Good morning. We're very pleased to host Tony Makuch, the President, CEO, and Director of Discovery Silver. That's got 16 million ounces in Timmins and a bunch of silver in Mexico. Tony, let's hear all the good news.
Yeah, thanks, John, and appreciate getting the chance to be a part of this and get a chance to talk to you. I know last year we might have participated in the conference previously, but we were talking really about only having us being a silver developer in Mexico. Now, you know, through the acquisition of the Porcupine Complex off of Newmont, we've become a new Canadian gold producer. We think it's a pretty exciting time because we see, we definitely know there's a lot of upside in terms of what we're doing. Anyway, I appreciate the opportunity to talk, and I know it's lots of exciting things to do. These next two slides talk about forward-looking statements and cautionary language. We will give forward-looking statements. We will provide vision and view of what we think is going to happen.
You know, I think everybody should read it and that, but, you know, if we do not have a plan, if we do not have an idea of what we want to accomplish, we never get there. That is, you know, that is part of it. It is not necessarily, it is not a dream. I think a lot of this stuff can come to reality. We just have to make it work, right? It is a matter of doing the things that develop value in this industry and exploration. There is significant exploration upside, you know, how production and how we produce gold from that and how we benchmark ourselves and costs. Then, you know, there is lots of upside on talking about that and what it looks like and where we can go.
How we invest and build new mines or invest into the mines to pull costs down, build new mines, build new production, which creates new value for shareholders. The fourth leg of how we create value is when we acquire properties. This was definitely a very good acquisition from the perspective of a Discovery shareholder. We think there is still lots more opportunity in the region as we progress. It is a pretty exciting time. As we show here, this shows the land, the Porcupine Complex are the two main drivers on value within Discovery. We have the Porcupine camp, a historic mining camp, 70 million ounces of gold produced since 1910. We talked about it.
We have 15 million ounces we've identified today, and that's probably less than half of what's really still left. There is significant opportunity here. We did come up with a base case technical report that shows us producing 285,000 ounces a year for the next 10 years. At these gold prices, that NPV of over $3.4 billion. You know, our goal is to really build up and, you know, reduce costs and grow production in Porcupine. We think we can take this back up to a tier one asset at some point in time, which would be 500,000+ ounces a year. We have, we think a world-class, actually, we do not think, we know it is the largest undeveloped silver deposit, you know, silver reserve in the world.
It'll be, you know, when it goes in production, be 37 million ounces of silver equivalent on annual basis for, you know, 10 to 15 years, a long-life asset. Even in the mining we do, it'd be a fairly large resource over 1.3 billion ounces of silver equivalent. Our feasibility study only mines out about 65% of that. There's still lots of upside. You can see based on this figure here that it's in a very sparsely developed, but partly region of area within Mexico, easy to develop, not really any social displacement issues required at all. You know, lots of excitement in terms of what we can do with Discovery. This slide here just, you know, and I know Eric Sprott will talk to talk to him.
He said, "Why are we always embarrassed to talk about what our value is at these metal prices, right?" This kind of shows what our value, you know, is Porcupine, I think it said, talked about $3.4 billion. Cordero at $35 silver is over $2.3 billion. You can see that, you know, we are significantly trading at a discount to NPV still in our current share price. You can get us, and a lot of our peers are trading at one over 1x NPV, some up to 1.5x and even up to 2x NPV, now especially in the silver space.
On top of that, though, you know, you look at it, you say, you know, we're trading at either 0.34 x NPV in terms of the assets we have with the producing mines and the silver project, or 0.6 x NEV if we're only looking at Porcupine, which is gold production in Canada. The exciting part about this is, you know, everything we do, the upside from Dome, talk to you about the TVZ Zone exploration, they're all free in here. If you use the 0.57 x, and even free in terms of the value that we can create as we develop and build Cordero. I think there's, you know, it's an exciting time. Part of our job as management of the company, and we all work for the pleasure of the shareholders, and we're shareholders too.
You know, our goal here is to, you know, realize this value into the share price and bring in new value into the share price. Excuse me, this slide here is just, you know, giving you a sense of this, you know, cartoon-type map to show you where the operations are in Timmins. Really what we have is three operating mines: the Hoyle Pond, the underground mine, the Borden underground mine, which is in Chapleau, 190 km from the central mill in Timmins at the Dome mill. We have the Pamour mine, which is somewhat of a new open pit mine that we're building. It was an original open pit there. Now we're just extending the size of that pit. They say we have a central milling facility. We have a tailings facility that currently is permanent and has capacity to 2034.
I talked about a bit about the, you know, the mines, but I think a couple of highlights here, you know, and I think these are some things that maybe because these assets were always tied up in senior companies, maybe people do not understand. Hoyle Pond is one of North America's highest-grade gold mines, and we have grades definitely south of 10 grams per ton. You know, there were times when the grades were significantly higher. There is some higher-grade portions of the ore body. We need to, you know, continue to look at what we can do in terms of improving productivity at Hoyle Pond. In some mining, some of these narrower bay areas that were being ignored by Newmont just because they came up with minimal mining width and different sizes of equipment. We are going to look at that.
We think there's a lot of upside in drilling, etc., and upside in terms of gold production here. Borden is actually a fairly, is a new mine. It really didn't come into commercial production until 2019. It's a large land position and a new greenstone belt in the region. You know, it's producing about 2,000 tons per day. You know, in the PEA, our technical report, about 110,000-120,000 ounces a year for still another nine years in our current technical report. You know, it's been very limited exploration done over the last five years, almost non-existent. You know, we think we can continue to explore. I'll show you some things here about Borden. Then we have Pamour, which is a new open pit mine. It's situated, you know, right in the heart here.
Like I say, it's an extension of the original Pamour pit that was done in 2002 to 2008. There is significant exploration upside here, both in terms of underground development, but there is also potential to double the size, the geographical size of this pit by moving a railroad and doing some other things on the surface that create synergies. That is just going east-west or north-south in terms of the geography of the pit. There is also upside in terms of, you know, as we get costs down and as we improve productivity to deepen the pit and add more ounces that way as well. We have the Dome where we, you know, we do have a central milling facility here. It previously could process at somewhere around 4 million tons a year. It has been running at about 75% capacity the last five, six years.
You know, we see a lot of opportunity there, but we have the ability to bring on new sources and build over the next three to five years two new gold mines in Timmins, the Dome. Like I say, we have 11 million ounces of inferred resource. This is a resource all above 700 meters from surface. Some of it, you know, it could, you know, and the ultimate pit could require us to build a whole new central milling facility. There are options to look at other sources here. If we were to take this down to the full depth of the mine, there is significant exploration upside in terms of the mineralization at Dome. We have this TVZ Zone, which Goldcorp had done some work on back in the past, 2014, 2015, and 2016.
They had outlined a resource here up to almost 4 million ounces. Because it has different metallurgical process, they chose never to develop it. It is a fairly, like I say, a fairly large resource sitting nearby. You know, and then you have, and that is not in the resource model, by the way. Our resources that we gave up was Pamour, Hoyle Pond, Borden, and Dome in our technical report. We have nothing in our technical report about the TVZ Zone. We have nothing in our technical report about mineral inventory. I was thinking that Hollander, McIntyre, Paymaster, there is on our Delloite, there is significant areas. There is over almost 300 million tons of tailings that potentially could be reprocessed in the region. Like I say, we still see significant exploration potential. Lots of opportunity here.
If I'm talking too fast, don't be scared to ask a question or slow me down there, John. In terms of the technical report, this slide just shows the production that we showed from our three sources of production. The Borden project, which is in gray at the top, you're doing about, like I say, somewhere between 110,000 and 120,000 ounces a year. You see Hoyle Pond as it extends between 60,000 and 70,000 ounces a year over the next few years. You see Pamour. This 2025 is really a year. It really is not commercial production in 2025. This will be ramping up, and we expect to achieve commercial production sometime in 2026, probably the second half of 2026. You see a significant run rate in the current pit until 2046.
You know, as I said, there's a potential to more than double the size of this pit. You know, what we try to show here on the arrows is through exploration, we can extend the mine life at both Borden and Hoyle Pond. Through exploration and investment into these operations, we expect that we can grow productivity and increase productivity at both Borden and Hoyle Pond. That's value creation. You know, I mentioned earlier, we have the chance to build two new mines, the Dome mine and the TVZ Zone over the next three to five years, which will add to production here as well.
You know, all this plus the extension we talk about in Pamour and some of the other targets, you can see mining in Porcupine at these levels or higher levels till 2050, 2060. There is still lots of life left in this camp. A couple of things. I mean, the most important part is nice to mine gold, but, you know, we definitely have to make sure that these are supposed to be operating businesses that generate, you know, generate returns at the business level for the investment that's put in in order to create value for shareholders. You can see the difference in the, you know, definitely significant value creation. This is after tax. We do expect to pay a significant tax. Actually, in that PEA model, over the life of the model, we pay $3.4 billion in taxes.
It's a significant contributor to the local economy, etc., and to, you know, to support the governments in the region. You see a significant value creation for and cash available for the reinvestment. This is one thing that you try to lead people. You can see up to, it shows the cash flow coming in up to 2030. We're targeting with, and because I'm talking to you about all the different upside I see in the company, we don't expect that we're going to be doing any share buybacks or dividends at least till 2030. We're going to reinvest this. We think there's such amount of value creation to come here through exploration, through capital investment, and through building new mines and expanding mills that there's more value to be created for shareholders than they would get from any minimal dividend returns.
This slide is just showing, you know, sort of, again, we talk about how we're going to create value. You know, I showed you things like Hoyle Pond, Borden, and Pamour, three operating mines, you know, and what do we have to invest in from a capital point of view to improve productivity and reduce costs here. It's not necessarily all about increasing production because if we reduce costs at the same production, we create value for shareholders. You know, some simple things like ventilation, material handling, which extends as a shaft, improvements in new equipment, etc. There are better haulage systems that's tied into equipment and material handling. Backfill systems need to be reinvested back in. We talk about mining methods, and I just alluded to, you know, Newmont had a plan here, and they came with a minimum mining width of, say, five meters.
You have to bring this type of two-boom jumbos into slopes, etc. This is a camp that needs sometimes different attention. You know, I used to be the manager at Hoyle Pond, and we had shrinkage slopes mining to five, six feet wide. We had cut-and-fill slopes mining from six feet wide to 10-12 feet wide. We had long hole slopes. You know, you learned to use jack legs and stopers. You use long toms, you use one- boom jumbos in the yard. You use two- boom jumbos. You use one-yard LHDs or one-yard scoop trams, two-yard scoop trams, four-yard scoop trams, six-yard, eight-yard. We do not pick the equipment to mine the ore body. The ore body defines what equipment we use to mine it. Those are some of the things we can do.
Plus, again, investment and exploration upside can grow value, which, you know, again, I talk about a site length of about 500,000 ounces a year. You know, this slide here, you know, in terms of new growth besides what we're talking about at Hoyle Pond, Borden, and Pamour is, you know, we see the, you know, in a 100-year-old camp to build two new gold mines at Dome and Hoyle Pond TVZ zone mine. These could be two new mines. They're going to require, you know, improvements in processing or investments in processing in both alternatives. One with, you know, just increased throughput in order to do the Dome, which is conventional metallurgy.
You know, once we do the TVZ Zone and we unlock, you know, we put in a, excuse me, either, you know, an autoclave or a BIOX plant or a float circuit and ship our concentrates to a smelter somewhere. Once we unlock, once we're the first one to unlock this value creation in northeastern Ontario, northwestern Quebec, and the activity, I think it opens up a lot of doors to what can be done. By the way, like everything we're talking about here from a metallurgical point of view, it's no different than what Campbell, Red Lake Mine does. In Red Lake, i t's no different what all the mines in Nevada do. It's no different than, you know, Fosterville did in Australia. It's not like where it's new technology on the metallurgical side. It's just adopting that and putting it into play here in this camp.
It's never been done before.
Tony, if I can just elaborate, two companies ago, when you had Lakeshore Gold, there were metallurgically complex zones that are now idle, never developed in the possession of Pan American Silver. Those are examples. There was another company, the Bradshaw Mine, that was shipping concentrate to China. There are several specific opportunities if you had a bi-oxidation plant or refractory plant or autoclaves where you could process other people's nearby ores. That's what you're referring to.
Yeah, yeah. What you're referring to there is at Pan American now or Lakeshore, we had what's called the, we call it the Gold River Zone, which we identified just around 1 million ounces of 8-gram material.
Then you had the Bradshaw Zone, or, you know, which is, it is about a, it was close to a million ounces as well in terms of deposit size. Both of them sitting there undeveloped. The TVZ Zone, I mean, you know, you had a pre-feasibility study being done by Goldcorp, which outlined mining of 2.5 million ounces with upside up to 4 million in mineral inventory. If you do extensions, I mean, this could be a large resource as well. There is lots of upside. Hoyle Pond, by the way, when I was the manager at Hoyle Pond Mine, a lot of the actual Hoyle Pond or the 1060 zone, which is the zones being mined now, there are refractory portions within those zones.
But the grade is so high, we were getting 50%-70% metallurgical recovery on this stuff, but the grades were anywhere from, you know, 18 grams-25 grams per ton. Even at 50% recovery, it was still pretty 12 grams per ton, 10 grams-12 grams per ton recovered. It, you know, it was still something that went through our conventional mills at the time. You know, there is lots of other upside in the region. We did do some test work, by the way, when we were Kirkland Lake Gold on the refractory ores in Timmins. We mirrored the processing we were doing down at Fosterville on the BIOX to prove that it worked. Showed that we knew it could work.
You operated a heated bio leach at Fosterville when you ran Kirkland Lake.
Yes, yeah. Yeah.
I mean, the one thing that was unique about the BIOX in, you know, I know I was at Campbell when they decided to put in the autoclave as opposed to gold BIOX. We had done work at BIOX. I mean, this is early 1990s now. They had done work in BIOX. They had done work on the autoclave. BIOX was just coming new. There was concern that the work had showed that it worked. There was concern that the bugs were dying in the cold weather. We went to an autoclave to replace the roaster that had been in place at Campbell for years. When we go down to Australia, when I'm already looking and there's this, you know, you have this mill all open, but there's a huge building, which is the size of a Home Depot on the side.
I said, "What's that building?" He said, "Oh, it's air conditioners. We've got to keep it cool." Because it's an exothermic reaction, you have to cool it down to 43 degrees Celsius. You know, it's kind of, well, and, you know, since then, like I know Victoria Gold was able to prove that you can do, you know, that heat leaching up in the Arctic and such or so, you know, just because it's winter does not mean it limits our ability to do some of these metallurgical processes. Anyway, moving on here, this slide is just showing the Dome mill. I made some reference to it earlier. You know, part of our goal here is to return the mill up to about 12,000-12,500 ton per day capacity that it operated on until about 2012, 2013.
It's currently doing about eight to nine thousand tons per day at the mill. Actually, since we've turned it on, we've been running almost between 9,500 and 10,500 tons per day this year. You know, we did have a two-week shutdown to make some repairs. There's still a lot of work to do to improve availability and utilization rates of the mill. Some of it, if you come up there, there's leach tanks still to repair. There's CIP tanks there. You know, they've been left, excuse me, and they've been around for a number of years. You know, a lot of them are corroding, so they need to be replaced or repaired. We got stuff like that to do in the mill. You know, we got to put, there's no automatic sampling in the mill. We got to improve that.
We want to improve crushing and grinding. You know, and, you know, this slide here is showing a lot of stuff. If I were to show this, if you can see my mouse, this is, this here is where the crusher is. The crusher is here, and then it goes down into a bin, the low surface, and it comes up a ramp, and it gets ramped up into here, which is then another bin, which is the coarse ore storage. From here, there is a long conveyor gallery that comes to here. Right over in this corner, there are two stages, the secondary and tertiary crushing in here. This is a screen deck. You can see the two different conveyors. You have the recirculating load going through here, and then you have the final feed going to the mill.
This is all legacy because Dome was running both an underground mine and an open pit, and they kept it all together. This alone costs a lot of money. You know, these are the type of things that if I go back to when Lakeshore back in 2012, you know, we had known that their cost used to be about CAD 11 a ton to process here. Now the costs are over $23 a ton processing costs. This is, you know, even legacy in terms of closure costs. This is something we're going to look at over the next few years to remove and replace with a jaw crusher, single jaw crusher, and maybe put a side mill here to help us increase throughput, but pull out a lot of operating costs out of the plant. Just one option.
Anyway, you know, that's one of the unique opportunities we have is if we can increase productivity with a current plant from 9,000 tons a day to 12,500 tons a day, that's, you know, that's basically a million tons more a year. You know, that's going to significantly improve our production. You know, in a 100-year-old mining camp, you think, you know, it's been explored, and there's been a lot of drilling, and there's been a lot of resource here. I mean, one of the unique parts, you know, we always have to keep our feet on the ground, recognize that we're at $2,000 gold when we target our exploration program, a lot different than $30 gold or $1,200 gold that was here in the past.
You know, we're in the right environment in terms of higher gold prices, and then unlock some of these other zones that can now be, you know, become economic in terms of what you're doing. There's multiple targets where we look at Hoyle Pond. I'll show you some of this in 3D, Borden, where it's extension. Borden also, with the Greenstone Belt, there's only about 10% of it that has really been explored. There's really only, they've been only looking at the one discovery, which is the current Borden mine. I'll talk to you about Pamour. I think there's, besides this ability to grow the Pamour pit, you know, it extends both north-south or north-south-east-westerly, as well as at depth, there's significant underground exploration potential at Pamour.
I say we talk about Dome, and, you know, there's all kinds of other exploration areas like I could talk about in the camp. This is Hoyle Pond. You know, as I talked about, high-grade underground mine too, you know, we talk about from a point of view that one of the highest-grade gold mines in North America, you know, at the average grade of mineral inventory over 12.9 grams per ton. And you can see what they're mining at. And we think there's some potential improvements in grade control we can have by, you know, cutting out not mining as wide as we have here. They say this mine has continued to prove that it can extend resources year over year. This is just a slide showing the Hoyle Pond mine.
This is really the Hoyle Pond in terms of what it looks like today in terms of where the mining's taking place. This is the TVZ zone that I talk about, sitting right up in here. This is TVZ. You can see the TVZ zone. My mouse isn't working the greatest. I wonder if my fingers are better. You can see significant extensions here. I don't have them. Just to give you a sense on the exploration, a lot of exploration upside at the top. You know, one of the things I, you know, I think is always worth talking about here. I'm not sure if this view is going to give you the best view of what I want to show you. Maybe it's this slide here. This slide here will give you a good view of what part of what I want to show you.
This is, by the way, the Hoyle Pond mine included all this at the time. I was a manager here where we had development going almost halfway towards Out Creek. This was all part of Hoyle Pond at one time. The original Hoyle Pond deposit is really just sitting right in here. As it got deeper, I mean, this was, you know, this was the 1060 zone or the Inco Gold Ground that was acquired. You can see that there has been continuous exploration and development on 1060 over the years. Hoyle Pond, they came down to about 350 meter level. 1060 was really doing well. All the exploration, all the efforts went here, and they just continued to mine extension. They drilled a few holes. Yeah, it looks pretty quiet or whatever. Nobody continued looking down here.
I mean, if I were to show you outlines of the camp, you know, things progress, things come and go, come and go in a lot of different areas. There is some significant resource or deposits out in these areas. The difference in these deposits, excuse me, if I can reference, again, when I was here, we were mining at Hoyle Pond and 1060 zone or the Inco Gold and Falconbridge Gold Ground in these areas at over, you know, 14 grams per ton. You had a bunch of some large-scale materials here were anywhere from 5 grams-7 grams per ton. You know, out towards Out Creek was somewhat refractory mineralization. You know, we had an 800-ton a day mill that we expanded to 1,200, that we expanded to 1,500 in the period of time I was here.
We did not have, we were filling it with 18 gram material and 14 gram material. We did not even look at any of this stuff. You know, I remember having some stokes in here looking at these things and that there are some significant mineral blocks here. All this drilling that I am showing here is all drilling pre-1996. This is Borden. Again, we have mentioned you about being a serious miner.
Hey, Tony, did you say that there has not been new drilling around Hoyle Pond since 1996?
In this area of Hoyle Pond, I would say yes. Very little out here at all. All this drilling at Hoyle Pond.
Following the main structure down plunge.
Following the main structure down plunge. Right. This is where the majority of the efforts have been. You know, rightly so, right? I mean, they have been successful. It feeds the mine.
It fits where the infrastructure is. That is what they have been doing over the years, right? Just follow down on here as opposed to looking extension-wise. This is where I think there is lots of upside in terms of what we can do here. We are going to explore. If I, you know, again, the history of, if you go to the Dome mine, if I were to show you sections of Dome Hollinger, if I were to show you sections of Campbell mine, I worked at Campbell mine in Red Lake for over 10 years. You know, we had, you know, the zones at Campbell was every letter of the alphabet was a zone. Some of them were 500,000 ounces, some of them were 200,000. Some of them were 1,500,000 ounces that came up to make a total of 15 million ounce resource.
There was an A, B, and C, D, they're all letters of the alphabet. There was an F and zone, and an F1 and an F2 zone, and an A1 and an A2 zone, and a North L zone. You know, there's multiple zones. I think at the Dome, you know, I think we talked about there's like 36 different mineral zones that were mined. Just because you run out of one zone doesn't mean it's the end of it. You just got to keep looking, right? This is Borden. Again, I talked about a fairly new mine. It's run out of Chapleau. It's strictly a ramp access from surface. It's been a pretty successful operation, averaging about 2,000 tons a day or 700,000 tons a year, average grade somewhere around six grams.
It's been producing between, like I say, between 110,000 and 120,000 ounces a year. We see, you know, like there's one thing to look at trying to say, look, should we increase productivity here and get the grades up, or sorry, get the production up from 2,000 tons a day to 2,400, etc. You know, we also want to look at, you know, it's not necessarily about mining tons, it's about mining ounces. Can we mine less tons and get the grade up? These are some things we're going to look at over the next while. This is just showing you a little bit of drawings on what Borden looks like. It's fairly large land, but you can see this is the system at Borden. Again, been following along on the existing system. Lots of geological potential.
You can see the drilling, you know, as you go up higher. Sorry, I'm using a different computer. This is just showing what our, you know, part of our drilling program for 2025 and going into 2026 is. We expect to spend, you know, upwards of $50 million U.S. on exploration over the next 12 months, starting maybe June till next June, May. If we spend $50 million on exploration, that's going to be, I would say that that's probably five times more than what's been spent here in the last five years in one year. We have the Pamour mine, again, with, you know, a significant resource here, 3.9 million ounce total resource, 2.7 million MNI, 1 million ounce in fert, in pittable material. The existing pit that's here, maybe I can try to show it to you. There's the existing pit.
Then the new pit, you can see the phase one and phase two of the pit, which would, you know, extend the pit out to here. The pit is open, the mineralization is open in this direction here. There is a railroad track here, and mineralization is definitely open in this direction here.
Tony, excuse me while you're discussing the railroad tracks. Is the cement plant at the other end of the railroad tracks a ready-mix plant, or is it a kiln that operates at 1,500 degrees making the cement powder?
No, it's not. It's actually just a cement powder receiving location. They deliver cement powder to the region, and it's just an offloading facility and storage tanks. Then they put it in trucks, and they ship it to the ready-mix plants in the region. It's not a ready-mix plant. It's really just an offloading.
Is it cheaper to buy the cement plant or to move the railroad tracks?
I think we would just move the cement plant and remove the railroad tracks.
You would give the guy a new plant, and he would be happy.
The guy works extensively as a contractor for us. You can give him a new offloading facility just a little bit to the north, maybe a couple of kilometers away on the other side of the Kidd Met site on the same rail line. Or we could relocate the rail line. That is just another thought. Those are things that can be worked on, right? We could even just move the potential
ore on the other side of the tracks. Is it bigger than the current known ore?
No, it is about the same.
You know, as I can show you a long section here, maybe I'll show you the, okay, we just got a couple of views here. This is showing the mineralization here. This is like, again, Pamour was an underground mine, still a lot of extension mineralization not developed. If I were to go to this slide now, can I turn it a bit? In this slide here, just on here now, now some of this is owned by Pan American, but right in here now, you have the Hollinger mine, which sits here, which was the highest-grade gold mine in Timmins Camp. It mined a couple of million ounces, about 0.43 ounces per ton, and it's down to 5,000 feet. I mentioned it earlier, Hoyle Pond. Now, it's a little bit off section, but Hoyle Pond mine sits out here.
It's currently down 1,700 meters, sits out here. The Pamour mine only mined down 2,500 feet from surface, so half the distance of those two operations. Limited drilling, still mineralization at depth. If I were to go into, you know, if Eric Kallio was here and we were to do a land view, see that majority of this changes in geology and stratigraphy, the majority of the Temiskaming sediments and the actual volcanics sit to the north. This is based in the volcanics. This is based in the volcanics. There's need some new exploration and thought process here, but there's nothing to say this doesn't go on. Like I say, this mineralization here can extend into being pittable mineralization out here, and you could extend this substantially. You can, as I mentioned to you, went into the east on the pit.
You can see there's drilling out here that shows this could extend to the east as well. You know, we got a 20-year plan ahead of yourself for Pamour. I think over time, you can, you know, things will get worked out, and it'll become a larger operation. We, you know, we're talking about the Dome mill. Actually, this member, I was just showing you the, you know, trying to show you in that one section where the, you know, this is the conveyor gallery. This is the primary crusher sits here. This is the coarse ore storage sitting right here. This is this kilometer of conveyor, basically at two states, a secondary and tertiary crusher sitting in here. Two- cone crushers sitting in here. This is screen deck.
You got this recirculating load and dust control here, and then you deliver it to the mill. You know, again, you look at the costs and the operating legacy of all this facility over time. It could be removed. It also actually has a benefit from a closure liability point of view, with all the books for a big part of the liability. It also helps in terms of development of the Dome, the next phase of the Dome pit, where some of that stuff needs to be removed anyway. This is just showing the underground at Dome, what's been mined. Gives you a sense on some of the drill results.
If I try to, I don't have this opaque, so I can't quite show you everything, but you can see where the potential, you know, here's the, you know, you can see where the potential is to grow the pit at Dome. And reestablish some underground operations potentially at the bulk mining into here in terms of what could be done. If I do this and I go down here, you can see what the potential new Dome pit could look like in terms of where it is. Over time, it could affect the mill on a large scale, but you can have like a five- to ten-year plan in terms of what you do in the processing facility. Anyway, this couple of.
To the ore that's underneath the mill that someday will get mined. And you'll want to move the mill to the other side of the pit.
Other side of the property.
Or look at some of this could be bulk. You know, it's just because it's near surface doesn't mean you have to mine it with a pit. Some of it could be probably bulk mined underground, etc. Or, you know, there's a way to stage the pit. We have some ideas in the region and other synergies we could, and acquisitions we could do in the region that can actually help us in terms of give you the flexibility over years that you can, you know, go to one mill, new tailings areas, and other mills, and maybe collectively build on this over the next 20 years. This is, you know, from a sustainability point of view, you know, I think we've, you know, I think it's been a big part of our commitment to be responsible in terms of how we mine.
We do recognize and work constructively with First Nations partners in the region. We have nine, two different IBAs in place, but really with nine current partners, First Nations partners, and we're probably going to add a few more to this. We definitely, you know, recognize the needs towards communities and people, but, you know, one of the areas here, there is, you know, there's the closure liability settings currently on file, about $170 million U.S., CAD 230 million. Our plan would be progressive rehabilitation to help in terms of remove, reduce some of this cost and liabilities as we go. Some of it, we can, our obligations that can be done by just mining out and removing the hazard through new mine development, etc. and some reprocessing of tailings. And then this last slide, I mean, you know, this is showing our Cordero Silver project.
Again, you know, we don't talk much about it, but it's in a perfect location. It's just, you know, about, you know, 2.5 hours south of the city of Chihuahua, which in the state of Chihuahua, capital city of Chihuahua, a lot of mining region, the town of Parral or the city of Parral, 120,000 people is about, you know, 34 km away. You know, there's a main highway that goes through here. You're 15 km off the main highway. It's partially land and actually a tall ranch land that we actually own all the properties now. And I say we see this as being one of the best silver deposits to develop in the world. A two and a half year build, reasonable CapEx in terms of what's required here. We've de-risked the project both from a land acquisition point of view, from water, from power.
You know, we've done a feasibility study. We've done extensive board of engineering and co-work on the project. We've applied for a permit. It's been in place. The application has been in place for quite some time now with the authorities. We're really just waiting for that final approval. This could be a very, very good project. We do expect it will get approved in due course. We recognize what's been, you know, happening in Mexico and what's been happening in North America over the last bit that's creating a little bit of noise. This is definitely a value-creating project. One of the projects that the world needs, it's the right mix of metals, silver, lead, and zinc that the economy needs as we move forward. We expect it'll work out well.
I can say the environmental impact from this project is more positive, with more positive impacts that far outweigh the impact of an old pit hole. Anyway, this is the last slide. Again, we are building a new North American metals producer, a new gold and silver mining company. We started with Porcupine, which is a going concern. They say average 285,000 ounces over the next 10 years of gold production, which we expect to be able to grow and reduce costs and grow value here. You have a world, and like I said earlier, we expect to turn this into, I would say, a tier one gold production asset, which is over 500,000 ounces a year over 10 years at costs below the lower half of the cost curve in the industry.
The Cordero project, which is a tier one asset in the silver space. We are in here and get this built. You can see you are going to have two anchor assets, two great assets in a great company. I talked earlier about, you know, in terms of value creation that, you know, although we have definitely seen some value come in the stocks, companies with finance, we got over, you know, they say $240 million currently sitting in the bank. We are producing gold. We are investing in our mines, etc. We are paying taxes in the region. We are really setting ourselves up with a strong balance sheet and the ability to move forward as we develop Cordero. I do not know if anybody has any questions, John, or do you have anything else you want to ask?
Telling everyone on the call can submit questions through the question box. I'm going to ask a couple sort of right off the bat. As you took the mill down for a couple of weeks and have possession of the property, are there any old equipment or software where you can't get spare parts or that are not compatible with renovation or any mechanical problems that surfaced?
Nothing new surfaced, nothing that we didn't know about. There are some obsolete equipment here. There are areas in which we want to invest and change things around, definitely. Nothing that was a surprise to us. We did, you know, we do have a lot of knowledge. Of course, Levi worked with us, you know, and a few others. We do have a lot of knowledge of the plant and what's been going on there.
You know, we recognize it's been, I'd say, you know, they haven't invested in maintenance in the plant over the last few years. They've just, you know, effectively as, you know, it was a leach tank that, you know, these tanks, every seven or ten years, depending on, well, actually every five to ten years, they definitely all need to be inspected. There's corrosion that happens. It depends on how acidic yours and what you're doing. You know, the tanks haven't been gone through the regular, you know, where you might do some maintenance on them and repair them. One of the leach tanks was completely shut down. Basically, its base kind of rotted. We probably have to replace the tank, and they haven't been using it. Because they haven't been using it, they just use their other tanks. You lose a little bit of leach capacity.
That has an impact on metallurgical recovery. Similarly, in the CIP tanks, it's a CIP plant. The tanks, there was corrosion in the upper parts of the tank, and then some corrosion in the base of the tanks. They were started to work on doing one at a time. That's why we're probably going to be replacing these tanks as we go. One of the main things that was done in our shutdown was identified about three years ago that the gearbox and the drive for the rigs for the thickener was actually deteriorated. What they did was over the last two years, it just kept adding oil to it every month to keep it operating. It was just at a point in time when you needed to shut it down so you wouldn't have a catastrophic failure. We were down for almost 11 days because of it.
You have to empty the tank. It took three days to completely empty the thickener and then replace the drive motor. The rigs were all good, etc. Replace the drive motor and then, you know, we do some minor repairs to the walls of the thickener and then, you know, just some minor cleanup and then allow it to fill. That was the main part of that. There was work done on the grinding mills and some work done on the crusher, etc. during this period of time. We have a number of other projects we need to fix over the next while that it's going to be selectively.
We're going to be having, we have planned mill shutdowns where we'll do maintenance over the next year to work towards repairing this and, I say, the benefit of increasing throughput and increasing metallurgical recovery. They've also, you know, the normal grind here, you're looking at 80% passing 200 mesh, which is 75 micron, which is really the target. And they've been, you know, because of the problems they were having in tanks, etc., they increased the grind from 70 micron, 75 micron to 120 micron to 140 micron. It's coarser grind. You save on electricity, but you know, it does affect metallurgical recovery. We've got to get back to that. That requires, you know, I saw I can get maybe getting into too much detail here, but that requires time for you to change out your ball load, etc., your grinding media.
A lot of these things are going to happen over time. Nothing that we did not expect. There is still lots of stuff to do in terms of improving the plant. Our goal is to take this plant from a 3 million ton a year plant to a 4-4.4 million ton a year plant, take our costs down from $23 a ton or something like CAD 30 a ton, maybe down to below CAD 20 a ton in terms of processing, and take our metallurgical recovery from about 90.5%-91% up to 92.5%-93% over the next two or three years.
Tell me when you announced the 43101 and your initial rollout, I made an assumption that you built the 30,000-ton-a-day Cordero mill twice, or that you just took those blueprints and built it twice and made the equipment supplier happy with a double order, maybe get some discounts. You built the Cordero mill on the other side of the Dome pit first, and then years later built it in Mexico. Now, maybe the comminution or grinding characters of the ores are different, but I thought that was a simple but very conservative expensive assumption, $500 million plus. Is there a smarter way to add capacity for the expansions of the other three mines, etc., etc., in the Dome pit that maybe would not cost $500 million?
First off, you know, again, we have to look at the Dome underground.
We've got to study the Dome underground, that open pit and that. There's probably somewhere between a four-year and a six-year plan where we could be mining there without having any impact at all on the existing mill. One option would be if I talk to you about removing these, you know, the legacy single-stage crushing and two kilometers of conveyor and then a double secondary crushing plant and a screen plant, removing all that on all the costs, putting in a single-stage primary crusher and going into a segment, and maybe that's going to cost us $100 million. That would increase capacity at our current with a couple of new tanks and increase capacity at the current Dome mill from about 12,500 tons a day to 25,000 tons a day. The payback of that would be one year.
Maybe that lasts for four or five years. That's one thing we could do. There's other opportunities in the region. I think we're familiar. We built the Lakeshore operations and the Del Creek mill, which is a 6,000-ton-a-day plant. We know there's excess capacity there. There's also synergies that are working in terms of geological potential and mining potential, like I talked about just even with Pan American, with some synergies that if we could work with Pan American better. There's the Kidd Met site sitting there, which has got lots of excess or untapped circuits in the current plant, a lot of power available, and a tailings facility available that could probably be used to expand.
Yeah, your concept of building, excuse me, the Cordero plant here, you know, two times, first time here and then down there, it could work. There are options here in terms of what could be done in terms of unlocking mining potential by, you know, being synergistic and strategic in terms of what we do for some of the other processing facilities in the region and even our own processing facility. Those are things we'll be working on. We want to, you know, we're not going to stop at, you know, 4.4 million tons a year of mill capacity at this point in time. We think that there are other options available, and we're going to work towards that over the next six to nine months.
Tony, clearly the 11 million ounce Dome pit is a focus. It's possible that there's a Dome underground mine. That's a focus.
In terms of the TVZ, 4 million ounce approximate resource that hasn't been put into a document yet publicly, would you scale the refractory circuit at something like 200,000 ounces a year for a 20-year life and then have the foundations to drop in more circuits or more vessels in case you had a satellite operation from a neighbor property? How should we think of the scale of the refractory circuit?
Yeah. I mean, I think that's a valid point. I mean, you could stage this where you, you know, we could produce from the TVZs on something like 2,000 to 3,000 tons per day. So from, you know, 650,000 to, to say, 1 million tons per year out of TVZ. And that's in the current, you know, potential. That's already a 20-year plan. There's others in the region that can come in.
I mean, part of the balance will always be when you expand, John, you know, where's the highest grade and highest return coming from? Sometimes you might displace some of the mineralization or it might get put in stockpile and left or left in inventory to be mined later. You will make the investment in terms of expanding the potential on the plants. You know, the Dome mill is unique. It's got two circuits in the Dome mill. There's the option of putting a flotation circuit in the Dome mill as part of what we have there. There's part of the opportunity to use some of the, you know, the Bell Creek mill. Even the Kidd Met site does have two flotation circuits that are currently shut down, not being utilized, and a third one that's only being about 25% utilized.
There's potential to use some of these other plants in the region that can help. You mentioned earlier about the Bradshaw deposit. I mean, there's another plant that's about a 3,000-ton-a-day circuit sitting in Timmins not far away that could be utilized also. There are options to do this. I think the goal would be that as you explore and you discover these resources, then we do the development to build them and bring them to production and recognize the value. You can start at 2,000 tons a day, but there's definitely capacity to go higher over the years as you open up these deposits.
In terms of sequencing, clearly the Dome pit, the Dome underground, the TVZ, and things that you're going to discover with your $50 million exploration budget are priorities. The gold cash flow in Timmins facilitates engineering and permitting and advancing Cordero. The $606 million construction CapEx might get pushed back a couple of years because you got so many low-hanging fruit in Timmins. Maybe it's a good thing to let Mexico settle socially if they don't have human trafficking and drug revenues and less auto output, etc. You're just swimming in opportunities.
Yeah. To your point, I mean, you know, over time, I mean, Cordero is not going to go away. We get a permit. There's a lot of value there. Price of silver is definitely going in the right direction. It is one of the largest undeveloped silver reserves in the world.
You know, we figure we can have options over time as well. You know, as we progress in Timmins and what we're doing here in Porcupine and building this up, I mean, there's synergies with, you know, maybe we could have partners to help us develop that project and/or, like I say, develop it at the right time when it fits for the company.
Some of the investors are thinking that because the stock quadrupled so fast, you're going to issue stock. The gold price is $1,200 higher than your budget. If you produce 700-750 ounces a day, you're going to have $1 million a day revenue and pre-tax cash flow more than your budgets. There's not a need to issue stock, and you don't even think you're going to draw down the $100 million Franco-Nevada Credit Line.
Yeah. I mean, excuse me, we're, you know, I think the best financing available, we talk about the business, our best financing and most agreed financing we do is produce gold, as much gold as we can at the lowest price possible. At these metal prices, you're generating a lot of free cash. I say, you know, I mean, if we dilute, if we take some dilution and issue stock, it's because, you know, you're going to try to invest that. You know, if I tell you our current shares are trading at somewhere between 0.3 and 0.5 x or 0.6 x NAV, it has to be, if we do issue stock, it has to be really, really accretive for what it can do versus focusing on our business. Part of it is how fast you can grow the business.
You know, we're not currently, you know, like I say, we're well-financed and well-positioned to keep going here. You know, we're looking at what we can do in terms of adding or replacing or even increasing the corporate credit facility. We're looking at debt facilities, etc., and other financing alternatives now that gets unlocked for if we did want to develop Cordero or some of these other projects. We have the ability to raise financing through our existing operations and cash flow. I, you know, try to show you the cash flow and say we're going to be better prepared to rather invest that into the business than issue stock.
Second thing we do is, you know, we have access to debt facilities and leverage that we can then use to help us invest and build the business. We're shareholders too, so.
I'm looking at the question box now, Tony. Could you talk about the capital structure, shareholders, board of directors, ownership, and maybe they're wondering when Newmont sells the other 69.2 million shares they still own.
Sure. So, I mean, as part of the transaction, we sit there with about 802 million shares currently outstanding. I said, you know, with a fully diluted number, so probably maybe closer, but 830. About 850. Yeah, 830 million shares. Our major shareholders, you know, we have, you know, Eric Sprott and Jupiter. They're still both over 10% of our stock. And then we have Franco- Nevada, you know, just under 10%. And then we have Newmont now, which is just under 10%.
Newmont, over time, could, you know, I mean, they're locked up for a year in terms of our agreement. We did allow them to sell a partial of their block. This is the divestiture for Newmont on this. And they said that's part of the goal with all these sales is that it's divestiture than on it. You know, they don't, over time, they don't want to hold stock. But we, you know, we have a 12-month lockup on them selling. For the next six months after that, they have to give us, they have to give us, you know, give us an opportunity to, five-day opportunity to try to place it if we can. Limit in terms of what we do.
We're going to continue to work with Newmont in terms of what we can do to help them in terms of at some point in time, you know, move this on, you know, as we go and take that overhang off our stock. For right now, you know, we're, you know, that's pretty much where our capital structure sits. I don't know, you know, there's a lot of other shareholders, but those are the main large shareholders in the company.
You've described a lot of opportunity for exploration upside at Porcupine. How do you envision prioritizing expanding Porcupine production, building Cordero, liability reduction, royalty repurchase, etc.?
Yeah, that's a good question. Those are all things as part of your, you know, capital allocation strategy.
That, you know, in the end, it's what, you know, how we invest in, you know, first off, invest and create new value for shareholders. Definitely, you know, we see some, you know, some things in Porcupine and stuff under our control, and especially as we get our permits and the strength and the exploration results, etc., to advance that. We have operating and going concerns with us. Those type of capital projects would be, you know, definitely important. Working on sustainability and environmental legacy and cleaning up areas or dealing with liabilities, I think that helps de-risk the company, but also helps to strengthen our balance sheet and take some of that risk off our balance sheet. Restricted cashing, maybe that we have. We think that's important.
Your social license and the impact or positive impact, etc., we have on communities and the environment is really important to us. Currently, Mexico is sitting as a standalone project. You know, we'll be at a point where, you know, I think the biggest part of the decision will be we get a permit there and we'll be at a point with a lot of options in terms of what to do there. We're going to, you know, whatever we do, we're going to, you know, we're going to work at it to get the best value we can for our shareholders. You know, be able to make sure that, you know, it's not just having capital resources available to do this work, it's also people, right?
Make sure that we, you know, we have the strength and the people to and what needs to be done. I say that one of the biggest faults that can happen in our industry and anything is, you know, we have big egos that we just want to do it to do it all, right? We can, you know, we're okay to get a partner. We're okay to have someone help us if it creates value for shareholders and de-risk the projects. You know, definitely, you know, we do have a good team in Mexico. Over time, that'll be definitely a value-creating project for us. You know, we're going to attack it in the right way. I don't know. That's a pretty, you know, in the end, everything's got to create the best value for us.
All the stuff up in Porcupine is really easy for us. Same time zone, an hour and a half away. Same language. We speak French and English. You know, what we have to do in Mexico, it's a different country, etc. We will deal with it as it comes. We will make the right decisions. We will make sure we keep good communication with our shareholders for what's happening there.
Tony, in my models, I estimated that you buy back the 2% buy-backable royalty from Franco-Nevada for $100 million next year or early next year because the $3,300 gold, that's very expensive money.
Actually, the way it works, and I know our forms, I can get forms answered, but the way it works is it's a 12%, it's 72,000 ounces or a 12% IRR.
At $3,300 gold at a current, in a current production rate within our PEA, that's the technical report. Actually, if we had $3,300 gold, I think the total number of ounces would be something like 56,000 ounces. It never really goes over 12% cost of capital.
Okay. Maybe you'd spend some CapEx faster than buy-back capital.
Yeah. Franco-Nevada was, it was definitely a very, you know, definitely a beneficial, the way Franco-Nevada negotiated. Franco- Nevada was really good to work with. I mean, they take a long-term view here in terms of what to be done here. You know, it's basically like a royalty-linked amortization schedule. As we're able to pay it back, you know, we have access to cash, we can pay it back. It sort of helps us. Am I correct in that form?
Yeah. That's correct.
I mean, it provides very good alignment in the higher the gold price or the more gold we produce, the quicker we accelerate that payback. As Tony mentioned, if the gold price is in around $3,300, we do not have to deliver the 72,000 ounces. Because once we deliver around 50-odd thousand ounces, we have hit that 12% IRR threshold. Then that $100 million goes away. It provides us with a lot of flexibility. There is good alignment there. I think when you talk about capital priority, everything that is in front of us, buying this back would be lower down the pecking order in terms of what we would want to do given that alignment.
Yeah.
It's definitely, I mean, it is 12% money, but it's definitely, you know, a very, you know, I say, you know, something, it's not something that I think there's other value we can create by investing the money. I mean, that's what, you know, in terms of what Franco-Nevada worked with. You know, we invest the money. It helps on the 2.4% NSR that they do have as well, right?
That is where they were the big part of what they were working to do to invest, to provide the capital structure in place to have a strong balance sheet and assist the company in being able to move forward with, you know, the other things we recognize that we do to create value for our shareholders, which would be beneficial for them, which is exploration, discovering new resources, and then putting the money that we have back invested in to get that new production, right?
Tony, you mentioned the word joint venture 10 minutes ago. You have abundant opportunities. There might be other companies that come to you and say, "Hey, could we JV Mexico or this or that or the other?" You might want 100% of those opportunities in 2030 after the Dome pit has been restarted.
Once the Dome pit's restarted in size, you're going to be swimming in cash. Also, if Kinross or Alamos or Agnico or some Gold Fields, AngloGold, a project short company wanted to buy you out, they would view JVs as an impediment or a, you know, encumbrance. So sort of, are JVs something that could be in the near term or is it just a different arrow in your quiver?
No, it could be something in the near term. You know, like part of what you mentioned, John, I think is important to understand. Like let's say we've got this buildup going off in Porcupine. We have a permit to Mexico, or we've got this buildup in Porcupine, and we're really creating a lot of value in Porcupine. And we say we got this thing that we only want to develop Mexico by ourselves.
We make it sit on the shelf of 2030, 2035. That is value that belongs to the shareholders. By us deferring that, you know, it just pushes value. We do not get that value realized on a share price. If we get a partner, we can, you know, somebody invest and bring that value forward faster. I mean, that is what we are going to look for, right? We are not here to sit on deposits. We are here to get them developed. We are miners first, right? However, whatever we can do to get that value created and the project de-risked and built, that is the kind of stuff we would like to do, right?
Tony, I would love to talk another hour, but I am supposed to open up a window and start Alamos Gold in two minutes.
Okay.
Thank you, Tony, and Forbes and Mark.
I'll be up at the mine next week. I'm so happy to be a shareholder.
Thank you for the opportunity.
Thank you for the opportunity. We appreciate it. Hey, Karen, look forward to continuing to have a good time.