B2Gold Corp

TSX:BTO

Earnings Call Transcript 2024-Q1

[Operator]

Thank you for standing by. This is the conference operator. Welcome to B2Gold Corporation's First Quarter 2024 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions]I would now like to turn the conference over to Clive Johnson, President and CEO of B2Gold. Please go ahead.

[Clive Johnson, executive]

Thank you, operator. Good morning, ladies and gentlemen. Welcome to our call to discuss our first quarter of 2024 operating and financial results and to give you a corporate update as well. Many of you or all of you will have seen the news that's come out. It gives quite a lot of detail. We're off to a solid start for 2024. We produced over 225,000 ounces gold production across a solid basis in line with what we expected, with all 3 B2Gold operating lines performing well.Importantly, cash operating costs and all sustained costs in the first quarter both came in well below our annual guidance ranges. And Mike will give you a lot more [indiscernible] and we'll be talking shortly to give you a lot more detail. But a very strong quarter, excellent financial position. Going forward, the mines are operating very well. So 2024, what we have described as a transitional year for B2Gold, we have made strong progress on 2 of our most important items for the year.First thing, we've had some encouraging discussions with the Mali government throughout the start of 2024. It's really important to stress that despite some rumors out there and irresponsible journalism out there, in fact, the matters as Barrick confirmed recently, there's been absolutely zero indications that the government of Mali is considering nationalizing Western-owned gold mines.On the contrary, we have had productive dialogue with the government on how our opportunity in the Fekola region can fit in the long-term future of the Fekola complex. The government has expressed a desire to fast-track the granting of an exploitation permit once the [ imposition ] decree in the new 2023 mining code is finalized.We believe over the next few months, we have the potential to agree with the government and look forward to starting to truck ore from what we call the Anaconda area to the north, down to the Fekola Mill. The roads are built. We're ready to go. We need an exploitation permit to do that.As I said, we're hoping to secure shortly. It's definitely a mutual interest we have with the government. We want to increase production by potentially 100,000 ounces a year by trucking this good green material down to the Fekola Mill. And the government wants more revenue from gold mining.This is one of the things going after illegal or too slow mining are the 2 best opportunities for the government of Mali to increase revenue from gold mining. We'll see the process as we move forward, hopefully shortly, as soon as things are moving forward with the trucking of ore from the Fekola region.The other most important area of interest we are focused on is construction progress at Goose. I'll give you an update on how we're progressing. Very encouraging in the sense that we just closed the ice road. The ice road was extraordinarily successful this year in getting everything up the road we need, the 160-kilometer ice roads, everything up to complete construction.So it was a major year of getting equipment in for construction and of course running the operations as well. That was a great success and that's a real tribute to our logistical team, our experience factor of building ice roads and just a great team on site to make all of that happen. That is a significant derisk project [indiscernible].We did announce today a slight delay, or last night a slight delay on the estimate of first gold at the Goose Project from Q1 2025 to Q2 2025. Bill will give you detail on that, but I think it's really important to point out that the construction team has delivered. The B2Gold construction team has delivered despite picking up a project that was partly some equipment that had been ordered, a lot of things had been done in terms of a previous owner looking to move the mine into pre-construction. So we inherited some good things and we inherited some challenges. We'll talk a bit about what we've done to turn the Goose Project into a B2Gold project.The main reason for the shift from the quarter is the fact that the mill could be built on schedule at the end of the first quarter of 2025, but because of some delays in the open pit and underground mining schedule, we won't have ore to feed through the mill. So that's the driving force behind moving to the second quarter. The construction is actually on track. We expect it to remain on track. Bill will give you details on that.I think it's really important to underline the fact that one of the things that we benefited from in the acquisition of Sabina was they did a very good job in exploration and permitting and an excellent job in relationships with the Inuit population and also government. So that part of the team that was involved in the Goose Project has remained with the project and they are very important to the success of the project.We were just up in the capital a couple of weeks ago for the Inuit mining symposium. It was an excellent conference. Very upbeat. We are in the right place at the right time. The population and the government at every level is very excited about B2Gold completing its mining. We're looking forward to great success there.Obviously, exploration has been part of what we do historically and there's a reason why half of our large exploration budget for this year, $73 million -- $63 million, over half of that exploration budget is focused on back river. For a reason, we see extraordinary potential there. I've had some very good results so far in our drilling campaign. I'm happy to answer questions about that.Just in terms of catalysts going forward and I'll pass it over to Mike, I think the catalysts going forward, obviously, as I mentioned, is the resolution of the valley and being able to move forward with trucking ore. I'm looking forward to a very good construction season this year at Goose and we'll continue to update.Also, I think another exciting potential is looking at gravel lotting. As everyone probably remembers, we had a joint venture with the AngloGold Ashanti looking to build a big mine to justify that for 2 companies. Now it's owned by [ Bavicha Gold ]. We've been looking at a number of different cases. We will come up with results of a new study for the UGM and what they're targeting now is something around a 6 million tonne per year case and that could produce 200,000 ounces of gold a year.We're waiting anxiously to look at the economics of that. We're not quite there yet, but we're having some encouraging signals from the engineers that we can reduce our footprint and reestablish our permit. Actually, we could be looking at quite a potentially interesting economic opportunity.So if you add it all together, you look at the catalyst and the future of gold production potential for this company, we have the potential for 100,000 ounces a year to come from trucking ore for coal, as I mentioned. Over 300,000 ounces a year is expected from Goose with gold production starting in the middle of 2025, as I mentioned. And then if we win our arms a little bit, we'll know soon, if [indiscernible], that can add another 200,000 ounces of gold production potential to the company, subject to our study coming up and being positive. So there's 600,000 ounces of growth from existing assets.In addition to that, robust exploration programs and also our investments in junior companies will continue. So when we look to the future, it's very bright. We're at an extremely strong financial position, with an industry-leading equivalent on a yield basis. So we're excited about where we're going. This is a transitional year and we've had some challenges in the first quarter. We've met them, but seems to get lost in the shuffle here. But yet again, another quarter of strong financial results. This will be what I'll track for our ninth year delivered on our guidance about production and about costs.So with that, I'm going to hand it over to Mike Cinnamond to give you an overview of the quarter from a financial point of view. Mike?

[Michael Cinnamond, executive]

Thanks, Clive. So I'll just jump into the operations. Firstly, Fekola, we produced just under 120,000 ounces of gold, which was in line with our guidance. Cash operating costs were well below our annual guidance range and all in sustaining costs of $1,436 per ounce of gold. So it was at the low end of our guidance range.Also, as a reminder, Fekola -- in 2024, Fekola, it's a transitional year, where we estimated that gold production would be lower than prior years. We have a lot of capital programs ongoing this year that are scheduled to complete in the year. And for 2025, this trend should reverse and 2025 gold production should increase. And all in sustaining costs drop as capital programs get completed.Moving to Masbate, we had another excellent quarter of Masbate with mine producing almost 48,000 ounces of gold. Cash operating costs and all in sustaining costs were both well below our annual guidance range. Fuel, lower fuel prices definitely contributed there at all operations that we could pull in Masbate and Otjikoto. So Masbate, this was a very strong operating cash flow and we anticipate to continue through the year to face low prices.Finally, last but not least, at Otjikoto, we continued our momentum from a very strong fourth quarter in 2023. In the first quarter, 2024, Otjikoto produced just over 45,000 ounces of gold. And like Masbate, both cash operating costs and all in sustaining costs were well below our annual guidance ranges.I'd say for Otjikoto as well, we also benefited from a weaker Namibian dollar. So as well as higher production, lower fuel prices, we also had a weaker Namibian dollar, which helped our costs in the dollar terms. And also, excitingly, we look forward to continue to advance the Antelope discovery, which we think has the potential to extend underground mining in Otjikoto, perhaps into the 2030s.And we remain -- at the end of [indiscernible], we remain a very strong financial position. Current gold prices, of course, are only helping that and enhancing that. And I think you can see those going forward. And as we know that in January, we completed a $500 million prepayment goal with some of our banks and members, which completely fortified our balance sheet for the gold projects we want to accomplish in the near term and the medium term.And at the end of March, we had cash balance of $568 million and nothing drawn on our revolver, so we've got a $700 million facility available on that revolver. And we do anticipate refreshing that facility a bit later in the year.Based on our existing Goose budget, which we announced in January, we've just over USD 400 million left to bring Goose into production. And now that the winter ice road campaign has finished successfully, you'll hear more about that from Bill and we've brought materials to site.And we have announced our decision to push back the Goose schedule, as Clive said, by 3 months. We've undertaken as well to update our cost to complete estimates for Goose by the end of June, I think the end of the second quarter and we'll come out with those. But I can say that based on where we are today, we're very confident that we have the resources to not only complete Goose, but we also have the liquidity for potential organic growth projects in Namibia and Colombia as well as continue to pay an industry-leading dividend.So not only are we very comfortable with the financial situation, but it's also expected to be further strengthened in '25 when the Goose capital is completed, consolidated gold production is expected to increase and all in sustaining cost and growth capital is expected to decrease.So that's a high-level summary. It's Q1. It was a good quarter, I'd say, operating-wise. And so with that, I think I'll pass the call over to Bill for discussion on the Goose construction progress.

[William Lytle, executive]

Yes. Thanks, Mike. So I'll quickly touch on the Goose construction progress. I think we signaled very clearly that this was on a critical path to have success. And I'll tell you that I think the team did a phenomenal job bringing everything down. Despite a high snow year and El Nino year, which was a bit of an anomaly, we were able to bring everything down from the marine landing area. This significantly derisks the remaining construction schedule.And now we have everything that we need, basically, to build out the Goose Project on site. And just to remind everybody, out of what we brought down, some of the key things that we brought down almost 19 million liters of fuel, all of the modular units necessary to expand the camp to 500, which will allow us to get through construction, all of the stuff necessary to build the mill, all the steel and rebar, all the cement necessary, more than 3,000 bags, 1 in 4,000 bags, actually.And one of the key things is all the reagents necessary to commission and operate the mill starting in 2025. So at the end of the day, as Mike said and Clive alluded to, the mill itself would be ready to go in Q1 2025. The construction team has done a great job of coming in and grabbing hold of this project and making a B2 type construction. The mill construction does remain on schedule.We had previously told the market that we are, in fact, ahead in some areas. Installation of the ball mill is progressing ahead of schedule. All the shell sections are in. The discharge heads, trunnions, pinions and bearings have all been completed.What really is slightly behind schedule is the open pit and underground and that really relates to the commissioning of the equipment and getting some of the people in during some of these heavy snow days. The current schedule indicates that approximately 3 months must be added and that really is to allow us to mine out some of the open pit and underground to allow us to get the appropriate amount of material on the stockpile to start the mill.So with that, we're talking about first go forward in Q2 2025. And that, of course, does reduce what we're going to produce in 2025, but I do want to indicate that it's not like those ounces are lost. They've just been pushed into 2026. So instead of having the first 5 years at plus 300,000, now we're talking the first 5 years at 310,000 plus. So overall, I'd say I remain very confident in the path forward for Goose and this is absolutely a world-class operation that will begin production in Q2 2025.With that, I will turn it back to you, Clive, for questions.

[Clive Johnson, executive]

Can you talk a little bit about the tradeoffs going forward about capital?

[William Lytle, executive]

Yes. There were some questions on whether or not we were going to be on budget given the new schedule. And I'd say we're working through that right now. But just because the road just closed, I can't tell you exactly where we're at. There's going to be some overs and there are going to be some unders. But remember, right now the 2024-2025 winter ice road season is opening. So what we're seeing is anything which would be kind of in that critical spares for 2024-2025, we're ordering right now.So we'll be able to give you actual costs for what our carrying costs are going to be. But also, we've done a good job kind of looking at what a B2Gold design would look like. Certainly, John Rajala has looked at reagent consumption. Can we bring those down? The answer is yes. We've talked about the actual fuel costs that Mike alluded to already that some of the other operations are under cost, so we're seeing how that impacts the Goose projects.We're working with vendors to see if they can carry stock as opposed to us ordering it and that's putting it into our critical spare inventory. And probably one of the big ones is the labor. So the labor, obviously, is a function of what has to be done. Given the fact that we're actually ahead of construction in some areas, we feel like we can certainly flatten those costs a little bit to make sure that we remain materially on budget.

[Clive Johnson, executive]

Okay. Thanks, Bill. I think, operator, we'll now move to Q&A.

[Operator]

[Operator Instructions] The first question comes from Ovais Habib with Scotiabank.

[Ovais Habib, analyst]

Congrats on completing a successful ice road season at Goose. Just a couple of questions for me, Clive. Number one, starting off with Mali. In regards to the 2023 Mali mining code, obviously B2 is having discussions with Mali, Barrick is having their own discussions with Mali on Lulu and Resolute is likely having discussions as well. So the question is, are you all asking for the same terms or are the terms specific to each of your projects? I'm just trying to figure out how is Mali looking to form a new kind of set of terms for the 2023 mining code.

[Clive Johnson, executive]

Everyone is in a slightly different situation because of the time frame in terms of some of the mining conventions that were signed with the government. So we are as you know, the government has acknowledged time and time again that the Fekola is [indiscernible] by law under the 2012 mining code. We haven't leased out that mining license until 2040.

[Michael Cinnamond, executive]

2044.

[Clive Johnson, executive]

2044. So that's a very positive thing from our point of view. And now the conversations with the government are really around the implementation of the '23 code, which of course the regional opportunity, they're all under an exploration license, so they need to move to an exploitation license. So the regional will be subject to the 2023 mining code. Yet we feel confident that we've got some pretty robust economics there and are looking forward to realizing the final agreement.I can't speak for Barrick or anybody else, but everyone has a different -- everyone has their own particular license and issues and Barrick will -- and others are going to be down there as we will be over the next while, to try and finalize the agreement with the government. But we are in a different situation. So we're the only company in Mali that I know that has something that could quickly turn into more revenue for the company and for our partner, the government of Mali, by trucking the ore.And that could be a significant amount of revenue. When you look at what we're projecting now, when we look at our numbers, the regional production can be very important to the future of Fekola. Of course, trucking the ore down, the roads are built, we're ready to go. So we're in a different situation. It's up to Barrick and Mercer to speak for themselves, but we're confident where we sit and we definitely have a good relationship with the government.We're concerned about the '23 code, I guess, in terms of future production for Mali. Mali has been -- despite some of the issues and rumors and stuff that we see out there, Mali has been a very good country to invest in gold mining, when you look at Randgold and Barrick and ourselves and others. So the issue there is that the government wants to take too big a piece of the pie in 2023.The big question is who's going to go explore for the next Fekola in Mali, if the economic terms are much less attractive than they have been. Just a reminder, we built the Fekola mine for over USD 500 million, 100% of our risk. To-date, the government of Mali has realized a little over 50% of the economic benefit of the Fekola mine with no risk.I think that's a deal anybody would take all day, every day. If someone wants to spend all the risk capital, we get 50% plus of the upside.So I'm worried that the new code is going to change those economics. So it doesn't speak to what we're doing, but it speaks to -- because of our very robust economics and the trucking opportunity, but it does speak to the future of gold mining in Mali. And I hope the government over time will consider whether they want to become one of the less attractive countries to invest in gold mining, as opposed to being one of the ones that's been attractive.But our discussions are ongoing and they've been positive because I think we're on the same page with the government, which is to support Fekola going forward and also the regional opportunity.

[Ovais Habib, analyst]

And just a follow-up on that in terms of assuming the negotiations goes well and all the terms are agreed upon, how fast can you get the exploitation permit once everything is set in motion?

[Clive Johnson, executive]

Well, if we reach agreement in the near term, which we're hoping to do, then the exploitation license, apparently the government's interested in fast-tracking that. So that could be hopefully a few months potentially and then we've got some pre-stripping to do. But we're pretty much ready to go. We derisked the project in the sense that we have built the facilities, we built the roads and we're ready to go. So that could be a very quick opportunity. Bill, how many stripping we do for?

[William Lytle, executive]

Three months.

[Clive Johnson, executive]

Three months stripping and then we'll be over.

[Ovais Habib, analyst]

Got it. And then just switching gears to the Goose Project, as you mentioned, B2 is currently in the midst of an infill drill program in the underground component of Goose. I just wanted to understand and maybe this is a question for Bill or Vic as well, is the purpose of the drill program to increase confidence in the ore body, to include it into the mine plan kind of going into 2025? Or is there a worry about the geological model that was built by the previous owners? Maybe some color on that, please.

[Clive Johnson, executive]

Vic?

[Victor King, executive]

Not at all. The infill that we've done to-date, we did quite a bit last year, has certainly corroborated or supported the Sabina model. The infill is merely to get the indicated resources to our standard. And that also improves or helps improve the design that the engineers need to do. But there's no question about the model. It's solid. We understand what the controls are and the results we've got have pretty much concerned our model.

[Ovais Habib, analyst]

And in terms of has the drilling commenced and what are the results have been so far? Any color on that?

[Victor King, executive]

We started drilling in April. We have 4 rigs turning. No results yet from the drilling this year, but we expect them to be pretty much in line with what we saw last year.

[Ovais Habib, analyst]

Okay. And just on remaining at Goose, my last question would be regarding the CapEx update expected in June, Bill, what are you worried about that could take CapEx higher or any opportunities to maintain or even reduce the current CapEx estimate?

[William Lytle, executive]

Well, I went through some of them already, for sure. Like I say, it's tough to say some of them because we're right now in the process of ordering for 2024-2025. So those RFPs are out. We're in the process of shutting down the winter roads. We're in the process of evaluating that. But if you look at, like I said, things like reagents, we think that's going to be an under, for sure. I think some of the critical spares, some of the things that we can hold off of site, I think those are going to be unders.Remember, in theory, you would have one more shipping season, so anything you wouldn't have to fly in, that could be an under. But the counter also holds true that if there's something critical we need for the mill, you might fly it in this year, that might be an over, right? Or maybe on the mining side, because we didn't commission the trucks as quickly as we thought, a lot of those operating costs for those trucks are going to be an under up to this point, which is not to say it's not going to catch up. So that's why I can't really tell you exactly, but I certainly feel very good that we are currently on budget or under budget at this time.

[Operator]

The next question comes from Ralph Profiti with Eight Capital.

[Ralph Profiti, analyst]

Maybe a question for Mike. I just want to ask sort of a follow-up or in a different way, the Goose CapEx question because at the time we get the update in June, we're still sort of 6 to 9 months ahead of first gold production. Will all of the outstanding spending be committed or locked in at that time? I'm just trying to get a sense of what state of finalization we'll be in when we get that June update?

[Clive Johnson, executive]

Sorry, can you clarify what you mean by locked in? [Indiscernible].

[Ralph Profiti, analyst]

Yes. Just the amount of committed CapEx, right, in the context of total by the time we get to June.

[Clive Johnson, executive]

How much have we spent so far? Do we know?

[Michael Cinnamond, executive]

We spend -- like so far, in cash terms, we've spent $840,000. We haven't spent all that, but the project today is $840,000. There's probably another $60,000 plus payable, so the total cost is $900,000 in that ballpark. And you've got to compare that to the total that we were talking about for construction of $1,050,000, redevelopment $200,000 and working capital, another $205,000. So $1,450,000, basically.

[William Lytle, executive]

[Indiscernible]. The amount that's been spent so far, I think, has been ordered. Would you suggest we derisk it by the amount we've spent already...

[Clive Johnson, executive]

Yes. I think a lot of the capital is being ordered, certainly. Like Bill said, I can't give you the number right now. If you're saying what, at the end of June, I'll be saying it's fully committed. But everything, all the key stuff that we thought we needed, it's not only been ordered, it was delivered to the MLA and it's now being driven up the road for construction purposes.So as you get into the latter part of this bill, a lot of the costs are going to be us building up the work capital, right, that we need to labor, a lot of labor going in there and fuel and all the consumables as you move forward. But a lot of those have already been ordered and brought up the ice road. But I mean, we'll certainly focus on there. I guess we're trying to give you some guidance on that when we get a new cost estimate for that process.

[Ralph Profiti, analyst]

Yes. Okay. Got you. That's exactly what I was looking for. Clive, Finland. Can you talk a little bit about your role in the country, given some of the decisions out there that we're waiting for? Should we think about your approach as sort of more or less or different than what we're seeing now and just sort of how you're thinking about that country as a jurisdiction when you approach exploration and future potential?

[Clive Johnson, executive]

Yes. We've been at it for a while there. We had some exponential success for sure. We didn't get out of the park and find millions of ounces of gold. It doesn't mean there's still potential for that. Obviously, our ground is very important to Rupert in terms of the ultimate development of an open pit and also because of the 600,000 ounces or more potential that we see there.But I think it's an elegant deal and we are happy to be shareholders of Rupert with the closing of the -- soon-to-be closing of that deal allows us to recoup our exploration expenditures today, potentially by owning better shares, but also be part of the future. That's a very good deposit.Someone's going to build it at the end of the day. So we thought it was a really good way to stay involved in the sense of through share ownership and on the upside potential, but also focus our exploration on some of the things we consider to be higher priorities, such as Goose. And as we get back into trucking ore for Fekola as we start that, we will be looking at more exploration there as well.Great potential there in the region, not only for additional oxide-heavily weathered saprolite material, but also the sulfides as well. So that's the rationale. I think it was a very good deal. Good for Rupert, good for ourselves and hopefully good for our joint venture partner as well.

[Operator]

The next question comes from Anita Soni with CIBC World Markets.

[Anita Soni, analyst]

So I just wanted to understand the delay and specifically what's the pinch point. I'm assuming it's a tailings dam. And I just want to sort of understand what the mechanics are there in terms of why the 3 months was added?

[William Lytle, executive]

Yes. Kind of, but not 100%. It's the combination of putting ore on the pad and completing the Echo pit, right? So basically, we've got 10 trucks on site. When we took over and were commissioning the trucks, we identified that we didn't have some of the personnel resources that were appropriate for the scope and they didn't get the trucks commissioned on time and there were some issues there.So basically, we fell behind mining in both Echo and Umwelt pit. So like I said, a combination of the 2. I can do one or the other and still make the schedule. I can put ore on the pad and have no tailings, or I can do Echo pit and have no ore, but I couldn't do both given the schedule I've got now. So that's the delay.

[Anita Soni, analyst]

Okay, sorry. And is the Echo pit the one that's where the tailings are going to be deposited? Is that what's happening?

[William Lytle, executive]

That's correct.

[Anita Soni, analyst]

Okay. And then long-term -- like when does the Echo pit tap out on capacity? Do you build another tailings dam after that?

[William Lytle, executive]

Absolutely, we do. It's going to go from Umwelt and then I think it goes into LOM eventually.

[Anita Soni, analyst]

Okay. And so just in terms of the trucks on site, you said you had 10 originally. How many do you need to get to get to the full production rate?

[William Lytle, executive]

I think it's -- I'm not -- I might have to get back to you. I think it's 15 is where we ultimately get, but I can't remember exactly. If I'm wrong, I'll come back to you.

[Anita Soni, analyst]

Sure. And the other question that I would have is the ultimate mining capacity of the entire fleet at 15?

[Clive Johnson, executive]

Yes. I don't have that number right in front of me. I'll get [indiscernible].

[Anita Soni, analyst]

Sorry. The stumpers. The other question that I had in terms of next year -- and I know that Ralph has sort of asked a little bit about this. But I'm just curious about if you've got 3 months that you didn't anticipate, would there not be standby costs in terms of like G&A and people running the site that would be additional? And what would be the sort of run rate on that? I would assume somewhere in the range of about $5 million to $10 million a month I guess would just -- but that would be what I know from comps in Northern Ontario might be a little bit more costly up there.

[William Lytle, executive]

Yes. The answer is if we didn't manage it, if we just let everything run wild, then you could see those kind of numbers. That's what we said. We're actually trying to manage that down by making sure that the appropriate staffing is on site and making sure that the appropriate fuel consumption, all this stuff. Basically, we're just trying to take the construction curve and flatten it out by 3 months.

[Anita Soni, analyst]

Okay. And then just another thing that I would ask is as you get closer to construction, what would you think outside obviously of the critical paths items that you've addressed at this point? Is there anything else that we should be thinking about like enclosing truck shops and things like that? Is that something that you're also watching? Like what else keeps you up at night?

[William Lytle, executive]

Well, a lot of stuff keeps me up at night, but let's start with -- no? Let's start with -- so let's start with fuel tank construction, right? We've got to -- as you know, we've got to bring in almost a little bit more than 80 million liters of fuel. At both the MLA and at-site, those tanks have to be built and in particular the one at the MLA because in September, that boat's going to arrive. We've already paid for it. And so if there's no tankage there, we've got a problem, right? So that's probably the next thing on the critical path.Giving us this additional kind of 3 month buffer -- and don't ever tell the construction guys I said there was a 3 month buffer now because they're still heading towards the original schedule. But if you look at like the underground and stuff, that really gives us some opportunities to look at various options.And that's what we're going through right now is how do we really optimize it given this kind of bit of reprieve from an operational perspective. But everything else is going quite well.

[Anita Soni, analyst]

Okay. And final question, are you guys going to do the site tour again in September so we can recalibrate ourselves or...

[William Lytle, executive]

Yes.

[Operator]

The next question comes from Don DeMarco with National Bank Financial.

[Don DeMarco, analyst]

Congrats on strong start to the year. So start off with Goose, so we've seen updates on budget and schedule. Do you plan to release any updates on, say, OpEx after the mines in production? I think the view is that ASIC will increases the tech report, but do you have any color on maybe the magnitude of the increase or a more precise estimate at this point?

[Michael Cinnamond, executive]

So the answer is, yes, as one of the things that we've been waiting on is to update the resource model. And so when that comes up, we certainly want to put together a whole package I think and update it.

[Don DeMarco, analyst]

Okay. And when do you think that would be?

[Clive Johnson, executive]

Yes. We expect to update the resource model into AIF. So the updated resource will come into AIF next year. So we're still talking about a quick follow on that update.

[Don DeMarco, analyst]

Okay. Great. Maybe shifting over to Fekola, we saw that there was a tech report filed in March and 2026 is highlighted as an opportunity for the underground. When do you expect to have to realize some of the potential of the underground or do the necessary conversion to reserves that might be needed?

[Michael Cinnamond, executive]

Yes. So we're going to reach the base at the end of this year and we fully plan to be in mining operationally in kind of late Q1, Q2 next year.

[Clive Johnson, executive]

The regional drilling continues and once, as we said, when we get the -- when we succeed on getting the exploitation permit, then we will accelerate some more drilling up the regional area -- remember the technical report is a regulatory requirement that did not include any inferred. And as you guys know, not all inferred is treated equally.We have a great track record there and elsewhere in turning inferred into indicated, so they'll be on like work there plus additional step-out drilling, numerous ones up and down the belts to test the ultimate potential mine life of the trucking board.

[Operator]

This concludes the question-and-answer...

[Clive Johnson, executive]

Thank you all for your time and we look forward to continuing to update you on our progress. Thanks so much.

[Operator]

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.