(ITRG)
Q4 2024 Earnings-Transcript
Operator: Good morning. My name is Julie Anne and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Integra Resource Fourth Quarter and Full Year 2024 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would like to turn the meeting over to Jason Banducci, Vice President, Corporate Development and Investor Relations. Please go ahead, Mr. Banducci.
Jason Banducci: Thank you, operator. I’d like to welcome everyone today to Integra’s fourth quarter and full year 2024 results conference call. Before we begin, I would like to note that we will be making forward looking statements during today’s call. And I would direct you to the second slide of our presentation, also accessible on Integra’s website, which contains important cautionary notes regarding these forward-looking statements. All dollar amounts discussed today will refer to US dollars unless otherwise indicated. I would also like to highlight that all financial results included in the presentation today are reflective of Integra’s ownership period during the fourth quarter for Florida Canyon, which was November 8th to December 31st, 2024.
Please note that we have also included full year operating metrics for Florida Canyon for strictly informational purposes. On the call today, I’m joined by Integra’s President, CEO and Director, George Salamis; Chief Financial Officer, Andree St-Germain; and General Manager of the Florida Canyon Mine, Greg Robinson. Today, we are pleased to provide an operating and financial update on what was a transformational year in 2024 for Integra. With that, I would like to hand the call over to our President and CEO, George.
George Salamis: All right. Thanks, Jason. So, 2024 marked a transformational year for the company. Integra evolved from a development stage company in the US through the acquisition of the Florida Canyon mine. We believe that the company is better positioned now more than ever with Florida Canyon producing and selling gold at record prices. Better positioned to advance our two heap leach projects, DeLamar and Nevada North. Our strategy is simple, operate efficiently, develop responsibly, allocate capital wisely, and grow through tactical M&A. We are building a modern growth-focused gold company in the heart of the Great Basin. Moving to Slide 5, we have highlighted some metrics that underscore our success in 2024. In Q4, we closed the acquisition of Florida Canyon, catapulting the company from developer to producer status.
Florida Canyon demonstrated an excellent performance in 2024 with total production of just over 72,000 ounces of gold, marking the highest production output in 21 years. During Integra’s ownership period from November 8th to December 31st, Florida Canyon produced approximately 11,000 ounces of gold at all-in sustaining costs of $2,103 per ounce. Average realized gold price during that period was $2,643 per ounce. At DeLamar, we have had a very productive year making significant advancements from an engineering and permitting perspective, ones that will set the stage for a pivotal year in 2025 with an upcoming feasibility study and significant permitting advancement. At our Nevada North project, we successfully executed a drill program at the Wildcat Deposit that confirmed continuity of mineralization and gathered important technical data.
From a financial perspective, we ended the year in 2024 in the strongest position ever for this company, with a cash balance of $52 million, well-positioning us to execute on all of our major objectives in 2025 without having to return to the market for financing. I will now hand the call over to Greg Robinson, our Mine General Manager at Florida Canyon to provide an operational overview from 2024. Over to you, Greg.
Greg Robinson: Thanks, George. Turning to Slide 5, we have outlined the key production metrics for Florida Canyon from November 8th through December 31st and for the full year. During Integra’s ownership in the fourth quarter, Florida Canyon produced 10,984 ounces at cash cost per ounce sold of $1,884 an ounce and all-in sustaining cost of $2,103 an ounce. Production during the fourth quarter was particularly strong, with the newly constructed CIC circuit coming online and beginning drawdown of the heap leach pad [Technical Difficulty]. For the full year 2024, Florida Canyon produced 72,229 ounces, marking the highest production in 21 years. Record production was supported by the construction and commissioning of the new Phase 3a of the South Heap Leach Pad and enhancements to solution processing systems.
2024 sustaining capital at Florida Canyon totaled $41.3 million, with approximately $30 million towards the heap leach pad expansion at CIC and approximately $8 million in deferred stripping. 2025 sustaining capital will include the expansion of the south heap leach pad Phase 3b, which is expected to amount to approximately $12 million. We also expect sustaining capital to include expenditures for our mining equipment fleet, additional deferred stripping, and other projects. We plan to provide formal guidance in mid-year 2025. On Slide 7, we show a breakdown of the mine profile of Florida Canyon from 2017 to 2024. Record production levels in 2023 and 2024 are supported by placing increased run of mine ore directly on the heap leach pads, in addition to maximizing the crusher throughput.
Record 2024 production was supported by excellent crusher performance and delivery of more run of mine ore to the leach pad than planned. Other operational improvements include a drawdown of heap leach pad inventory, improved short and long range planning, operational efficiency improvements, emphasis on stability and consistency, and a renewed focus on workforce development, employee retention, and culture. I will now pass the call back to George to discuss some of the key achievements at DeLamar and Nevada North during the fourth quarter.
George Salamis: Great. Thanks, Greg. So at DeLamar, 2024 was a foundational year as we completed engineering for our upcoming feasibility study. As a result of extensive engineering studies, we made substantial improvements to the project, including optimizing the heat bleach footprint and eliminating the need for tertiary crushing, which is expected to reduce power needs and have a positive impact overall on capital costs. Perhaps most importantly, we finalized a gold silver recovery model that leverages refining capacity at Florida Canyon, proving yet another example of the synergies we’re unlocking in our portfolio with the recent acquisition. From a permitting perspective, significant progress was made on the DeLamar Mine Plan of Operations, including regulatory milestones, environmental surveys, and coordination with federal and state agencies.
In 2024, we focused on refining our operational and permitting strategy, addressing agency concerns, and advancing critical environmental and engineering studies. In light of the work completed at DeLamar in 2024 and the current political and economic backdrop in the US, we believe we are better positioned now more than ever to make significant progress at DeLamar in 2025. Over to Wildcat. So at Wildcat, part of our Nevada North project, we completed a targeted 1,940 meter drill program to refine our understanding of geology, metallurgy, and geotechnical elements of the project. Results confirmed strong oxide continuity and hydrogeological data confirmed a dry pit, which we expect to simplify future operations and permitting. We’ve also secured the first tranche of Sage Grouse Conservation Credits and key disturbance permits.
Nevada North continues to evolve into a de-risked growth asset in a premier jurisdiction. Nevada North is a project that we believe can advance rapidly to the next stages of feasibility and permitting, especially given the obvious synergies of having Florida Canyon so close by, operating 30 miles to the east. I will now hand the call to Andree to walk through the financial highlights for the fourth quarter and full year of 2024.
Andree St-Germain: Thank you, George. Integra closed fiscal 2024 in a strong financial position. The company saw a significant increase in cash in the fourth quarter, ending the year with a cash balance of $52.2 million as a result of cash acquired with the Florida Canyon acquisition, the equity offering launched concurrently with the Florida Canyon transaction, a $5 million drawdown on our convertible loan in November and cash flows from operations from Florida Canyon. We ended the year with a healthy working capital of $64.4 million. It is important to note that included in the working capital are short-term liabilities of approximately $17 million related to a convertible loan. The convertible loan had to be classified as current debt even though the loan only matures in July 2027, given that our lender has the right to exercise a conversion option at any time.
In conclusion, from a financial perspective, Integra is well positioned to fund sustaining capital needs at Florida Canyon, development expenditures at DeLamar and Nevada North, and cover G&A expenditures for the upcoming years. It is important to note that full year 2024 results are not reflective of the business going forward due to Florida Canyon only being consolidated from November 8 to December 31, 2024. Next, we will focus on Q4 2024 metrics on Slide 11. Q4 2024 revenue of $30.4 million and cost of sales of $25 million resulted in $5.4 million in gross profit, reflecting an 18% profit margin. Q4 net income of $9.5 million and net income per share of $0.07 included a bargain purchase gain of $14 million, partially offset by transaction and integration expenditures of $2.8 million.
The purchase gain is primarily the results of the gold price increase from announcement of the Florida Canyon transaction in late July to the close of the transaction in November 8. Adjusting net income for non-recurring items such as the purchase gain and transaction costs resulted in Q4 2024 adjusted earnings per share of $0.02. As previously highlighted by George, 2024 was a busy and very successful year at DeLamar and Nevada North. Exploration and project expenditures at DeLamar, Nevada North, and other exploration properties were $14.2 million for fiscal 2024, which included $8.2 million in engineering and permitting work at DeLamar, and roughly $1 million in exploration and drilling at the Wildcat deposit, which is one of the two deposits of the Nevada North Project.
I’ll note that we anticipate similar expenditures in 2025. I’ll now hand the call back to George to walk through the 2025 outlook and key objectives.
George Salamis: Thanks, Andre. Our priorities in 2025 are clear. At Florida Canyon, we aim to optimize production, grow cash flow, and initiate near-mine exploration. At DeLamar, we will release our feasibility study mid-year and expect to initiate federal permitting in the second half of the year. It is important to note that DeLamar will be one of very few large-scale precious metal projects in the US actively being advanced through federal mine permitting. At Nevada North, we’re exploring, de-risking, and laying the foundation for future development. We’ve significantly strengthened our team with two recent great executive appointments, which we’ll touch on later, and we are well positioned to deliver on our goals in 2025.
From a corporate perspective, we are focused on disciplined capital allocation and bolstering our capital markets profile to become eligible for indices such as the GDXJ and appeal to larger institutional investors. On a longer-term horizon, we will continue to evaluate strategic and accretive M&A opportunities that support our strategic goal of becoming a leading mid-tier gold producer. Our work at Florida Canyon is just beginning. Several parallel studies are underway to optimize and streamline all aspects of the operation, from metallurgical efficiency and mine planning to fleet management and G&A. With all of these optimization studies planned or underway, we are contemplating a new 43-101 at some point for Florida Canyon in the future.
This is part of continuous improvement mindset that we all have. We are focused on generating robust cash flow in 2025 and for many years to come. We see clear pathways to margin expansion and operational excellence. We expect to be in a position to provide formal guidance for Florida Canyon in mid-2025 and a further operational update from the mine in the second half of the year, which will provide detail on some of these important initiatives. We’ve made strong permitting progress on DeLamar, and the broader permitting and regulatory landscape in the US is evolving in our favor. Idaho’s SPEED Act is streamlining state-level permitting coordination, and just last week, the Trump administration signed a new executive order aimed at accelerating federal permitting timelines and providing financial incentives to support domestic mineral production.
This includes fast-tracking critical and precious metal projects like ours and facilitating investment in US-based mine development. With a combination of these initiatives and bipartisan momentum for mineral independence, we believe we’re advancing our development projects at the right time and in the right place. To support us in achieving our strategic goals, we have recently announced key executive additions, ones that enhance our operating strength and signal our readiness for the next phase of growth. We very recently welcomed Clifford Lafleur as Chief Operating Officer, who played a key role in the growth and success at SilverCrest Metals, ultimately leading to the recent $1.7 billion sale to Coeur Mining. Cliff will be instrumental for Integra as we look to optimize Florida Canyon and significantly advance DeLamar in Nevada North.
Cliff will play a key role in determining operating and cost guidance for Florida Canyon, which we expect to release in mid-2025. We also recently announced the appointment of Dale Kerner as VP of Permitting. Dale brings a deep level of experience from Perpetua’s Stibnite project, one of the few goal projects in the US to receive a final record of decision in recent years. In our view, we could have not hired anyone better to help Integra spearhead the upcoming permitting efforts for DeLamar. These two appointments reflect our commitment to operational excellence and permitting success as we build a leading US gold producer. So I would like to end the formal part of the presentation with Slide 17 as it captures our strategy, production, pipeline, jurisdiction, scale, and value.
We now generate cash flow to fund growth. We hold one of the largest inventories of gold and silver in the Great Basin, not controlled by a major mining company. Our pipeline and development projects are being efficiently de-risked. We operate in Idaho and Nevada, two of the best mining jurisdictions in the world. We built a team with a proven track record of execution. Integra is no longer just a developer or a US gold producer with a growth runway and a clear strategy to become a mid-tier gold producer. At this point, I would like to turn the call back to the operator to begin the Q&A session. Thank you.
Operator: [Operator Instructions] Our first question will come from Phil Ker from Ventum Financial. Please go ahead. Your line is open.
Phil Ker: Thanks, operator. Good morning, everyone. Obviously, a big congratulations on the acquisition of the mine and transitioning yourselves into a bonafide gold operator. But just a couple questions here. First off, on the mining costs and unit costs that is in G&A, if we back out those numbers provided, are these unit costs that we can expect being carried forward over the course of this year and beyond?
George Salamis: Andree, I’m going to hand that one to you.
Andree St-Germain: Thank you, George. I think at this point, we will just refrain from making any guidance on 2025 figures. We’ll have a, like George mentioned earlier today, we’ll have a better update in mid-May. When it comes to G&A expenditures, though, you can expect 2024 where G&A expenditures related to our stage, which was a development stage company as we transitioned to producer, we can expect some of the G&A cost will increase accordingly.
Phil Ker: I guess I just felt that the unit cost per ton mined reported was quite high. So I was just wondering if there were some one-off items in there or severances or whatever it may be to previous personnel that may have been at site that may have been reflected in those.
George Salamis: Yeah, so maybe or you want to jump in on that one, Andree? I can handle that if you want.
Andree St-Germain: Perfect, go ahead.
George Salamis: Yeah, I mean, so there are a lot of things that we’re looking at optimizing right now. There are a bunch of optimization studies that are underway that will look at reducing those costs at some point in the future and these studies will take some time to play out so we expect to give guidance on that by sometime mid-year this year. Also, we’ve got Cliff Lafleur coming in as our new COO. We need to give him some time to kind of get comfortable and dive in essentially and take ownership of the costs from the Florida Canyon.
Phil Ker: Okay. And then just transitioning into the mining fleet, what sort of utilization are you seeing now and maybe what sort of preliminary quotes have you seen or evaluated prior to purchasing this new equipment and when can we expect the capital to be deployed?
George Salamis: Greg, I’m going to direct that question to you, if you don’t mind.
Greg Robinson: Yep. Yeah, so we’re seeing pretty good utilization in the pit. We target around 80%. That has — we’ve been focused on increasing that, and we’re getting up in the mid-80s for utilization. It is — our mining fleet is becoming due for its kind of second planned component replacement, major maintenance, and we’re currently going through a study to determine what the best next steps are. That study is not complete, and we’ll be providing some updates on that mid-year as well. But we’re looking at multiple different options for the mining fleet.
Phil Ker: So it sounds like you’d be able to get through, at least the first half of the year here with the equipment on hand and then begin, or use the study to evaluate what’s most critical over the near term in the latter half of the year?
Greg Robinson: Yeah, that’s correct. We’re taking steps to make sure that the equipment is serviceable through the decision-making time and if we end up ordering new equipment that it will last through that time as well. We can supplement with rental equipment as needed. We’ve got a couple of pieces on site right now to help maintain our fleet availability and meet our production.
Phil Ker: Okay, good stuff. And maybe just one last one. I think it was earlier this year you engaged or initiated into a hedging program. Could you just provide a refresh on that and maybe just provide us with where you’re at with that now and moving forward?
George Salamis: Sure, maybe I’ll pass that one off to you, Jason.
Jason Banducci: Yeah, sure. So, we’ve outlined the number of, I don’t have the number off the top of my head, but it represented about 75% of the gold sold ounces as reflected in the technical report. And again, that was just purchased through the purchase of put options with a floor of $2,400. And so, for us, as we look at risk mitigation for this year and into next year, and if you look at, again, how the mine plan sequences we view this year and next year as higher cost, higher capital, and in our view, a little bit higher risk years where we need to really make sure we’re protecting margin. I think if you look back at what’s reflected in the MD&A and financial statements, it’ll outline what we spent on the put options. But again, the beauty of put options is it protects the downside, but leaves you fully exposed to the upside.
And so I think the put buying or any sort of hedging for 2025 is fully complete, so we’ll do obviously do no more. And it’s just to our benefit that these options are going to expire worthless because we’re seeing, we’re selling gold today at over $3,000. I think as we look to evolve the strategy into next year, which again, as I’ve outlined, is a year that we’ll probably look to do more hedging, we’ll probably look to roll and do a similar style of put buying, but again nothing set in stone and once we have a bit more of a vision on what that’s going to look like, we’ll provide an update to the market. But hopefully that answers your question. So yes, hedging this year is done and we’ll probably look to do a bit more. And again, with where it is, obviously the strike price won’t be $2,400.
We’ll probably move it up a bit.
Phil Ker: That’s great color. I appreciate that, Jason. That’s all I have today, operator. Thank you.
Jason Banducci: Thanks, Phil.
Operator: [Operator Instructions] Our next question comes from Heiko Ihle from H.C. Wainwright. Please go ahead. Your line is open.
Heiko Ihle: Good morning. Thanks for taking my questions. Hello?
George Salamis: Go ahead, Heiko.
Heiko Ihle: Hello, can you — perfect. On the mining fleet, can you maybe just walk us through a bit what you’re seeing in regards to cost inflations and maybe even some bottlenecks in getting spares or whatever this you might be needing?
George Salamis: Okay, I will direct that one back to you, Greg.
Greg Robinson: Yeah, so if I think I understand your question, there isn’t — we don’t really have a problem with spares or parts availability for the mining fleet. Right now, we operate under a mark type contract with the local Caterpillar dealer and they have a strong presence onsite and a good supply chain. System and parts availability hasn’t been an issue since kind of the bottom of COVID era. We — that said, we’re — because we’re making this kind of study for the mining fleet in general, we’re holding off on some of the major maintenance because that’s very expensive and we don’t want to invest money needlessly if we don’t have to. So we’re running a balance when equipment downs itself or shows signs that one of the major components is failing, we’ll take the equipment down and we’ll replace that component and think about what else needs changed at the time that equipment is down before we put it back in the dirt.
But yeah, we’re just kind of playing that by ear, managing the fleet as best we can while we make this decision. And we want to make the right decision on our mining fleet going forward. And so we don’t want to rush that process or do something rash. And so that’s kind of the philosophy we’re taking and so far it’s working for us.
Heiko Ihle: Perfect. And then just one quick follow up on the South Heap Leach Pad Phase III-b. We spent $12 million on that this year as per your release. Could you maybe give some color on a quarter-by-quarter breakdown for that money going out the door, please? Thank you.
Greg Robinson: Yeah, for sure. So we’re starting to mobilize the contractor now. We’ve selected our primary contractor, and we have all the permits in place and everything. So that’s all. We’re ready to go, and we’re going to start kind of ramping up slowly through the second quarter. Probably towards the end of second quarter, we’ll start spending kind of on the main part of the earthwork and the laydown of the plastic and that kind of thing. And it should wrap up towards the end of third quarter. Just for perspective, if you followed the construction of Phase 3a last year, the scope of Phase 3b is much smaller. We don’t have to build any additional event ponds or invest in the barren solution supply system or anything like that. It’s basically just building the leach pad itself. And we’ve done part of the prep work already last year in the dirt work in that leach pad area. So we’ve got a good head start and should be a fairly smooth project.
Heiko Ihle: Perfect. I’ll get back to queue.
Operator: There are no further questions at this time. I’ll turn the call back over to Mr. Salamis for closing remarks.
George Salamis: Okay, great. Well, thanks everybody for attending the presentation today. Again, we’re always open and able to do individual presentations if there are any follow-up questions to be had. I’d really like to thank everyone for attending the call first and foremost. We’re very proud of the work that we’ve done to get here. It really is an exciting time for Integra and we appreciate the support. We look forward to providing another formal update as part of the 2025 Q1 earnings call, which will be held mid-May sometime. Please do not hesitate to reach out to myself, Jason Banducci, or anyone else in the company if you have any other follow-up questions. And on that note, thank you all very much.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.