for phosphates. And they have everything else, uh, from copper, nickel, pure silver mines, gold mines, uh, I mean, it's, it's all there, antimony. And, and they like mining. It's not they tolerate mining, it's okay. They like mining. Mining is part of one of their strategic development concept, like values and, and they push you to go faster, they want you to, to invest, they give you a mining permit on a PEA. Once you're permitted, you're permitted for life. Every ten years you have to do a report, but it's just an automatic renewal. So when you have all of that, it's, it's a tier one mining asset. There's no royalty, except we bought two properties from the government, from not the government, the, the, the development company of the government, so we have a three percent royalty, but that as part of our investment agreement. But if you get permits from the state, which we have many, the royalty is zero. The free carried interest is zero. The t- the tax rate on, on Boumadiene over life of mine is twenty-two percent. The, uh... And, and it's, it is a mining culture, it's a mining country. So in an environment where prices are gonna be coming up, and not today or yesterday, but commodity prices are coming up, you need a country that where mining is not seventy-five percent of their revenue, because then they look at you and you become, you're on the menu. Like Mr. Carney would say, "If you're not on the menu, you've gotta, you've gotta be at the, the other side of the table." So if, if, if they're, if you're seventy-five percent of their revenue, you're on the menu. Mining in Morocco is less than one percent. So it, it, th- there's no changes coming. It's a mining country. And the p- they have schools of mines because of OCP with twenty-six thousand employees and twenty mines, and Managem with ten mines, I haven't counted recently, and eight thousand employees. So you've got very, very good people. You've got amazing geology. And you've got a tier one country that is similar to North America, to Australia. But there, and, and, and I'm gonna close on that, there was a panel in London not long ago. All the ministers of mines were there. It was a big panel. And the final question was, "To you, minister of mine of Canada, how long for permitting?" "Uh, seven to twelve years." "You, mister minister of mine in France, how long?" "Well, twenty to twenty-five years." "And you, uh, so many years. And you, madam, the minister of mine from, uh, Morocco." "Well, us it's from two to three months." And it's true. So it makes all the difference in the world. Construction is great. The quality of construction's great. Go and visit Marrakesh. And it's an open-minded country. Like it is an open-minded country. It's, it's, it's, it's, it's got six percent GDP growth. It's got bullet trains that we don't even have in North America. It's... And it's gonna have the World Cup of soccer in twenty thirty. So look, where else do you wanna be? I mean, I, I, I, you know, I did Ouagadougou, Conakry, Abidjan, and, uh, Bangui, and many others. You know what? I prefer Marrakesh. Yeah, well, I think we're, we're watching Aya and we're certainly, uh, you're educating us on, on the merits of operating there. And I think Aya, as we've said before, is well-positioned with a first-mover advantage in the country as you, uh, grow your relationship with the government there. Um, so maybe now we'll shift over to, uh, your operating portfolio. And of course, uh, Zouger, the, being the flagship operating mine right now, is distinguished by being the only TSX pure play silver operator. And so maybe if you could... You're, you're now heading into this post-expansion, and so what has this ramp-up taught you and, and why is there still room on throughput, recovery, and costs? Well, it, it's all about geology. When, when we arrived, there was ten million ounces in the resource statement, plus or minus. We did drilling and we've drilled a lot, and we've moved this from ten million ounces to a hundred million ounces, and the geology is there and it's just, you know, massive drill programs to come up with your resource model. And then you look at who can build, and locally, the contractors are fantastic. You know, we build at Zouger a power line that's seventy-two kilometer long. In Canada it would've... And we did it for six million in Morocco. So it's... What we know in Morocco is you trust the local contractors. You do have your engineers of, of, of reference and all that, but the local people have built mines. They've built major complex. So, you know, again, is Because Morocco is not an open pit country, so we had to train them on open pit. So we had a bit of dilution at the beginning. The blasting wasn't perfect. We had to bring in expert because they are very good underground miners, like very, very good. Open pit, uh, but it's now we're back now to where it should be. And, and, and look at the construction. We built it in 18 months, on time and on budget, maybe even a little bit below budget. Nameplate capacity is 2,700 ton a day, and right now we are a year later at 4,000 ton a day. So it just shows you the quality of the construction, and anybody who goes-- s- been to site, you've been to site, like it's really very well done. So, so yes, so Zgounder has got 11-year mine life. It will produce six million ounces of silver per year. Uh, uh, cash cost at about $16, so AISC at 19. So it is a machine that will generate two hun- at the current price, 250 million a year of operating cash flow. Yeah, that's great. And, uh, so yeah, certainly that throughput has been very robust. Uh, but the flip side of the story here then is on the, uh, the resource. And, um, what's the exploration story at Zgounder, and do you think that's a conversation that will increase in 2027? Yeah, so, so you know, we are one of the largest explorer in, in, in the world of mining. We have 400 people in geology and, and in exploration. We have 20 drills turning. We spend 60 million a year, US. So at Zgounder, we're spending 15 million, uh, and we have, uh, regional play, we have larger play, and we have, you know, very close to the mine. And we believe that we have extension to the west, to the northeast, and, and we've done all the work. So we've done the geophysics, the geochem, the satellite imagery, and now we're using a lot of AI. We have actually two firms that are, you know, that have all the data and that are reviewing all of the data to give us targets that our team has already some identified, some not, and we're just gonna go and be drilling them. The mine is generating 250 million a year. We're gonna give it 15, 20 million a year budget, and we would like to increase the resource past the 11-year mine life to thirteen, fourteen, fifteen. And also, we always look at increasing throughput. 'Cause right now it's 4,000 ton. We could take it to five, could take it to six if the resource is there. But we have a very large land package, and it's never been walked. It's never been looked at. We-- You saw recently we bought 10 permits from a family. Sadly, they had spent 15 million on it. They did all the infrastructure. They were looking for manganese. Totally forgot to look at the silver content, copper content, gold content. We paid the family three million, no royalty, no payment on resources, three million at closing, got the 10 permits, all the infrastructure, the trucks, the building, everything. It's 30 kilometers away from Zgounder, and we're seeing already some very interesting, uh, silver structures. So this is what Morocco is all about, is you gotta look at what is there. It's 1,600-kilometer-long default, like the Cadillac break, and 65% of it has never been walked by a geo. So we, uh, families are there doing a little bit of artisanal, uh, mining, which is, uh, barite, so it's sand. It's l- little quarries. And we can buy a lot of ground and, and position ourselves. So yeah, Zgounder has got a beautiful exploration story. So then, uh, moving on to Boumadiene, I mean, the company's in the unique position of having a, a ramped-up cash flowing mine paired with a very promising, uh, development project. And of course, at Boumadiene, the updated PEA moved the NPV up materially from the first iteration. So can you walk us through what actually drove that and, uh, you know, is it price or w- what are the elements that you were de-risking, uh, during the engineering of the resource? Yes. So Boumadiene is a teenager athlete. It's like Coco Gauff at 16 playing in the US Open. You know, she's good, she'll get better, stronger, and she'll win all the tournaments. It's exactly that. Boumadiene is a three-year-old project. It has received 320,000 meters of drilling. It is a tier one asset because it's got 15 billion of in situ value of the resource net of recovery. That's Rick Rule's definition, net of recovery. And what we did is we did a first pass last year, but we were missing 190,000 meters of drilling. So we did a first pass where we had, you know, uh, drilling, but not enough. It was already a mine, but we did 190,000 meters additional. We did a new resource update, and we ch- we verified the CapEx, so the CapEx have moved up 4%. We verified the OpEx. We looked at, you know, a, a tighter model for the mine plan, and we, uh, we changed a little bit the price. So yes, there was a price effect because we doubled the NPV from one point seven to three point five. We've increased the internal rate of return from 40 to 93, and that's at the base case, at $3,500 gold and $50 silver. But also because it's a, it's, it's a VMS system, it's a volcanic system with a lot of s- massive sulfide in the concentrate Massive sulfide or sulfide in the concentrate is sulfuric acid. The, the, the sulfide, the, it's, it's forty-three percent of the rock material. So when we sell our pyrite concentrate to Europe, to Asia, to maybe one day North America, they'll get-- they'll produce the gold, they'll produce the silver, lead, and zinc, and they can also produce sulfuric acid. Sulfuric acid went from a hundred dollar a ton to a thousand dollar a ton recently. That's not even in the model yet. We haven't put that in the model, the value of the acid. It's only the gold, the silver, lead, and zinc, which we recover at ninety-six percent through the smelter, and we have an eighty-three percent payability. So one of the element that change in the PEA is the, the payability. At the, the first PEA, we were at seventy-three percent. The second PEA, the offers were in at eighty-three percent. So we, we, you know, we, we crush it. We, uh, there's a ball mill. We float it. We have a pyrite concentrate, a lead concentrate, and a zinc concentrate, which we sell to the, the end u- user, which is the smelters. They need that. They need that in the smelters right now all over the world, and we get a good price. So that's why it's so robust, because the payback of Boumadin at the base case, the payback is like seven months. At the spot price, it's five months. So we're gonna invest five hundred million. It will give it back to us in six months, five months, and then it will make one point one billion a year for currently fourteen years mine life after we've drilled less than one percent of the property. The structure that we're putting into the model, we track it in geophysics for almost eight kilometer. We've only drilled it on five point four kilometer, and we've drilled it down to six hundred meter, knowing that it continues. And the best drill hole of the story is as a parallel zone to the main zone. We went through the main zone to the parallel zone. At seven hundred meter, we hit fifty-one meter of eight hundred and ninety gram silver equivalent. So Boumadin means the father of all deposit in, in, in, in, in the late Na- native language. That's what it means, and that comes from two thousand years ago. So they knew that this was the biggest deposit probably of the Atlas Mountain, I, I guess so. But it is a very, very large system. Uh, it's Stephie Graf or Coco Gauff at sixteen year old getting better, stronger, and playing in, you know, in, in the top tournaments. Well, I, I mean, it's an interesting comparison 'cause actually I had a chance to see Coco Gauff this summer- [laughs] ...in Toronto. And, uh, well, I guess, uh, to put it briefly, she won. [laughs] But, uh, when you have something good like Boumadin, you don't wanna waste any time getting started. And, uh, you know, we see here that you're looking at targeting construction start in Q4 this year. Yes. But yet the, the feasibility study is not till H227. So why, why start before the FS, and, and how are you managing the risk associated with that? Well, so we've already made the investment decision. I mean, it's so good that we've already made the investment decision, but there's certain things that need to be done, like tighter grid for the resource. So we need to do this to make sure it's a little bit tighter to m-- to, you know, make sure we don't have dilution. But then the infrastructure, the power line, the water line, the, the tailings dam, the, uh, the, the, the, the camp, the infrastructure, we can start that now. Now, again, another example, we're building a ninety-two kilometer power line. We have power at sites, but we have to go high voltage, fifty megawatt. That is going to cost like eighteen million. In Canada, it'd be a hundred and fifty million. The tailings dam, life of mine tailings dam, how much? For fifty thousand ton a year of movement, eight million dollars, life of mine in Morocco. Why? There's a valley where we have permission to use the valley. We're gonna build a wall, and we have life of mine tailings to go there, unless we increase capacity, which we probably will. But that's what Morocco is all about, is your water pipeline, which costs two, three hundred in North America, there it's gonna cost thirty million. The power line will cost eighteen, let's say twenty million. The tailings dam will cost eight million. The plant is of course gonna be kind of n- not normal because w- a lot of things are manufactured in Morocco, but we're gonna go out on an international RFP. We're gonna get bids from Europe, from Morocco, from even China, and then we'll decide what, what we're gonna take. So we're starting construction in Q4, in, in next month, for on the infrastructure while we're finishing detail engineering to have long lead items purchased mid-year next year. We're finishing the drilling to have a very tight grid, uh, to be able to have a very tight, uh, mining, uh, s- strategy 'cause it's, it's gonna be fifty-five percent open pit, forty-f- six percent underground. So we need to know to... that to be very tight 'cause that's the-- What have we learned from Zgounder? Very tight drilling 'cause it's not the same geology as Zgounder. It was disseminated, so it was a bit more difficult to follow. There it's the structure is dark, n- almost black 'cause it's got four point two percent specific gravity, so it's very heavy. It's got four point one percent or four point one gram of, uh, gold equivalent per ton, and it's, it's dark compared to the rest, which is pinkish. So it'll be much easier to mine long hole. Uh, we'll, you know, increase throughput. And our goal is to really build a ten thousand ton per day nameplate And then do over time what we did at, uh, at, at Sgounder, which is increase it twenty, thirty, forty percent. We can pay, and that's the next question. I'm sorry I'm jumping your question. All that is funded by Sgounder. Yeah, that was my next question. Yeah. So all that's funded by Sgounder. Sgounder, you know, we have currently about two hundred million in the bank. Sgounder is generating, uh, one-- net, net, net of all expenses, about a hundred and seventy million a year. So we have twenty twenty-six, what's left? Twenty twenty-seven, twenty twenty-eight. The big payments are gonna start in twenty twenty-eight, twenty twenty-nine. And we also have our banker, EBRD, the European Bank for Reconstruction and Development, which is a DFI bank, so it's extremely, uh, nice to deal with them, uh, as they are, you know, all ESG, you know, uh, KPI are all ESGs. And we have available with them up to about three hundred million, if needed, at very, very competitive rates. So we have the DFI available. We have our own cash flow. All the off-takers would like to put up also a prepayment. So we haven't decided exactly how we're gonna do it, so we're gonna make a final dis-- fi- uh, financial decision, uh, in Q2 next year on to close the financing, like have the five hundred million available. CapEx will be four fifty, so five hundred, and then we'll, we'll, we'll, we'll... But we're als- already starting. Yeah, it's great to hear, and it is de-risking associated with the fact that you've been there and done that. You've already financed Sgounder. You kind of-- those paths are well worn. You're repeating them. Um, I see here we have probably time for one quick question from the audience. If anyone has a question, please raise their hand. You know, well, m-maybe not- About, about, about the food in Morocco or... [laughs] Marrakech, yeah. Or the biking in Morocco? Great biking. So, well, maybe in, in closing, I, I mean, what's the, uh, the one thing the market misunderstands about IO? Well, uh, the, the-- First of all, when you-- we meet funds, they always say, "Yeah, but permitting's gonna be so long." That's always like... Say, "No, we're permitted." "Oh, okay. Okay, how's that?" Well, it's-- that's the way it is in Morocco, so that they don't understand. And they're trying... The, uh, the, the industry's giving us twenty-five percent value of the base case NAV because it's a PA and it's normally five years away from construction or... So they're giving us a very low value on the NAV of, of Boumaazoun. They're giving us the proper value on Sgounder. But if you look at it on a cash flow basis, by twenty-thirty, we will generate net, net, net one point one billion of free-- US, of free cash on a four billion market cap, so twenty-five percent yield in two and a half years. So it's a twenty-five percent yield cash on cash. At one point, there'll be a readjustment, for sure, because there's gotta be... The average of our industry is around five, so I think there's a re-rate of about five times. And all of that is debugged, de-risked. There's no more geological risk. There's no permitting risk. There's no financing risk. There's a construction risk which we manage. Government is on side. And the government today announced the new g- g-- uh, the, the, the, the, the, the palace, the pr- the, the, the, the king announced the new government today. A lady, young lady who was the mayor of Marrakech and took Marrakech from a developing city to Ibiza on steroid, and she was now named today the new prime minister. First time ever a lady lawyer speaks all the languages is now the new prime minister to execute the strategy from the palace. Okay. Well, Benoit, we really appreciate all the extra color here on this, uh, on Sgounder, the jurisdiction, and the growth pipeline. Thank you very much for joining us.