June 14 MD&AOperational Outlook
The Company continued to experience operational challenges throughout the quarter which ultimately resulted in less than anticipated production from the Elk Gold Project. Delays were largely due to one-off matters including drill and blasting operational issues, financial challenges resulting in not paying site contractors, and turnover in site leadership. With the continued operational challenges, the Company’s mandate over the next twelve (12) months is to continue to refine its drill and blast techniques, ore extraction, and transition into a steady state of production. The Company is continuing to improve the accuracy of grade forecasting, generate a greater understanding of the ore body through improved data collection/analysis, drilling and blasting designs, and sampling techniques. The Company is also evaluating approaches to mine with greater efficiency and more selectively with geological and operations personnel working together to optimize vein exposure and reduce excess dilution and mine loss. With continued challenges on ore extraction and financial constraints to pay contractors on site, the Company decided to reduce production in Q3 and Q4 2024, in order to focus on how best to extract the ore, rather than continue to deliver subpar grades to its ore purchase partner. Going forward, the Company expects the grades to improve with incremental improvements in the accuracy of grade forecasting and increased consistency and efficiencies in mining operations to reduce dilution and improve production rates. This will be supported by continued analysis of the historic geological data, continued refinement of drill and blast techniques and better controls on ore extraction. The Company continues to work with the respective governing bodies to obtain the necessary permits for the expansion of mining operations from the current 70,000 tonnes permitted to 324,000 tonnes per year, as contemplated in the 2021 PEA (further discussed in the section Elk Gold Mine). The Company continues with its engagement with surrounding Indigenous Communities to proactively address any community concerns respecting the future mining plans. The Company is aware of and acknowledges each respective Indigenous Nation’s decision-making process that will continue independently from the federal and provincial regulatory regimes. Timing and analysis of the underground development is ongoing. The Company continues to evaluate all current and historic geological information. The Company will look to initiate technical and economic studies required for the permit expansion from 70,000 tonnes to 324,000 tonnes per year starting in the next calendar year and intends to have these studies commence in 2024