Kirkland Lake Gold Ltd.
Q1 2021 Earnings Call Transcript

Published: 6 May 2021

[Operator:]

Good afternoon, ladies and gentlemen. My name is Jason, and I will be your conference operator today. I would like to welcome everyone to the Kirkland Lake Gold conference call and webcast to discuss the company's first quarter 2021 financial and operating results. With that, I would now like to turn the call over to Senior Vice President of Investor Relations, Mark Utting.

[Mark Utting:]

Thanks very much, operator, and good afternoon, everyone. Welcome to our Kirkland Lake Gold First Quarter 2021 Conference Call and Webcast. On the call today are many members of the Kirkland gold senior management team. Speaking today will be Tony Makuch, our President and CEO; David Soares, our Chief Financial Officer; Natasha Vaz, our Chief Operating Officer; Larry Lazeski, our General Manager for Detour Lake Mine, Evan Pelletier, our Vice President of Mining for Kirkland Lake, Ian Holland, our Vice President our Co-lead of Australian Operations, and Eric Kallio, our Senior Vice President of Exploration. There are also several other members of the management team on the phone as well. After we go through the presentation, we'll then open up the call to questions. The slide deck that we'll be referring to is available on our website, both on the homepage and in the Events section. Before I get started, I would like to direct everyone to the forward-looking statement on Slide 2 on our slide deck. Our remarks and answers to questions may contain and likely will contain forward-looking information about future events affecting our company. Please refer to Slide 2 as well as the forward-looking information section of our most recent Management discussion and analysis dated May 05, 2021, for more information. Also, during today's call, we'll be making reference to non-IFRS performance measures. A reconciliation of these measures is also available in our most recent MD&A. Finally, all figures are mentioned today will be in U.S. dollars unless otherwise stated. With that, I'll now turn the call over to Tony Makuch, President and CEO of Kirkland Lake Gold.

[Tony Makuch:]

Thanks, Mark. And thanks everybody for being on the call. I know, it's been trying times for people but at the same time, it's a pleasure to get the opportunity to give a update on how but successively better Kirkland Lake and Q1 of this year. We're going to start on slide, slide four, and actually getting back to just the thoughts have started off with and they these are challenging times. But there are also opportunities and, you get to know us more and more as we go through this. And I know we're all going through COVID fatigue and it's affecting a lot of people in a lot of different ways, but a lot a lot of good is coming out of people and we really got to acknowledge the support and the, we're receiving from shareholders from communities from even the support we received from the healthy mobile health use of Kirkland Lake and -- region in north-eastern Ontario, as well as the support from the people in Australia. Also, we have to acknowledge the people that work for us, they that these are definitely trying times the families that come into work and, performing them and putting in a good day's work this time and we really appreciate all the efforts been happening and, our main goal is to maintain a safe workplace and with its there's definitely there's things constantly evolving and changing and it could be challenged, but because of the people and the support we're getting from all the people that work for us, I think, where we're moving forward, and we're winning the battle.

[David Soares:]

Thank you, Tony and good afternoon everyone. I will be starting on slide 13. In Q1 2021, adjusted net earnings totaled $167.8 million or $0.63 per share. The difference between the adjusted net earnings per share of $0.63 and net earnings per share of $0.60 in Q1 2021 was mainly related to the exclusion of the hold complex asset impairment charge of $6.5 million and $5.7 million of non-cash foreign exchange gains reflecting the strengthening of the Australian dollar against the U.S. dollar during the quarter.

[Natasha Vaz:]

Thanks, David and hi everyone. Okay, so starting on slide 18. For the first quarter of 2021 Detour Lake produced 147,000 ounces, which actually exceeded our target levels because of higher than planned average grade for the quarter. Also, the 27 million tonnes that we progress in Q1 2021 was a record level for first quarter content. On March 24, this year, we actually achieved a very a new day to record at the processing plant of over 3000 tonnes yield. So we're moving in the right direction. Alright, so now looking at unit costs, operating cash costs average $748 an ounce for the quarter. This increase in operating cash costs per ounce sold compared to Q1 last year largely relates to a stronger Canadian dollar in Q1 2021 as well, we incurred highest stripping and milling costs this quarter. The increase compared to Q4 last year, so that mainly reflects higher low maintenance costs and higher costs for consumables such as diesel this quarter. For all-in sustaining costs, per ounce sold Detour, averaged $1,064 an ounce which was down from the previous quarter, reflecting lower different stripping costs in sustaining capital as well as lower expenditures relating to the tailings management. I'll now call on Larry Lazeski our General Manager of Detour Lake lead the project growth in Q1

[Larry Lazeski:]

Thanks, Natasha. So looking at slide 19 as Tony mentioned earlier, we have an array of projects ongoing at Detour Lake which support the vision for the mine. Growth capital expenditure in Q1 2021 stood at $27.8 million. This includes $14.9 million related to deferred stripping and phase 4 and the maintenance. The remaining $4.9 million is related to the procurement and mobile equivalents and projects involving Kirkland’s management area, process plants enhancements, as well as construction of the new assay lab and airfield. We’re fully mobilized and I've already done work on the tailings dam with an earlier start than in years. As for the process plant enhancements, we're on track to accomplish our objectives for this year but support our ramp up plans and then finally mine plants. This year focuses on crushing CIP and detox circuits. Initial surface infrastructure projects including new core shaft, fuel maintenance contract, plant expansion, improved access roads and cell tower construction. The state of the art communications improvements initiated this year will support our investments in technology for years to come. So that's I'll turn the call back to Natasha.

[Natasha Vaz:]

Thanks, Larry. Okay, so turning to Macassa I’m speaking to slide 20 production in Macassa in Q1 2021, with just over 47,000 ounces at an operating cash cost of $699 an ounce and an defending cost of $947 an ounce. The change in production from Q1 of last year reflected lower time to progress while the change from Q4 2020s is mainly due to a lower plan grades during Q1 2021 as a result of mine sequencing. The increase in operating costs compared to both prior periods, it largely reflected higher operating times mine in Q1 2021. And this is in terms of both ore and lease. We also had increased maintenance costs related to mobile mining equipment and processing. As well we have the impact of a stronger rotating dollar. As mentioned AISC per ounce sold average $947 an ounce in Q1 2021, which was largely unchanged from the previous quarter or higher operating cash costs were offset by lower sustaining capital expenditures. The sustaining capital totaled about $9.3 million in Q1, reflecting the completion or near completion of the number of projects during Q4 2020. We also had lower levels of capital development in this quarter and we also revised the timing of delivery of new mobile equipment. Okay, so I'll now ask Evan Pelletier, our VP, Mining, Kirkland Lake to look at our project for Macassa.

[Evan Pelletier:]

Thanks, Natasha. Looking at slide 21, we had a very good quarter in terms of our projects. As Tony mentioned earlier, we continue to make excellent progress on the shaft, for shaft advancing approximately 750 feet in Q1 and reaching a depth of 5000 feet by the end of March. Another project where we made good progress was in Q1 was our ventilation expansion involving the development of two new vent raises. The first raise is targeted for completion by the end of this quarter, with the second expected to be completed in the first half of 2022. The two new raises will almost double the ventilation going into the mine, dramatically improving working conditions. We achieved a major milestone on the vent raises on Tuesday this week; we hope to resurface with the first raise. These raises are significant and that they will be two of the longest raises ever completed for mine in North and South America, extending over 3300 feet. So to provide some context on that, that's twice the height of the CN Tower. I'll now pass the presentation over to Ian Holland, Vice President Co-lead of Australian Operations.

[Ian Holland:]

Thanks, Evan. Good evening and afternoon, everyone. I'll be speaking to slide 22. Fosterville produced just under 109,000 ounces in Q1 2021. That compared to approximately 160,000 ounces in Q1 2020 and 164,000 ounces the previous quarter. The change from both prior periods, mainly the result of lower average grade consistent with our previous and standard playing to return production in the swan zone by increasing mining activities in other areas of the mine. The intention is to create a more sustainable operation over a longer period while I continue extensive exploration program. Production in Q1 2021 exceeded plant levels mainly reflecting greater performance in the Swan Zone in March. The Swan Zone accounted for 42% of tonnes milled and 72% of ounces produced in Q1 2021, compare that to the 62% and 93% respectively in Q1 2020. Looking at costs, operating cash costs in Q1 2021 was $228 while all in sustaining costs of $423. Both measures were higher than in prior periods, with the key factor driving unit cost performance for an impact with a lower grade on sales volume. In addition, compared to Q1 2020, we also had significantly higher terms mined and milled. to reduce grades with increased throughput levels. So those are foreign – impact given the strengthening of the Australian dollar we've contributed, particularly this last year's first quarter. I’ll now the presentation over to Eric Kallio, Senior Vice President, Exploration

[Eric Kallio:]

Thank you very much, Ian. And good afternoon, everyone. Thanks Ian and good afternoon, everyone. My first slide today will be number 23. And related to Detour where we're continuing to advance the large scale program commenced in 2020 to evaluate resource potential surrounding the main and future West tips. As previously announced the program includes the minimum of 250,000 meters and aiming for an updated resource and potentially expanded mine plan for announcement in early 2022. In terms of progress to date, we believe it's been going very well, with close to 70,000 meters of drilling completed in 2020, another 60,000 in Q1 and things still proceeding very, very well. Additional to this, we’ve now had, we’ve now already seen quite a large number of assets return and had five press releases, including one earlier this week with results that we believe are very, very urgent. Summarizing some of these results is the image on the current slide, which is a long section from the latest release, and is indicating 40 new zones, which are mainly from Saddle zones, but with a number of others from both under into the West and the future West. Although all areas continue to look very good we're especially happy with what we see in the central and east part of the saddle where drilling continues to intersect broad zones in our addition, a very good open fifth grade with higher grade topping it all. Significant results further central in these areas are shown on the image with pink and green dots, and as indicated, include a number of outstanding intersections such as 1.13, over 155.1 2.03 over 73, 9 over 13 and 31 over 5, all from the lower part of the current resource scale, as well as 1.08 or 56 and 0.9 over 103 meters from areas very close to surface. Additional to the block, we also saw some very good results nearby to the future Western where again, the intersections not only demonstrated very good listing grades, but extension mineralization to depth and to the west. Key results from all tests in the depth are shown on the image in blue, and include intercepts such as 2.94 over 51.9, 2.37 over 36 meters, which intersect the central part of the area between the 25 and 50 meter level below the current pitch. You also have 2.26 over 21 and 1.04 over 46.9 on the east side of that pit area. Keyholes to the west are highlighted here in yellow, and as indicated not only confirm strong validation up to 400 meters in this direction, but include a highlight hole of 10.66 grams a ton over 13 meters. And some of the work to Detour continues to judge very well and argue proving our initial theory that there's a much larger goal system here than previously thought. So now turning to my next slide, slide number 24. You see an image for the Macassa mine, which outlines the overall exploration plan for 21 as well as progress for Q1. As announced in the past, we're aiming for a minimum of 150 to 300,000 ounces, replacing –mine this year and there's going to be some like broad areas but strongly of the current resource shown here in orange, as well as implemented break to the south. These are all high potential target areas where we've always had a lot of success in the past. And we're very optimistic again this year. Additional to this, the plan includes work on a number of new areas on 34, 51 and 58 levels, where there's been not been any recent work, and our view have a lot of new potential to add. Work on the 15th level will be done mainly from a new grip being developed for access to the number four shaft and targeting both the up diff extension of the SMC, as well as the west part of the main break, where we announce high grade intercepts and the new highway corridor 30 last year. Work on 34 will be from adrift just south of number two shaft and testing for extensions of the main break, which is shown here in the dark blue in the background. And as well as looking for new structures, which could be above in parallel to the mine complex. And the work on 51, which is on the far left side of the slide here will be will be from a new drift, which we're going to be developing this year and extending west from three shaft. So in this area, what we'll be targeting is really the downtrend extension of the main break. So again, the larger the new structure, which you see on the slide here. And this area is going to bring us out past the previous limit of path mining, where there's very little happy. Aside from this we have a small amount of work both on surface and in the new service ramp where again, we still feel there's a lot of areas that have not been fully tested, and a lot of untapped potential. In terms of progress to date, I believe it's been going very well. The 46,000 meters of drilling completed in Q1 and a lot of this focused on the SMC. But what some small amounts on 34 and 58 already started. We also accomplished about 450 meters the development with good portions of this being completed to gain access to the new targets on 34, 51 and 58. Although no results to report today, we see good progress be made so far. And we've been confident for success in 2021. So now I'll turn into my next slide, which is number 25. We should see an image for the Fosterville mine area and outlining expiration plan and recent progress here in Q1 as well. And as with Macassa, program here is aiming to at least try and replace -- all mine in 21, which is in the order of both 450,000. As indicated, the plan includes work on a number of different targets, with most of the focus being on the lower part of the Fosterville mine and the Robin’s Hill Area, with remainder being on a series of new what we believe are very interesting targets lying to the . Work at Fosterville will be all from underground involve drilling and strong focus down plans of the swan zone to both convert and expand the current resource. As you know this is a very high potential area we already have, we already have widely spaced drilling indicating that the system extends for at least another 900 meters down plunge and with locally higher grades and physical gold. So we're putting a lot of emphasis on this. Some of the work was planned for existing drifts near the upper part of the zone and already in progress in Q1. But the largest part of this will actually be from a new hanging ball drive, which is being developed near the 3900 level and aiming for completion in mid-June. So as such, most of the new results from this drilling, which we believe will be quite positive will only become available to us later this year. Work at Robin’s Hill will be done mainly from drilling from surface, but expecting to do at least some drilling from underground platforms in our new exploration drive, starting sometime in Q3. And as with Fosterville, the drilling will be strongly focused on the area down plans of the current reserve. We already have seen some good success, but believe there's a lot more potential for ounces and higher grades. In terms of progress to date, work has been proceeding well against and accrued over 39,000 meters of drilling into key targets at both Fosterville and Robbin’s Hill. We also have 1.8 kilometres of development on our two main exploration drives at North Phoenix and Robbin’s Hill. So in summary, I think we had a pretty good overall quarter for exploration, and still be feeling very confident on achieving our goals for 2021. With that, I will now pass the call back to Tony.

[Tony Makuch:]

Hey, thanks. Thanks, Eric and thanks Natasha and Larry Lazeski and Ian and Mark for supporting this call, I hope may be by giving you a variety of speakers, we keep every interested. Anyway, I'm just going to summarize on one Slide 26 and maybe want again no, I think if we just keep things in and very shortened, that's in terms of what the highlights are for the quarter. It wasn’t very strong solid quarter from our perspective. We've beaten any of our own targets for the quarter. We are now placed the three very strong quarters over the balance of the year and we're on track to achieve all of our full-year 2021 guidance. And we see, where projects coming on this year in 2022, being very strong. Year 2023, having a lot of developments and maybe you'd see a lot of upside as we continue with company forward. But very importantly, we are well-positioned and coming out of end of Q2 to outperform a peer group in the coming months and really based upon a number of two three points. One is we've had we continue to have significant success at Detour lake. And we really believe that Detour we're going to be a benefit -- Detour is one of the premium deferral amount in Auckland in North America and definitely in the world. And we'll be demonstrating that over the next while. And the two, we have to really progress with the number 04 shaft at Macassa, combined that with exploration operating success and operating growth where we are going to be creating a new mine with significant upside. So, we see Macassa as being coming into 2023 being one of the most one of the top 10 in terms of largest underground gold mine and that was one again one of the most profitable gold mines in the world. And number 03 with our expensive exploration program at Fosterville, we see we have a refractive exploration upside wind and then had in terms of be able to demonstrate. And Fosterville is already one of the best gold mines in the world. With the exploration success and new discoveries and mineralization of Fosterville which there's all things clean to it, we'd be able to demonstrate long-term sustainability at Fosterville as well. So, we have three solid projects, very profitable company, cash flow generating and we're focused on responsible mining and really being able to be leaders in terms of moving forward, in terms of in a change and supporting a lot of change and lots brought for the communities that with there we working so. And we thank you again for participating in today's call and we're happy to take any questions.

[Operator:]

Your first question comes from the line of Cosmos Chiu from CIBC. Your line is open.

[Cosmos Chiu:]

Hi, thanks Tony and Ian. We're not maybe my question is on cost. There is nowadays some concerns about inflationary cost in the mining sector. With a big project like shaft number 04, are you seeing any kind of impact in terms of higher input cost and how are you managing that risk. And I guess if we can talk about the strengthening Canadian dollar as well. In this case it might actually help if you're making any purchases in U.S. dollars. But could you talk about inflation and how do you manage that risk for big project like Shaft number 04?

[Tony Makuch:]

Yes. I'll start and probably that cash and aggregate that a little bit of color in terms of some of the things they're seeing and same as even and to be in Macassa. But you first off at Shaft number 04, I mean that project has been ongoing for quite some time. Lot of the procurement it's been done. We that you're correct that there is inflationary effects and there is extra cost associated with a lot of things we you're coming out and learning how to live within this pandemic type environment and these processes. But for the most part the number, the number 04 shaft since scope is defined, since there is a lot of low cuts in the project is where you find we don’t see ourselves going over budget at all of that. And Macassa, in terms and scheduling in terms of completing that. We are seeing new impacts in fuel costs et cetera. We'd be better if I let Larry and Larry and Ian and Evan give some color there. I don’t know, Larry you want to get into the thoughts and would you see some cause happening?

[Larry Lazeski:]

Yes. We're seeing an impact, I guess with some other consumer bones. If want a particular seeing it'll increase the price up sure. It's for a limiting of each or anything it becomes I know the high volume as we move. We're seeing a slight I guess increase some maybe some things like steel and parts like that. But again, a lot of the activities and pairs with we have ongoing students here in it, part of explorations. Unfortunately, we have the older DropBox moving and we'll have contract unit place. So, won't be really impact it that way. But there is some pressure but are going to material at Detroit.

[Tony Makuch:]

Okay. And I think, definitely that the strengthening both Canadian and Australian dollar has offset some of the impacts in some of these areas. Any color, Ian from Australia?

[Ian Holland:]

Yes, thanks Tony. Look, we haven’t really seen strong per share across the board, in Australia he's died. And once your time is Larry, we've got a number of long-term contacts in place for a lot of reaction seen the most. And apart just sitting and therefore a goddess where will bite some stronger conservative numbers and all there is any of our exit tracks and Scott, we enter into some of in. sorry, that's it's not sort of micey concern of that as it mistake. Certainly from the library, when the life at point-of-view, we are not saying any significant increases in terms of lightweight plus Index's or anything of that?

[Cosmos Chiu:]

Great, thanks Stephan. Sorry Tony.

[Tony Makuch:]

I'm just to say and for the most part like if you can see we're not really destiny of our cost guidance. So, we see and think something manageable as we progress throughout the year.

[Cosmos Chiu:]

Okay, understand. That's the only question I have. Now should keep Mark happy. So, thanks again.

[Tony Makuch:]

Thanks. Thanks, Cosmos.

[Operator:]

Your next question comes from line of Ovais Habib from Scotiabank. Your line is open.

[Ovais Habib:]

Thanks, for bringing in. Hi, Tony and productivity team and thanks for taking my questions. A couple of questions from me. Just starting off with the performance you had in March, and obviously it was a pretty strong performance that you've been talking about. Any color you guys can provide on whether this performance continuing into April?

[Tony Makuch:]

Natasha, you want to give some color in if that's okay?

[Natasha Vaz:]

Sure, no problem. So, with respect to March, we had a pretty strong March and into the Detour like I mentioned the throughput was up. And that's the function of the commissions we had pretty mild winter, so maybe we got with both mine and the mill better than expected than we had. So, could I help on that again? And then Fosterville, I think we'd have to mention it, but we had a still that how performed but being had originally planned to what makes a very positive by conservation on that end. And in terms of April, in the Q2 we did expect like I mentioned, I think we had a route, we were playing to have in Q1 that was a big quarter, the next big quarter we’re expecting to be better it's going to be more weighted to the second half of the year. So, we expect to have a strong . In terms of Macassa, we’re seeing good productivity reach there with months and some good reconciliation.

[Ovais Habib:]

Okay, thanks Natasha. And I’m just going to follow-up on that regarding Detour. Detour's grade was higher than average in Q1, what we were expecting in Q1. Was it due to faster reconciliation or was this just the fact that you moved into a higher grade areas during the quarter. Essentially I'm asking is that have you moved into Phase 3 from Phase 2?

[Natasha Vaz:]

And we're in Phase 2 right now, but to be obviously mind more, we put more out of the pits and what we had planned and have to move more so, we were able to, it's a bit of both, honestly say. I would take 50/50. We had a very positive reconciliation, but we also were able to bring up higher grade material that we had forecasted.

[Ovais Habib:]

Okay, thanks Natasha. I'll stick with my two questions and jump back in the group.

[Operator:]

Your next questions comes from the line of Mike Parkin from National Bank. Your line is open.

[Mike Parkin:]

Hi guys, thanks for taking my questions. One would on the new rate -- now on the situation where the challenge you had last summer with high temperature rate side -- where you could access safely underground from a heat perspective as kind of thing of a past, so you got that Q3 kind of de-risked?

[Tony Makuch:]

It’s definitely going to help, it’s helping as we speak, yes it’s absolutely going to provide more air and cooler, air down there. So the rates actually extend always down the 5,600 so just two legs, but the longest leg is 3,300 feet. And there is a parallel rate at that ongoing rate now, hopefully you can get that and then -- and that’s another step change and then once the shaft is connected that’s a third -- and step changes.

[Mike Parkin:]

Super, I appreciate it. And then, just on the investments being made on the ESG front with the goals being towards net zero, is there any thoughts around detour maybe using an in pick conveyor to one of the amount of trucks you’re using, is that something that might be considered for the new plan, especially as you -- if you’re going into the west pit, you’re moving further away from the pits, seems like it could be a big OpEx savings tip?

[Tony Makuch:]

Yes, I mean, good point, we’re looking at variety of alternatives and that’s one and the cash vary even provide some supporting -- vary on that.

[Unidentified Company Representative:]

Yes. As part of that initiatives, we’re looking at a number of options, we’re looking at conveyors, we’re looking at trolley as well. Yes, so we’re in there, we’re just starting off, so there is still a lot of work we need to do on our end.

[Unidentified Company Representative:]

Yes, for sure. All those things looking at, can we put in more material in pits and I’ve .

[Tony Makuch:]

And that’s one area where it can be taken to pit where as a point in time when you start putting, selling back into the pit as you move through east or west. But there is a number, there is one big initiative for this year, just getting by private area network the partnership we have with Rogers Communication up in the region and being able to start advancing -- use the technologies and be able to look at lot of ways to really transform above operations.

[Mike Parkin:]

Great, just one last question. The 75 million you’re planning to spend on those initiatives through the next several years, how should we think about that going through, it would be all capitalized or it’s going to different buckets on the financial payments?

[Tony Makuch:]

Go ahead David, in a variety of areas, some of it -- not already in the budget, but David will get you -- can answer that.

[David Soares:]

Yes. That is already incorporated into our guidance numbers, there is a large influx in the technology and this is my version of it that is focused on growth. And so, I’d say a little bit mixture of bucket, but we’re focused on growth.

[Mike Parkin:]

Super. Thanks, that’s it.

[Operator:]

Your next question comes from the line of John Tumazos from John Tumazos, independent research, your line is open.

[John Tumazos:]

Congrats Tony and good work, I got to stick to two questions, so I can move from the jersey short. First, thank you for disclosing great tons and answers by zone. It looks like heavier and lower phoenix more than doubled their tons from a year ago and their gravy grows from 9.4% to 9.6% or 9.8%, so some real goods happening in the new stopes at faster go, like you to elaborate on that first? Then second, the whole number 103 that was the first line of the press release on Tuesday, I understand the great result that there was 9 grams over 13 meters. The other 141.6 meters, you algebra works out 0.397 grams to get to the 1.13 grams over 155 meters, so was the 146.1 a mistake or do you have to take that out at 0.397 grams because it’s between 350 meters and 400 meters in the pit and you’re going to have the world’s biggest stock power from 2040 to 2045 or 2050 of 0.4 material?

[Mike Parkin:]

Eric.

[Eric Kallio:]

That’s pretty done. The 9 over 30 meters is likely whole 103.

[John Tumazos:]

Now I’ve the numbers, the first sentence of the release.

[Eric Kallio:]

No, it’s not including. The 103 that one is 1.13 over 155 meters and that’s in 103. The 9 over 13 is in whole 79 being W.

[John Tumazos:]

So it’s not inclusive, there are all different intercepts and there is no smearing?

[Eric Kallio:]

Yes, it’s right. That’s a separate intercept altogether.

[John Tumazos:]

Thank you. Excuse me, I thought it was something else.

[Tony Makuch:]

Often probably -- the first part of that question when it comes to the production. We’ve got numbers on in lower -- that contributed for the quarter. For instance, for the first time the mine stock in the wrapped up area that’s proven to be solid contributor for the quarter and we did have, well worked at. We did have some solid contribution from the area and we saw some higher grades in the area, higher than the stocks we’ve seen, so we’re trying to balance the time and money.

[John Tumazos:]

Thank you, it’s working good.

[Operator:]

Your next question comes from the line of Carey MacRury from Canaccord Genuity, your line is open.

[Carey MacRury:]

Maybe just a question on detour. Just with the daily limit lifted there. Just how should we think about throughput for the balance of the year, I assume it’s going to increase from here?

[Tony Makuch:]

When we gave out our guidance for the year, we expect this year to be 24.5 million tons total give or take a few percent process this year and then by 2025, again in the forecast of reports it’s up to 20 million tons a year and that’s based on the number of initiatives as we progress. But, Natasha you want to or Larry you want to give a simplest point for that.

[Natasha Vaz:]

Yes, I think as we mentioned -- in 2021, we’re going planning on having 24.5 million tons that hasn’t changed on average -- and then fully growing for 2025 to 28 million tons and doing just 25 million tons and slowly as we have the project come to line we get to 27 and then 27.8 and then 28.

[Tony Makuch:]

And one of the things that’s going to -- and that’s where as the year progresses, Larry has been working on alternate pit set, but I think the biggest projects we have that going on this year would be the installing that screen index before that -- made between the primary crusher and the secondary crusher and both secondary crusher sides. We’re doing one and then the other one in the meantime, there is an alternate feed system being put in place that to trying to keep the mills, to be able to keep the mills running under one piece, running during this period of construction and then that’s made into -- further increases in 20, as we progress into future years.

[Unidentified Analyst:]

And then Q2 last year, there was a cash tax payment just wondering if there was something similar for this year for Q2.

[Tony Makuch:]

David.

[David Soares:]

Yes, thanks Tony. Yes, last year there was a large tax payment in June that was really related to filing of our Australian tax and so we’re still working through the tax returns this year and we probably will see an increase from Q1 because Q1 was just the right moment, but as we close out the year, we had a very strong year, last year in Australia and probably expect an increase from what we gain in Q1.

[Unidentified Analyst:]

But am I missing a magnitude of last year?

[David Soares:]

Well, it could be, last year was again a record year I expect, the profitable income to be significantly higher. Last year or the previous year, our storm is based on not last year profitable income, the year before so 2019 and so I’m expecting -- it's certainly enough to cover what the full tax is in Australia and so I see a bit of a cap in Q2 .

[Unidentified Analyst:]

Thank you.

[Operator:]

That concludes our Q&A for today. I’d now like to turn the call back over to Senior Vice President of Investor Relations, Mark Utting for closing comments.

[Mark Utting:]

Thanks very much, operator. And again, thanks everyone for participating in the call today. As you’ve heard, we’ve got a lot going on, and there is a lot going to forward to and we’re going to have a lot to talk about over the balance of 2021 and in the next year. So, we look forward to our next call to update you on how much more progress we’ve made. Thanks very much, have a good day.

[Operator:]

That concludes today’s conference call, you may now disconnect.