Aya Gold & Silver (AYA) Q3 2025 earnings call transcript

Thank you, Operator, and welcome to everyone who has joined Aya's third quarter 2025 earnings conference call. Here with me today, I have Benoit Lassalle, President and CEO, We will be referring to a presentation on this conference call, which is available via the webcast and is also posted on our website. As we will be making forward-looking statements during the call, please refer to the cautionary notes included in the presentation, I would also like to remind everyone that our presentation will be followed by the Aya Gold & Silver I. followed by a Q&A session.

With that, I would now like to turn the call over to Benoit Lassalle. Benoit?

Elizabeth, thank you very much. Hello everybody and welcome to our Q3 conference call. Q3 is a strong quarter. We're delivering across all key pillars of our strategy. On the production side, we have solid operational KPIs. We have produced for the quarter 1,347,000 ounces. The mill plant ramp-up is near complete, and we have ongoing targeted improvement to the mine plant. So for the financial results, we have $54 million of revenue in Q3 only, and we have $22 million of cash flow from operation. So it is a very strong quarter. We finished a quarter with $129 million in cash that's not restricted, and $16 million in restricted cash with EBRD. On the drilling program, on the exploration front, we had a very strong quarter.

We'll review this. The drill programs are continuing both at Gunder and at Boumadzin. And just after the end of our quarter, we've announced the Boumadzin PEA results, which I will review with you as well. On the ESG front, we continue to progress in the strengthening of our positioning in-country. We're also advancing towards an ISO 14001 environmental certification. So, 14,001 environmental certification is being done at the moment. Focusing on health and safety, we had another strong quarter on site at Skulder. So the financial position is strong, the balance sheet is strong, and we have the money to develop Zgundair to what it is right now and to continue the drilling. But most important is we have the money to develop Boumadzin, and that is extremely important as Boumadzin is becoming a world-class Tier 1 asset.

I'm going to slide on page number five. Just a couple of KPIs for you to see that we are really, really progressing. So as you know, let's look at the plant to start. So the ore process and the milling rate. So the ore process here, you recall the plant's been built for 2,700 ton a day. This is where we were at Q1 2025. Then we went up to 3,000 ton a day in Q2. By Q3, we were running at 3,300 ton a day. We've also indicated that, you know, at the end of September, we were at 3,600. And currently, in November, we've been hitting 4,000 ton a day. We don't believe that the 4,000 ton a day will be sustained throughout the quarter.

We're more towards 3,700, 3,800 ton per day. But understanding that from a design and a construction of 2,700 ton a day, this is a major success. I recall again we did this for $140 million, less the money we've received from the EPC contractor for the damage that they were late delivering to us the plant. Technically, we did this construction for about $133 million. It's quite spectacular in the mining space. On mill recoveries, well, the mill recoveries, you know, is always something very sensitive. In Silver, mill recoveries often are more in the mid-70s. Well, we were in Q3 at 92.5%. And on mill availability or plant availability, let's call it this way, we were at 96%.

There was a little bit of preventive maintenance in the quarter because on the previous quarter in Q2, we were at 98% plant availability. So you see if the ramp-up momentum is continuing, we are now at capacity. The ramp-up has been very smooth, and the execution is on track with a very strong plant that is processing way above the plant capacity. For the mine, the mine is also on slide number six. The mine is running smoothly. The underground mine at a steady state of 1,300 ton per day, running at 159 gram per ton. So you recall the KPI that was giving us a little bit of headache, a few, was the grade and the dilution of the grade.

We are getting better every quarter with the underground line. So that's where it started at the beginning of the year, where we were having issues. This is now really coming through, and the grade of the underground mine is better, and it's getting better every quarter. On the open pit, I've been focusing on the northeast stripping. We've done a lot of stripping, and this is why on the slide, when you look at the total tonnage done in the quarter, it looks like the total tonnage done is lower. It's true because that's ore, but actually we are much higher in portal ore transported because we did focus on opening up the large pit. So we're currently running on a daily basis at moving 45,000 to 50,000 tons of not only ore, but also of sterile, and this is because we're preparing the large pit.

So we have been doing extremely well at the underground mining. The throughput is increasing. The grade is getting much better. And now we're working on the open pit where we do still need to improve in the open pit mining selectivity and operational control. We know, and this is of the five KPIs, that was the last one, and now it's half of it that we still need to attend to it, but we are attending to the grade in the open pit. But the throughput of the underground and the throughput of the open pit is there. You know our objective is to be at 4,000 tons per day, 1,500 tons coming from the underground. We're there today, and 2,500 ton coming from the open pit.

We're not there right now, but we'll be there for year end. So of the five KPIs that we've been managing for the ramp-up, all the plant KPIs are done and are doing better than expected. The throughput of the mine is there, and it's only still we are working on the grade coming from the open pit. So it is a ramp-up process, and this is why, going to page number 7, you look at, on the left-hand side, if you look at the cost, the cost for the quarter is a little bit higher than what we wanted it to be. The cost, though it's lower than 2.2, it's at $20. Our goal was to be more towards $18.5, and the reason for the cost, it's not the cost per ton.

Our cost per ton is excellent. It's the cost per ounce, and the reason is the grade coming from the open pit. Also, in 2025, the price of cyanide really went up considerably, and right now we can see it coming down on a per ton basis. It's coming down almost like $3 per ton. Now we are seeing it. We are completing our purchasing for 2026, and the cost of cyanide is coming down lower than it was for 2025. But again, as we've been saying quarter over quarter, look at the margin on that chart. Look at the margin. In Q1, we were working with $13 margin, $31 less $18. In Q2, we were working with $12, $13 margin.

In Q3, we're working with almost $20 or $19 margin. And in Q4 at the moment, as we speak, silver is at $50. We've been selling in Q4 silver between $48 and $51. So you're looking at your $28 margin for Q4. So yes, and the costs have to come down. And this is the objective that we have for Q4 and for 2026. But the margin is really strong and getting stronger. So when you look on the right-hand side of that slide on page 7, you see the growth in revenue, which is, of course, due to the increase in production, but also the increase in silver price. So the higher volume is about plus 20%, and silver price is plus 18%.

So for Q3, you have record revenue of $54 million, and you have record net income of $12.4 million, which when we convert that on a per share basis, it is $0.09 per share. I would like to draw your attention when you look at the cost. We have the stock option costs that are put into each quarter, which amounts to $0.24 per share. This is a program that was put into place in 2020 and that we've repeated in 2025 for the year 2025. It's the retention program of the senior management team. Those options vest over time, and the cost of the option, if you look at the G&A section of the financial statement, it's $0.04. So on an adjusted earnings per share, if you remove those which are continuing over time for quite a long period, If you look at the option package that I have or Mustafa El-Wafi has, we haven't touched on those options in the past five years, and we don't intend to touch them in the near future, but we do take the expense on a quarterly basis.

So we're looking at $0.09 per share after stock option plan or stock option cost, but before it's more $11.4 on a per share basis. The actual cash flow is also very, very strong. As we've indicated, we've generated cash flow from operation, and you have that on page 8, or I didn't say that earlier. On page 8, you have cash flow from operation of $22 million, and this, again, was working with a much smaller margin in Q3 than we have in Q4. You have the CapEx and the expiration program of 2022. The EPC compensation is a tribute to how well we structured the construction contract, and we were able to get a compensation of $8 million, less the legal fees associated with the court case or the negotiation of that in Spain.

So we had legal fees of close to $1 million. So we did receive $8 million, but we've accounted for $7 million, and that $7 million goes against the CapEx on our balance sheet. So it doesn't go against the cost, it goes against the CapEx. We have a strong cash position of 129 US, obviously $1 million, and we do have an undrawn credit facility with EBRD of $10 million.

Talking about expiration, moving to slide number nine. Again, you see Morocco. Morocco, again, is more and more now seen as a top, top-tier jurisdiction in the world. It's because of the speed of permitting, because of the quality of the geology. As you know, there are three elements that count. Geology is jurisdiction and the people who run this. In this case, jurisdiction is fantastic. Geology is fantastic. So, at Goundaire, our budget for the year was 20,000 to 25,000 meters of drilling. We are at quarter end at 19,659 meters drill. The cost of drilling in all-in in Morocco is $150 a meter, always U. S. , so it's really a fraction of the price of drilling anywhere else around the world.

So we been drilling at Gounder We been drilling at Gounder at the mine and have been putting out fantastic results We drilling on what we call Gounder proximal so very close to the mine and Zgunder regional as well where we do have many many targets So you've seen over the quarter some very good results of 1,164 grams per ton, over three meters, and we're continuing to have very, very good grade coming out of the drill program. The regional as well, and at one point we'll have a much more, a longer presentation on the regional play at Secondaire, but we're adding permits to the region. We're doing a lot of work on the region, and we're finding a lot of very good structures that we are drilling and that we intend to drill in 2026 as well.

So it's continuing to be a fantastic project with a very, very strong geological potential. The next one, the Boumadine, is our bigger asset because it's got a bigger resource, because we have a bigger footprint. We have a goal to drill 140,000 meters this year. By quarter end, we were at 109,000 meters drilled, and it's continuing to, you know, all drills are turning. We have shown you the PEA, which requires additional drilling, but the drilling this quarter confirmed continuity of the Boumadzin main zone, the TZ zone, and we've been extending the zone continuously in the Imari-Ren zone as well as now a striking of 1.2 kilometers. In the PEA, we only took into account the main permit, which is 32 square kilometers out of a district that we control about 800 square kilometers.

So we took into account just these three zones, Goumadine, Tiersy, and Imaveren, into the PEA. We had other very important hits on these three zones, but also on new satellite zones that we have discovered in the past few years, and one which is called Asirem, which is very, very interesting because it's a gold zone. It has also a little bit of copper. It's been drilled in very wide spacing on eight kilometers. We are seeing the mineralization on eight kilometers. But we have now extended the anomaly on more than 20 kilometers. And that's not in the PEA. This is a new zone, which is more gold and polymetallic, but also very interesting. And in the quarter, we've added two new mining licenses, which is quite spectacular.

We have many, many mining licenses in this district because you understand that we control a district. It's not just a permit or two. It's a mining district where we are the only player in the district. We've increased our land package that's permitted to 339 square kilometers, but we also have a 600 square kilometer exploration license. So it's just showing us the footprint that we have at Boumadzin is really exceptional. So, just quick on the outlook, we're confirming the outlook that you have on page 11. That is not changing. We know that the recovery will be a bit higher, that the grade will be a bit lower, but globally, the production will be aligned with the guidance, most likely the lower part of the guidance.

But our goal is to be within the guidance. Continuing with the presentation, going to the following page on the Boumadzin PEA. Just a quick summary. It's the most today important project, I believe, in the mining world because of the fact that it is permitted, It's a good thing. The financing is spoken for with our financial partner EBRD, with the off-taker who are going to be buying the concentrate, and the fact that we have as well liquidity, and we're bankable in-country with banks in Morocco. So the funding is spoken for. It's not done because obviously you understand that the bankable feasibility is not completed. We're missing the drilling, and we are launching as of now. A 360,000-meter drill campaign that is going to be executed over the next two years.

But the project at our base case, at $2,800 gold and $30 silver, has an NPV on a post-tax of 1.5. And as I said during the presentation, we're looking at both the post and the pre-tax because we have not yet done the tax structuring of this project. Something that we've discussed today, because as I'm talking to you, I am in Casablanca. We have had meetings on Bumadzin and on the track structuring and how we want to position this project. If we have time, because the project needs two years of drilling and the feasibility study, so there is time, but it's super important that we have the proper track structure. The NPV to CAPEX, the CAPEX intensity is absolutely unique.

It's between 3 to 1 to 5 to 1, and this is at the base case. The internal rate of returns between 47 and 69 percent, and the payback between two years and 1.3 years. So it's a very robust project. Why? It's because of the low initial CAPEX at $446 million. CAPEX that we control extremely well because, you know, 50 million of it is pre-strip of the open pit. It's the water system. It's the electricity. All the things that we've just done at Goundaire, which we're going to repeat at Boumadzin. And the beauty of it is it's low ASIC. The ASIC for the first five years is $928. The ASIC over demand life is $1,021. But all of that does not take into account the 140,000 meters of drilling of 2025 and all the additional drilling that we're going to be doing over the next two years.

So why we're focusing on the first five years, because that's where we have kind of clear visibility. After that, it's yes, it's what we have, but it's going to be a lot bigger than this. Like, there's no doubt in our mind that this is going to be a lot bigger. So when you look at it as a silver company, because we are a silver company, this project is, as silver equivalent, is adding 37.5 million ounces per year of silver production on an equivalent basis.

So moving to the next slide, why this is such a compelling story, because it's a district-scale land package. We owned the Red Lake District. We owned the Abitibi Belt. We owned all of the Cardinal Trends. It's all part of the same company. It's got exceptional economics because it's low capital because in Morocco, the cost of construction is about one-third the cost of construction of any other asset around the world, and it's very, very well built. So it's low capital intensity and very rapid payback. It's a low-risk project. It's based on a simple model. It's pre-concentrate. A lead, a zinc, and a pyrite concentrate. We have MOUs with three of them for all the concentrates. So we will then be selecting how we're going to go forward with this.

Financing, I said it, it's spoken for. We just have not finalized it. We have many, many options. The proven track record in the region is because we just built Gunder. So whoever is doing the excavation at Gunder and the open pit mining will be bidding to do the open pit mining at Boumadun. It's five times the size. Whoever is doing the underground development will be bidding for the underground development. So we're looking at a situation where the same suppliers are going to be coming in to work with us. We know them. They know us. We work very well together. And don't forget, all of that is possible because we build it, because the money is available in-country, and because we do have a mining license in hand.

So we're not waiting for the government to approve an environmental license or a mining license. I mean, we have our mining license in hand, and we can start. We cannot start now because we need to complete the drilling on a 50 by 50 meter spacing so that we can move our resource into the measured and inferred category in order to put them into the feasibility study. So, you know, we've covered the main point of the PEA, which we have on the next slide, the low capex, strong economics, revenue driven with gold, silver, lead and zinc.

It's open pit and underground, but the first two years will be open pit. And based on the extension, because you will see over the coming months, there's going to be more drill results showing additional structures that can be attacked either through open pit or underground mining. We keep drilling, and we have been putting out results because, don't forget, all the drilling of 2025 is not in the study. So, to conclude, what are the catalysts for 2025? We're, of course, almost done. This is mid-November, but the drill programs, which you have on slide 15, the drill programs are continuing. We will finish the year with almost 200,000 meters of drilling. We're heading into 2026 with most likely 250,000 meters, maybe 300,000, depending on the drill contractors and how fast we can do the drilling.

We are moving between 250,000 and 300,000 meters. We delivered in 2025 as we wanted the PEA on Bumadzin, which is a starting PEA because it only takes the resource until the end of 2024. In our catalyst for 2025, we wanted to reach 3,000 tons per day processing. We're actually now touching 4,000 tons per day processing. We are really, really showing that the plant is well-built, very robust, and exceeding nameplate capacity. The people were looking for an update on the boom-ad-zin metallurgy, so that is checked.

There's no metallurgy issue because we're going to be sending the concentrate to a smelter, or to smelters, not one, but many. So the recoveries are in the high 90s. The payability is lower because we do share on the payability, but the recoveries are in the high 90s. And we also have shown you that we can also use a roaster if we want to reduce our cost of transport. Because if you look at the ASIC at $1,000, there's $300 of transport and process and all that. If we want to remove that, then we do a roaster or a smelter in country. And I say we do. We won't do that ourselves. But with partners, we know that people are looking at this project, and there is a source of sulfuric acid in-country to the country that's probably the largest buyer in the world of sulfur for the fertilizer.

Well, that source of sulfur is something that's drawing a lot of attention right now because it's in-country. It's available to produce sulfuric acid. It can produce power, and it would also liberate the gold and silver. So on the metallurgy boom adzin, it's done. We should never talk about that anymore. It is done. It's either going to go through a smelter in Asia or in Europe, or it will go through a smelter in Morocco or a roaster in Morocco. So that discussion is done. The last element that we're now working on, which I said last time after we're done the PA and where we will finish the updated Sgunder model, we're almost there. Again, something we were discussing today, we're almost there, and we will be updating the market about the new Sgunder model, the new Sgunder mine plan, and going forward.

And again, as I said, the Gound there has a lot of upside potential. The geology is there, and now it's a question of working and getting more drilling done and new structures for the Gound there to have a very long mine life. It has already a long mine life, but even a longer mine life. So that completes my presentation for Q3 2025. Operators, I would like to turn it over to you for the question period.

Thank you. Yeah, we're very happy with the underground. Let me start with that. We've been working all very hard. We've got new stops going. We're comfortably above 1,000 tons per day, and great. The gray has been sustained around 150 lately, 160 even. About the open pit, as you all know, we increased the total tonnage move per day in the open pit by essentially tenfold. We were at 4,000 ton per day by the beginning of the year. In September, we were close to 40,000 ton per day total material move, and now we sit at around 45. We will continue marginally increasing it. We had a high stripping in the third quarter. That's why the ore per day was a bit lower, but we did a lot of ways to put us comfortable, especially in the northeast section of the open pit, to have flexibility in the open pit.

So everybody worked really hard, especially in Q3, to ramp up, to finalize the stripping of the northeast sector. And we now have 45,000 tons per day of total material moved. And to answer your question, that brings us to 2,000 tons per day. Even on higher strip months, on lower strip months, we'll reach even 3,000 tons per day, and perhaps even a little bit more depending on the month. But we're trying to plan conservatively to make sure we always have the flexibility in the pit. And I would say at this point, the ramp up is essentially done. The short term stripping is also done. We have a longer term stripping. Next year, we'll do another pushback, but that's toward the end of next year for the year to come when well positioned for the open pit to sustain above 2,000 ton per day in the open pit.

So in the underground, we can probably push a bit at 1500. We're not looking to go really above that. We want to take our time and do it right to make sure we control the cost. For the open pit, we'll take the rest. We have options. Either we mine faster in the open pit because we have room. We can even include, we still have stockpile, right? Don't forget, we still have 150,000 stockpile, and it's decreasing slower now, and we want to stabilize it. And finally, we still have marginal ore. We do stockpile marginal ore. We compile it as weight and include it in our cost, but it still has silver grade, and especially at the silver price, the mill will always be full.

This is not the issue here.

So when we, as we did stripping in the northeast, there was still ore in it. Like we did produce about a thousand tons per day of ore. So those were in more sparse and disseminated region in the open pit. So it's a bit harder to control. And as we mine the open pit and we get to more bulky ore zone, dilution will be easier to control. So we also focus on our recovery, and as I explained a bit before, we increase the tonnage in the open pit by tenfold. So there's also a learning curve for a team. We need to stabilize the work routine, the work procedures, and the first step was to do stripping, make a nice surface area to be able to work comfortably, and now we can focus on steady-state tonnage, and we can focus the team on great control rather than stripping and ramping up and making room to work.

Ralph, Justin's asking when do you see grade change, grade inflection for the open pit? Is it in Q4, or is it at the beginning of next year?

Well, I would say at the beginning of next year, Justin, we're finalizing to tidy up the pit. There was a lot of ways to move. Now we're slowly getting into ore, and we produce ore, but the highest grade is as we go deeper in the pit. So we should see that coming more in Q1.

Thanks, Justin.

Bryce, this is Benoit. So look, the new Zegunda mine plan is going to be done in the next two to three weeks. We are still reviewing it. We're looking at all the scenario. The plant is capable to run at 3,800. We're showing it, but we haven't yet finished the new case or the new mine plan where we're working on it at the moment. Also, something very interesting is we've just have recruited somebody on the team that's working with Ralph and Mustafa on mining underground and open pit mining. So we are bringing somebody with many, many years of experience to just complete the team. And so we're working with that person and our own team to have this new mine plan available, as we always said, in Q4.

So, look, obviously, we're not going to bring the throughput down to 2,700, but we're going to, you know, look at different scenarios, different grade, as you know, different cutoffs. So, we haven't yet finalized the plan, so it's hard to comment on throughput and grade and all of that, but that will be available in a couple of weeks.

Well, 99% it's a December update. And it's not that we haven't decided on throughput and all of that. We're just going through the final reviews, the final analysis, what we have. David and his team have completed the resource. Patrick and his team have completed the new mine plan. Ralph is looking at it with his team. So we're putting all of that together. So we're almost there. We've committed that it would be coming out in December, and we will try to try. We are 99% confident that we're going to meet that. But if somebody comes through and says, you know what, oh, by the way, we've just found this, or there's a new sector that we should look at, I mean, it could get delayed, but I would tell you it's very, very unlikely.

Thanks, Bryce.

So, yes, thank you for your question. We've been, it goes without saying, we've been milling also a bit of oxidized ore from the top of the pit. And as we get deeper in the pit, the ore hardness also changed, but we have experience with that mining from underground. So it will be a question of blending, and we also have time to continue working and adjusting the plant. That plant has been running for less than a year. We're still learning. We've done some changes over the year to get there, and we also have other ideas to get there. If we're ever to get in trouble with ore hardness as we go deeper and deeper in the open pit, I mean, we have solutions for that, relatively cheap solutions.

If we must, we can add a tertiary crusher. This is something that can be done relatively fast. It's not something I'm nervous about. We can address it. We can address it. The aura has been a bit soft, so the bottleneck was more on the tailing, on the refinery, and we've been working on that. So that's been the bottleneck, and we have good visibility for the near future, and as we go down the mine, if we must add another crusher, we'll just do that.

So in the open pit at Gunder, we focus on several aspects. Productivity, so we had to increase productivity, keep the mill flow, that's done. We also started to modelize our movement, okay, to make sure to recover every single ounce possible in that open pit. And as we go faster and our mining rate increases, we need to make sure to have good recovery. We also need to make sure we don't make mistakes, meaning we want to minimize external dilution as much as possible. So there's a bit of a change in philosophy, whereas what we've been doing at very small tonnage versus what must be done at higher tonnage. Now that we mine at over 2,000 tons per day, which is 50,000 tons material move, our main focus is to reduce external dilution, mine a bit larger block, make sure to modelize it properly, and then recover the whole thing.

So that will result into less external dilution because we'll control the block, we'll mine bigger blocks and we'll make less mistakes. It will also include partially into an increase in internal dilution. As we want to control block movement, we want to mine bigger blocks and make sure to have good recovery and reduce costs and sustain productivity. So a bit more internal lolution and what we predict is we'll have much less external lolution, so we'll see a great increase. The reason why I'm seeing what we'll see that more in Q1 is there is also a learning curve. We've been implementing ORPRO as a software and implementing good procedure in the pit to control our movement with blasting, also working with our contractor for blasting method.

There is also a running curve into that. So we're about one month into a month and a half into implementing this, and we need to let the team to work before we start judging of the results of that. So I'm expecting results the faster we can, even maybe in Q4. But that's the reason why I say I say Q1 is to make sure that we have the time, the team, to really implement these fundamental changes with an increase in productivity of 10-fold.

Yes, Ingrid, this is Benoit. If you recall, when we put the 25 million facility with EBRD at the time, which was at the beginning of the year 2025, many people were questioning our balance sheet because our cash position was below 50 million as an operating company. So when we negotiated with EBRD the 25 million line of credit, there was an undertaking that we would draw at least one time on the facility because they've put it into place and they went to credit committee and we went to board. And so it was just part of our undertaking. Of course, the money as we have it is in our bank account. The difference between what we earn and what we pay is extremely small.

We have very good return on our end. We're taking no risk on our liquidity. And as you know, EBRD is on SOFR plus and SOFR has been coming down. So the little amount of the points in between what we pay and what we receive is super small And that was part of the agreement Clearly we do not need to have that money There still 10 million available but that was part of the undertaking when we put the money the debt in the company You know that we did after that in June a financing of US$100 million, obviously made the US$25 million really, really not necessary, but we did have an agreement with EBRD. And EBRD is our financial partner.

They gave us US$100 million, they gave us US$25 million when we wanted to strengthen our balance sheet. They've committed themselves to be there for Boumadine, to be the main lender. They are our financial partners, and we just respected our agreement. But I understand your question. It's kind of bizarre why did we draw on it, but it was part of the agreement.

Thanks, Ingrid.

Well, I'll try not to speculate too much on future grades. Right now, we're focusing on a metric I've mentioned before. So, underground grain has been stable, even improving, even with higher tonnage. And underground, when you get a good stove, you get good stove, and we have many good stoves ahead. So, in underground, there will be more volatility as we had, and now we're in very good stove, and that's the result of the work we've been doing over the last year. So in underground, 150, 160, and that's quite stable. Whereas the open pit, I've commented already in the open pit, we want to stabilize throughput, we want to control dilution, and we'll keep on learning to this.

So I do expect grade to increase, especially early next year.

So as we review our reserves and our approach to the mine plan, Don, it goes without saying we learned quite a bit in the last few years of Gunder. So we'll have a more aggressive approach just like we've been having over the last year on tonnage, mining bigger blocks, and controlling dilution with bigger blocks and focusing on unit costs and focusing on tonnage and production.

Look, this is Benoit Don. Definitely, we're managing the cost per ton extremely well. We just had a board meeting. We reviewed every line item on a per ton basis, and the one that was the outlier was the cyanide. A little bit on the consumption because of the oxide material, but definitely on the variance on price. So there was a quantity variance, but there was mainly a price variance with cyanide. I would tell you the rest is pretty straight on budget where we want it to be. So it is coming down, though the contracts that we were referring to were mainly for 2026, because as you know, you buy these boats of cyanide ahead of time.

So look, we'd love to see Q4 being below 20. There are many things that come into play, the strip ratio, a couple of expenses that we know we won't have in Q4. But the target is absolutely to bring cost down. Yes, in Q4 it is a target, and it is a target for next year as well. We would like it to be lower. There's no doubt about that. No doubt. So we don't expect it to be higher in Q4, that's for sure. And our goal would be to be below 20, but again, it's too early to tell. And cyanide is going to kick in more in 2026 than 2025.

Thank you. Thank you.

Well, Justin, the whole team has been working on this for a while, and we kept on saying, sun is going to increase, grade is going to increase. As you all were, on the ground, it's all about planning, multiplying phases, multiplying levels. So we're still in cotton fields. The team is getting better. We have some continuity within levels. We've been opening new levels, especially at deeper levels. So this is the result of the last year's work. And now we also, if you remember initially, we're targeting more 2000 tons per day on the ground. We've reduced that a little bit to 1500 tons per day, depending on the sequence. That also allows more time for better planning, better grade control.

So we're also working a bit more in bulk, and we've really improved our geological control, channel sampling, remodeling the fronts, remodeling the soaps, and closing the loop of planning. So that's all work that we owe to the team on site, and they've been very good at it. So now what's next for underground is to continue our mine plan and to get to the lower level to a good rate to make sure we can close the upper levels in a timely manner to leave room for the open phase.

Yeah, that's correct. We've always said that at Gunder, some stopes are larger, others are smaller. The larger stopes are definitely more continuous, and the smaller ones have shown more challenges in the past. And now we are in a good zone. So we continue to learn from these, and we also mine larger blocks, like I said, and lower mistakes, and we want to repeat that experience in the open space.

Hi, Justin. Yeah, income tax is 35%. You can take that. Obviously, it's not always a perfect divider just because we pay based on our local P&L and not on a consolidated basis. But I think on an average run rate, I think it's a pretty good estimate. And we pay, we have quarterly installments based on previous year's taxes. And so tax available year to year, a quarterly payment is a good approximation.

Thank you.

Thank you, everyone, for today's call. Look, we had a very good quarter. The questions were excellent, and you are questioning exactly what we are questioning and attending to. But today at Zgunder, we have four top, top priorities. We know, and we've always said it, we want to reach the 500,000 ounces of production per month. That's our goal. That's our target. That's what we're aiming for as quickly as possible. And the team is all aligned with this. The grade is something that we've been managing, and as Justin pointed out, we have managed it in the underground. We are very pleased the way the team is working in the underground. The open pit, we knew there was a learning process.

We expected that. It's maybe taking a little bit longer than what we would have liked to, but it's getting better, and we know it's going to get better in Q4, and for next year, it's something that we've been managing. We hope that we will be stable, obviously because we want to do 500,000 ounces per month, and that requires a stable grade. Cost is an element that once the ramp-up is done, once we're in steady state, we were reviewing the staff. Ralph was confirming that a lot of the consultants completed their jobs this quarter. We had many expats who were there helping with programming, helping with the plant, helping with different aspects of the business, which is normal.

The ramp-up team, most of them, I think, except for one, they're all gone. We had many of them for a while. That has a direct effect on our costs, and we are working on controlling our costs, obviously. Now, you also know that the price of silver is 51, and clearly when we mine and we see a marginal ore, we expense that, but we take it out. We don't leave it underground or in the pit. We take it out. We have a pretty big pile of marginal ore, and it's expense. It's gone through the expense, but we have a stockpile of marginal ore. And the last item for secondaire is the optimal plan. And Ingrid asked the question, and we are not limited in our thinking.

We have money. We are cash flow positive. You saw that we generated a very strong 22 million last quarter. We believe that Q4 will be even stronger. So we're not limited to our thinking. We can think outside the box, but the beauty of Scounder, and you saw the picture, some of you visited the plant, it's like open space construction. So we don't need to move the roof or to push some of the plant. It's open space. So we can add a crusher, we can add a ball mill if we want to, if the team decides that that's the way to go. The cost of increasing throughput is not very, very high. It can be done in our open space construction.

And yes, we are looking at the optimal plan, given the new silver price, given the new grade, given the new cost. So that is taken into account and obviously it was part of Bryce's question and Ingrid's question on where do we go next and we understand. Boumadzin, nobody was asking questions about geology. David is right beside me. He was hoping for some very good questions on geology. But, you know, Gumazin is a star asset with the main zone and all these regional zones. So that will be something that we will keep exploring and keep drilling. As we mentioned, we're looking for next year at probably over 200,000 meters of drilling, 180 on infill drilling, and between 20 and 40 on exploration drilling on the regional plate.

So there's a lot of things coming from Boumadine over the next quarter and over the next year. And look, we are extremely pleased with where we are. And furthermore, the jurisdiction in Morocco is getting better as an investment jurisdiction. And we're seeing it now. There'll be a major event in Marrakesh in two weeks on mining in Morocco, and we expect to see a lot of people there. So look, we have our first mover advantage. We do have a very large footprint. We have two well understood assets. We need to work on them, and we expect to have another strong quarter in Q4. Thank you for your time. Thank you for being there. And we will see you some in Europe over the next few days or few weeks as there are many conferences.

Otherwise, we'll see you in Toronto at the Scotia Conference or others. We'll see you in Toronto as we are in town to meet some of our shareholders. Thank you very much and have a good day.