Transcript: Aya Gold & Silver Q1 2026 Earnings Conference Call

On Thursday, Aya Gold & Silver (TSX:AYA) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Aya Gold & Silver reported exceptional financial results for Q1 2026, achieving record revenue of $117 million, record cash flow of $17 million, and a net income of $49 million, despite losing five days of production due to extreme weather conditions.

The company maintained high production rates with nearly 1.5 million ounces of silver produced, and an increase in stockpiled resources, leveraging a strong mining rate of 4,600 tons per day.

Aya Gold & Silver continues to focus on strategic initiatives, including the Boumadin project, which is progressing with pyrite reclamation and planning for future feasibility studies, while maintaining strong cost controls and increasing their exploration budget to $60 million for 2026.

The company is confident in its future outlook, maintaining guidance for 2026 production between 6.2 to 6.8 million ounces of silver, and expects to improve margins further due to rising silver prices and stable operational costs.

Management highlighted the company's strong balance sheet with $172 million in unrestricted cash, a robust exploration program aiming to drill 240,000 meters, and a strategic focus on expanding operations in Morocco, supported by a favorable mining jurisdiction.

Full Transcript

OPERATOR

Good morning everyone. I will now turn the call over to Elizabeth Hemowy, Aya Gold & Silver's Director of Corporate and Financial Communications. Please go ahead.

Elizabeth Hemowy (Director of Corporate and Financial Communications)

Thank you Operator. And welcome to everyone who has joined IA's first quarter 2026 earnings conference call. Here with me today I have Benoit Alazal President and CEO Hugo Lambry, Tolsch Chief Financial Officer Elias Elias, Chief Legal and Sustainability Officer, Rafael Baudoin, Vice President of Operations and David Lalonde, Vice President of Exploration. 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 news release and MDA as well as the risk factors included in our annual information form. Technical information in this presentation has been reviewed and approved by Rafael Baudoin, Aya's Vice President of Operations and David Lalonde, Aya's Vice President of Exploration, both of whom are IAAS qualified Persons as defined under National Instruments 43101 Standards of disclosure for Minerals Projects. I would also like to remind everyone that our presentation will be followed by a Q and A session. With that I would now like to turn the call over to Benoit Alazal.

Benoit Alazal

Thank you Elizabeth. Good morning everyone. Thank you for assisting this Q1 2026 conference call. Let me summarize the quarter before we get through the presentation. I think we need to Summarize this as Q1 is an exceptional quarter for Aya. It's an exceptional quarter knowing that Q1 is always the most difficult quarter for the company as we are at 2,200 meter above sea level in the mountains with lots of snow and rain and wind. So this year due to the fact that we lost five days of operation due to weather related situation, we still delivered an outstanding quarter. I had delivered record revenue, record cash flow, expanding margin, rising silver price and lower cash costs. So we have a very strong Q1 and when you compare it to Q4 of last year with Q1 of this year on a per day basis, the production per day is very similar, approaching 15,000 ounces. The reason the production is a little bit lower in Q1 is due to the fact that we lost an equivalent of about five days of production. But when you look at the highlights, it's record revenue of $117 million, it's record cash flow of $17 million, it's a record net income after tax of $49 million. It's a cash balance at the end of the Quarter of unrestricted cash of $172 million. It's a production of almost 1.5 million ounces for the quarter with record mining rates, you know, really strong quarter. And as we have a record mining rate, we've also increased are stockpiled. So taking you to our presentation that we use, showing you some, you know, graphics. If we go to page four after the forward looking statement, you see exactly what I've just said. The record revenue in Q1 2026 at 117 million. Compare that to last year at 34 million. The net income of 49 million compared to last year of 7 million with an EPS of $33 fully diluted, $0.33 fully diluted and 34 on a non diluted basis. And when you look at Q1 of operating cash flow this year at 70 million compared to last year, 8 million. So very strong quarter. You see it on the right hand side we're showing you the production profile as increase from Q1 2025 where we produced a million ounces of silver to Q1 of 2026 where we're at 1,490,000 ounces. Of course a little bit lower than Q4 of last year. Because Q4 of last year had no weather related event. Whereas Q1 of this year had approximately five days of weather related events. Moving on to page five of the presentation. Very interesting. On the left hand side, the quarterly mining tonnage. You know, we've always been saying that the mining has to follow the plant. The plant is. The plant's production profile has been 30 to 40% above nameplate capacity. But the mine also needs to follow the plant. And the mine is actually now exceeding the plant. So you see on the left hand side, last year we were running at 2,200 ton a day. In Q4 we were at 4,200 ton a day. And now by Q1 this quarter, we were running at 4,600 ton a day. So absolutely stellar performance from the mine, from the open pit and from the underground mine. The grade is also steady and improving. So we're pleased with the outcome of the mining and the grade and the throughput. And then on the right hand side, you look at the plant. Well, in Q4 the plant was running at 3,800 ton a day. In Q1 the plant's running as well. And if not sometimes higher. But as indicated because of the lost days. If some of you have followed the weather in Morocco, it was extremely rare. Like they had two times the historical average rainfall and snowfall in all of Morocco. I was there two weeks ago and the week before that there was snow in Marrakech, which is absolutely, you know, rare. So this is in one way it was a little bit difficult on the actual production, but we now have more than 15 months of inventory of water at site and the rivers are still running. So, you know, being a little difficult on the production was a great situation for water management and for us and for all the country. Now all the water reservoirs have been filled. Some of the reservoirs that had not seen water in many, many, many years are now full. So the water situation globally for the country was extremely good. Moving on to slide number six. A quick word on Boumadine. You know, at Boumadine we are reclaiming the pyrite. The operation is going extremely well. We produced 127,000 ounces of silver and, and 1,757 ounces of gold. A little bit lower than what we wanted it to be. Again, weather related because of course the bad weather of Zgounder was also weather related at Boumadine. And the other situation with Boumadine is because we are exporting the pyrite tonnage. The port in Morocco were shut down for one month because of weather, because of floods. So of course that's why, you know, this silver equivalent sold. If when you look at page 6, you see the silver equivalent produced of 227,000 ounces and only 50,000 ounces sold. One reason exporting is, you know, we produce it, we ship it to port and then it stayed there because we could not ship it just because of very, very difficult weather. All of that is behind us. It's probably now going to rain next time in November or December. It's all behind us. But the reality was that even at Boumadine we were a little bit affected, especially on the shipment of the concentrate to Asia. But the Boumadine project is really an add on to it's minimal capex. Very, very low cash cost. It's positive cash flow. The grade reconciliation is actually better. We have the gold grade is a little bit better. The silver grade is better than what we had in our model. So globally it's a very profitable project and which is at the same time an ESG project because we're cleaning all of the historical waste that was left there for many, many years. So it's still going on and it's accelerating now in Q2, Q3 and Q4, we are accelerating the reclamation of the Boumadine pirate. Going to page seven of the presentation. This again Coming back to last quarter, this is the most important slide. The one on the left is the margin. Look at the margins from Q1 2025 to Q1 2026. You know, we were working with a $12 margin in Q1 last year and staying at $12 in Q2 of last year. And then margins started going up to $20 in Q3 and then you saw to about $40 in Q4. And now margins right now are like $63 in Q1 of 2026. And obviously you are following the silver price and we're seeing that this is, you know, is very, very. It's a very strong silver price at the moment and our costs are stable. We are not affected greatly by the war and the increase in fuel price. We are. Cyanide went up a little bit. We're going to see that in Q2, but it's marginal. The main reason is our electricity is from the grid and it's solar and wind. So most companies are affected because they need to generate their own power at. And it will be the same at Boumadine. The power is solar and wind. So we do not expect cost to increase more than maybe $1 announced if they increase by that much. And the reason is really because of the source of energy. On the right hand side you see the growth of revenue and obviously, As I said, Q1 at US$117 million revenue with a net income after tax of 49 million. This is a very strong performance of revenue increasing. Of course it's due to the silver as we understand what the production profile is. But that the silver price was extremely good in Q1, our highest selling unit or selling price in Q1 at one point we were able to sell close to $120 an ounce. So it's showing. And now the average of 82 as we speak. Right now the silver price is higher than the average of Q1 2026. And the net income, well, net income after tax of 49 million with an EPS of $33. Taking us to page eight, a very strong balance sheet. We finished the quarter with $172 million US in the bank. And on top of that we have the restricted cash that we have for the eBRD loan of 16 million US. So when you look at this, it's a very, very strong cash position, a strong balance sheet. Only one debt with EBRD which is now below $100 million and which we could pay, but it's a very good and not so expensive loan with ebrd. So there's no point in pushing the repayment of that debt. When you look at cash from operation at 70 million, our capital expenditure program is 4 million. The expiration and evaluation expiration mainly is 14 million. We had a very good quarter on expiration and I'll talk about the drilling. So all in all, when you look at this with an $18 cash costs and all the capital expenditure behind us, so it's a very, very profitable quarter.

Benoit Alazal

Moving to page nine, which is our guidance. So our guidance was presented to you at the beginning of 2026. We are maintaining our guidance though we are a little bit below where we wanted to be in our production guidance. We knew that that Q1 is always a little bit weaker than the rest of the year because of seasonality and we knew that. So that was part of our planning. And we're very comfortable with our guidance of 6.2 to 6.8 million ounces. This Zgounder production between 5.2 and 5.8. The Boumadine at 1 million ounces of silver equivalent. We're very comfortable with that. Now when you look at Zgounder cash costs at 2150, I understand that we were at 18 this quarter but you know, it's a question of the strip ratio and we know that, you know, over time we're going to be a little bit higher than this. So we're comfortable to say that the guidance at 2150 is where it should be. The Boumadine cash cost at 10, 10 in Q4 it was 6. In Q1 of this year it's more like 11.

Benoit Alazal

We're very close. We are also going to ramp up on quantity and in ramping up on quantity, obviously the cash cost per ounce will come down a little bit. On the sustaining and growth capital sustaining is about half 18 and growth capital is 18 for a total of 36. The main growth capital is really we're pushing the ramp down all the way down to the granite so that we can go and reach those lower levels where we see high grade silver. And on the exploration expenditure, well, the budget is 60 million. As you know as a company we plan to drill close to 240,000 meters this year. This is ongoing. We have always between 14 and 18 drills turning David has a team of almost 400 people in exploration including all the drillers. So it's a large program but we need that program to convert the resource at Boumadine from inferred to measured and indicated for the feasibility study of next year. Taking you to slide number 10. Where are we Going this year. What are the priorities? Well, look, Boumadine is a top priority. We're very happy and very in an extremely good position that we can do. Buzzin with no outside debt, no equity financing, we have the money available to push on Bumedin. So we are pushing on the feasibility study which we want to be ready for next year, 2027 and also the updated PEA which will be ready by the end of June, beginning of July. And so we have, you know, we are stepping up on every aspect. I always say every chapter of the study, make it water, tsf, energy flow sheet, logistics. Every chapter is being worked on and as soon as it's ready, it's being executed. So the feasibility study is ongoing. We have identified the contractors for the open pit, we have identified the contractors for the flow sheet. We will be going into detailed engineering shortly. I mean we are working with our partners on logistics. All of that is moving towards completion of the feasibility next year and beginning of construction. On the drilling front at Boumadine, we drilled in 20 in Q1, obviously 42,000 meters. And you know, this was the ramp up, plus it was the one month of Ramadan which we for during Ramadan sometimes we do not drill as much and we do have a week off at the end of Ramadan. So for Q1 we've drilled 42,000 meters. We're stepping up there because the objective is 180,000 meters for the main structure and an additional 20,000 meters on the regional plate. So that is being done and we will be delivering on that. At Z. The plan is, well, just, you know, be more efficient, control your costs, make sure that, you know, we maximize our revenue, that the mining is very precise, that there's no dilution. And the key thing at $80 or $90 silver is let's not leave an ounce behind and sterilize those ounces. We take it out. If it's between 50 and 80 grand per ton, we stockpile it. We don't, you know, we expense it. It's in the cash cost, but we stockpile it. And if it is between 80 and, you know, the deposit grade, we put it through, we have a stockpile and then we put it through the plant. So it's extremely important for us to maximize what we're mining, the ounces that we're mining. And that's why we're running way above 4000 ton per day and controlling costs. We've also been working on the tailings facility because originally the tailing was planned for 2,800 ton a day. We're now running close to 4,000 ton a day. So we've decided to do the first phase of the tailings construction to increase the tailings capacity. And that will be done at this summer. We will be all done over the summer. So when you look on page 11 where we are, we have Zgounder that will be producing Life of mine, 6 million ounces a year. Life of mine cash cost at $16 ASIC around $19 Life of mine extremely profitable. And that is only from one structure. You will see in the coming weeks some more exploration results coming out as Zgounder because of course as Zgounder we would like to increase the life of mine from 11 years, hopefully to 15 years and if possible even increase the throughput. Our development asset, Boumadine well that is the PEA is being reviewed. The resource update will come with the pea. As of the end of 2024, we were looking at 450 million ounces of silver equivalent. That will be updated because we've drilled more than one year the structure. So that will be updated and it will be included in the new pea. But on the right hand side to me that's the most important strategic view of Aya is we are currently a 6 million ounce producer at $19 all in life of mine. We will add TO that by 2029, 37 million ounces of silver production equivalent at an all in cost of $14. Making us a 43 million ounce producer, of course silver equivalent. And that will have an average ASIC. When you look at 20 or 19 for and 14 for Boumadine, you're looking at mid teens per NASA depending what silver price you want to assume. You can do the math. On top of that, AIA is a major exploration play. We have two districts. We have the Boumadine district and we have the Zgundeir district. So not only do you have two projects, you have two mines. You have the Zgounder mine and you have the Buumed in development mine. You have the Bumadin regional play and that is an extremely large play. We have 800 square kilometers. We will be drilling there 20,000 meters on the regional play, of course the 180 on the main zone. That is infill though we are finding new zones. You saw in the last press release we had identified a new zone. But we will be pushing the drilling on the main zone of course up to 180,000 meters. And on the exploration on the regional, as we keep telling the team, as soon as you have another structure where you want to really drill it out. Just come back to the committee and to the management committee and we will give you more budget. So Boumanjin as an exploration play is very unique. It's got big systems. The main zone is over 5.4 km. You have also a CRM which is an 8 kilometer long structure. I mean, we have very, very, very strong zone. Tizi is a parallel zone and it's also 5.4km long. So Boumadine is a major regional plate and is. We've done a lot of work, We've done a lot of geological work. We've used AI. We have many targets. We have new theories and new geological concepts beyond Zgounder that we're going to be testing this year. So it is also a very interesting geological play. So in IA you have all the geological upside of a major, major exploration company drilling 230, 240,000 oz. Ounces. 240,000 meters of exploration drilling coming in 2026. And then you have the production coming from there and you have the development at Boumenzen. So again, to conclude and to go into the Q and A period, very strong quarter in our weakest quarter. As planned. As planned. We are pleased with the production. We are confirming our guidance and we look forward to a stronger Q2 and much stronger Q4 and Q3 to close the year again. And based on the silver price, it should be an extremely profitable year. So thank you. And I will turn it back to the operator for the Q and A period.

OPERATOR

Thank you. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11. Again, our first question comes from the line of Larry Lu with cibc. Your line is open.

Larry Lu (Equity Analyst)

Hi Benoitin, thanks for taking my question. I guess I'll start off asking about the severe weather conditions. So, Benoit, Lucky, can you tell us what are some of the precautionary measures now that a team have taken? I know you mentioned that this is a very rare event, but are there any precautionary measures you've taken to prevent any further impact to your current operations? And I guess second part of that question is your stockpile did increase by 44% or 15 months worth of production. Is there an optimal kind of size of stockpile you're looking for or should we start to see it gradually decline as the milling throughput comes back up again?

Benoit Alazal

Yeah, thank you for your question. I'll pass it over to Rafael who was at site for all of that Period. And we'll tell you what we have done to mitigate the risk of weather related events and what it does to our production profile, which is only in Q1 by the way, because after that it's sunshine for the rest of the year.

Rafael Baudoin (Vice President of Operations)

So we're in the mountain. And as a good mountain climate, when it rains, it pours. So that essentially results into stickiness of the ore and decreases throughput of the crushing circuit to catch up. It's something we've been working on for a while to increase the crushing throughput, which is the actual bottleneck in the plant we did in Q1, 3633 ton per day on average in Q1. And as soon as sunshine came back in April, we're back on track at 4000 right there in April. So the worst is behind us for the rest of the year, essentially. But to answer your question, to mitigate that, we gave a small contract to a contractor, a crushing contractor that is up in operation now a bit as a contingency for weather and also to help debottleneck the plant a bit on the crushing side. So this contractor will stay there as long as we need it. And we're also contemplating to increase our own crushing capacity within this gunder plant. And that's something under study that we should be able to make a decision on that soon. But bottom line is we have a contractor that helps us out since maybe a bit less than a month now that can compensate for a bit lower crushing capacity to make sure the plants remain saturated. And the stockpile? Oh yeah, sorry. So the stockpile we set about 300,000 ton. Right now it's close to a three months worth of production. It's a buffer that, that I'm personally comfortable with. We've been really pushing over the last year to bring the open pit to steady state. Now we're producing comfortably over 3,000 ton per day in the open pit with peaks much above that. It gives us time to do the pushback if we want to later on this year. It gives us time to shut down upper levels in the underground that will be mined in the open pit. So it's a flexibility that we always believed in that helped us out in many ways. So to answer your question, 300,000 tonnes is probably where we want to be. It gives us the flexibility we need for future pushback and the flexibility to maximize again the ore recovery by the open pit. So now that we've reached this capacity and this flexibility, we will look to continue optimizing the underground development, especially on the sub levels. So we can focus now more our efforts into the lower levels and keep the stockpile around 300,000. I wouldn't be surprised. We see it go down a bit through the year, which is fine. That's where it's there. Perfect. Sounds good. We'll start to push back in the open pit towards the end of the year.

Larry Lu (Equity Analyst)

Perfect. Sounds good. Thanks, Rafael. I guess, you know, kind of shifting gears away from the Zgounder now and walking back to Boumadine. You know, this quarter there was some commercialization of the pirate concentrate. We see the cost come in at $11.86 per ounce of silver equivalent. How should we look at it? I know it excludes mining, but how does that comPAre to your PA for example? And would this be a good read through in terms of cost we should see within the feasibility study coming up?

Rafael Baudoin (Vice President of Operations)

Well, for the current pyrite reclaim, we essentially dig a pyrite stockpile, we crush it and we send it in trucks. So our costs are really low. Our costs will remain for the rest of the operation and. But it's tough to make a parallel with that with our future Boumadine project. It has nothing to do. This is a small project. It's going to be reclaimed for the next two years. It gives good cash flow. It's a good exercise to start building a small operating team at Boumadin and to have more presence on our Boumadin site as we go from PA to feasibility to construction. But one is not comparable with another.

Larry Lu (Equity Analyst)

Gotcha. Sounds good. All right, I think that's all the questions I have today. Thanks, Rafael. And thanks, Ben Watin, for taking my question. Thank you. Thank you.

OPERATOR

Thank you. Our next question comes from Justin Chan with SCP Resource Finance. Your line is open.

Justin Chan

Hi, guys. Yeah, congrats on a good quarter. Thanks for the update. My first one is just on the mine plan for the rest of the year, I guess compared to Q1, how should we think about strip for the open pit? And then I saw the underground really push tons quite hard. Do you expect that to continue or. I think you were foreshadowing. Maybe you're shifting more to development and into the lower level. So should we expect tonnes mined to come down a little bit from that high pace and T1 from the underground.

Rafael Baudoin (Vice President of Operations)

Hi, Justin. Yeah, good question. Actually, it's. We've been, as you all know, we've been pushing tonnage both in the other ground, the open pit we had. We really wanted to bring back the stockpile where it deserved. Show everybody we could have a good. We could have a good throughput of gunder both in the open pit, in the underground, in the plant. And I think those discussions are behind us now. So we have full team on the ground. The open pit has showed it can deliver. Now the open pit is wide open. We have room to work. So first, for your strip ratio. We expect the long term strip ratio to be what we publish in our latest for E3 100:1. So this strip ratio of 9, it's temporary. We will have months at 8 or 9 like we have now and we will have months at 20 like we had in the past. Overall it's between 13 and 16. And this is what we expect and this is what we expect on the longer term. Can you hear me, Justin? Yeah, I can hear you. Well, thanks Raf. Okay. And so for the underground, absolutely. We've been, you know, we've been at a rate of over 1500 ton per day on the ground. And we have some of these levels that we want to shut them down because we want to increase the maximum ore recovery through the open pit. So to answer your question, yes, there will be a shift in focus in Q2 moving on for the rest of the year to accelerate the ramp down and to transfer some of this production power into stove development and sub level development. We're comfortable at the underground rate at around 1000 ton per day is something we're comfortable with because the open pit is well established now. So you can expect moving on to have the rate of the underground to slightly decrease. 1000 to 12 to 1300 ton per day is probably the sweet spot. We need to really focus on those sublevels for which we also know we have pretty good grade going down.

Justin Chan

Okay, gotcha. Thanks Raf.

Rafael Baudoin (Vice President of Operations)

That's great color. And on the plant, do you think you'll keep the mobile crushers around even when it gets dry? And what would your throughput potential be if that's the case? So again, what we publish in our fees, BoP is above 3600 this year and 3850 next year. Internally we're trying to beat that. We have like our best days right now are around 4300 ton per day. Those are punctual like best daily performance. I think Justin, around 3800 is probably, is probably where we'll be comfortably at in the near future. And that will like we're really pushing this plant. As you know, nameplate is 2700. Now we're near 4000. It's difficult for me to speculate above that because we need to Go bottleneck after bottleneck. I think there's a bit of juice left in the plant but we need extra crushing capacity for that. So 300 is probably. Is probably where we would be some good months above that, some bad months around that. But to answer your question, 3800 including the mobile crusher, that will keep as long as we need.

Justin Chan

Okay, perfect. Thanks. And I'm not sure who's the best person to ask this question to but on boomedin the. I guess the ounces that weren't sold this quarter, do you expect to sell them in Q2 or should that become spread through the rest of the year? And also just given the world being pretty short of sulfur, will there be any noticeable increase in payability, do you think, for Q2 and 3 or is it too early to say that?

Rafael Baudoin (Vice President of Operations)

I just said it to go. Yeah. For production, for sales of Boumadine, it's not that the clients don't want it. I think we get called every week and they said can we get more material? So especially with what's happening in the sulfur market today. So we are logistics by truck like we're learning it. So it's going to be spread out throughout the year and we're trying to modify things a little bit to send larger shipments. And so that on that I think it's going to be going to be through the year. But the 1 million ounces of silver equivalent is still what we're on track to do. And in terms of payability, it's not going to change because it's. Because it's old material has been there for a long time that the sulfur quantity is a lot less than fresh rock from. From Bumadin. And so the payabilities aren't going to. And the volumes are small on the. On the two to 240,000 tons total. And so that we've. We've agreed on a price and on a contract for. With our traders. And so that's not going to change throughout the year throughout that stockpile. So Justin, if I can add on payability and payability. The payability is changing on the bigger project. Because that has 45% sulfur. As Hugo said, the tailings is a bit worn out. So it's got very good gold and silver content. Pyrite is a bit tired. So it's not changing on the small project but on the bigger project it is changing in an important way.

Justin Chan

Yeah, absolutely. Okay. Thanks very much. That's really helpful color. Thank you Hugo. And thanks Benoit. And thanks overall I'll straight up the line. Thanks, Justin.

OPERATOR

Thank you. Our next question comes from Mike Kozak with Kanjra Fitzgerald. Your line is open.

Mike Kozak

Good morning, Benoit team. A few questions from me. First one. Q1, it was the fourth quarter in a row where unit costs at Segunda on a per ton basis have trended down. I mean, a portion of that is obviously more open pit material, but they can settle in around $80 a tonne. In Q1. You were north of $100 a tonne a few quarters ago. Is that $80 a ton a good number going forward? Do you think it's going to continue trending down, or where do you expect to settle out?

Rafael Baudoin (Vice President of Operations)

I can comment a bit on the ounce unit cost. Our costs have been going down, and we're happy about that. Throughput has been going up and production has been stabilizing in the open pit in the underground. Now, a lot of that unit cost saving comes from the underground unit cost per ton as well as the open pit unit cost per ton. And we've also had gains in the plant as we process more throughput and stabilizer cyanide consumption. So we've been winning on all fronts, including site services and surface and utilities as we're toward being more mature operation, and we're happy to see that. Now, that being said, there is a lot of cost fluctuation at Gunder based on the open pit strip ratio, as you can imagine. So depending on the sequencing, we have months. Now, this quarter's trip ratio was around 9, which is quite exceptional. The overall strip ratio of the open pit gets better through the life of mine. And again, we've made that quite clear in our latest 43, 101, but it will increase slightly this year towards. Especially towards the end of the year, we'll have a bit higher strip ratio in the open pit, and I expect our strip ratio for the year to sit between 13 and 16. So we'll continue to improve our overall cost, but inherently, the open pit will be more expensive in terms of cost per ton because we'll converge more toward the 13 to 16 strip ratio as opposed to 9. And let's not forget on the ground, we need to develop new Stokes. Now, we have lower levels around 1925 that are operating, that costs are good. But on the long term, the underground cost of this Gundor mine will slowly creep up as we go deeper and deeper, which is also normal and captured in our projections.

Mike Kozak

Okay, thank you. That's good color. Second, what do you expect? Your average, now that you're making so much money what do you expect your average income tax expense rate to be this year?

Rafael Baudoin (Vice President of Operations)

Income tax rate. So I think five years ago the government of Morocco, when we were back at 20%, had put out a new law and said that it was going to increase to 35% being 20, 26 at 35%. Then during COVID they added a 5% Covid tax which got converted into a 5% solidarity tax which is supposed to be temporary. Okay. It's been three, three years now. And going on a fourth year of that, of that tax being in existence. We are one of 187 companies in Morocco that pay that tax rate. Everybody else that makes less than 100 million dirhams of profit pays 20%. We know there's the World cup coming. I think the government, like all governments, need money. But more and more we're starting to see companies like ourselves within 127 that are saying, hey, 40% income tax is simply not competitive. And so I would expect that 27 moving on, at least that 5% falls away and then we'll see what happens with the, with the, with the additional tax rate. But yeah, it's our biggest cost today.

Mike Kozak

Yeah, got it. And then one more. If you don't mind. Cash obviously building at a fast pace. Do you have any options available to you to accelerate repayment of the remaining EBRD debt?

Rafael Baudoin (Vice President of Operations)

Yeah, so we, if we want to repay, like all debt, we have a, there's prepayment penalties. We do have a slight out is that we can do cash sweeps out of the country back to head office and we have a cash sweep of 30%. And with that comes no prepayment. So we have to do that at specific timings. When we pay, when we repay capital and January and July. So assuming things continue like this, I think we're going to be using that option to cash sweep money out of the country and then force a cash reap and prepay, something like that. That's the expectation. But capital cost cash has to keep going up. But assuming it does, I think that's an option we'll use.

Mike Kozak

Okay, very good. That's helpful. That's it for me. I'll jump back into you.

OPERATOR

Thanks. Thank you. Our next question comes from Eric Windmill with Scotiabank. Your line is open.

Eric Windmill

Oh, hi everyone. Thanks for taking my question today. Just wanted to ask quickly about the tailings. I know you're increasing capacity there. Can you just remind us how long that's going to get you, how much Runway you'll have once that expansion is done?

Rafael Baudoin (Vice President of Operations)

Sure. So the first phase was obviously a short one to keep capital costs throughout the initial construction. Phase two is our biggest raise. So we have. Well, we have about two years and a half of storage in. It obviously went down because throughput went up quite a bit. So we have over two years and a half after which we have another phase planned.

Eric Windmill

Okay, great. Thank you very much. Maybe just on the Boumidine. So you're coming out with the new pea, you said sort of May, June or excuse me, June, July timeframe. Any views on CAPEX there? Should we expect meaningful changes from the

Rafael Baudoin (Vice President of Operations)

last study that you put out? Well, Ralph is with us today and he's in charge of the team that's overseeing the Bumadin study. So I guess it's the right time to ask him. So in the PA we had a CAPEX or a healthy contingency for that level of the study. And at that point, as we are advancing through this updated PA and also the feasibility study, we will have some extra costs as we define and detail the project, but would also reduce the contingency as the project is well defined. So right now we said that we don't expect capital to go higher than the PEA or sit in the same range.

Eric Windmill

Okay, great. That's really helpful. Appreciate it. Just one more on Zigunder as well. So you're looking to increase crushing capacity there. Any updates in terms of ordering of long lead time items or critical path items? We should be looking at maybe updates

Rafael Baudoin (Vice President of Operations)

on the status, please. Well, the good news is we already have the process unit, the comb crusher. We have it, so that's a relief. And once we decide to go ahead with that expansion, we're probably looking to a nine month expansion. So yeah, it's something that can be done within, probably within a year. And it's not really important because in the meantime we have the crushing contractor then, then bridge that gap.

Eric Windmill

Okay, fantastic. That's very helpful. I appreciate the added color. I'll hop back in the queue.

OPERATOR

Cheers. Well, ladies and gentlemen, that concludes our Q and A period. I would now like to turn the call back over to Benoit for closing remarks.

Benoit Alazal

Thank you, operator. Thank you for all the questions. Look, what is coming for us now is I mentioned it. We'll have some exploration results coming in the next few weeks. We'll have a Boumedin exploration press release in the next week or two. We'll have the same as Zgounder. We also are looking at in country consolidation of ground because Morocco is very interesting. It's got fantastic geology and we have a first mover advantage and we will, we are taking advantage of this. So you can expect some more news from us. We will be on the road for the coming two months meeting some of our shareholders in the United States and in Europe. As you are fully aware, we started trading a week ago or 10 days ago on Nasdaq. It's going extremely well. We're getting a lot of positive feedback. So we're really pleased with the NASDAQ listing so globally. And again, I will close on this. You know you have Aya is a company that is in Morocco focusing in Morocco where the geology is exceptional. You can see it on our discovery cost. There were some slides that were put together by a competitor recently on discovery cost and we have the lowest discovery cost in our industry because of the geology. The jurisdiction is probably one of the best in the world with the permitting, with the employees, with the people. We are in a country that does not just tolerate mining, but in a country where mining is part of their strategic plan and they want it to be very successful. And we have a team at AIEA now which has built many, many mines and has shown geological expertise. So you have a very strong growth profile with Boumadin being developed and starting to be built in the next few quarters towards a 37 million ounces of annual production of silver equivalent coming at Boumadine, which is just from only one structure. So you have beautiful growth profile in the company. You have core assets with two districts, the Bumadin district and the Zgounder district. And you have a company that will spend 60 million US in exploration drilling over 200,000 meters and over 230,000 meters this year. So major geological upside, strong cash flow, great core assets in one of the best jurisdiction in the world. So look, we will be coming back to you follow Morocco in the World cup of soccer or what they call football because they have an amazing team. And that will be the topic of all the new slow coming out of Morocco for the next couple of months. So again, thank you so much for participating in this conference call. We look forward to seeing you at the Q2 call and for many of you we will be seeing you in all the conferences that are starting next week in Vegas and continuing to London the week after and on and on for the rest till the Rick Rule conference in July in Boca Raton and then we should take a few weeks off for the summer. So thank you very much. We'll see you in the coming weeks and otherwise we'll see you at the Q2 conference call. In August. Thank you.

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