Okay. Thanks, everyone. Thank you for standing by, and welcome to the Victoria Gold Second Quarter 2021 Zoom Conference Call. At this time, all participants are in mute. Please be advised that today's conference is being recorded. [Operator Instructions] And with that, I'd now like to turn the call over to our speakers today. They are John McConnell, President and CEO; Mark Ayranto, COO; and Marty Rendall, CFO. Please go ahead, John.

Good morning or afternoon or evening, everyone. It's a pleasure to see so many people joining. See lots of familiar names that I've talked to either via Zoom or on the phone over the last 1.5 years. It would appear most people are shy. They've got their video off. So we're going to just summarize how things went in Q2, and more of our focus will be on costs and revenue that will be led by Marty Rendall. So just to -- and then we'll have a Q&A period. So just to summarize Q2 operational results, I think the key numbers are gold produced. We produced over 32,000 ounces of gold, and that is ramping up exactly as we budgeted. So we continue to have a good quarter in Q3. And from a -- results, we're very happy with how the ramp-up is going, and we will always be a bit of a seasonal operation until we get to year-round stacking. So our production will be skewed to the second half. And certainly, we're seeing that, and you can expect a sharp run-up in gold produced as we move into H2. And I don't think I need to review the specific numbers around mining or stacking. What I'll do now is turn it over to Marty to elaborate on the financial aspects of the Q2 results.

Thanks, John. Hi, everyone. I'll touch on some of the financial highlights. It is a repetition from what is in the management discussion and analysis as well as a press release, and then I will try to go in a little deeper in a couple of the more important numbers and provide a little bit of commentary on the financial statements. So we did sell 28,731 ounces of gold during the quarter. We also do sell some silver, but it's not material when compared to the gold ounces in revenue. Total revenue was $63.5 million, and that was based on an average realized selling price of just a shade under USD 1,800 per ounce. Our operating earnings were approximately CAD 21 million. Net income was CAD 1.3 million or $0.02 per share. Our cash costs were USD 775 per gold ounce, while our all-in sustaining costs were $1,485 per ounce of gold sold. Earnings before interest, tax, depreciation and amortization were CAD 28 million, while free cash flow deficiency was CAD 15.5 million. Cash and cash equivalents at the end of the quarter were $14.8 million, and we did repay CAD 7.6 million against our principal debt facilities. So that's a bit of a regurditation from the press release. If we look a little closer to a couple of the numbers, we mentioned cash. And the cash, $14.8 million, is materially lower than it was at year-end, and that is as a result of our new debt facilities. We did refinance our debt facilities at materially lower interest costs very late in 2020, and that refinancing did include a revolving credit facility, and that revolving credit facility provides us with quite a bit of flexibility. We can draw on it when we need to. We can repay it whenever we want. And therefore, we manage our cash through that revolver. And so going forward in the short to medium term, we should expect our cash to remain fairly low, and we'll use the revolver to keep our interest charge as low as well as keep our debt balances as low as possible rather than managing it through our cash. The other number you'll notice on the balance sheet is the total debt, and I was happy that we were able to reduce our debt over the first half, marginally, not a lot, but we did reduce our debt. And this is during, as John mentioned, our seasonally low half of the year, and we'll expect that debt to fall materially in H2 as our free cash flow picks up substantially. The other number to notice on the balance sheet, it's one of the bigger numbers on there is inventory. Recall that our inventory on our balance sheet is valued at the lower of cost or market. Obviously, it is cost that is valued at, and it's jumped all the way up to over CAD 120 million. So this is really being a very substantial use of working capital. Since we started the mine operating 1.5 years to 2 years ago, building that inventory has been very expensive on the pad. And it's now, the end of Q2 was a little over 85,000 ounces of recoverable gold in inventory. Again, over H2, as our production picks up, that inventory will no longer be at the massive use of cash and working capital as it has been to date because that pad is getting to a state that is getting close to fully pregnant where as we -- going forward, we should be pulling off almost as much recoverable gold as we're putting on really for the first time since we started operations. So from a cash flow point of view, that bodes well for H2. If we look over at the income statement and comment on a couple of the numbers there. Gross profit and operating profit were very similar in Q2 as they were in Q1, again, through our seasonally lower production half of the year. However, you'll notice net income was lower in Q2 than Q1 at CAD 1.3 million. Really, the primary reason for that lower net income is a loss on derivatives during Q2 versus a gain in Q1, and most of that loss is unrealized and noncash at the current time. And that's a result of, number one, a higher gold price at the end of Q2, meaning we have a loss on the call options that we sold early in construction; and number two is our share price was higher at the end of Q2 than Q1, meaning any stock options experienced a loss, again, a paper loss, not cash loss. Just to comment further on the derivatives. The collar that we put in place, which is selling call options and buying put options. We put that in place a few years ago for construction. Happily, it is coming to an end, and there's only 30,000 ounces left on that hedge, and it will be over by the end of this year, and therefore, will no longer be a drain on our cash. So we're looking forward to that. If we look at some of our non-IFRS or non-accounting measures. I think one that many people follow, including us, closely is the all-in sustaining cost per ounce. The cost -- all-in sustaining cost per ounce during the quarter was USD 1,485 per production out sold during the quarter, and that is high. And again, as John mentioned, Q1 and Q2 are lower production. In fact, if you look at our guidance, H2 is expected to produce more than twice as much as H1, and therefore, we'll definitely see our unit costs fall. So again, all-in sustaining cost per ounce, the formula is all-in sustaining costs divided by production ounces. So our denominator should rise substantially in H2. And if we look at the numerator, which is the cost side, they are relatively close to predictions. They're a little bit higher, and we did touch on that in the MD&A. And they're a little higher due to a number of reasons, including widespread cost escalation. I think we're seeing that across the industry. Frankly, across the world in all industries due to COVID and the printing presses that have been running full time. So we are seeing some inflation and escalation. The other one that affects it quite a bit is the exchange rate. Again, the all-in sustaining cost per ounce is a U.S. dollar number, and the majority of our costs are in Canadian dollars. So we do see some cost pressure from that U.S. dollar-Canadian dollar exchange rate. However, as per our guidance, we're looking at coming in towards the higher end of our guidance numbers, which is USD 1,175 per ounce. So from $1,485 this quarter to a yearly average of $1,175, you can certainly see that we expect a massive reduction in our unit cost in H2. And that's all I've got for now, John.

Lenora, what's the process if people have questions?

[Operator Instructions]

Tom has a question.

We have a question from Mark Riley.

Just interested in production expectance. I know there's some variability. But in the statement out recently, you said that the figures coming in were at the lower end of expectations. And of course, that's at the end of Q2. We're now in August. At the moment, are we on track to hit the lower end of expectations?

Yes. It's John McConnell, and then I'll let Marty elaborate, but we're bang on our budget for Q3. So our guidance is fully intact. Any additional comments, Marty?

Just maybe to note, John, that it's interesting when you look at our financial statements, they are in our balance sheet. There is at the end of Q2, which is 46 days ago now. So they're already very slightly stale as they're at the end of June 30. However, I would note that the management discussion and analysis is right up to the date of that document, which was on Friday. So everything in that management discussion and analysis includes everything we know right up until Friday. And so as John said, our production estimate is saying that we're looking to be to the lower end of our guidance range on production and to the upper end of our guidance range on cost. That's right up to date and current.

Okay. There's a question from Thom Calandra.

Marty, you mentioned this massive reduction in H2. I'm just trying to understand. Again, what is the main driver? I mean that's a sharp drop in unit costs for the second half.

It is a sharp drop, and the main driver is the denominator of that equation. Our all-in sustaining cost as a numerator, that actually stays relatively constant. We do see a little bit of fluctuation mostly due to timing of sustaining capital. However, it stays relatively constant. What isn't staying constant is that denominator and the ounces. So if you can imagine, we've got the same cost on top divided by over twice as much production in H2. And therefore, our all-in sustaining cost is constant, while our production doubles.

And that's seasonal? In other words, you're always going to do better in the second half in terms of ounces?

So we get to year-round stacking. Once we're a year round stacking, then which we're targeting in 2023, then we will no longer be seasonal.

Right. You mentioned that in the press release, John. So the other thing is that the the greater production, this year this fiscal year. Is any of it coming from that reserve that you talk about something like 85,000 ounces in mineral reserve that are recoverable?

Yes. Just a little bit of miscommunication maybe here. The 85,000 is not a reserve, so to speak. Our actual -- those are actual ounces that we've mined and we've crushed or we've tracked them over to the heap leach pad. So the vast majority of those 85,000 ounces are sitting on our heap leach pad. They're being solutions being added to them as we speak, and they're running their way through our plant and to be poured in the future, including much of it in H2. And so yes, those are high confidence ounces because a lot of those ounces in H2 are already on the pad, although we continue to add more material daily.

And finally, the transition to full year stacking, I know I should understand this having been there. Why is it taking this amount of time to get to that addition or to have more stacking?

Yes, we're being cautious. We're following the process that Kinross did at Fort Knox, and we're just being very careful. The last thing we want to do is freeze a section of the leach pad because then you'd never get that gold out. So we've learned from the last 2 winters, and made some changes in how we stack and we'll continue to do that. And we're pretty confident that by 2023, we can get to year-round stacking. Thanks, Tom. I think Martin has a question as well.

Yes. I was wondering when we would hear about the exploration. I think it's waving or nugget where we've got all the growth running.

Yes. So we're owed at Raven now. We've got 3 drills out there. It's been a challenge not getting drills this year, but it's been a challenge getting people. So I won't say that 3 drills are running full time right now because I think it's more like 2.5. But our big spend will be in August and September, and we'll probably start seeing some results probably by October because Yukon is very busy this summer.

Okay. We have a question from Paul, and he'd like John to discuss the merger process, where do we stand and what's the potential time lines.

Yes. Thanks for that question, Paul. I can't really talk about M&A activity other than to say Coor is now a large shareholder of Victoria, and we are running a soft process. We've signed a number of CAs and we've opened a data room -- But other than that, I can't provide any further information at this time.

Okay. And we have a question from Vic. Any update -- all right. It was the same question. Sorry, it was an update on the core transaction. Let me just see if there's another question here. There's a question. Can you please comment on the 2022 production analysis estimates of 220,000 ounces at an all-in sustaining cost of 850 ounces?

We haven't provided any guidance for 2022 production yet. So I'm not sure where those numbers come from, maybe from the feasibility study. But we will be publishing guidance for 2022, probably in the latter half of Q4.

Okay. And he also asks if there's any thoughts on the 2023 production costs and full year stacking.

Yes. Just to comment, we have a project I've talked about, which is Project 250K, and that's to get to 250,000 ounces per year by 2023, and that will be from 2 areas. One is getting to year-round stacking. And the other is by screening off fines and direct hauling not to the leach pad giving us more capacity through the crushing plant. We're doing on that aspect. We're doing the engineering right now, and we'll probably make some announcements in Q4, both the timing of making those changes in the process and the timing of getting to 250,000 ounces per year.

Okay. And there's another question from David. With respect to the merger, does the lower share price make the company more attractive for a merger or less attractive in your opinion?

Again, I can't really comment on that. You guys are all sophisticated investors, and I suspect you have your own opinion on that question.

[Operator Instructions] Okay. John, it doesn't look like we have any further questions. So I'll hand it back over to you. Oh hang on, there is one more question from Mark.

Just unmuted it. Can you hear me?

Yes. It's good.

Sorry for my lack of knowledge. Can I just go back to the 85 ounces that are on the pad? Did you say they're in reserve. If so, where do they come from? I'm a relatively new shareholder. So I'll maybe be a bit behind the curve here.

Yes, sure. So yes, those ounces did come out of the reserve in the pit. So obviously, we've got millions of ounces of resource in a bit, much of it is a reserve. However, the ounces on the pad did come from our resource in the pit. They've been mined, processed, placed on the pad. And so now they are inventory. Once they get to a stockpile or the heap leach pad or in our process plant, that's when we add them to inventory.

So can I just check that at the end of H2, they weren't inventory?

Yes. At the end of H2, they were in inventory. And they're on our balance sheet under inventory, and the valuation is $120 million of inventory at the end of H2. And that 85,000 ounces is a large portion of that $120 million.

Okay. And we have a question from Rick. And Rick, I'd ask you to unmute. There you go. Rick, we can't hear you. Oh, okay. So he sent it to me in a text. Why is the company investing in Banyan? And when are we looking to sell?

We've been -- Banyan, we've been a shareholder of for a number of years. We've ended the property into Banyan and Alexco vended a property into Banyan. So there was the original Alexco property that we've ended. As a result of that vending, we became a shareholder and we've participated in all of Banyan's financings to date. And if you follow Banyan, they're having excellent exploration success and the property is a kilometer 1 of our access road. So very close, and we felt it was an excellent opportunity to increase our position in the recent financing. Ranjan has a question as well.

I was the person who asked the question on your '22 production, and thank you for the guidance on 23. I presume everything is on track. My question was to you and to Marty, who mentioned cost increases, and you mentioned that the Yukon is particularly busy at this point of time. Can you just expand on that a little bit?

Yes. Marty, you want to hit that one?

Ranjan well, again, our costs are not too far out. The reason our all-in sustaining costs are high in H1 is really production-related is 80% of it. But the other 20% is due to increased all-in sustaining costs. And as mentioned, we are seeing widespread cost escalation. I guess the easiest one for us to comment on is fuel. And fuel is 20% to 30% higher than our budget or our forecast and we thought we were being conservative at the time, but fuel prices have come up significantly as you're aware. Well, we're seeing those same types of increases across the board, whether it be Lyme or our largest cost is labor and there is cost pressures on labor as well. So we're seeing these cost pressures across the board. And so that's relating to -- if I had to put a number on it at this point, 10% to 15% higher costs across the board than we may have anticipated at the end of last year when we put our budgets together. And I mentioned on the all-in sustaining costs. Again, it's in U.S. dollars, and the U.S. dollar has been strong relative to the Canadian dollar. And so that makes our U.S. dollar costs look higher on a per unit basis.

And is the shortage of labor affecting your heap leach operations also, just piling stuff?

I wouldn't say it's affecting the heat bleach, Ranjan. But we do have a fair amount of turnover, and we're constantly hiring people and training them, and where it affects the cost is on productivity. So when we do our budgeting, we assume a certain productivity from our employees. And in some cases, it's lower because of the turnover.

[Operator Instructions] Okay. John, it doesn't look like we have any more questions. I'll hand it over to you to close the meeting.

All right. Thanks, everyone. Pleasure chatting with everyone, and we'll chat again in -- I guess that will be sometime in October related to the Q3 financial results. Cheers, everyone.

Thank you.

Thanks, everyone.