Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold fourth 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. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. 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 Rhylin Bailie, 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 visit our continuous disclosure documents on SEDAR and on EDGAR. I'm now going to turn the conference call over to our CEO, Christian Milau, for opening remarks.
Great. Thanks, Rhylin, welcome everyone today. Just looking at slide number three and running through this past year, we had a heck of a busy year and lots on the go. A strong finish to the year and a good performance on the health and safety front with very good mine integration and work on the safety front during a very taxing year when COVID was a key impact on the business. We tested over 15,000 people for COVID during the year, and our workforce is only just under 6,000 people. Multiple tests per person on average, and I think we've done an excellent job, kudos to the mine 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 to the year as we go into a big investment year this year. We had very good solid cash generation on here. I'll talk about that in a few slides here. Good end to the year. Let me turn over to slide number four. Busy on the development and corporate highlights front. Development was extremely busy during the year, with Castle Mountain phase I going into production and hitting commercial production in the fourth quarter. 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. Los Filos Feasibility Study update is also underway and is a little bit behind.
We'll come out during the Q2, during the mid-Q2, just behind Castle Mountain phase II. 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, there's a PEA study underway, which we expect to give out to the market in the second half of this year. Lots on that front, lots of new information, some exciting additions coming to both reserves and resources. A big year on that front. We also saw a nice increase last year in the reserves and resources at Mesquite, kudos to Scott and the team who did a great job of basically increasing reserves and resources substantially there. Also really pleased with Mesquite performance overall. We've owned it for just over a couple of years, just over two years now.
Paid just over $150 million for it, and we generated free cash flow of almost $140 million. Almost repaid that purchase price within two years' time. Excellent performance. Also, the Santa Luz feasibility was released with strong results, really good high return project, $100 million of capital. Construction started, and we're now about 25% complete. We've also appointed Sally Eyre to the board, so welcome to her this year as well. We integrated the Leagold merger. The teams are now in one office in Vancouver. We also announced the Premier Gold acquisition, so very busy on the corporate development front as well. I'll pass over to Peter to walk you through the financials on the next couple of slides.
Thanks, Christian. On slide five, you can see we had a good year. We sold 135,000 ounces of gold at an average realized price of about $1,871 per ounce, which generated revenues of $253 million. On the cost front, our cash costs for the quarter were $848 an ounce and just under $1,100 an ounce for all-in sustaining. That led to earnings for mine ops for the quarter of $95 million. Income for the quarter was $89 million. For an EPS of $0.37 a share, when you adjust out a number of non-cash charges, our adjusted earnings, our income is $34 million at an adjusted EPS of $0.14 a share. Fully diluted, that's $0.12 a share. Most importantly, we generated a lot of cash during the quarter.
It was our strongest quarter for that, generating $87 million in operating cash flow before changes in non-cash working capital. We've continued to strengthen our balance sheet, which is with cash of $345 million at the end of the year, which is up from $310 million at the end of Q3. In addition, strong balance sheet, we have $200 million in net debt, which, if you assume the money converts to our equity, is $55 million of net cash. Our net liquidity after you include the CAD 75 million financing is about $600 million. In addition, our investment in Solaris has performed really well. We equity account for it, so it only has a book value of $22 million in our balance sheet. However, the fair value of the shares that we own there are about $150 million U.S.
Good strong balance sheet for the pathway ahead and the development that we need to do. Moving to slide six. 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 Q3 of 125,000 ounces to the 136,000 ounces produced and 135,000 ounces sold. Mesquite, Aurizona, and Fazenda had 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 36,000 ounces it produced during the quarter. Moving to slide seven, which highlights our earnings and operations results. Here you can see in the comparison to prior year, really the increase in scale from the Leagold merger.
One item I would point out is we finalized our purchase accounting for the Leagold merger in Q4. Unfortunately, that created a bit of noise because we updated our assumptions on the gold price we used for fair value to heap leach pad at Los Filos. When you make changes in your purchase accounting, you have to apply that. IFRS requires you to apply that back to prior quarters, which is why previous quarters are updated as if those changes had been made on day one. 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 what our expectations are for the year, 61% of our sustaining expenditures in the first half of the year, but only 40% of our gold sales, meaning that we expect to have higher all-in sustaining costs in the first half of the year versus the 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 is that all of the financial results that we're reviewing today and that are in our press release are unaudited. It's our first year of SOX. We're in the process of just finishing up the control side of the audit with respect to our financial statements. We expect that to be done in the next couple of weeks. You'll see our audited financials in MD&A about then.
I'll turn the time back over to Christian.
Yeah. Thanks, Peter. Looking at slide number eight, just want to run through the operations and a little bit of a look back and a little bit of a look forward for 2021. Looking at Mexico and California first, Los Filos and Mesquite are, as Peter said, in an investment phase here, particularly during the first half of this year. Los Filos, we're opening up the Guadalupe open pit. We're also ready to start the Bermejal Underground once the social collaboration agreement is signed with the community, which I'll comment on in just a second here. We restarted the Los Filos mines in December, and it poured about 15,000 ounces of gold last year and is on track to be ramped up to full production here as we speak. Pleased to see that back and 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 Castle Hills community. Their key areas of sticking points, two points basically, were around employment and contracts for this future growth in the operation, particularly around Bermejal. We've agreed those clauses around employment and sharing between the various communities and ultimately contracts and awarding certain contracts and tendering into the local community. 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'll have that resolved during the next few weeks. We're getting very close. We've made progress since last time we spoke to you when Ross and I were on the call a few weeks ago here.
Good progress being made, and we plan to see that finished here in the near term and get back to normal business in Los Filos and get the mine expanded. For Mesquite, it's a big, heavy stripping period during the first half of this year, as Peter sort of alluded to. The Brownie Pit is being stripped. There's very little new ore going to the pads during this period. We are residually leaching and adding some supplemental ore to the pads. We're also spending about $9 million this year on exploration in Mesquite. We've been an outstanding performer over the last couple of years, and a key area of focus to continue to extend the mine life. As I said earlier, it was a good job of increasing resources and reserves, and we want to just keep doing that this year as well.
Opening up the new area of Brownie, looking to expand the reserves and reserve and invest in this mine. We've also leased a new fleet from Caterpillar because we have such confidence in the future of this mine continuing on for a while. Lots of investment in those two mines this year. If we look at Castle, we've been ramping that up. We hit commercial production later in the fourth quarter of last year. We're still working on some niggly points around solution flow and leach pad management. One of our 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. We're going to put all that investment into this year.
It gives a lot more flexibility in the operating team, a chance to work on increasing the flows and having more flexibility on the leach pad. We'll see production sort of a little bit lower the first half of the year, and it'll ramp up in the second half of the year. Turning to slide number nine, 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 help on the cost, but performance-wise, in terms of production, all the mines performed well last year. We expect a pretty steady performance this year, quarter-over-quarter.
You'll see less variability than you'll see in the other mines in Mexico and California. For Aurizona, I do want to point out it just had an outstanding end of 2020, as Peter said, about $100 million of free cash flow last year. Not only its second year of operation, very good results there. In 2021, we have a large stripping program and a TSF lift. The sustaining capital is a little bit elevated this year. Operating costs are basically in line with last year, there'll 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 H2, and continue to work on satellite extensions, as well as looking at some new potential deposits which are within the 10-20 km radius of the mine.
We're really excited about the future here and we're allocating the capital to extend that mine life. Los Filos continues business as usual. It's been going on and off for about 25 years, so business as usual. It's had a good start to this year. RDM, again, another good start. The mill's performing very well. The mining contract has continued to perform. We got that large pit expansion permit late last year. We're spending almost $35 million on stripping this year, so that's a key portion of our capital for the growth capital this year. Interestingly, this has been quite a rainy period during this rainy season this year, and as you remember historically, it always was challenged with having enough raw water in the raw water dam to get through a full year of production. This year, the actual raw water dam's overflowing.
They probably have two years worth of water, so it's really, really pleasing pictures to see that in the last week or so. And Pilar just continues on a 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. 600,000- 655,000 ounces, that's a 30% increase on 2020, so continuing our move towards that million-ounce target. Cash costs are up slightly as mentioned earlier. Fuel, reagents, labor, and FX have slightly more conservative assumptions this year going into the year, although we're actually seeing almost the opposite on the FX front. I think both the peso and the Brazilian real have actually been weaker than initially than we expected early this year. 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 of the year as Peter alluded to. Quarter four looks to be a really good quarter as we open up new ore sources at both Mesquite and Los Filos. New CapEx, basically the key components of that are the $100 million investment in Santa Luz restart. I'll comment on that in a second here. $35 million on the pit expansion at RDM, and also opening up the Guadalupe open pit and the Bermejal Underground at Los Filos. Those are the key components that make up that $200 million. We're spending about $400 million on CapEx this year in total, including the sustaining, but it really does set us up for a strong 2022 and beyond.
Next year, in 2022, we should be producing about 900,000 ounces of gold. Turning to slide 11. Looking at the development projects. Los Filos expansion, the plan there is to move that towards 350,000 ounces of annual production on a fairly steady basis from 2023 onwards. We've selected an 8,000 ton per day plant, and that new feasibility study, as I said, will be out in Q2. We won't start that investment until the social collaboration agreement is signed for Bermejal Underground, but we hope to have that up and running fairly soon here, and we should be in a position to launching the construction on the CIL or the carbon-in-leach plant later this year as well. In terms of Santa Luz, 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 pours for the mill foundations, also for the tank foundations. Resin's been ordered. Steel work is well underway. Mining's expected to start in May, so making a really good start to the 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, so good to see, and some of the team that helped build Aurizona are down there spearheading this one. Looking at Castle Mountain phase II feasibility, that'll be ready imminently. We expect that out in the public domain in a few weeks' time here. That should show a nice increase to the mine life, the annual production, to the reserve base. On the back of all that, we'll also be looking at a slightly larger mill.
What this feasibility will allow us to do is start our permitting process to amend that permit in the summer this year and make a submission to the regulators. We think that'll take us up to two years to permit, which works in really well with our current development pipeline to get Santa Luz done by around this year-end. Hardrock construction could be started in that second half of this year and completed around the end of 2023 or 2024. You could be starting construction on Castle Mountain, so a nice sequencing of our projects. Looking at page number 12. The Premier acquisition, we announced that, I think it was December 16th. Vote happened last week. We got 99.9% in favor for the Premier shareholder vote. 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 Leagold. It took us till mid-March, we expect probably second half of March, we should have that. Also the i-80 spin-outs that Ewan Downie will be running. It has had a nice sort of visibility in the Premier share price. It has probably moved up to about $250 million of implied value.
Our 30% stake will be just under $100 million, nice to see that value creation happening already and focus on that pure Nevada-based company. Looking a little more closely on slide number 13, that is Hardrock asset. As we announced earlier this week, we will hold a 60% stake in Hardrock. We bought 50% through the Premier acquisition, and we have negotiated a deal to buy another 10%, which will close just after closing of the Premier deal. I will acquire that 10% from Orion for just over $60 million.
Really pleased to have that majority stake to really be able to say that we're behind this project 100%. We actually got a chance to visit it last week and get our feet on the ground and actually see the excitement in the local region for this project. They're really keen to see it up and running, and all the stakeholders are behind it. Nice to start with that support. Just a quick reminder, this is a permitted project with social agreements in place with the 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 Agnico Eagle in fairly remote locations in northern Canada. Really got all the pieces in place to get going later this year.
We're pretty excited to get this acquisition completed and do a bit of work before we can launch into construction, but really get this thing moving later this year. This asset will be a cornerstone asset for us for years to come. It's a 5.5 million ounce deposit, so great scale to it. It'll produce over 400,000 ounces in the early phases. Lots of exploration upside and 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 satellite deposits to the west of the property. There's some really exciting drill results come out of there as well. We see this as a multi-decade mine eventually. A great starting project, plan to get into construction there hopefully later this year.
I think the other asset from slide number 14 of the Premier acquisition, Mercedes, a 50,000-ounce producer currently. It's producing good cash flow. It's about $1,000 all-in sustaining cost. They're generating good cash on a quarterly basis. Hasaga is an exciting Red Lake property. It could be a mine one day. We plan to do some exploration there in due course, but we're really excited about that one. Greyhill and Manvel, it's a bit of a smaller project sitting between some Evolution properties, and is a logical part of that complex in the long term, for sure. i-80 Gold, as I mentioned earlier, Ewan Downie will be running that out of Reno, Nevada. Three focused assets in Nevada, one producing, one that's going to be put back into production fairly easily in a high-grade exploration project, effectively.
I think Ewan and the team will be able to create some real value there. As we've done with Solaris, we think we can support them and help them surface that value as a focused U.S.-based gold mining company. Turning to 15, just to 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 jurisdiction. We've got almost a quarter in each of these jurisdictions in Canada, U.S., Mexico, and Brazil, with reserves, with net 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 were able to balance it now almost 25% in each of these regions.
I think this year will be exciting because we'll 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 and potential in all of these regions. We're not reliant on any one. It's 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 third column there. We plan to be hitting that sort of million-ounce mark in a couple of years' time here. We also have a nice reserve base of almost 16 million ounces, and we see that growing in the near term here.
At the leading end of all the peer comparable categories here on this slide, except for at the valuation end. Our key job here is to move that multiple of price and net asset value up from 0.5x-0.6x up into that range like our peers of that 0.8x-1x . Really over the next 12-24 months, as we execute, as we expand the portfolios, become a 900,000 to a million-ounce producer, I really think that re-rating has got a really good chance of achieving that, and the balance sheet's in place to deliver on that growth. Just in summary here on slide number 17, a busy year in 2020, a long list of catalysts for 2021. We're going to focus on delivering on the production and the cost base that we have.
That production will have a 30% growth factor built into it. We've also got a CAD 37 million exploration program, which will be mostly focused on extending the mine lives and around the mines that have shorter than 10-year mine lives. It's nice to see that we're actually reinvesting in our own portfolio this year, 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 i-80 Gold as they create some value. Really on the M&A front, it's a little bit more subdued, 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.
What we think we've done here is we've created a company with all those pieces to create value. It's well-positioned in this gold cycle. Diversity of scale. We're in mining-friendly jurisdictions 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, $600 million in liquidity, another couple of $100 million in investments, and a very low net debt to EBITDA ratio of well below 1x . 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 a fun and exciting year. With that, I think I'll end the formal part of the presentation and maybe turn it over for question- and- answer.
Thank you, Christian. Operator, can you please remind people how to ask a question?
Certainly. Once again, to join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. 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. 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, Christian, some very impressive growth 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 reflected in the share price?
I think one of the key things that certainly in the feedback we get is you can do a lot on a plate. Really focus on your core projects and the opportunity to create value in those core projects and areas where you can expand the reserves and deliver on what you say you're going to do. I think it's all about the execution here. We've gathered all the pieces to the puzzle. 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&A and integrating cultures and companies and creating some value already.
I just think that it's a matter of executing is the key thing, and I think the balance sheet's in a strong place to allow us to do that. Again, the shareholder base has 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 Kerry Smith with Haywood Securities. Please go ahead.
Thanks, Operator. Maybe Doug can answer this question. Just for the pre-strips you have at Mesquite, Filos, and Aurizona, and I guess RDM. Would that pre-strip be happening sort of equally over the year, or is it sort of front half weighted, one for three quarters? Just a bit more clarity on how it's going to be scaled out or scheduled out over the year?
RDM is through the year. Los Filos is more front-end weighted as we strip down, probably and get into the ore. Mesquite is again, back-end weighted as we open up the Brownie Pit to access the ore in the southern part of that pit. Aurizona stripping is, I think, a holdover from last year. It just continues into this year. Will go through most of the year as well.
Yeah, 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.
Yeah.
Yeah. Aurizona built up a very big profile coming into the rainy season. I think it was over 1 million tons. We'll take advantage of that as we work through the rainy season and then get back into the stripping through the rest of the year.
Right. Okay. Doug, while guidance on RDM for the production, that mine's been doing 18,000, 19,000 ounces a quarter over the last few quarters at least. Your guidance this year is 55,000- 60,000 ounces. Do you want to maybe just talk a bit about why that production is actually a bit lower than what we'd kind of expect on a quarterly annualized rate?
We were waiting for the permits to be able to do the pre-stripping, which came through middle of last year. That's why we're pushing it through this year, as we're actually a bit delayed in getting going with that pre-strip. 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 against our expected grade. Maybe we'll get a little bit of a bump. It was kind of expected that when we got into the stripping, we would have a more modest grade going into the plant so that we could get access to better grade in the remaining life of mine.
Okay. Then does that, all that stripping finish by the end of year, then? Is there some of it roll over into.
It rolls over.
Okay. Christian or Peter, could you maybe just let me know what the book value will be for your i-80 Gold position once the deal closes, the financing closes, and the company starts trading? Just what your dollars million will be for your allocated book value there.
I think that one's for you, Peter. You know that, yeah.
Yeah. We're going to have to do fair value accounting for it. The short answer is it'll be at whatever the shares trade at initially at inception. The fair value of that is going to be in and around, call it $100 million, $80 million-$100 million.
Okay.
That's a let's wait to see one question, really, Kerry.
Right. Yeah. Okay. If I just took the average price it trades at in the first week and just multiply by the shares, that's kind of going to be your book value then?
Correct. Yeah.
Got you. Okay, that's great. Thanks very much, guys.
Yeah.
Thanks, Kerry. Take another question from the phone, please.
The next question comes from Lawrence Dennie, a private investor. Please go ahead.
Morning, gentlemen, thank you for all your hard work. As an CPA, I'm a tad bit concerned on the all-in sustaining cost numbers. With the acquisitions and streamlining, are you going to be able to cut costs and 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. We have the short-term impacts of these stripping programs and less ore going on the pads, et cetera, in Los Filos in the first half of this year. We have an elevated period here in the first few quarters of this year. You start to see that downward trend. I think as we get into next year, you're running at almost 900,000 ounces, and you've got some expansions that have already come to fruition. You start to see those costs starting to come down. Gradually, over time, as we get Hardrock into production, as we expand Castle, and as well as we expand Los Filos to its full capacity, those will all be lower costs.
It's a process here that we're going through of bringing costs down over time, for sure.
Will that lend itself to the potential of dividends, like after those things happen, will that lend itself to maybe the potential of dividends, maybe in 2022 or 2023?
Yes. I don't have the exact timing yet, but absolutely, we're heading in that direction. The goal here really is to get this portfolio humming and spend some of this development and growth capital where we think we can get some great returns on it, and then we'll move to another dividend model, and we'll probably be able to allocate some capital back to shareholders as well as invest in future growth. I think you're right. It's 2022, maybe, but 2023 is much more likely for that.
Yeah, that should help valuation, too. Thanks very much.
Yeah. Thank you.
Thank you, Lawrence. Another question from the phones, please.
The next question comes from Michael Parkin of National Bank. Please go ahead.
Hi, guys. Thanks for taking my questions.
Hey, Mike.
Can you speak to how Santa Luz's development budget is tracking? Are you seeing any wins on certain kind of cost items and wherever you can kind of give some color?
Maybe I'll start there, but Peter and Doug, please jump in as well. So far, we've seen it pretty much tracking, I think, 1% or 2% behind where we expected it to be in terms of, at this stage, I think around 25%, and that should be 26%-27%. I think it's tracking basically on plan for budget as well. 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 Aurizona, as you have a rainy season, that doesn't have as much an impact, and we're finding that contractors in the area are probably a little more qualified. So far, we've had a really good start to it and really encouraged. It's a fairly short build because a lot of that infrastructure is in place.
When we get asked what's the critical path and what are the key issues that could cause any issues or delays, it's not about waiting for a mill to come from China or from Europe or whatever. Those are there on site. It's more about executing on concrete pours, getting that early mining going, getting the steel work erected, et cetera. There's less areas for things to go wrong. Of course, it's a construction project, and you can't be totally certain, but so far it's tracking really nicely. I don't know if I missed anything.
No, I think you summarized it well.
Oh, go ahead, Peter.
No, I was going to say the same.
Great. Excellent. On Hardrock, can you just give us an idea of once the deal closes, it's already permitted for construction. Can you give us an idea of what kind of activity we should expect on that project this year? Do you have a % of engineering completion on the project that you can share with us?
I'll comment on the first part there, Doug. I don't know, maybe you can comment on the second part, but the idea here is to close. We have been out to site. We've sort of started the process of getting up to speed with the team. We have a few questions to answer and a few points we want to explore and look into. Overall, we were very happy with the work done to date and the project team in place. Premier's given the go-ahead, I guess, on just getting some early work done, like tree clearing and that has to be done during the summer months. It's the lighter end of early works. 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.
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. You're not going to see a big capital spend, certainly for the next few to six months. As we get into construction later this year, you could see us launch into a bit more detail. At that stage, we can give a full budget and timeline and be able to articulate capital. A small proportion of the capital will be spent in the second half of this year, of course.
Okay.
Detailed engineering, Doug, I don't know if you know the % there, where they're at?
Well, part of the work in the latter half of the year is updating all the costs. The majority of the costs for all the equipment was based on some quotes. There is an updating phase and completion of additional engineering. It's a variable between about 60%, depending on some of the detailed engineering on the plant, up to closer to 90% complete for TSF and highway rerouting. I will add that part of the push for the second half of the year is establishing the camp and the water treatment plants that are needed to be in place prior to being able to initiate the main construction for the project.
All right. That's very good color. Thanks guys very much.
Thanks, Mike. I'll take a couple questions online now. The first one I get asked all the time through emails, I'm going to let you answer it, Christian. Are there any plans to employ synergies at Mesquite with KORE M ining in Trio Gold's project?
That would be a save, that's for sure. We're pretty happy with what we got going on at Mesquite there, and we find the best investment dollar we have at the moment is actually going, exploring, and adding ounces reasonably cheaply through the drill bit of the work that Scott and the team and Palmer are doing down there. That's what we're focused on. Because of all the upside and the potential there at Castle, and because we think of them not quite as one complex, but we certainly share some of the people, the skills, the systems, the cash to consolidate. We're able to smelt all the gold, and we have a somewhat symbiotic relationship, and we think of that as not just one complex but a linked set of two mines, and we've got a long mine life and opportunity there.
At the moment, we're really focused on that. In the last year, I would say we've probably done a lot in terms of the acquiring side of things, and we've got a big portfolio now. We're really squarely focused on our own assets and not really in acquisition mode at the moment. We need to execute, deliver on 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 at any of your mining locations?
I think I would say more generally is that you see political risks around the world anywhere you are. With today's environment in COVID, I think there are certainly some moving shifts in terms of obviously government and public spending and maybe some tax risks. I think many governments are looking at increasing taxes. I believe the U.K. government did so yesterday or the day before. That's something we certainly keep an eye on. I do think that the jurisdictions we're in are very mining friendly. I mean Ontario is one of the top maybe three in the world. The U.S. is fantastic where we are in California. I know people think you can't mine in California, but Mesquite's been going for 30 years. Castle went for 12 years before, and we're having our due diligence right now, so we're very happy there.
Mexico's got a long tradition of mining. There's a little bit more left-leaning government at the moment, but it's a key engine to the economy there. Brazil, honestly, when we got back involved in 2016, Brazil has really improved, and we've seen the labor relations, the government policy around permitting, also contracting has actually improved. Maybe it's all marginally, but we've seen an incremental improvement across the board, and tax rates have 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. That's one of the key things and part of our story is being diversified and living the spread amongst our four countries rather than being reliant on one or two assets that are much more at 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, and I do think we have pretty good relationships with all of them, and there is always risks in those kind of partnerships that need to be cultivated and managed well, and certainly at Los Filos is an area that we learned a few things from after acquiring it, and we'll do our best to improve that partnership and its reframe with the unions. So far, I don't see any major issues jumping out at us.
Thank you, Christian. Got another question online from one of our institutional investors in the U.K. At current levels, the equity is extremely discounted. Is management open to considering a small buyback that doesn't materially impact cash levels?
Yeah, it's a question we get. I mean, the dividend share buyback question is always on the radar and does get raised in this market. I think with our growth profile and the ability to invest and the need to ensure that our balance sheet remains solid, I'm not sure it would send the right signal necessarily to do a buyback at the moment. That would take some of that capital away from all the expansion projects we have on the go. There's some really low-hanging fruit in our portfolio. I think we want to focus our capital on that. I think we're more likely to look towards a sustainable dividend when we get to that stage. Sometimes share buybacks could be fleeting and momentary because they are, by definition, effectively finite. You just can't keep continuing on with them.
We want to do something that's got a more sustaining long-term view here. Of course, we worry about the share price. We're all owners of this company, Ross himself and all the management team. We have an 8.5% stake, so we're very attuned to the low share price. Really, it's the long-term vision that wins out here, and we do believe that we've got the right vision to deliver on value over time here, and we don't necessarily just want to do a short-term buyback. We'll focus on getting to that point where we have a sustainable dividend first.
Thank you. Operator, can we please take a question from the phone line?
Certainly. The next question comes from Andrew Weekly with SmithWeekly Research. Please go ahead.
Thanks, operator. Well, I wanted to extend the appreciation for the work you guys have done on this pipeline. This is really good, and I don't think the market's paying attention to anything other than 10-year rates and a little bit of the gold price here at the moment. Christian, can you add any color as to some of the highlights of the forthcoming community agreement at Los Filos? If you can share maybe just vaguely, what things do you think will keep this relationship aligned longer term?
Yeah. Thanks, Andrew. I want to be careful. I don't want to speak to all the granularity of an agreement, but I think I was pretty forthcoming the last few calls and a little bit earlier where the goal here is to set a collaboration, social collaboration agreement with the community that will make sure that we look after the areas of concern and where we can help, it includes things like improving the water distribution system, which we committed to previously, and we will continue to commit to, and we'll make sure we upgrade that. Things that involve scholarships and medicines and other areas that we can contribute to the wider community and make a difference, a positive difference. The key areas that obviously the local community leaders were pushing for is making sure that there's a reasonable and fair distribution of employment and contracts.
For us, it's absolutely vital that it's reasonably split between the three core communities there like it is for any other communities we affect and all the other mines as well. Those are the key areas that we're focusing on because we plan to be there, hopefully, for a long period of time, and there's lots of investment to go in. We want it as solid as possible. We want it as understandable as possible. In particular, as we said, the dispute resolution mechanism or grievance mechanism is as clear as possible so that blockades 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, but actually a company.
With Ross's 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 we're 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 site level because of COVID and because the transaction happened just before that. I'm looking forward to, and I think I'm pretty optimistic that sometime later this year, in most of the countries we're in, COVID will be under control, and we'll be able to start building upon those partnerships and relationships. Part of it is having the agreement in place, having it well understood, managing it well, having a regular dialogue and grievance mechanism.
Also it's about building those personal relationships that come all the way up to Ross and all the way down to the local team that's working with the community. It's hard work. It's a regular thing that you have to keep up. Just like exercise, you have to keep your body in shape, you have to keep your local relationships in shape. It's an ongoing multiple touchpoint relationship. I think it's just a bunch of hard work on that front. I think the agreement is the foundation of it and the relationships are the key that keeps it going and keeps the machine oiled well.
Yeah, I appreciate that, Christian. I think it is important for the ESG part of it that's happening in this market, which has been largely unexpected. Of course, you guys have been servicing ESG for many decades here, but just wanted to bring that back up. I'm sure you guys are listening to what the community wants as well and trying to find a common ground. I appreciate that. You guys keep up the good work, keep up the efforts, and take care.
Thanks, Andrew. We get a lot of personal joy and pleasure from actually making a positive difference to communities and regions we operate in. We take it really seriously, and we'll invest in that. I think COVID, and I'll just touch on that since you kind of alluded to that. COVID's had a big impact last year, both mentally and morally, and just the impact it's had on testing and the way that we operate in protocols. We do see that the case levels have been reducing across probably the portfolio of mines. Mine has done a wonderful job of managing COVID. Obviously in the U.S., we're seeing a big roll out of vaccines. I think everyone will have a chance to be vaccinated in the second quarter this year.
We've even been approached in Brazil about do we want as a company to order vaccines, which is something that we would have to consider. I don't know if we want to do that, but 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 are always keen to add in Canada. I think Ross was saying when we were on site last week, his first time back in Canada in a few years. I was here obviously with New Gold. We're really excited to be back in Canada. There's a lot of good reasons to be here. It's a great mining jurisdiction, a lot of good people who know what they're doing in mining. It's really prospective. Obviously, rule of law, the social relationships are very strong at this project as well. A number of shareholders said to us, one of the key pieces that would round out our portfolio would be adding a good available Canadian asset. We hope that we tick 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.
Yeah, why not? We'd love to be a little bit bigger in Canada. It wouldn't hurt. We're not actively out there looking for more projects at the moment, particularly development stage. In case of Equinox Gold, we've got Santa Luz, Hardrock, and then Castle, and then there's a bit of work obviously to go on at Filos, so it overlaps a bit. We want to focus on what we've got in hand, and we're not in a rush to look for something. If we do ever do anything in the next year or two, it would certainly have to be an accretive deal, and we've got to get our multiple and our valuation up. Our focus is on delivering value and having people realize that this portfolio is well undervalued right now and getting that re-rating.
That is the end of our questions for the day. Thank you everybody for joining us. If you do have questions that you think about after we're done, please don't hesitate to get in touch. I will hand it back now to Christian for closing remarks.
Great. Thank you. Thanks for the questions from these shareholders and supporters who've been around for a long time and patient here. We're building a good pipeline and portfolio in this business. We think the best growth, I think maybe globally for a mid-size mining company. As you see us execute over the next couple of years here, it's going to be an exciting ride as we creep up in that re-rating in terms of our valuation. Glad to have you along for the ride now. 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.