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Pretium Resources Inc (NYSE:PVG)
Q1 2020 Earnings Call
May 1, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Thank you all for joining us this morning. Welcome to the Pretium Resources First Quarter 2020 Conference Call. [Operator Instructions] The conference call today is being webcast live and available along with the presentation slides on Pretium's website at pretivm.com.

I will now turn the call over to Mr. Tom Yip, Pretium's CFO. Please go ahead.

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Good morning, everybody. Welcome to our first quarter 2020 operating and financial results call. Joining me today on the call today is our Board Chair, Richard O'Brien; and Jacques Perron, who has just joined Pretium as President and CEO. Richard and Jacques will take the opportunity to discuss our leadership transition, then I will review the operational and financial highlights of the first quarter. At the end of my prepared remarks, Dave Prins, our Vice President of Operations, will join, and we will address your questions on the results from the first quarter.

Before we begin, note, our statements contain forward-looking information and future-oriented financial information based on certain assumptions. I refer you to the cautionary language included in our news release and as well as a management discussion and analysis for the same periods. These are available on our website and have been filed on SEDAR. Please note, all dollar amounts mentioned on this call are in U.S. dollars unless otherwise noted.

Now I'll turn the call over to our Chair, Richard O'Brien.

Richard O' Brien B.A., J.D. -- Chairman

Thank you, Tom. First, I'd like to thank everyone at the company for their hard work that contributed to another profitable quarter. The determination of our team has been even more evident over the last couple of months as we face the unprecedented challenges related to the COVID-19 pandemic and continued safe operations at Brucejack. On Monday, we are pleased to announce that Jacques Perron has joined Pretium as President and Chief Executive Officer, and I'm happy to introduce him now.

Jacques' career of over 35 years in the global mining industry comprises roles in technical and operational leadership and the contribution to numerous boards. In key senior executive positions, Jacques served as President, Chief Executive Officer and Director of Thompson Creek Metals until it was acquired by Centerra Gold. And prior to that, he was Director, President and CEO of St. Andrew Goldfields. The Board looks forward to working with him as he brings his extensive underground operating experience and professional insights to drive the continued success of Pretium and the Brucejack Mine.

Welcome, Jacques. And with that, I'll turn it over to Jacques.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you, Richard, and good morning, everyone. I'm very happy to be here today. After Thompson Creek Metals, I vowed that I would not return to an active management role unless it was for the right opportunity. Pretium is that opportunity. The Brucejack Mine is a unique world-class asset. It is well built with both mining and milling operations working well with excellent potential for resource expansion. The company is financially robust and has been consistently profitable since achieving production with strong cash flow generation. Most importantly, Pretium has a solid safety record.

All of this to the credit of the team who advanced the project from discovery to development and in two profitable operations. Every mine has its own unique challenges, and Brucejack is no different. As it is well known, the biggest challenge has been understanding and mining the gold grade distribution of Brucejack at erogenous deposits. I believe the March 2020 update to mineral reserves and resources and the life of mine plan is a big step in the right direction. I look forward to leveraging my past experience as we move forward to unlock the potential of this asset.

However, I still have a lot to learn and will be rolling up my sleeves, including spending a lot of time at the mine itself in the coming weeks and months. A key priority for any incoming CEO is to meet with management, employees, stakeholder communities and First Nations partners. We are all facing an unusual situation due to the pandemic and the need to maintain physical distancing. I am one week into a two-week quarantine in Vancouver, having crossed the border into Canada from the U.S. Even if I were not in quarantine, our head office personnel are working from home right now, so that creates yet another challenge in terms of getting to know everyone. I also intend to meet personally with our shareholders, but it will likely take a bit longer than usual for that to happen.

The return of marketing roadshows may not occur until some time in the future, but in the meantime, I look forward to virtually connecting and speaking with shareholders, and I value your insights and feedback. We are in a healthy financial position that improves with each ounce of gold produced from Brucejack. We are already much better off than many other miners at this uncertain time. However, one of my early priorities will be a review of Pretium's short-term liquidity. Given the unusual risks related to the COVID-19 pandemic, it is prudent to consider our position.

Operationally speaking, we are in the gold mining business, and that's not going to change. We remain focused on safety and profitable growth. We will work as a team to identify areas to improve operational performance, and we will continue our strategy to advance our significant exploration potential to unlock that unrecognized value. For the long term, I see great potential here and believe we are well positioned for growth. I look forward to updating you in the coming months.

And I will now pass the call back over to our CFO, Tom Yip. Tom?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Thanks, Jacques. I will now provide a review of the first quarter operating financial results. As we continue to navigate to the challenges related to the COVID-19 pandemic, the company's primary commitment is to the safety and health of our workforce and neighboring communities in Northwest British Columbia. We have taken significant steps to adjust our procedures and protocols to limit the risk of COVID-19 exposure for our staff, their families and communities, including modification of work shifts, attention to the details of safely transporting ARPUs and ensuring a safe operating and living environment of our work sites.

Only personnel necessary to support gold production continue to work at the mine, while COVID-19 restrictions are in place. Consequently, all capital projects and expansion drilling programs have been suspended and crews have been demobilized. Throughout the COVID pandemic, the Brucejack Mine has operated continuously under the strict guidelines and directives of government health authorities. In terms of operations, COVID-19 did not have a significant effect on first quarter gold production. A shortage of personnel at the outset of the crisis in March resulted in a minor impact on development during the quarter. Interruptions to the supply chain are not anticipated at present, and the increased inventories have been established, with supplies on order accordingly.

We continue to monitor the situation and will assess the potential for longer-term impacts to mine production as we evaluate the continuing risks associated with the crisis. Subsequent to the quarter end, as a precautionary measure to increase available liquidity, the company drew down $16 million of the revolving portion of the loan facility and added to our March 31 cash balance of $40 million. Over the first quarter, we produced 82,888 ounces of gold at an all-in sustaining cost of $996 per ounce gold sold. We remain on track to achieve 2020 gold production guidance of 325,000 to 365,000 ounces this year. And maintain costs within our AISC guidance that ranges from $910 to $1,060 per ounce of gold sold.

First quarter free cash flow was $41.8 million at an average realized gold price of $1,605 per ounce. The company remains on target to achieve free cash flow for 2020 in the range of $100 million to $170 million, and the 2020 forecast is based on an average gold price of $1,450 per ounce. Foreseeable 2020 production and financial guidance remains achievable, assuming there is no significant impact on operations at the Brucejack Mine due to the COVID-19 pandemic. As described earlier, while we have taken precautions to mitigate the risk of COVID-19, we are reviewing the future impact to development, stope availability and production should the restrictions related to the COVID-19 persist. If the current situation continues or if the government authorities mandate temporary closures or if the company is not able to maintain operations, it could have a significant impact on cost and production.

During this period of uncertainty, we will focus on increasing our liquidity versus discretionary debt repayments on our revolver. In the first quarter, 345,139 tonnes of ore were processed, equivalent to a throughput rate of 3,793 tonnes per day. The mill head grade averaged 7.8 grams per tonne gold and is within the estimated 2020 guidance range. We are processing all neatly available stopes above the cap rate to ensure consistent mill supply while continuing to advance development. Gold recovery for the first quarter of 2020 was 96.4% compared to 96.8% in the comparable period in 2019. We continuously review the mill process to identify opportunities to improve efficiency and optimize recoveries. Over the quarter, 357,674 tonnes of ore were mined, equivalent to a mining rate of 9,330 tonnes per day.

A total of 2,784 meters of lateral development and 60 meters of vertical development were achieved. Through 2020, mining will continue to focus on advancing underground development and open up the mine to operate at a production rate of 3,800 tonnes per day. We continue our track record of positive cash flow and profitability again this quarter as we have every quarter since achieving commercial production on July 1, 2017. For the quarter, we realized a gold price of $1,605 per ounce, an increase of 22% over 2019, driving similar increases year-over-year in earnings from mine operations and a significant adjusted earnings increase of 56% over the last year's first quarter. The robust gold environment also enabled us to generate strong free cash flow, which increased 19% over the last year's first quarter.

Turning to slide nine. During the quarter, we sold 80,460 ounces of gold compared to 81,434 ounces of gold in 2019. The $286 per ounce increase in gold price contributed to the 23% increase in total revenues of $126.6 million versus $103 million in 2019. Gold sales are proceeding as planned with multiple off-takers for both dore and flow concentrates. No sales disruptions are anticipated at this time. We processed 3,793 tonnes per day in the quarter compared to 3,279 tonnes per day in Q1 of 2019. 2019 was a wrap-up year after receiving our permits in December of 2018 to increase our throughput from the nominal 2,700 to 3,800 tonnes per day. This resulted in cost per tonne mill of $179 for the quarter, similar to the $180 per tonne in Q1 of last year.

Turning to slide 11. Our cost of sales, which includes production cash costs, depreciation and depletion, royalties and selling costs, averaged $1,112 per ounce sold. This is compared to $908 for 2019. Depreciation and depletion expense increased in the quarter by approximately $120 per ounce sold. This is as a result of the updated reserves, which we reported in March 2020. The total cash cost averaged $787 per ounce sold for the quarter versus $686 for 2019. Total spending was on the low end of guidance set out for 2020. Total costs were $7.5 million higher than in 2019 due to the increased lateral development and drilling this quarter as mill throughput increased over 2019.

Looking ahead, the company currently expects a modest impact on costs should operations continue with enhanced safety measures in effect related to COVID-19. We continue to show robust earnings from mine operations of $37.1 million in the first quarter compared to $29.2 million in 2019. After deducting our corporate G&A costs, we generated operating earnings for the quarter of $31.5 million compared to $25.2 million last year. There are two items of note on our P&L. The first is interest and financing expense of $7.7 million compared to $9.4 million in Q1 of 2019. The decrease was driven by lower outstanding loan balance and lower LIBOR rates throughout the period. Secondly, we incurred $18.7 million of taxes during this quarter.

This consists of $1.3 million of cash taxes related to the BC Mineral Tax and $17.4 million related to deferred taxes, the significant increase in our deferred taxes is due to the weakening of the Canadian dollar impacting the value of our BC Mineral Tax pools, which were denominated in Canadian dollars. We currently pay BC Mineral Taxes at the minimal rate of 2%, not 13%, as we draw down our significant tax pools. Based on the updated life of mine and current gold prices, we do not anticipate any cash taxes for federal and conventional income taxes of three to four years. Thereafter, we anticipate paying taxes at a rate of 36.5% on mine operating earnings.

Net earnings for the quarter were $6.2 million or $0.03 per share versus $4.2 million or $0.02 a share for 2019. We adjusted earnings for items we believe are not reflective of the underlying operations of the company. These are noncash items consisting primarily of deferred income taxes and accretion on convertible notes. The adjusted earnings were $25.9 million or $0.14 per share for the quarter compared to $16.5 million or $0.09 per share in the first quarter of 2019.

Turning to slide 14. For the quarter, we generated $52.5 million of cash flow from operations. This continues a record of positive cash flows from operations since start-up in mid-2017. We generated $41.8 million of free cash flow defined as cash from operations less investing activities. The $52.5 million of operating cash flow generated this quarter enabled us to pay $22.3 million on debt service and spent $11 million on capex. We ended the quarter with $40.6 million in cash.

At the beginning of the year, our syndicated loan facility totaled $382 million, we repaid a scheduled $16.7 million payment in the quarter and as a precautionary measure in response to the continuing operating risk related to COVID-19, we drew down $16 million, which was available on our revolving portion of the loan facility. We will focus on liquidity rather than discretionary debt repayment until the restrictions we made to the COVID pandemic have been lifted.

On slide 17, for the quarter, our all-in sustaining costs totaled $80.2 million and is tracking at the low end of our guidance range for the year. Assuming minimal impact for the COVID-19 pandemic, we're maintaining our guidance. We're also maintaining our target of free cash flow of $100 million to $170 million at a gold price of $1,450 per ounce. And as previously mentioned, with the ongoing uncertainty related to the COVID-19 issue, we will focus on increasing our liquidity versus discretionary debt repayments.

In the quarter, the company announced an updated mineral reserve and resource estimate and the life of mine to the Brucejack Mine, which highlights the continued robust economics of the long life underground operations. Following these updates, we hosted an Investors Day Technical Session, where we outlined a number of strategies we believe will help us optimize our stope design and improve the gold grade. Our priority remains increasing mine access. As we progress to 2020, lateral development will continue to focus on opening the mine at depth and toward the west to the Brucejack Fault Zone.

As Brucejack does not have a stock volume, maintaining gold production at the mine requires a sufficient stope inventory to support operations. The increased development should improve access to build stope inventory. We will then be able to increase the efficiency of the operations and enhance the opportunity to blend stope material from multiple areas. This is aimed at improving the tonnes available for mining and supporting grade control. We highlighted two drilling initiatives in the technical session planned for 2020. A reverse circulation definition program to improve stope design, and a resource expansion program designed to follow-up on Valley of the Kings style mineralization at depth and to the east.

These initiatives have been delayed while COVID-19 restrictions are in place. These programs were not factored into the 2020 life-of-mine plan update and were not incorporated into our 2020 production guidance. As such, temporarily putting these initiatives on hold should not influence achieving our 2020 production targets. We are, however, reviewing the future impacts to development, stope availability and production should the restrictions related to the COVID-19 persists. We continue to take advantage of the favorable gold in mine. In the first quarter, our adjusted earnings were $25.9 million, equivalent of $0.14 per share. We generated $52.5 million in capital operated and free cash flow of $41.8 million.

To sum up, we have successfully navigated an unusual quarter. While we have addressed the immediate challenges presented by the COVID-19 crisis and continue to operate the Brucejack Mine, we are evaluating the potential for longer-term impacts to our strategies. And at this time, we remain on track to achieve our 2020 production and cost guidance.

Thank you. And that concludes the formal presentation. I will now turn the call over to the operator, who will open the lines for your questions. Operator?

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Justin Chan of Numis Securities. Please go ahead.

Justin Chan -- Numis Securities -- Analyst

Sure, Jack and Tom. Good morning and thanks. Thanks for hosting the call. My first one is just on development. I mean it looks like you're relatively close to 1,000 meter per month budget in Q1. Can you just give us that figure for March and whether you feel that and I guess, where you were in April and whether that starts to become a constraint for this year? Or at your current levels, do you feel like your self availability is where you is that a point where it shouldn't be an issue this year?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Justin, thank you for your question. I'll ask Dave to answer your question. Dave, please?

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Yes, Justin, and thanks for the question. Development to year-to-date, as we published in our MD&A is slightly short, approximately 300 meters under for the year. I'd just like to and last year was slightly I'd just like to state the impact of that. We're also undertaking development for the longer-term exploration, which is not currently in our mine plan. So the meters we're not were just three to five years out that those drilling horizons. So obviously, we're not furnishing an upfront our near-term mine development. It's those meters that have been taken away from that long-term development for the drilling programs. So we were down due to COVID and the severe winter of 300 meters.

And I think we can still we still have the chance to make those up. So we shouldn't be off track by the end of the year, and we should be able to make those meters up. Regarding your question on stope availability, I'd like to point out that stopes vary in size and drastically different in size. So I'd rather refer to tonnes. And at present, we have drilled off 170,000 tonnes, which is the best position that we've been in since the start of the mine. We must remember that we ramped up from up to 3,800 tonne in Q4 of last year. And in Q4, we actually overachieved on the throughput we budgeted. So we're still crawling or opening up the mine to build up that inventory.

But at this point in time, at our standard stope size for a design purposes, not to say it's a standard size we actually mined of 30 meters by 15, 25 meter high stope, there's 32,000 tonnes, we have 5.3 of those available to us, which is around six five to six weeks of mining at 110,000, 120,000 tonnes per month at 3,800 tonnes per day. So we're sitting in a good position. Unfortunately, some of those stopes are sequence constrained, which means they're not in the order we can just go and blast and mine tomorrow, where they're dependent on pace, fill, geotechnical and other constraints that you would understand. I'll hand it back for the next question.

Justin Chan -- Numis Securities -- Analyst

Okay. That's really helpful. And just as a follow-up to that, the numbers you reported in Q1. Was there much of a trend into March as COVID started have a larger impact? And I guess if you could share what are your levels now? And how does it relate to the levels in Q1 overall?

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Yes. Thanks, Justin. I assume your question's relating to development. So obviously, our biggest impact in Q1 was to COVID. That's when we had trouble with getting people to site and transport and some people need to stay home because of family. So it was the peak reduction, if I could put it that way, in development. We're back on track now. We're fully our human resource or manpower is back up in development, and we're hitting and/or achieving a daily target. So I think we're in a good position, so long as COVID doesn't come back and hit us. And we've also got a new jumbo riding on site as of yesterday, down at the site to meet and hopefully exceed our goals for this year? Thanks, Justin.

Justin Chan -- Numis Securities -- Analyst

Okay, excellent. Really pleased to hear that. Just two more. One, I'll let you answer, and then maybe I'll ask the last one after. But on transverse and longitudinal, are you finding do you have more results from longitudinal? And what are the findings so far? Are they supportive of a greater integration and perhaps even incremental changes from the mine plan that we've just received?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Dave, do you want to answer that as well.

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Yes. Thanks, Justin. I was just playing with the microphone there. Yes. Good question. Justin, we did undertake a fair amount of longitudinal mining out there last year, a substantial amount, in fact. But the longitudinal mining is only applicable to certain parts of the mine. Like if we're going out in the fault section this year and we're crossing the fault and getting the mineralization out there which is perpendicular the way out, there will be going and transverse mining that. In certain areas, it will be OK. They just you look at the geology there with all the drill information and the information we have coming back, that's about to us from the drifting in there.

And you can just see that some of those areas must be transversed mine. Yet other areas you can go in and you can see clear cases out there why we should be longitudinal. So we'll be adopting a phased approach on this, and it will be I can see it being both transverse and longitudinal as we progress. The mine plan does include both. At this point in time, it's more transverse than longitudinal. But again, as we get out into the fault zone, which we just mentioning our intent that the percentage could increase of longitudinal.

Justin Chan -- Numis Securities -- Analyst

Okay. Great. And just my last one, Jacques and perhaps, Richard, for the both of you, strategically, to get opportunities to kind of review high level what the plan is, do you have anything that you'd like to share in terms of strategy on both operational and sort of high-level for the company? What the focuses are beyond operating well and paying down debt?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Justin, I think you will understand it's my first week in the chair, so a bit early to tell the market what I think what's we're going to be doing. My intent is to focus on the business, learn the business in the coming months, definitely spend some time with the team, regrouping to put together our plan going forward. But like I said, we're the strategy for us is to generate the maximum possible value, which road we're going to take to get there, that needs to be determined. But at this time, it's we're going to I'm an operator. I'm going to keep my head down and focus, work hard, focus on what we can control, what we need to control, to make sure that we build the best possible business and then discussions around strategy and how we see the future, that's going to come down the road.

Justin Chan -- Numis Securities -- Analyst

Okay. Very sorry. Thanks a lot. I'll say it the line, but. Thanks very much guys. Really appreciate it.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you, Justin.

Operator

Our next question comes from Heiko Ihle of H.C. Wainwright. Please go ahead.

Heiko Ihle -- H.C. Wainwright -- Analyst

Hi, thanks for taking my questions and congratulations to Jacques on your new appointment there.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you, Heiko. It's very nice of you to say that.

Heiko Ihle -- H.C. Wainwright -- Analyst

Gladly. Gladly. So can you provide some details on how many people are currently present both above and underground at the site, the current payroll for April versus March and February, and your quarantine requirements and also your fallback options on that? I assume that the newly arriving essential staff members are quarantined off-site for two weeks, and I assume they're getting paid during that time. But I mean, can you just provide some color on that and how many people are in that quarantine? Any other impacts we should look at? I know there's like six questions in one, but...

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

That's OK, Heiko. That's good. Dave, can you give some color on the manpower and who's in and who's out?

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

For sure, Heiko. Thanks for the question, Heiko, a very good one. So typically, we're at probably 670, 680 people on site during the peak reduction in March. We were down to 400, 410 people, but that wasn't enough to sustain. Obviously, we had people away, we couldn't get people in from over Easter miners. As of today, we're probably at 445, 450 range, with a development team back up to full resource power there now. So there I told you where we're at. So you can do the math, on probably a couple of hundred people off sites still that we run construction projects and other noncritical, some management as well. Quarantine, we currently have no one in. We actually feel that all the steps we've taken for COVID or something we'd like to try and keep as we move forward.

Typically, for COVID and flu-type symptoms, we have people in quarantine all the time, but ironically, it's all the cleaning we're doing, all the protocols and procedures we have in place for hygiene now, social distancing, and all the other COVID-related requirements that we're fully supporting and backing as a team, we've actually been a couple of weeks now without anyone at all in quarantine. So it's a good thing. The next part of your question, yes, we're still we did put a small quantity of personnel off. They're on the construction teams at the short contracts and a couple of drillers, I believe. But yes, we need to get our heads around in the future, what we do with the remaining 200 people.

And some of them, as we got down in March, we had to ramp down quickly there because people couldn't get back to site. However, that is not a sustainable number, so we do need to get some of those people back to sustain that. So it's not in the very short term, but for the medium-term as well. So we'll be bumping those numbers back up. I hope that answers your question, Heiko.

Heiko Ihle -- H.C. Wainwright -- Analyst

Hi guys. Very much so. Thanks for all the color there. And then just one more, so other people get a chance to ask some questions. I went through your MD&A and through your own sustaining chart there on page 39. And it seems like three things really yielded the cost increase, an extra $7 million to $8 million of total cash costs, an extra $2.3 million of sustaining capital and extra $1.5 million of corporate D&A there. Tom, can you maybe just provide a breakdown of the extra sustaining capital in dollar terms and also in the extra G&A, please?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Tom?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Yes. Thank you, Heiko. The G&A, it was for additional costs related to the change in the leadership that we accrued in March. So that's pretty much what that was. The sustaining capital, we're still projecting approximately $30 million, plus or minus, for the year. And most of that is going to be sort of in the summer months. As you typically know, that's the best part of the time where we're getting most of our projects completed. So that's sort of where we're at with the sustaining capital. It's a little lower, a little late in the first quarter, but it will pick up in the next several quarters.

Heiko Ihle -- H.C. Wainwright -- Analyst

Right. So those were year-over-year numbers I just gave you.

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Well, they're just sort of they're just different programs, though, Heiko, between last year and this year.

Heiko Ihle -- H.C. Wainwright -- Analyst

Got it. Perfect, thank you guys. I'll get back in queue.

Operator

Our next question comes from Mark Mihaljevic of RBC Capital Markets. Please go ahead.

Mark Mihaljevic -- RBC Capital Markets -- Analyst

Hi, thanks. Good morning, everyone, and congrats and good luck, Jacques in the new role. I guess my first one, again, you guys mentioned a focus on preserving near-term liquidity over the selective debt repayments. Are there any other initiatives you're looking at from a liquidity perspective, obviously, you've fully drawn the revolver now. So are you looking at anything else beyond that? Or is it just the fact that you're going to preserve cash and not make any elective payments on the debt? How should we be thinking about that?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Well, Mark, thank you for your question. That's a good one. So right now, we I was happy to see before at my arrival that the company made the decision to draw down the $16 million, I think that was a very prudent decision in the current circumstances. I don't see in the immediate need for any additional decisions. However, as we all know, this COVID pandemic is very unpredictable and very difficult to understand exactly what's going to happen and when we're going to return to the new normal. So what I want to do with the finance team is to look at what are the potential alternatives.

We're not planning to do anything drastic at this time, but we want to make sure that we are in a position, if we have to, to pull levers, so we can improve our liquidity again, if we would need to. We're not planning anything, but what we're doing is we're planning for the worst and hoping for the best. And we're going to have alternatives in our back pockets and make sure that if we need to, we'll be able to do something. But again, I want to say that, right now, based on our current plan and if the situation remains as it is, there is no reason for us to panic at this time. There is no reason to do anything drastic, but we just want to be prepared in case that we have to do something.

Mark Mihaljevic -- RBC Capital Markets -- Analyst

Perfect. And that's a prudent approach to be taking here. And then I guess kind of following to that question, and appreciate it might be a little bit early for you to be in a position to answer this, but as you start to think about the longer-term capital structure, would you continue the previous trend of trying to just in a normal world without COVID, would you be trying to just delever the balance sheet as quickly as possible? Or would you be more inclined to maybe terming it out, giving yourself a little more discretionary capital to invest in the business or pursue other opportunities?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Well, it's another good question, Mark. I want to continue to reduce the debt, but no, it's a balancing act all the time between our capital needs and what we want to do and what we want to achieve. But definitely, the objective of reducing the debt, the objective that the company had before continues to be there. And again, we're going to balance this with all the other requirements, but everything being equal. And as you said, if we forget about COVID, we would like to see a reduction a significant reduction of the debt in the coming years. Unfortunately, for us, we're generating significant cash flow. So we have the ability to do that and be able to have, at the same time, sufficient resources to continue to grow the business.

Mark Mihaljevic -- RBC Capital Markets -- Analyst

Okay. That's fair. And then one more for me. I guess, you guys mentioned some cost pressures from all the initiatives you've implemented. Can you, a, kind of quantify that either on a the absolute basis around a dollar per tonne basis? And then how long would you think the current situation could persist before it be starting to pressure your or your full year all-in cost guidance.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Tom, could you answer that, please?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Well, we've said that it's been minimal impact because the pandemic really came upon us in the month of March. So in the first quarter, we saw very minimal. Going forward, we think there's a modest increase, but we're well within the guidance that we set out earlier this year. And part of that is because we've got a favorable Canadian dollar FX impact when we compare what we did for the budget and the forecast vis-a-vis what we're seeing today. So I guess I'll conclude is that we're well within the cost guidance at this point in time.

Mark Mihaljevic -- RBC Capital Markets -- Analyst

Okay, perfect that's it for me. Thank you.

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Thank you. Mark.

Operator

Our next question comes from Joseph Reagor of Roth Capital. Please go ahead.

Joseph Reagor -- Roth Capital -- Analyst

Hi guys, thanks for taking the questions. And welcome aboard, Jacques.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you.

Joseph Reagor -- Roth Capital -- Analyst

So hopefully, I'm not too redundant in this, but I'm going to try to ask in a slightly different way. Can you guys quantify kind of on a monthly basis with the COVID-19 additional measures costs, maybe on a total dollar basis?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Tom, could you give some general guidelines the general answer on this?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Well, it's, like I say, it's still within the guidance. What we're seeing is the cost increases would be a little bit on a shift change. So there's a little a bit of overtime. We've kept most of the staff on board. We've changed business for our transportation. So we've got more buses in place. Normally, I'll say that this is approximately about CAD two million a month.

Joseph Reagor -- Roth Capital -- Analyst

Okay. That's very helpful. And then shifting gears a bit. So the grade for Q1 was kind of toward the lower end of the scale, but within it, for the year. Do you guys have some idea kind of as far as expectations on a quarterly basis over the remainder of the year? Is there a specific quarter you're expecting any better than the others? Or is it just kind of a flat guide of, call it, low eight grams per tonne the rest of the year?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

That's Joseph, that's a very good question. As we said, our grade is going to be within a range. That's part of our guidance, the range of the grade. I think everybody needs to understand that Brucejack deposit is a very unique geological context. I'm sure you all know that. It's a very different geology. It is going to continue to be variable. My understanding is that there's been a lot of progress to understand the geology and the grade distribution, but it's not perfect yet. So we're going to continue to see variation from quarter-to-quarter. That's going to continue, but so far, our plan for this year, and from what I've been able to look at and discuss with the team, is within the range that was disclosed and it's gonna be within that range. There's going to be ups and there's going to be downs, and we're going to move a little bit around.

And I think everybody needs to understand that this mine is not like other gold mines where you can dial in the grade and be fairly consistent quarter after quarter, year after year. This is going to be a little different. The objective that I have and that the team has is to be able, over time, to reduce that volatility, to reduce the range of grades and which we're going to be operating. But there will always be volatility with that deposit. We'll never be able to say it's going to be x, and it's going to be x every quarter and flat for the balance of the year. We continue to expect that some quarters will be higher than Q1, and some quarters may be closer to Q1, but it's going to be within that range from what we can see right now.

Joseph Reagor -- Roth Capital -- Analyst

All right. And one last one. Obviously, you guys expressed that you think you can catch up for the COVID-19-related impacts for drilling and development. But could you guys kind of give us an idea of like how long the catch-up time might be like per month of time that you lose for COVID-19 for development and drilling, like how many months it will take to catch that back up?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Yes. Joseph Dave, could you give a little bit of an answer on that one?

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Yes, I can, definitely. Obviously, I'll start with the resource drilling. We that's on hold right now, full stop. So when we get back into drilling again, which hopefully we're thinking in July now, but again, we'll be depending when the restrictions are lifted. We didn't have a lot of meters programmed this year. So I don't see any issues with the meters we had budgeted that we'll get those by the end of the year. In regard to RC, we have started RC, and we showed in Toronto at the technical session that we had Phase one and two. Phase one, 14,400 meters. We're at 3,000 2,500 into that already with the drill we have on site. So it's not that we stopped the RC.

We just haven't started the other two drills that we have on site, waiting to be commissioned. So I believe even with one drill running from at the end of the year in the RC program with the Phases one and two we showed, we still get those done. We also stated that we had about 100,000 meters approximately 100,000 meters budgeted of RC. If that doesn't happen this year, it won't impact this year's production. That will be pushed off to next year. It might be different there because we'll have to start mining in those areas toward the end of the year. So we'll just push those out to next year, but it won't impact this year's production.

And then in relation to the development, as I stated before, the development is we're losing our longer-term development out there for the longer-term resource drilling. So those won't impact the near-term production, but I do hope, as I sit here now, that we should be able to catch those up by the end of the year. That's what we're pushing the team for. It will all depend. And as I mentioned, we're back up to full resources now, and we're achieving our daily goals and exceeding them. So it just depend if we have another COVID impact. I hope that answers your question. Thank you.

Joseph Reagor -- Roth Capital -- Analyst

Thank you. Yeah, great thanks. I'll turn it over, guys.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you, Joe.

Operator

Our next question comes from Adam Graf of B. Riley. Please go ahead.

Adam Graf -- B. Riley -- Analyst

Hey, Tom, and Richard. Thanks for taking my question. Most of my questions have been asked, but just super quick here. Maybe you could remind us of the quarterly debt required that's required to be repaid for the rest of the year?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Yes. Tom, do you want to take that one?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Sure. Thanks, Adam. Our quarterly payments are $16.7 million, and that's every quarter for the duration until the end of 2022.

Adam Graf -- B. Riley -- Analyst

And on a slightly different subject. Can you guys just remind us of the payable rate you guys get on the concentrates?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Tom?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

So that we get approximately 92%, I believe, plus or minus.

Adam Graf -- B. Riley -- Analyst

And have you guys been able to make any progress on recovering more to dore versus concentrate?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Yes. Dave can answer this one.

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Yes, Adam. As you know, our gravity recovery at Brucejack is exceptional. It's exceeding 60%, which in the feasibility study, we're around about the 50% level. So we are pushing that circuit. So yes, don't expect us to get a lot more out of it. It's running pretty much at max. There is a sweet maximum. There is some tweaking we could do once we get some other things sorted out, but I don't see that happening in the very near term. And it's only a very minor adjustment that will increases that would be expect to get out of that, obviously, because of the high overall recovery we're getting in any case. I'll hand the question back.

Adam Graf -- B. Riley -- Analyst

All right, great, thank you guys. Appreciate it.

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Thank you, Adam.

Operator

Our next question comes from Andrew Mikitchook of BMO Capital Markets. Please go ahead.

Andrew Mikitchook -- BMO Capital Markets -- Analyst

Thank you. A lot of great questions already been asked. Maybe, Jacques, I'll just ask a slightly unfair question, but maybe post this COVID, do you think that we should kind of expect under your guidance a bit of a revision on, for lack of a better word, the mine plan or priorities and expectations that you guys are delivering to the market? And all else being equal, would that be kind of later this year you'd expect that?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Andrew, thanks for the question. At this time, Andrew, it's a bit early for me to tell you if I think or not, there's going to be a need for revision. In the past months, I was able to spend before taking the job, I was able to spend a lot of time looking at data and information and reports and whatnot. And I believe the current 43-101, the current plan is a good plan, makes sense. I'm sure I'm 100% sure that once we start to dive into the details, as you know, Andrew, these 43-101s, they are done at certain points in time. And you get new information and you learn new things and you always come up at some point, you have to issue another one to adjust things.

So I'm sure there's going to be some adjustments. But again, at this time, I don't see any reason why we would I would expect to put out a significant change toward the end of the year or next year? Or that's not in my plan right now. But like I said, you never know what's going to happen, but no nothing on the horizon at this time.

Andrew Mikitchook -- BMO Capital Markets -- Analyst

Okay. And just one question maybe for Tom. I guess just to be clear, I think you used the word that there is very negligible impact in Q1 from COVID precautions and costs. Obviously, does that imply, based on some of the other commentary and responses, that there would be a more substantial impact in Q2 at this point in time. Is that a fair expectation?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Tom?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Yes, I think that's correct. And I think I just said that we're sort of nominally about CAD two million on a monthly basis. And it just depends how long these restrictions are going to be in place. So I think I'll leave it at that.

Andrew Mikitchook -- BMO Capital Markets -- Analyst

Great, thank you very much for that.

Operator

Our next question comes from Anita Soni of RBC World Markets. Please go ahead.

Anita Soni -- RBC World Markets -- Analyst

Hi, good morning guys. So Andrew kind of covered off the two questions that I felt had not yet been asked, but I'll ask another couple then. Just in terms of the trajectory of the grade, I know you talked about volatility. I think we all understand that it's a very volatile mine in terms of grade. But can you just give us a bit of a road map on how your development work has an impact on grade, if it does at all?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Dave, do you want to answer that one?

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Yes. Anita, good question. Yes. We have our mine plan set out pretty much from last year. We bring other stopes in as we get more information avail along. I mean if they're obviously meeting several constraints and grade is one of those, we have all of the stopes in this year's mine plan are at the highest confidence that we could gather together within the sequencing that we could mind to. So I think there's no issues there. And also I previously stated that the development constraints or reductions aren't going to hurt us in our mine plan in the short term. So I hope that answers your question on that.

Anita Soni -- RBC World Markets -- Analyst

Okay. Yes, it does. And then secondly, in terms of the discretionary debt repayments, Tom, could you tell me which one of your what you're referring to there? And which ones are discretionary and what isn't?

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Tom?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Sure, Anita. Yes, sure, Anita. What we had set out at the beginning of the year was related to the free cash flow that we were generating. And that was what I was referring to as discretionary repayments on our revolver. So we said that we would have about $150 million to $230 million or approximately $100 million to $107 million of free cash flow, and that was going to be directed at debt repayments. When we set that the earlier year before this COVID-19 came upon us, so that's what I was referring to. It's just use of free cash flow.

Anita Soni -- RBC World Markets -- Analyst

Okay. So just so I'm clear, I'm just wondering if you're do you have to apply for relief to your debt holders to not pay? Or are you free not to pay right now?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

On the ROI, there is no yes. There is no requirement to pay any of that down.

Anita Soni -- RBC World Markets -- Analyst

Okay. And then lastly, I guess my question, I guess, comes back to the taxes that were adjusted out. Could you give us an idea what a more normalized deferred tax number would be? I see in your notation that the taxes were basically about $18 million. And I think one or two with cash taxes, and the rest was excluded in your adjusted number. But it seems like only about $8 million was related to the kinds of fluctuations you're talking about, revaluation. So is it fair to say that the remaining amount, maybe another $8 million would be a more normalized deferred tax number?

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

I would generally, for planning purposes, use our deferred tax rate at about 30 36.5%, 37% approximately. The fluctuations are really based on things that are sort of beyond our control and just occurs when we have changes in FX rates or changes in share prices that affect our stock-based compensation. So I guess that's sort of the way I would look at it.

Anita Soni -- RBC World Markets -- Analyst

Okay. All right, sounds good. Thank you.

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Thanks,

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you, Anita.

Operator

Our next question comes from John Tumazos from John Tumazos Very Independent Research. Please go ahead.

John Tumazos -- John Tumazos Very Independent Research` -- Analyst

Congratulations. Jacques.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you, John.

John Tumazos -- John Tumazos Very Independent Research` -- Analyst

So instituting a dividend where $0.01 would be just under USD two million, and nickel would be $9 million. It's not big money. Gold is up $400. And second question, are there any policies that you're reevaluating that you don't want to own from your from the predecessors, we heard you earlier dancing a little bit about ore grade, for example.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

So first part of your question, John. On the dividend front, at this point, and in the current situation, I don't have any plans to even think about dividends. I don't think it would be the right thing to do. We still have a lot of debt on the balance sheet. We need to continue to grow this business. So for the time being, that's not on my radar. However, that's a Board decision. It's not a CEO decision, it's a Board decision, so we'll if we and I'm sure it's there's going to be we're going to have discussions. But if you want my point of view, it's not like I said, this is not on my radar right now.

And with regards to policies, yes, John, I in the next months, that's I want to like I said earlier, I want to learn the business. I'm going to spend a lot of time. The month of May will be time meeting the team and spending time at site. I want to go at site for a good seven to 14 days at site in the month of May. So that's going to be number one for me, number one priority. And then the month of June, I'll be looking at all these other things and policies and whatnot and come up to a conclusion on what we need to adjust, what we need to keep, what we need to change. And then, like I said, in the month of July, put the plan together and see how we're going to approach all these things going forward.

Operator

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Perron for any closing remarks.

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

Thank you. As we all know, we are living in very challenging times. However, the Pretium team has done an excellent job managing the business in this unprecedented situation, and we will continue to do everything we can to minimize the impact of the pandemic on our operation. I'm excited with the potential of our company and look forward to work with the team to create value for all our stakeholders.

Thank you, everyone, for dialing in into our earnings call this morning. We appreciate your comments and your questions. Stay safe, stay healthy and wash your hands, and have a great weekend, everyone. Bye now.

Operator

[Operator Closing Remarks]

Duration: 59 minutes

Call participants:

Tom S.Q. Yip CPA, CA -- Executive Vice President and Chief Financial Officer

Richard O' Brien B.A., J.D. -- Chairman

Jacques Perron B.SC., P.ENG, ING. -- President, Chief Executive Officer and Director

David Prins B.ENG. TECH -- Vice President Operations, Brucejack Mine

Justin Chan -- Numis Securities -- Analyst

Heiko Ihle -- H.C. Wainwright -- Analyst

Mark Mihaljevic -- RBC Capital Markets -- Analyst

Joseph Reagor -- Roth Capital -- Analyst

Adam Graf -- B. Riley -- Analyst

Andrew Mikitchook -- BMO Capital Markets -- Analyst

Anita Soni -- RBC World Markets -- Analyst

John Tumazos -- John Tumazos Very Independent Research` -- Analyst

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