Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold's 4th Quarter and Fiscal 2020 Financial Results and Corporate Update Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
If you are participating through the webcast, you can submit a question in writing by using the text box in the lower left corner of the webcast frame. I would now like to turn the conference over to Rylin Beilin, Vice President, Investor Relations for Equinox Gold. Please go ahead. Thank you, Anastasia, and thank you everybody for joining us today for the Q4 call. We will, of course, be making a number of forward looking statements today, so please do take the time to visit our website and to discuss continuous disclosure documents on CRM and EDGAR.
I'm now going to turn the conference call over to our CEO, Christian Meadell, for opening remarks.
Great. Thanks, Raline, and welcome, everyone, today. Just looking at slide number 3 and running through this past year, we had a heck of a busy year and lots on the go. Strong finish to the year and a good performance on the health and safety front with very good mine integration and work on the The safety front during the very tough accident year when COVID was a key impact on the business, and we've tested over 15,000 people for COVID during the year, and our workforce is only just under 6,000 people. So multiple tests per person on average.
And We've done an excellent job and kudos to the mines for managing through that difficult year. We had the highest production quarter to date and good cost performance. So we're pleased with the end of the year as we go into a big investment year this year. We had very good solid cash generation, and Peter will talk about that in a few slides here. So Thanks again to the year.
Let me turn over to Slide number 4. Busy on the development and corporate highlights front, development was We expect to be extremely busy during the year with Castle Mountain Phase 1 going into production and hitting commercial production in the Q4. The feasibility study for Castle Mountain was ongoing, and we've been optimizing that and ready for release in the next few weeks. So keep an eye open for that coming out. Well, Filo's feasibility study update is also underway and a little bit behind when we come out during quarter 2 or in mid quarter quarter, it seems to be just behind That's on Phase 2.
We're expecting some good results from that in terms of reserve and resource expansion. In addition to that, we've finished off the underground drilling at Aurizona and we'll see that study underway, which we expect to drive to the market in the second half of this year. So Monster on that front, lots of new information, some exciting additions coming to both reserves and resources. So a big year on that front. We also saw a nice increase last year in the reserves and resources at Mesquite.
And I'll give us Scott and McEwen did a great job of basically increasing reserves and resources Substantially there. And also really pleased with the ski performance overall. We've owned it for just over a couple of years, so over 2 years now. It's over $150,000,000 for it. We generated free cash flow of almost $140,000,000 So almost repaid that purchase price within the 2 years' line.
So excellent performance. Also, this metalluzz feasibility was released with strong results, really good high return project, dollars 100,000,000 of capital. Construction started and we're now about 25% complete. We've also appointed Taliaire to the Board, so welcome to her this past year as well. We integrated the Leagold merger, the teams are now in one office in Vancouver.
And we also announced the Premier Gold acquisition are very busy on the corporate development front as well. So I'll pass over to Peter to walk you through the financials on the next couple of slides.
Thanks, Christian. So on Slide 5, you can see we had a good year. We sold 135,000 ounces of gold at an average realized price of about $18.71 per ounce, which generated revenues of $253,000,000
On the
cost front, our cash costs for the quarter were $8.48 an ounce and just under $1100 an ounce for all in sustaining. That led to my earnings for Minox for the quarter of 95,000,000 Income for the quarter was $89,000,000 when you for an EPS of $0.47 a share when you adjust out a number of Non cash charges, our adjusted earnings, our income is $34,000,000 at an adjusted EPS of $0.14 a share, will be diluted. That's all I have to share. Most importantly, we generated a lot
of cash during the quarter.
It was our strongest quarter for that, generating 87,000,000 and operating cash flow before changes in non cash working capital. We continue to strengthen our balance sheet, which is with cash of $345,000,000 at the end of the year, which is up from $310,000,000 at the end of Q3. In addition, strong balance sheet. We have $200,000,000 in net debt, which if you assume in the money converts our equity, is $55,000,000 of net cash. Our net liquidity after you include the CAD75,000,000 financing is about CAD600,000,000 In addition, our investment in Polaris has performed really well.
We actually account for us, but only has a book value of $22,000,000 in our balance sheet. The fair value of the shares that we own there are about $150,000,000 So good strong balance For the pathway ahead and the development we need to do. Moving to Slide 6, You can see here our quarterly results by mine. Mesquite, we had a strong quarter, as you can see, with an increase in product or ounces sold, pardon me, from its Q3 125,000 ounces to the 100 and well, 36,000 ounces produced and 135,000 ounces sold. Mesquite's Horizona presented particularly strong quarters.
Mesquite benefited from an increase in ounces, comparable ounces back in Q3, which came out in Q4. Aurizona benefited from a higher throughput and stronger grade, which we always love to see with the 37,000 ounces that produced during the quarter.
Moving to
Slide 7, which highlights our earnings and operations results. Here you can see in the comparison to prior year really the increase in scale from the legal merger. One item I would point out is we finalized our purchase accounting for the legal merger in Q4. Unfortunately, that created a bit of noise because we updated our assumptions Depends on the gold price to use, the fair value to heat each pad at least kilos. And when you make changes in your project accounting, You have to apply that.
IFRS requires you to apply that back to prior quarters, which is our previous quarters are updated as if those changes had been made on day 1. I do want to emphasize though that none of those changes affect cash. Looking forward to 2021, while we had a very strong Q4, It is a year of investment. We have a lot of sustaining expenditures. You would have heard from our guidance call and our guidance news release from February.
To help understand a little bit of the structure of how what our expectations are for the year, 61% of our sustaining expenditures in first half of the year, but only 40% of our gold sales, being that we expect to have higher all in sustaining costs in the first half of the year versus second half of the year. That's mostly going to affect Castle Mountain, Los Filos and Mesquite. Final point before handing things back over to Christian Yes. All of the financial results that we're reviewing today and that are in our press release are unaudited. We are it's our 1st year of SOX and we're in the process of just finishing up the control side of the audit and with respect to our financial statements.
We expect that to be done in the next couple of weeks and you'll see our audited financials and MD and A about them. I'll turn the time back over
to Christian. Thanks, Dan. Looking to Slide number 8, just want to run through the operations and a little bit of a look back and a little bit of a look forward in 2021. So Now looking at Mexico and California first, Los Filos and Mesquite are, as Pete said, in an investment phase here, particularly during the first half of this year. As Filos, we're opening up the Guadalupe open pit.
We're also ready to start the Vermall underground once the social collaboration agreement is signed with the community, which I'll comment in on just a second here. We restarted the Los Filos mines in December and it poured 14,000 ounces of gold last year and is on track to ramp up the full production here as we speak. So pleased to see that back in operating. As we said last year on our last conference call, we've been working on an updated social collaboration agreement with the local leadership of the Castelillo community. And the key areas of sticking, first two points basically were around employment and contracts for this future growth in the operations, particularly around thermohol.
We've agreed those closets around employment and sharing between the various communities and ultimately contracts and Awarding certain contracts of tendering into the local community. So we're pleased that we were able to come to a resolution on those. We're still working on the final dispute resolution mechanism in the contract, and Hopefully, we will have that resolved during the next few weeks, but getting very close. We've made progress since last time we spoke to you when Ross and I were We had a call a few weeks ago here. So, good progress being made, and we plan to see that finished here in the near term and get back to normal business in Losivos, it's a buying expanded hub escape.
A big heavy stripping period during the first half of this year, as Pete sort of alluded to. The brownie pit is being stripped, but very little new ore going to the pads during this period. So we are residual leaching like adding sort of some supplemental works to the pads. We're also spending about $9,000,000 this year on exploration in Mesquite. We've been in an outstanding performance over the last couple of years and it's And a key area focus to continue to expand the mine life.
Like I said earlier, it was a good job of increasing resources and reserves, and So we want to just keep doing that this year as well. So opening up the new area of Brownie, looking to expand the reserves and reserve And that's in its mine. And we've also leased a new fleet from Caterpillar because we have such confidence in the future, this mine will continue on for a while. So Lots of work from there in those combined this year. When we look at Castle, we've been ramping that up.
We hit commercial production later in the Q4 last this year. We're still working on some niggly points around solutions flow and leach pad management. One of the key investments this year really is in Expanding the leach pad, actually spending the capital to build out the Phase I leach pad to cover the whole period of Phase I. So we're going to put all that investment into this year It gives us a lot more flexibility in the operating team and the chance to work on increasing the flows and having more flexibility on the leach pad. So we'll see production, so a little bit lower in the first half of the year and it'll ramp up in the second half of the year.
Turning to Slide 9, looking at the Brazil operating mine. Extremely good year last year, very satisfying to see all those mines perform well. Obviously, the currency was a key impact and helped on the cost. Performance wise, in terms of production, all the mines performed well last year. And expect a pretty steady performance this year quarter over quarter.
So you'll see less variability than you'll see in the other mines in Mexico and California. Aurizona, I do want to point out, is just had an outstanding end of 20 fund, as Pete said, about $100,000,000 of free cash flow last year. I'm not going to say it's 2nd year operation, so very good results there. 2021 has a large shipping program and a TSF list. So sustaining capital is a little bit elevated this year.
Operating costs are basically in line with last year, but it will be slightly elevated All in sustaining costs, we'll continue to allocate exploration dollars as well with that underground pre feasibility study coming out in to and continued work on satellite extensions as well as looking at some new potential deposits, which are within the 10 kilometer radius of the mine. We're really excited about the future here, and we're allocating the capital to extend that mine life. Zendesk continues business as usual. It's been going on and off for about 25 years. So business as usual, we've had a good start to this year.
RDM, again, another good start. The mill is performing very well. The mining contract form. We got that large bid expansion permit late last year. We're spending almost $35,000,000 on stripping this year.
So that's a key portion of our and capital for the growth capital this year. Interestingly, this has been a rainy quite a rainy period during this rainy season this year. And as you remember, historically, it always is challenged with having enough raw water in the Wildwater dam to get through a full year of production. But This year, the actual hot water dam is overflowing. They've got a 2 years' worth of water.
So really, really prudent pictures to see over the last week or so. And P. Large continues on, smaller scale, delivering free cash flow, just at a steady state. Turning to Slide 10, just a refresh on the guidance we put out a few weeks back. 600 155,000 ounces, a 30% increase on 2020.
So continuing our move towards that 1,000,000 ounce target. Gas costs are up slightly, as mentioned earlier. Fuel, reagents, labor and FX are slightly more conservative assumptions this year going into the year, although We're actually seeing almost the opposite on the FX trend. I think both the peso and the Brazilian real have actually been weaker than I'm not sure what we expected early this year. So I'm getting some benefit from that at the moment.
All the sustaining costs increased A little more substantially due to the CapEx programs at Los Filos, Mesquite, Castle and RDM. We'll be improving those substantially in the second half The year has been alluded to. Quarter 4 looks to be a really good quarter as we open up new ore sources at both Mesquite and Los Filos. On CapEx, basically, the key components of that are the $100,000,000 investment in Santa Luz Restart, I'll comment on that in a second here, $35,000,000 on the pay expansion at RDM and also opening up the Guadalupe open pit in the Permihal underground at So those are the 2 components that make up that $200,000,000 So we're spending about $400,000,000 on CapEx this year in total, including sustaining. But it really
does set us up for
a strong 2022 and beyond. So next year in 2022, we should be producing about 900,000 ounces of gold. Turning to Slide 11. Looking at the development projects. So Los Filos expansion, the plan there is to move that towards 350,000 of annual production on a fairly steady basis from 2023 onwards.
We've selected an 8,000 tonne per day plant And that new feasibility study, as I said, will be out in Q2. And we won't start the investment with virtual collaboration agreements signed for Bernal Underground, We hope to have that running fairly soon here. And we should be in a position to launching the construction on the CIO, the carbon emission plant later this year as well. In terms of Sandalhoo's, we did start construction as we announced in the second half of last year. It's About 25% complete.
Just seeing pictures on the concrete course for the mill foundations, also for the Pang foundations. Resin has been ordered. Steel work is well underway. Mining is expected to start in May. So I think really good start to progress there.
It'll be constructed by year end. The physical construction will be done, so we should be pouring gold in early 2022. At the moment, the mine is on time and on budget for us to see, and some Looking at Castle Mountain's pace to feasibility, that will be ready imminently. We expect that out in the public domain in a few weeks' time here. It actually show a nice increase to the mine life, the annual production, the reserve base.
On the back of all that, we'll also be looking at a slightly larger mill. And then what this feasibility will allow us to do is have a permitting process to amend that permit in the summer this year when we make submission CDV escalators. And we expect that will take us up to 3 years to earn it, which works in really well with our current development pipeline to get Santa Lu is done by around this year end. Hard Rock, which you can be started in that second half of this year, completed around the end of 2023, early 'twenty four. Then you could be starting construction on Castle Mounts, a nice sequencing of our projects.
Okay. Page number 12. The Premier acquisition, we announced that, I think, it was December 16. Both happened last week. We got 99.9 Thank you, Chaver for the Premier Shareholder Group.
We're just waiting on the Mexican antitrust approvals. We expect that in the next few weeks here, Similar to what we had last year with PayGold, I think it's still mid March, so it's probably second half of March we should have that. And also the IE spinouts that you and Downey will be running. It's had a nice sort of visibility in the premium share price. It's probably moved up to $250,000,000 of implied value.
Our $0.30 stake then will be $50,000,000 to $100,000,000 So nice to see that value creation happening already and focus on that Sure, Nevada based company. Looking a little more closely on Slide number 13, that's Hard Rock asset. As we announced earlier this week, we'll hold a 60% stake and harder off the 50% through the Premier acquisition, and we initiated a deal to buy another 10%, will close just after closing of the Premier deal. We'll acquire that 10% from Orion for just over $60,000,000 So Really pleased to have that majority stake to really be able to say that we're behind this project at 100%. We actually got a chance when they did it last week and Put our feet on the ground and actually see the excitement in the local region for this project.
They're really keen to see up and running and all the stakeholders are behind it. So I'd like to start with that support. As well, just a quick reminder, this is a permitted project with social agreements in place with First Nations. It's truly construction ready and has a project team that's been there that's done the feasibility study that's built a few mines for at East L'Eagle in Fairly remote locations in Northern Canada. So really got all the pieces in place to get going later this year.
So we're pretty excited to get this acquisition completed and A little bit of work before we've been launching the construction, but really get this thing moving later this year. This asset will be a cornerstone asset for us for years to come to $5,500,000 of deposits. So great scale to it. We'll produce over 400,000 ounces in the early phases. Lots of Exploration upside potential, I was really pleased to see that last week.
There's potential for an underground eventually. A 14 year mine life is only focused on the open pit. As well, there's some tantalite deposits to the west of the property. Some really exciting drill results come out of there as well. So We see this as a multi decade mine eventually, a great starting project and we're going to get into construction there hopefully later this year.
The other asset from Slide number 14 of the Premier acquisition, Mercedes, 50,000 ounce producer currently, Producing good cash flow. It's about $1,000 all in sustaining costs. We're generating good cash on a quarterly basis. Asaga is an exciting Red Lake property. It could be a buy in one day.
We plan to do some exploration there in green cores, but we're really excited about that one. Ray Hill and Anzalp, a bit of a smaller project sitting between some evolution properties and that was the logical part of that complex in the long term for sure. And then IAD Gold, I mentioned earlier, Ewan Downey will be running that out of Reno, Nevada. 3 focused Assets in Nevada, one producing, one that's scheduled back into production fairly usually in a high grade exploration project effectively. And Ewan and the team will be able to create some real value there.
And as we've done with Savares, we think we can support them and help them service that value as a focused U. S.-based Gold Mining Company. Turning to 15, just to kind of bring it together. When you look at this portfolio of assets With the Premier acquisition completed, it really does create a nice balanced portfolio. We're happy with the solicitation.
We've got Almost a quarter in each of these jurisdictions in Canada, the U. S, Mexico and Brazil. The reserves and asset values, The upside and expansion potential and all the exploration that sits in this portfolio is just fantastic. We're really pleased that we're able to balance it now almost 25 sent into these regions. And I think this year will be exciting because to get a number of studies out, we'll have some exploration results, and what we'll be able to do is expand a couple of the assets And really show that there's growth potential in all of these regions.
We're not reliant on any run actually nicely balanced going forward. Turning to 16 and just pulling that all together, what does that really translate to? Well, this is the leading Growth company in the sector right now. I'm not sure there's anyone with that kind of growth rate as you can see in the parent column there. We plan to be hitting that sort of 1,000,000 ounce mark in a couple of years' time here.
We also have a nice reserve base of almost 16,000,000 ounces, and we see that growing in the near term here. So at the leading end of all the peer comparable categories here on this slide, except for at the valuation end. So our key job here is to move that multiple of price to net asset value Up from 0.5 to 0.6, up into that sort of range like our peers of that 0.8 to 1x. And really over the next 12 to 24 months as we execute, As we expand the portfolio to become a 900,000 to 1,000,000 ounce producer, we really think that we're getting has got a really good chance of achieving that and the balance sheet in place Deliver on that growth. And just in summary here on Slide number 17, Nelson, a busy year in 2020, along with catalyst for 2021.
We're going to focus on delivering on the production and the cost base that we have. With that production, we'll have a 30% growth factor And we've also got a $37,000,000,000 exploration program, which will be mostly focused on expanding the mine lives and around the mines that have Shorter than 10 year mine life. So it's nice to see that we're actually reinvesting in our own portfolio this year. It's more inward looking than it has been probably in the last couple of years. We'll be looking to close and integrate the Premier Gold acquisition.
We'll be looking to support Solaris and IE Gold as they create some value. And really on the M and A front, it's a little bit more complete. I think going forward right now, we're focused on basically expanding our assets, delivering on the value of all the great assets we have internally here and simplifying the portfolio. So what we think we've done here is we've created a company with all those pieces to Great value. It's well positioned in this gold cycle.
Diversity scale. We're in mining centers, you're seeing in the Americas. The growth is all owned internally at the moment. We don't need to go out and buy it. We've got a strong balance sheet, dollars 600,000,000 in liquidity, Another couple of $100,000,000 investments, again, a very low net debt to EBITDA ratio of well below 1x.
So with that and our Long term common vision with our core shareholder base. We're really excited about the future here, and we think that Equinox is really set up for a strong future, And 2021 will be an exciting year. So if not, I think I'll end the formal part of the presentation and maybe turn it over to the question and answer.
Thank you, Christian. Operator, can you please remind people how to ask a question? Certainly. For pressing any you can submit a question in writing by using the checkbox in the lower left corner of the webcast frame. We will pause for a moment as callers join the queue.
Thank you. We do have one question from an investor in the United Kingdom. You've just outlined questions with very impressive plans for the coming years. What do you think The market is missing. What does the market need to do to believe in Equinox Gold and have that refracted in the share price?
I think one of the key things that Certainly, and the feedback we get, it's a lot on the plate. So really focus on your core projects and the opportunity to create value in those Core expansion projects in areas where you can expand the reserves and deliver on what you say you're going to do. And I think it's all about the execution here. We've gathered all the pieces to the cargo now. We just have to put them together and be on time on budget and execute.
I hope that we've done a good job of Building a mine per year over the last few years of doing some M and A and integrating cultures and companies and creating some value already. I just think that it's a matter of executing. It's a key thing, and I think the balance sheet fell strongly to allow us to do that. Again, the Shareholder Day could have got a common vision with us of delivering something that has a long term vision, not just a short term vision.
Thank you. We'll take a question from the phone now, please. Next question comes from Terry Smith with Haywood Securities. Please go ahead.
Thanks, operator. Maybe Doug can answer this question. Just for the You have it, Ms. Steve Filos and Aurizona and I guess our DM. Would that pre strip be happening sort of probably over the year?
Or is it sort of half weighted runs for 3 quarters? Just a bit more clarity on how it's going to be scaled out or scheduled out over the year.
RDMs through the year. Los Filos is more front end weighted as we stepped on I'll start with you and get into the ore. Mesquite is again hand weighted as we Open up the brownie pit to access the ore in the southern port of that pit. And Aurizona stripping is a bit of a holdover from last year, it just continues into this year, and We'll
go through most of the year as well. Okay. Yes. I think with the rainy season there, Kerry, we tend to do more tons obviously after sort of April, May. So probably be evenly distributed?
Yes. Yes. Arizona built a very big profile Looking into the rainy season, I think it's over 1,000,000 tons. So we will take advantage of that as we work through the rainy season and get
back to business Through the rest of the year.
Right. Okay. And guidance on RDM production, that mine has been doing sort of 18,000, 19,000 ounces a quarter Over the last few quarters at least. And your guidance this year is $50,000 to $60,000 Do you want to maybe just Talk a bit about why that correction actually is lower than what we kind of expect on a quarterly annualized rate?
We were waiting for the permits to be able to do the stripping, which came through middle of last year, and that's why We're pushing it through this year. We're actually hopefully delayed in getting going with that
last year.
And now That we're into it. We're focused on that. It means that we have a more modest grade through 2021. That said, it's actually been doing pretty good so far this year. Again, it's our expected grade.
So maybe we'll get a little bit of a bump, but it was kind of When we got into this stripping, we would have a more modest 30% to the plant so that we can get access to better trade in the remaining life of the plant.
Okay. And then does that all that stripping finished by the end of the year then, is there some of the rollover into
It rolls over.
Okay. And Christian or Peter, could you maybe just let me know what the book value will be for your IAB position Once the deal closes, the financing closes and the company starts trading, just what your $1,000,000 will be for your allocated book value there?
Take that one for me, Peter.
Yes. We're going to have to fair about So A, we'll have to do fair value accounting for us. So the short answer is It will be at whatever the shares trade at initially at inception. The fair value That is going to be in and around, call it, dollars 100,000,000, maybe to 100,000,000 I mean, that is a that's a let's wait for Q1 question really, Kerry.
Right. But if I just took the Sort of the average price that
is at the 1st week
and multiply by the shares, that's kind of going
to be your book value in? Correct.
Yes. Got you. Okay, that's great. Thanks very much, Chris.
Thanks, Terry.
Thanks, Terry. We'll take another question from the phone, please. The next question comes from Lawrence Denny, a Private Investor. Please go ahead.
Good morning, gentlemen, and thank you for all your hard work. As a CPA, I'm a tad bit concerned on the all in sustaining cost numbers. With the acquisitions streamlining, Are you going to be able to cut costs there? Are those numbers going to fall in the coming quarters? The bigger trend here is, obviously, as we expand and develop these longer life, larger assets, those will naturally bring down our costs.
But also, we have The short term impacts of these stricken programs and less ore going on the pads, etcetera, in Filos in the first So we have an elevated period here in the 1st few quarters of this year and you start to see that downward trend. And I think as you get into sort of like next You're running at almost 900,000 ounces and you've got some expansions that have already come to fruition, such field costs starting to come down. And Roger, over time as we get Cardrock into production as we expand Castle and as well as we expand Filo's physical capacity, Those will all be lower costs. So the process here that we're going through of bringing costs down over time for sure. And will that lend itself to the potential of events, like after those things happen, will that be more Fund itself to maybe potential dividends maybe in 2022 or 2023?
Yes. I don't show the exact timing yet, but absolutely, we're heading in that direction. And the goal here really is to get this portfolio humming and Spend some of this development growth capital where we think we can get some great returns on it and then we'll lose some capital and I'll probably be able to allocate some capital back to shareholders as well as invest in future growth. But I think you're right, it's 'twenty two maybe, but 2023 is much more likely for that. Yes, that should help valuation too.
Thank you, Lawrence. We have a question from the phones, please. Next question comes from Mike Parkin of National Bank. Please go ahead.
Hi, guys. Thanks for taking my questions. Can you speak to how Tantalus' development budget is kind
of tracking?
Are you seeing kind of any wins on certain kind of cost wins and wherever you can kind of give some color?
Maybe I'll start there, but Pete and Doug, please jump in as well. So far, we've seen it pretty much tracking, I think, 1% behind where we expect that to be in terms of at this stage, I think around 25% and that should be 20% to 27 And I think it's tracking basically on plan for the budget as well. And we're obviously getting the tailwinds from the FX rate. It's a slightly better environment than we had to work in up in Northern Brazil there with Arizona. We have a rainy season with assets and have a bunch of impact.
We're finding that contractors in the area are probably a little more qualified.
And so far, we've had
a really good start to it and really encouraged. And really, it's fairly short build because A lot of that infrastructure is in place. So when we get asked what's the critical path and what are the key issues that could cause any issues or delays, No, it's not about waiting for a mill to come from China or from Europe or whatever. And those are there on-site. So it's more about Moving on, obviously, floors, getting that early training going, getting the fuel work erected, etcetera.
And so There's less areas for things to go wrong. Of course, it's a concession project and I can't be totally certain. But so far, it's tracking really nicely.
Yes. That's correct.
Great. That's fine. And on Hard Rock,
can you just give
us an idea of like once the deal closes, It's already permitted for construction. Can you give us an idea of where what kind of activity we should expect on that project this year? And do You have a percent of engineering completion on the project that
you can share with us? I'll comment on that in the first part there, Doug. I don't know if you can comment on the second But the idea here is to close. We have been out to site. We've sort of started the process of looking at the speed of the team.
We have a few Questions just to answer and a few points we want to explore and look into. But overall, we were very happy with the work done to date and the project team in place. And Premier has given the go ahead, I guess, on just getting some early works done like tree clearing and that has to be done during the, call it, the summer months. And it's the lighter end of early works. And I can't predict the exact timing, but hopefully in the second half of this year, we're in a position to be able to launch into construction.
So you're going to see, call it, the lighter end of works where you're hiring a few project team members, maybe doing a bit of tree clearing, Ordering a few things with some deposits that you're not going to see on big capital spend certainly for the next 3 to 6 months. And if you get into construction later this year, you could see us Launch into a bit more detail. In that case, we can get a full budget and time line to build our cash capital, but a Small proportion of the capital would be spent in the second half this year, of course. Okay. And then that's on the line engineering.
Well, part of the work in the latter half of the year is updating all the costs. The majority of the cost for all the equipment was based on imports. So There is an updating phase and completion of additional engineering. It's variable between
about 50% and some of
the detailed engineering On the plan, up to closer to 90% complete for TSF, even highway rerouting. I will add that Part of the first for the second half of the year is establishing the Canton and the water treatment plants that on EBITDA to be in place prior to the unit to initiate the main construction project. All right. That's very good color. Thanks very much.
Thanks, Alex.
I'll take a couple of questions A couple of questions online now. So the first one, I get asked all the time by e mails and then let you answer it, Christian. Are there any plans to employ synergies at Mesquite with Core Mining's material gold project?
Not at this stage, that's for sure. We're happy with what we got going on in the heat there and The best investment dollars we have at the moment is actually going exploring and adding down crude, at least more cheaply to The drill bit of the work that Scott and the team and Tom are doing out there. So that's what we're focused on. And because of all the upside Potential there at Castle and because think of them quite as one complex, but we certainly shared some of The people, the skill, the systems, the cash to consolidate, we're able to smelt all the gold that we have a somewhat symbiotic relationship. And we think of that as not Just one complex, but a linked set of 2 mines.
And we've got a long line life and I'll talk to Sumy there. So at the moment, we're really focused on that. In the last year, I would say we haven't we're probably done a lot in terms of the acquiring side of things, and we've got a big portfolio now. We're really clearly focused on our own assets and not really an acquisition vote at the moment. We need to actually dig around what we've got on our plate.
Thank you. Another question from a shareholder in Estonia.
Do you see any political or union related risks in any of your mining location?
I think I would say more generally is that you see political risks in the world anywhere you are. And with today's And COVID, I think there are some moving shifts in terms of obviously government, all the spending and maybe some Tax risks. I think the government is looking at increasing taxes. I believe the U. K.
Government did so yesterday or the day before. So that's something we certainly keep an eye on. But I do think that the jurisdictions we're in are very mining friendly. I mean, Ontario is one of the top maybe 3 in the world. The U.
S. Is fantastic where we are in California. I know people said you can't mine in California, but Mesquite's been going for 30 years, Castle went for 12 years And we're having a good go right now, so we're very happy there. And Mexico has got a long traditional mining. There's a little bit more left in the room at the moment, but it's a key Key engine for the economy there.
And Brazil, honestly, when we got back involved in 2016, Brazil has really, really improved. And we've seen The labor relations, the government policy around permitting, also contracting has actually improved. And maybe it's all marginally, but we've seen an Incremental improvement across the board and traction, I think, has stayed very amenable in Brazil as well. I think we're prepared now. We've got a diversified portfolio.
And if there are changes, we can withstand that. And that's one of the key things and part of our story is being diversified And given that amongst our 4 countries rather than being reliant on 1 or 2 assets, that are much higher risk. In terms of unions, I think we've got unions at a lot of our sites. We have good relationships. And that's something just like communities that you have to work on.
It's a long term partnership. I do think we have pretty good relationships with all of them. And there's always risks in those kind of partnerships that need to be cultivated And managed well. And certainly, Los Feliz is an area that led a few things from after acquiring it. And we'll do our best
Thank you, Christian. We've got another question online from one of our institutional investors in the UK. At current levels, the equity is extremely discounted. Is management open to considering a small buyback that doesn't materially impact cash levels?
Yes. It's a question we get.
I mean, the dividend share buyback question is always On the radar and we'll get ready for the next market. I think with the growth profile and the ability to invest And then you could assure that we're the balance sheet remains lower. I'm not sure if it's the right signal necessarily to do a buyback at the moment. That takes some of that capital away from all the expansion projects we have in the go. There's some really low hanging fruit in our portfolio, and I think we wanted to focus our capital on that.
But I think we're more likely to look towards a sustainable dividend when we get to that stage. And sometimes share buybacks can be fleeting and momentary because they are, by definition, effectively finite. You can't continue on with them. So We want to do something that's got a more sustained and long term view here. And of course, we worry about the share price.
We're all owners of this company, Ross, Myself and all the management team, we have an 8.5% stake. So we're very attuned to the full share price. But clearly, it's the long term vision that wins out here, and we do believe that we've got Right decision to deliver on value over time here. So just kind of your short term buybacks. So we'll focus on getting to that point where we have sustainable dividend first.
Thank you. Operator, can you please take your questions from the phone line? Certainly. The next question comes from Andrew Weakley with Smith Weekly Research. Please go ahead.
Thanks, operator. Well, I wanted to extend the appreciation for the work you guys have done in this pipeline. This is Really good. And I don't think the market is paying attention to anything other than 10 year rates and a little bit of a gold price here at the moment. But Christian, can you add any color as to some of the highlights of the forthcoming community agreement that allows to those?
And if you can share maybe just regularly, What things do you think will keep this relationship aligned longer term? Yes. Thanks, Andrew. And I want to be careful. I don't want to divulge the granularity of an agreement, but I think I was pretty forthcoming in the last few calls, we came a little bit earlier where The goal here is to set a collaboration, a special collaboration agreement with the community that will make sure that we look after The areas of concern and where we can help that include things like improving the water distribution system that we committed to previously and we will continue to commit to it and we will make sure we upgrade that, And that involves, call it, fellowships and medicines and other areas that we can contribute to the wider community and make a difference, a positive difference.
And the key areas that obviously were that the local community leaders were pushing for is making sure that There's a reasonable and fair distribution of employment and contracts. And for us, it's absolutely vital, but it's reasonably split between the 3 core candidates in there like it is for any other communities, but that's in all the other mines as well. And those are the key areas that we're focusing on because we plan to be there hopefully for a long period of time We want it as solid as possible. We want it as understandable as possible. And particularly, as we said, the dispute resolution mechanism or grievance mechanism is It's clear as possible so that co op days don't happen in the future and that they feel they can come to us and as an institution we're able to work with them and deal with things and It's not one individual or one person that builds that relationship with us to get company.
With Ross' background and certainly ours, this kind of stuff is critical, vital. It's something that we've all had good experience in over the years and was disappointed with how this played out. We didn't get A good chance to go in and build those relationships on a personal level as well amongst senior people in Vancouver and at the mine today level Because of COVID and because of the transaction happened just before that. So I'm looking forward to what I think I'm pretty optimistic sometime later this year Most of the countries we're in early will be under control, and we'll be able to start building upon those partnerships and relationships. And part of it's Having the agreement in place, having it well understood, managing it well, having a regular dialogue meetings mechanism.
But also it's about building those personal relationships that I'm all the way up to Ross and all the way down to the local team that's working with the community. And it's hard work. It's a regular thing. You have to keep up Just quick exercise, you have to keep your volume sheet and make your local relationships in shape. And it's an ongoing multiple touch point relationship.
And I think we've both got hard work on that front, and I think the agreement is the foundation of it and the relationships are the key that keeps it going and keeps the machine oil as well. I appreciate that, Christian. And I guess it's important for the ESG part that's happened in this market, which has And largely unexpected and of course you guys have been servicing ESG for many of the executives here, but just wanted to bring that back up and I'm sure you guys are listening for what to future launch as well and trying to find a common ground. So I appreciate that you guys keep up the good work, keep up the efforts in there. Thanks, Andrea.
And we get a lot of personal joy and pleasure from actually making a positive difference to communities and regions we operate in. So Take it really seriously, and we'll invest in that. And I think COVID, and I'll just touch on that, you kind of alluded to that. So COVID's had an impact last year, much mentally and morally and just the impact it's had on testing and the Way that we operate in protocols, but we do see that the case levels have been reducing across probably the portfolio of mines. It's been a wonderful job of managing COVID.
And Obviously, in the U. S, we're seeing a big rollout of vaccines. I think everyone will have a chance to be vaccinated in the Q2 this year. We've even been approached in Brazil about do we want the We're seeing the vaccines starting to come out. And I do believe that this year, hopefully, we'll be turning a corner on that front.
Thank you.
Thank you, Andrew. One more question online from a brand new shareholder as of this week. You've got your first project in Canada now. Are you thinking of expanding in that country?
Well, we were always keen to add in Canada. I think Ross was saying we were on stake last week, the First time back in Canada in a few years. I mean, I was here obviously with New Gold, but we're really excited to be back in Canada. There's a lot of good reasons to be here. It's a great line of jurisdiction.
A lot of people who know what they're doing in mining. It's really prospective. Obviously, rule of law, the social Relationships are very strong, this project as well. And a number of shareholders said to us, one of the key pieces that will round out our portfolio is adding our new Available Canadian assets. So we hope that we keep that box.
And we're really excited about that project as a part of our portfolio and think that we can add some value to it. And yes, I mean, why not? We'd love to be a little bit bigger in Canada, in Perth. But we're not actively out there looking for more projects At the moment, particularly development page in case our pipeline is full. We've got Santa Luz, Hard Rock and then Castle, and then there's a bit of work obviously to go on Overlaps is it.
So we want to focus on what we've got in hand, and we're not in a rush to look for something. And if we do ever do anything in the next year or 2, it would certainly have to be And we've got to get our multiple and evaluation up, so our focus is on delivering value and having people realize that It's fully well undervalued right now and we're getting that rerating.
That is the end of our questions for the day. So thank you everybody for joining If you do have questions that you think about after we're done, please don't hesitate to get in touch. And I will hand it back now to Christian for closing remarks.
Great. Thank you. And thanks for a couple of questions from just short shareholders and supporters who've been around for a long time and patients who are So I mean, a new pipeline and portfolio in this business would be a test growth, I think, maybe globally for a midsized mining company. And As you see us execute over the next couple of years here, it's been an exciting ride as we creep up in that rerating in terms of our or evaluation. And glad to have you along for the ride now.
And thanks again for all the questions, and we'll speak to you again soon.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.