Good morning, and welcome to the GCM Mining Corp. first quarter 2022 results webcast. My name is Brandon, and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session during which you may dial zero one if you have a question. Please note it is zero one, not star one. As a reminder, this conference is being recorded. I will now turn the call over to Mike Davies. Mike, you may begin.
Great. Thanks, Brandon. Good morning, and thank you for joining us this morning for our first quarter 2022 results webcast. Joining me on the call this morning is our CEO, Lombardo Paredes. As is customary, I'll first go through our prepared remarks regarding the first quarter, and then Lombardo will join in through the Q&A session. Before we begin, let me remind you of our cautionary statement regarding forward-looking statements that may be made by us in this morning's webcast. Last night, we released our first quarter results. The financial markets have been very volatile so far in 2022, and this past week has been no exception. At times like this, we find our best course of action is to focus on what we can control, our cash, our costs, and our execution.
We are pleased with our first quarter 2022 results, which highlight our commitment to staying focused on what we can control. Production, cost, adjusted EBITDA, earnings, and cash flow results all met our expectations in the first quarter of 2022. From a capital structure perspective, we have used our Normal Course Issuer Bid over the first four months of 2022 to repurchase and cancel approximately 400,000 shares, keeping us at 98 million shares issued and outstanding at the present time. At current market prices, we expect to be active starting again next week using our Normal Course Issuer Bid to purchase additional shares for cancellation once the quarter-end blackout is lifted on Monday. We maintained our dividend policy through the first quarter of 2022, continuing to pay CAD 0.015 per share on a monthly basis.
This resulted in total dividends paid of $3.5 million from our free cash flow in the first quarter. Since we implemented our dividend policy in the second half of 2020, we have paid out total dividends to our shareholders now of $17.5 million, and our next monthly dividend will be paid on Monday. In mid-April, we pre-released our first quarter 2022 production of 50,000 ounces of gold from Segovia. Last night, we announced another solid month in April, in which we processed an average of 1,693 tons per day at a head grade of 12.4 grams per ton, resulting in 18,321 ounces of gold in April.
This brings the total gold production for the first four months of 2022 to 68,272 ounces, and for our trailing twelve months to a total of 208,130 ounces, up about 1% over the 2021 calendar year. We remain on track to produce between 210,000 and 225,000 ounces of gold at Segovia this year. Taking a closer look at our first quarter production, we're seeing a trend that has been taking shape for a couple of years now when you look at our annual reserve and resource updates. El Silencio is continuing at a very steady rate, and Sandra K. is continuing to take on a more prominent role in contributing to our production.
These were the two mines with the largest year-over-year increases in our recent resource update. Providencia is still making a solid contribution, but grades have come down from about 20 grams per ton in Q1 of 2021 to 15 grams per ton in Q1 of 2022, as certain of the super-rich areas we had been mining have been depleted. Carla is starting to make a greater contribution to our production this year, and the small scale miners are continuing to perform very well. In the first quarter of 2022, we sold 53,645 ounces of gold, about 3,500 more than we produced in the quarter, which represented the production in December 2021 that remained in our year-end inventory as a result of the normal holiday shutdown period at the refinery.
With an average realized gold price of $1,860 per ounce, our first quarter 2022 revenue was $101.3 million, about 5% higher than the first quarter of 2021 after adjusting from our model. Our revenue in the first quarter did not include anything for the zinc and lead from the concentrate production at our new polymetallic plant. We expect that this will start toward the end of the second quarter now that we have selected an offtake customer and expect to commence shipments of the polymetallic concentrates in June. From a cost perspective, our cash cost came in at $817 per ounce in the first quarter, a slight improvement from the first quarter a year ago of $825 an ounce at Segovia.
Our all-in sustaining cost came in at $1,187 per ounce sold in the first quarter, including $159 per ounce of sustaining CapEx at Segovia, largely our ongoing exploration and development at our four producing mines. We had $58 an ounce of ESG expenditures in the first quarter, $82 an ounce of G&A, and $60 an ounce of costs related to our free trade arbitration proceedings with the government of Colombia. The free trade arbitration costs were significantly higher in the first quarter this year as we filed our last major memorial with the tribunal ahead of hearings scheduled to take place later this year. The decision on this matter could be coming next year. For Q1, our all-in sustaining cost margin was about 36% of our realized gold price, compared with 33% for calendar 2021.
Our adjusted EBITDA came in at $45.2 million in the first quarter, reflecting the impact of the free trade arbitration claim costs and quarterly results, but not too different from where we were in the first quarter a year ago at $46 million. Our trailing twelve months adjusted EBITDA stood at $170.5 million, implying a leverage ratio below 2x as expected. In the first quarter of 2022, our cash flow metrics remained solid, with $24 million of operating cash flow, bringing our trailing twelve-month operating cash flow to $91 million, up from $81 million in the calendar 2021 year. Our free cash flow after Segovia's CapEx was almost $11 million in the first quarter, more than sufficient to fund our dividends and normal course issuer bid purchases.
Our trailing twelve-month free cash flow improved to $34 million from $26 million in calendar 2021. Our balance sheet and financial liquidity remained strong in the first quarter. We finished the quarter with $315 million of cash. This, after paying $14 million of tax installments in Colombia and making the first $10 million semi-annual interest payment on the senior notes. Our VAT receivable in Colombia did increase as expected in the first quarter, but we anticipate receipt before the end of the second quarter of the $28 million of refunds from last year's VAT claims, and this will cover the income tax installments that we have coming due in the second quarter of this year. On this slide, just a reminder of our annual reserve and resource update we announced for Segovia in late March.
We had a very successful drilling campaign last year, and we've continued the similar emphasis in the first quarter of 2022, with over 8,700 meters drilled by our exploration team, principally at El Silencio and Sandra K, and another 6,500 meters in our brownfield program focused on Cristales, Marmajito, Manzanillo, and Vera. Our mine geology team has also continued to be active with underground drilling programs at El Silencio and Sandra K, and we expect to have results updating on these drilling programs later this quarter. We have three important infrastructure projects on the go at Segovia. Our expansion of the Maria Dama plant to 2,000 tons per day is progressing well and should be completed in the second quarter as expected.
We're continuing with the construction activities in our El Choco tailings storage facility, where we use filter press systems and geotubes to dry stack our material in accordance with international best practices. We're completing some of the upgrades of equipment and systems at the new polymetallic plant to automate certain processes and add warehousing space as we increase our treatment rates towards the 200 tons per day capacity level in the second half this year. Lots of exciting investment activity that is truly remarkable in the way it is expanding and upgrading our Segovia Operations. Turning to our Toroparu project in Guyana. Our team is working very diligently to prepare this project to go into formal construction mode once we complete the PFS in the third quarter and finalizing the mining license mid-year.
Drilling has continued to infill the resources required for the PFS, and Lombardo and the team are conducting several key processes to select the mine contractor, the power plant contractor, and the main civil works contractor, while pre-construction activities related to the project site, camp, and southern access road are carrying on. We spent $6.7 million in the first quarter of 2022 on these various activities, which was funded by the net proceeds from the senior notes issuance. Lombardo will no doubt provide further details on the Toroparu project when we get into the Q&A portion of this webcast. In this last slide, before we get into the Q&A session, I wanted to highlight a couple of things related to our equity investments.
At Aris Mining last night, they announced positive results from their performance optimization initiatives at the Marmato Upper Mine, and construction activities are underway related to the Lower Mine expansion. Equally important, they have taken steps to step into the operator role at their latest acquisition, the Soto Norte project in Colombia, one of the world's largest undeveloped gold projects with tier one scale and economics. Exciting times for Aris Gold as it moves forward with its expansion strategy. At Denarius Metals, drilling at the Lomero Project continues to confirm the historic polymetallic resource, and the company is advancing towards an updated mineral resource estimate and a PEA by the third quarter of this year. We continue to see both of these investments as key value drivers for shareholders of GCM Mining. With that, Brandon, we can now proceed with the Q&A session.
Thank you. We'll now begin the question-and-answer session. If you have a question, please dial zero one on your phone keypad. If you'd like to be removed from the queue, please dial zero two. If you're on a speakerphone, please pick up your handset first before dialing. Once again, if you have a question, please dial zero one on your phone keypad. On the line, we have Carey MacRury. Please go ahead.
Hey, good morning, guys. Maybe first, do you see any potential impact from the upcoming election in Colombia on the mining industry?
All right. Okay. Let me answer that. So far, you know, as you know, the election in Colombia is a tight race between the center right and the left. We're going to have two rounds. The first round probably, you know, Petro is going to be the winner. In the second round, we strongly believe that Federico is going to win, probably with a margin of one, no more than one million votes. So far, what Petro, the leftist, has said is that he will forbid exploration and in the oil industry.
Petro has been attacking the oil industry, and he is thinking that he can replace the revenues coming from the oil industry with revenues coming from tourism. To that, he's planning to bring 50 million people per year, you know, coming into Colombia for that. In the mining industry, so far he has not been strong announcing, you know, a strong measure or that kind of things. On top of that, remember that our title in Colombia is not a concession. It's a property. We own the land and the underground in perpetuity.
You know, more, you know, the majority of the thing that he can apply in an eventual case to the mining industry, you know, it will apply to company who have concession. We don't have concession. We have property. We have private property on our title. Yeah, I think that can reflect the situation in Colombia now with the election.
Okay. Just moving on to Toroparu. I know we talked a little bit on the last call around, you know, capital. Obviously, we're seeing capital inflation there. Any update on the PFS, either in terms of capital or operating costs or any other sort of moving parts?
Yeah. The PFS, you know, remain to be delivered, you know, in July. Yeah. That will allow us to have a much better estimate. I would like to talk a little bit more about that. Our cost estimate for the Toroparu project, based on the PEA, is $355 million. Remember that our PEA is not a typical PEA. A typical PEA is a document which, according to the American Association of Cost Engineers, is a Class 3, Class 4 estimate. So with 90% probability to be ±30%.
Our case, the PEA, because that project had been, you know, on the table since 2001, 2002. That project has a lot of information, much more information than, you know, than a typical PEA. Our estimate is not a Class 3 estimate. It's more than that. It's close to a Class 2 estimate. Class 2 estimate is an estimate which is with 90% probability to be within ±20%. One strategy that we use in our project is to, for example, in the PEA estimate, we are supposed to do our own mining. We are supposed to generate our own electricity. We are supposed to store and distribute the fuel with our own resources.
We decide to use a mining contractor, and we decide to use a BOO build and operate power plant. We decided to use a BOO, build own and operate, fuel plant, which we store and distribute the fuel. In those processes, for example, the mining contractor, we are in the final stage to award the contract. Now we are deciding with two contenders. Out of the four, the initial bid was 5. Reduced to 4, and then reduced to 2. The BOO, we already have a winner in the contract. With that information in hand, that information will dictate. That information is quite good because coming from the contractors.
That information will deduct from the estimate, from the $355 million, an amount of money which is between $66 million and $75 million. Also, to gain time, we are not waiting to have, you know, the contractor for the Engineering, Procurement, and Construction Manager for the power plant, for the processing plant and related facility. We are advancing on that. We prepare all the specifications for the long-lead items. Now we are out in the market, you know, to get quotations from the long-lead items. We have bidders, a bidder from China, Europe, and the States. We will see.
With that information in hand, we will know the delivery time of the long-lead item and the cost. If that is going to have some impact on the project or not. For example, the contractor for the front-end loading engineering for the processing plant is in place. It's Segment. It's an American company doing that. Also, we are expecting proposals from Segment to do the engineering procurement, you know, for that part of the project. At the moment when we are going to produce the PFS, we are going to have a lot of information which are close to a Class 1 estimate. We are confident that we are going to maintain, you know, the amount of money that we have in the budget.
I'm not going to say that, you know, that the disruption with supply chain or the inflation is not going to have an impact on the project. Yes. It's going to be minor. I can say for certain that probably the cost of the project in no case will be over $370 million, for example. Okay. That is more or less a résumé of what we are doing there in Toroparu.
Okay. Once again, if you have a question, please dial zero one. Standing by for anything further. From Marathon, we have Chris Dicario. Please go ahead.
Yeah. Hi. Thanks for the call. Just wondering also on Toroparu. It says you know, you said the finalization of the formal mining license was in process, completion expected by mid-2022. What are the risks around that and around maybe that getting delayed or for some reason not receiving it at all?
Okay. Yeah. We submit all the documentation with the government, you know, to get the final mining permit. We are in the process. We are, you know, working on that. On the, you know, the bureaucratic procedures and that kind of things. We are expecting that we will have that for July. But the advantage in our mining permit is that we will not need that until we are in the pre-stripping phase of the project, which will start in the first quarter 2023. That is the moment when we are going to need the final mining permit. We have some spare time in case that we have some unexpected delays.
Because for the roads, camp construction, you know, internal roads, starting the civil work related with the tailings facility, we will not need, you know, the mining permit according to the Guyana legislation. I don't see any risk that we are not going to have our mining permit on time to go to start the, you know, the real mining work on site.
Great. Understood. Thank you.
We have a follow-up from Carey MacRury. Please go ahead.
I just wanted to follow up on the previous question. You know, obviously a lot of moving parts in the macro picture. You know, you got interest rates, supply chain challenges, COVID still lingering. Is there any scenario where you potentially, you know, delay the project and let things, you know, calm down on the macro front? Is it pretty much a go in your mind?
Well, according to my previous explanation related to the cost. We have enough money to continue with the project because even if the project is going to cost $350, something like that, we have enough money to do that. We do not foresee any problem, you know, to go ahead with the project.
Okay. Fair enough. Thank you.
We have no further questions at this time.
All right. I've got a couple here from viewers through the webcast. One is providing a bit more color on our G&A expenditures, expenses for the quarter and the trajectory going forward. Should we expect it to stay elevated or return closer? As I said in my upfront remarks, Q1 was a very unusual quarter. We have been involved in this free trade arbitration with Colombia the last couple of years, and we've typically had, around, you know, $4 million a year over the last couple of years of expenses related to this matter as it was moving along with the tribunal. However, this first quarter was a very heavy quarter.
Probably the most heavy quarter we've had so far in effort from the legal and other advisors, as mentioned, making the final submission ahead of the hearings that'll take place later this year. The cost was much more elevated in this quarter than any other quarter we've seen. With that, Q2 should be much more sedate. Q3 will probably pick up with a little bit higher level of activity of costs again for that matter, as we get to the preparation and then the hearings themselves. Again should die down after that for going forward. There will be some volatility in G&A, certainly in the first and third quarters this year.
I would expect, excluding the free trade arbitration costs, that our quarterly G&A should be about $4-$4.5 million based on our structure and run rates that we're seeing in the business outside of the expenses for the free trade arbitration. Another question that's here, can I confirm guidance for CapEx for 2022, and how much is sustaining and how much we'll spend at Toroparu? As we had outlined in our year-end MD&A, we've got sustaining CapEx guidance for Segovia of $50-$55 million this year. We're maintaining that guidance, no change there. We had also guided up to $10 million of non-sustaining CapEx at Segovia.
That did include some expenditures on the solar project, which we just announced, where we're gonna cancel based on some changes in the project scope and costs that are unacceptable to us. We're gonna look for a replacement for that project, 'cause we still believe that having a contribution of solar energy in our operations is fundamental to our ESG strategy around climate change. We'll look for a replacement for that. At this point, we don't have a full answer on that. As far as Toroparu goes, I mentioned we spent about $7 million this quarter. It'll start to ramp up in the second quarter, probably somewhere in the neighborhood of $15 million in the second quarter and then the second half of the year.
you know, Lombardo, how much do you think we'll spend in the second half of the year based on your work you're doing right now?
Yeah, in the second half of the year, I think that we will be a little bit above $70 million.
$70 million. Some of that will be funded by installments from the Wheaton stream, which we are sorting out with Wheaton, and we'll finalize the installment schedule once we deliver the PFS to them in the third quarter. As Lombardo said, we're fully funded for Toroparu. We're fully funded, certainly through cash flow and cash on hand for Segovia. We're very comfortable with our CapEx exploration and development plans at both of our major projects this year. Brandon, is there anything else from-
We do have a question on the.
Okay.
Yes. We do have a question on the phone from Robert Metcalfe. Please go ahead.
Yes. Hi, Mike. Things look very interesting.
Hi.
I think it's actually a pretty good quarter, and I've most particularly picked up on the operating cash flow before the taxes. I thought that was a really great figure. Does that look like it'll be continued with the operations of Segovia into the future?
Yes. That's always depending on, you know, where gold price is, but certainly with gold prices over $1,800, our cost structure is, I think fairly predictable. The peso is also a little volatile, but certainly in our favor, today at 4,100 COP per US dollar.
I think as we move forward, the operating cash flow should continue to bode well. In the second quarter, as I mentioned, we'll pick up some additional inflow from the VAT, and we'll make use of that to make further tax installments. All in all, I think, from a cash flow perspective, things should continue to function well for us.
Well, it looks good to me and, good to talk to you again. Thanks.
Great. Thanks, Robert.
We have no further questions at the moment.
All right. Well, I'd like to thank all of you for taking your time this morning to join us. Obviously, we're available if there's additional questions that come up. Thank you.
Sorry, I got one more question.
Thank you.
Yeah, that's good. Thank you.
Okay.
Thank you, ladies and gentlemen. This concludes today's webcast. Thank you for joining, and you may now disconnect.