Thank you for standing by. This is the conference operator. We are here to discuss Equinox Gold's friendly acquisition of Premier Gold Mines. This conference call is being jointly hosted by Equinox Gold And Premier Gold. As a reminder, all participants are in listen only mode and the conference is being recorded.
After the presentation, questions. I would now like to turn the conference over to Raylyn Bailey, Vice President, Investor Relations for Equinox Gold. Please go ahead.
Thank you, Anastasia, and thank you everybody for joining us today. On the call today, we have Ross Beatty, Chairman of Equinox Gold Christian Milau, CEO of Equinox Gold and Ewan Downey, CEO of Premier Gold. We will all be making a number of forward looking statements today. So please please do take the time to visit our continuous disclosure documents on the Equinox Gold And Premier Gold website on SEDAR and on EDGAR. I will now turn the call over to Ross Beatty for opening remarks.
Good morning, ladies and gentlemen. Thank you very much for for that, and welcome everyone to the call. I'm sure everyone's big question here is, you know, why on earth are we doing this deal at this time? And I'm gonna try to answer that really simply here. The quick the quick answer is that premier fits our strategic plan.
Which simply put is to grow as big as we can as quickly as we can as safely and as low risk as we can and as accretively as we Premier offers us a hard rock project, a large low grade, sorry, a large low risk development project. It's big, total production nearly 400,000 ounces a year for more than 10 years and more than 5,000,000 ounces of proven and probable gold reserves. It's pure gold, It's in Canada, it's ready to build, and it's totally within our financial and technical capacity to manage. Premier also offers us a great many opportunities for additional wealth creation from its other assets in Ontario, Mexico, and the US. We really like to spin out company I Eighty and hope to participate over the long term in what Ewan is going to be doing there.
We think there are many undervalued assets in the premium portfolio that we will also be able to demonstrate value on in due course that the market will applaud. This is a value creating deal. We have zero interest in growth simply for the sake of growth. That creates no value. Since our Leagold deal closed in early 2020, we've continued to look at new M and A opportunities.
But as the gold price rose this year, equity values rose 2, and we simply couldn't find real value, especially with respect to operating companies. Premier was an exception, in that it traded at a significant discount to its net present value. This happened because of its dispute with Centerra, And because Premier didn't have the critical mass to finance Hardrock without excessive equity dilution. When we looked at Hardrock, We really liked it because it offers us accretive growth, real value creating growth. And we were able to show the premier board of directors that we would be able to build hard rock and give all premier shareholders tremendous upside to gold and to all of Equinox's other assets for future value creation too.
So this is a great example of a win win deal that should be good for shareholders of both companies. Econox's core business plan, as I said, is to grow quickly into a globally important gold producer. Building our gold production and gold reserves and resources as large as possible as quickly as possible. This is important in terms of today's capital markets, which reward size and diversification. But it's also important in terms of creating as much leverage as possible, to today's bull market in gold.
Every additional ounce we produce and every additional ounce of reserves and resources we can acquire or discover build extra value with every dollar rise in the gold price. Scale counts, and this deal builds scale just as our Lea Cole acquisition earlier this year did. I remain very bullish on the call price for many reasons. We are hopefully seeing the sunset of the COVID pandemic with the arrival of vaccines. But the underlying macroeconomic factors in favor of higher gold prices remain as strong as ever.
And I think 2021 will be another great year for gold mining companies. The bigger, the better. Equinox has a fantastic future with enormous internal growth. This deal gives us another cornerstone growth asset that we will get to work on immediately after the deal closes. It's our 3rd M and A deal since we began business at the start of 2018.
The other 2 have worked out very well, and I'm certain that this deal will be another great win for all shareholders. I want to thank Premier's Board of Directors for their faith in us and their conviction that this deal will be great for shareholders of both companies. This is a logical deal. It's low risk. It's consistent with our strategic plan, and it's value creating for everyone.
I can't wait to start construction at Hard Rock. To really get into the Mercedes mine in Mexico and premier's gold assets at Red Lake, to see what additional value we can build there and to work with Ewan to help him with I Eighty as soon as possible. I personally cut my teeth in Nevada gold expiration in the 19 eighties and have been on the ground on each of I eighties major assets. So I know their potential. I hope I've answered why we are doing this deal, and now I'll turn the call over to Christian and Ewan to discuss it in more detail.
Over to you, Christian.
I think you, and if you want to say a
couple of words first?
Yeah. Thanks Ross. That was a that was a great, great introduction to today. Today is a very exciting day for for from your share. As, I believe that the Air, the Premier Equinox merger is a perfect match.
I think the premier assets, particularly in Canada, provide a solid presence for the company in what is one of the safest jurisdictions find anywhere in the planet and for premier exposure to multiple mining assets. Equinox brings a very strong mining and development team a very strong financial position that will advance our flagship Hardrock project and remove some of the financial uncertainty I think that would have been evident had we decided to build it on our own. Premier shareholders will benefit from the creation of the Nevada focus IED Gold. I look forward to building it with the team that we are assembling a Fortnott company and a launch that we expect to be in the first quarter. One of the the things that I like best about the SpinCo scenario in this instance is the fact that Equinox is going to be a big supporter of the company, and that will assist in ensuring that we have very strong finances as the company comes out of the gate.
As Ross said, why why did this happen? Why Equinox? As Ross said, fantastic future and very significant growth. And with that, I'll hand it over to Christian.
Yes, thanks, Hugh. And, I'll start on Slide 3 and walk you through the slides with you and, as well. And, you know, just echoing, what Ross said early on, you know, this is almost to the day when we announced the Leagold merger in 2000 and 19. And we're really excited about this. I think this 1+1 equals more than 2 sort of scenario here really ties into strategy of both companies.
And we're unlocking value and executing on growth. And I think it's vital in this market that we continue to move forward with that growth You know, Equinox will acquire the 50 percent interest in the permitted development ready hard rock project and it adds a really great asset here in Canada. Hard rock will be developed through the joint venture, between Equinox and now Orion when they close the deal with Centerra to buy the 50% stake. We know Orion really well. Orion was a large shareholder in Leah Gold.
We worked with them in the past and on a personal level, have very strong relationships and they're a very well funded partner. So we see that as another strength to the whole, whole story here. And Hardrock fits really well with our gross strategy on our pipeline. We've been building roughly 1 mine per year over the last 3 years. And we're really excited to see strong team in place at Greenstone already in the JV and they're ready to go.
So we're looking forward to working with them. In terms of launching IETI gold, obviously, you want to walk you through that a little bit further in the presentation, but, we're pleased to be supporting that and have you in leading it. Ewan and the team have done a just a great job bringing good assets together and once listed IETI should be a focused company and get a rerates as far as we're concerned. And Equinox has done a great job in the past of simplifying and unlocking value over the last 3 years by spinning out or selling smaller assets and we look at this as almost analogous to what we did with Solaris over the last couple of years where now Richard Wark and Dan Earl have a public company that's grown from sort of a $50,000,000 valuation up into the almost $5,000,000,000 range. And we really see the potential here by focusing on unlocking the value in I-eighty of creating value again and where a 30% shareholder in Soliris will be another substantial shareholder of about 30% here in I-eighty and very supportive.
In terms of funding the growth, Equinox is well positioned to advance Hardrock. We have almost $600,000,000 in available liquidity plus robust operating cash flow and a well funded JV partner. So we see ourselves in a great position to get going here, as Ross said. You know, and we're also ready to support IAD in their initial financing and will be a lead order taking up to 30% of that as we get going with I-eighty spinning out around the time of the transaction closing. Turning onto the transaction summary on Slide number 4.
As we said, this is in line with both company strategies. It focuses really the strategy for each surviving company. And it also is a smart deal in line with our previous transactions. And in terms of key highlights, they really include in terms of transaction structure, you know, Equinox Gold will acquire Premier via plan of arrangement, pretty standard. Same as done before.
We'll acquire the Greenstone property from, in Premier, as well as the exploration portfolio in Canada and Mercedes. The U. S. Assets will be spun out to I-eighty and the pro form a ownership will be 84% Equinox Gold and 16% premier gold shareholders in Equinox, And then on a pro form a basis for I-eighty goals, it'll be 70 70 percent premier shareholders and 30 percent Equinox gold on spin out. And will also participate and defend our position on a 30% holding of any financing.
So both shareholders are sharing the upside and the growth When you look at the concurrent financing as well that we announced, we'll be completing up to a $75,000,000 financing. It's fully underwritten by Ross. So again, Ross is supporting the company as he's done in the past and maintaining basically his position. Continues to strengthen our rock solid balance sheet. So we're really pleased to see that.
We'll be setting the pricing on that as the shares trade over the next number of days. In line with TSX rules. As well, the key approvals and timing, Premier will require 66 and 2 thirds vote of shareholders that vote We do not require shareholder vote and we expect the transaction to close in the first quarter of 2021. In terms of benefits to all shareholders, you and I'll let you kick off there on Slide 5 and I'll do the benefits to Equinox. Oh, maybe you and this dropped off there?
Nope. No. So let me just oh, you
got it?
Okay. Yeah, for Premier, it certainly is, is, I think, a great deal for our shareholders. The premium so to speak in the in the deal is the IAD share creation and a meaningful ownership in an America's focused gold producer that now is adding Canada to its repertoire. Our shareholders retain exposure to Hard Rock, which I believe is one of the top development ready projects that you find anywhere in the world. And when Christian gets into the slides, you'll see it sits right on the Transcan, the highway.
In fact, we are permitted to move the TransCanada Highway in order to build it, which is, quite a feet of the GGM or the Greenstone Gold Mines team. Our shareholders will participate in production and cash flow from Equinox Gold's 7 producing mines and upside from their leading growth profile and that growth profile will only be made larger with the addition of Mercedes and soon to be what we expect to be the building of Hard Rock. It eliminates our need for a significant capital raise that could have been another overhang on our stock following the lawsuit. And I believe that the IAD gold will be established as a peer leading well funded production and development company focused entirely on Nevada with Equinox as a strategic shareholder, but also a strong supporter of the company. As Christian mentioned, they've been very strong supporters, of other spinouts that they've done in the past.
The IAD focus, I believe, will bring our our shareholders and to Equinox considerable value as we grow that into what we hope will be seen as the next major producer in Nevada.
Thanks, Hugh. And then in terms of Equinox Gold shareholders, this is very consistent, as I said, with the strategy to grow through accretive acquisitions and development focused on the Americas as fits right in the sweet spot. It enhances the asset portfolio with a long life low cost permitted multimillion ounce development ready project in Canada, which is exactly what we were hoping to add as we grow the company. It improves the geographic diversity with top tier, low risk jurisdiction being obviously Ontario. Good scale this project as well fits in nicely.
And as well there's the immediate increase in gold production and cash flow for Mercedes. It's a smaller mine at 50,000 ounces at this point, but there is scalability there towards 80,000 or 90,000 ounces. And as well, there's a potential for long term discovery here in the portfolio of Canadian exploration assets. So Again, consistent with the strategy and we'll continue to optimize the whole portfolio and focus on the better return assets and the scalable assets that we have within the portfolio. Turning on to the actual assets of Premier, I'll comment on page 7 on the Hard Rock project.
So, that's the photo I think that Ewan was alluding to, but you can see there's the infrastructure is just fantastic. You know, one of the best, and most attractive development assets in Canada large scale right beside the TransCanada Highway. You know, our trivial percentage will be almost 3,000,000 ounces of gold reserves. Will produce over 400,000 ounces in the 1st years. We'll have an attributable percentage of well over 200,000 ounces there.
And it's permitted for construction. Community benefits and agreements are in place. They've done a great job on that. The team has really gotten ahead of themselves. And as well as it's, got the updated feasibility, which shows a nice nice mine.
So we're pleased to be joining the dedicated team there. It's, Greenstone to get this thing going. And, you know, this fits in really well with the strategy of becoming the premier America's gold producer at even ties in with the words exactly. So really pleased on that. Looking at the feasibility study highlights on slide number 8, there's obviously a press release out this morning as well on this.
So you can find a little more detail in there, and a technical report will be filed within the 45 days. But it'll be owned and managed by Greenstone Gold, which will be the joint venture between, ourselves, our premier and ourselves. And then ultimately, Orion, who's buying the Centerra Peace. It's a conventional open pit, mining or processing will be carbon and leach plant and it'll produce a gold dore. So fairly straightforward, very similar to our other operations.
We really like the updated feasibility study. It's got robust economics, a long life, and there's upside potential around So when you look at the actual numbers, you know, it's 14 year mine life. So a nice long life, grade is 1.3. It's almost 1.5 grams in the 1st 5 years. So good grade, 400,000 ounces of production of basically under $700 all in sustaining costs, so a top quality project.
And about $950,000,000 in capital, about half of that will be attributable to Equinox. It's just under $500,000,000. And the net present value at spot prices is, probably over $1,900,000,000. So, good leverage to the gold price, strong returns, and really pleased to be adding it to the portfolio. And when you look on slide number 9, the benchmarking that we did here, you know, it's one of the highest grade pit gold lines of scale in Canada.
When you look at the bubbles, the bubble size is the reserves. It's one of the larger reserves at you know, 5,500,000 ounces. The X axis indicates production, so almost 400,000 ounces of annual production. And then the Y axis represents grade. So it's one of the higher grade projects as well.
So it fits really nicely into the Canadian landscape and will be one of the top projects. Slide number 10 gives a bit more of a graphic view of the mine life. So nice mine life over 14 years, good cost base, good upside potential, large reserve base at 5,500,000 ounces, and the MI and I resources are almost 1,000,000 ounces. So really good starting point for a great project. And it'll take us several months to get preparation done and then it's about 10 to 12 quarters to get this into production.
So we're pretty excited about getting going, as Ross said. Bit more about the upside.
Yes, thanks, Christian. And really when you think about the economic is, as Krishna pointed out on Slide 8, the feasibility study that has been completed in all All economic work that's been completed on the project to date has been on the open pit portion of Hard Rock. So on the upper left image, you can see the the the formation of the plan pet around the mineralized zone. But there's a very substantial underground deposit, multimillion ounce underground deposit that I believe will take the mine life not just to 14 years, but well beyond 20 years. And provides major upside for the project.
The deposit remains wide open down plunge. The westernmost hole that we drilled was 18.5 grams over 20.5 meters. And in addition to that, look, we we owned or we hold 3 additional deposits in the region. The Kaylee deposit is is only 2 or 3 kilometers to the north of the hard rock pit. And in fact, is being drilled as we speak.
The Kaley deposit is expected to be another open pit at Hard Rock. Currently has indicated resources of 348,000 ounces and inferred of 136, And the drill program that is, being completed at Kaylee is showing some, some really good grades and widths that should, should expand that resource. And the Kaylee Pit alone could add a couple of years to the open pit mining at the Greenstone Project. The Key Lake deposit just down the highway has an open pit resource, but we believe the bigger potential at Key Lake is the underground potential. There's been multiple drill hits, some in the hundreds of grams in drilling that's been completed along that structure.
And drilling is being completed in the Key Lake area as well in the current program that's being completed here just before Christmas. Down the highway is one of the most exciting parts, Brookbank. Brookbank is a deposit that has both underground and open pit resources. The indicated grade of the underground is over 7 grams per ton, and the indicated grade of the the open pit portion is over 2 grams per ton. So we believe it's a very significant add to the project and all of these satellite deposits and the underground represent upside for the project.
And we look forward to hopefully in the near future making a construction decision here which will be very positive for the Northwestern Ontario region. And I'll hand it back over to Christian.
Yes, just commenting on Mercedes briefly. It was restarted recently and it's a 2000 ton per day underground gold and silver mine currently operating at about 1200 tons per day. And and you and the team has obviously done a good job, but, you know, basically resizing it after the the COVID shutdowns there in Mexico and it produces about 50,000 ounces in last quarter, made good cash flow from 12,000 ounces of production at $8.27 cost per ounce. Very respectable. And a good, the great part of this is there's upside potential towards 80,000 or 90,000 ounces, 80 or 90,000 ounces per year.
So we see that as a just a nice compliment to what we're already doing in Mexico. There may be a few synergies with, Mexico City Office, etcetera.
And Christian, do you mind if I jump in to
Red Lake?
Yes, go for it.
So, Red Lake has been, an important part of Premier's history. In fact, when Premier was spun out of Wolf then, we started in Red Lake. We've been very successful in Red Lake. I think, what we call a quiet discovery in the heart of the camp has been the Hasaga project. Currently, we have, measured and indicated resources defined at Hasaga of over a 1,000,000 ounces in the in the open pit portion.
But significantly over the past several years, we've been drilling off what we expect to be a good sized underground deposit that remains wide open for expansion. 23,000 meters of drilling has been completed in 2020, and we'll go into a new underground resource that we spec to have come out, sometime in the in late in the first quarter, early in the second quarter of 2021. The image at the bottom is the Red Lake Gold Mine Complex. That's, widely regarded 1 of the highest grade gold mines in the world. It's now owned by Evolution.
The picture that you see there is a picture taken standing on the joint venture property. And this is where Premier started. And a lot of people forget that we still own that 44% of the project that fits and is permitted as part of the Red Lake mine. And it is host to several gold deposits that we believe offer substantial future upside in the Red Lake Camp that with evolution now, taking over the asset, should see renewed expiration focus. And we believe that the, the Rayhill deposit on our on our property or the Wilmar deposit on our property represents one of the biggest upside opportunities in the entire Red Lake camp.
Great. Thank you. And then I'll turn it over to page 13 here and just really want to paint the picture on the next three slides of what the pro form a Equinox will look like. And slide number 13, you know, it'll be 8 producing mines and 4 growth projects. And what we're really pleased with here is that this transaction provides greater diversity, and it balances the portfolio as well.
With a 15,000,000 ounce reserve base and 28,000,000 ounces in resource, they're not exactly, but almost split a quarter between each of the countries. Brazil, Mexico, the U. S. And Canada now. And that's a nice diversification and, you know, some good scalable projects within that portfolio.
And obviously there's the pathway towards a 1,000,000 ounces of gold. And think we'd say more than a 1,000,000 ounces of gold annual production now with the addition of Hard Rock. So very solid path, looking forward here. And the great part of it, we have almost $600,000,000 of liquidity. So we're fully funded with strong partners, you know, Ross, Mubadala, our lending group, and Orion, etcetera.
Are great partners to continue to support us along the way here. And again, we'll own the 30% stake in I-eighty and support you. And as he grows that, into a meaningful company and also Solaris is another 30% stake that we have. So, we've proven to be good partners. And page 14, again, looks at more graphically, but in terms of price to net asset value basis on a positioning versus peers, I would say both companies were slightly undervalued versus some peers.
And when you combine them, it's a compelling deal. It's an accretive, accretive move on many metrics And there's lots of combined upside to realize together on a rerating here. So we see this as a win win as Ross said for both sets of shareholders that we can get a rerating. And you saw that after the Leagold merger. There was a quick move in the share price at a point when people, understood the deal and it really moved the company forward.
When you look at the actual production level, it vaults us into that well over a 1,000,000 ounces a year to 1,300,000 ounces, looking forward a few years here. And then when you look at the production growth, it's absolutely peer leading. We're really pleased to see this. It's best in class here. Equinox the upper end of growth at 39 percent over the next few years, adding the Hard Rock asset and a few more of these assets takes us up to about 60%.
So pleased with that growth profile here as the gold cycle seems to have taken a bit of a turn in 2020. And then the reserve base, we have a very large reserve base of 15,000,000 ounces. Turning to Slide 15, just looking again at where we've come from. This growth profile started in 2018 from standing start when Mesquite was acquired in the fourth quarter, so it added a few ounces. We've built out Aurizona in 20 and put it into production.
Castle Mountain just went into production in 2020. Santa Luz will be in production right around the end of 2021. So it's almost a mine per year. And hard rock will complement that very nicely and sort of sequence well with Santa Luz. We then on slide number 16, just looking at the funding to execute, I think I've alluded to this already, but we have over $370,000,000 in cash, drawn bank debts about $300,000,000.
So a cash position when you exclude the in the money convertibles and available liquidity is about $570,000,000. So getting close to that $600,000,000 mark. Our leverage ratio currently is below about 0.5 times in net debt to EBITDA to even approaching close to nil depending on the numbers. And we have more capacity if needed. So very strong balance sheet.
It's rock solid right now. And then the operating cash flow from the business on a pro form a basis this year would be probably well over $300,000,000 for a full year when you include the merger that happened early in the year. And as we move towards 2022, when we spent a lot of our growth capital year, this company will be producing, give or take 900,000 ounces of gold and be producing potential EBITDA if 3 quarters of $1,000,000,000 depending on the gold price. So, we're very substantial company, well positioned to finance the growth going forward. And really pleased to hand over to you in here to introduce, I-eighty and give you a bit more detail on that particularly for our shareholders who aren't as familiar with with the assets from Premier.
And we're looking forward to supporting on this, Ewen. So, please go ahead.
Thanks, Christian. Yeah, on slide slide 17 is the introduction slide to the the new planned gold company, IED Gold. The reason for the IIT name, it was an it was Matt Golat, our vice president's idea, that this would be a good name because if you drive from Reno through Nevada to to go to any of the mining operations or just drive along Highway I-eighty, it's pretty rare not to see a gold mine. And so we thought that was a very appropriate name for the company to get to, get you to get to South Arturo and to get to McCoy Cove, all projects you go to an IAD and take a a spur highway off. So it's a very important segue through to many gold mines.
And Nevada has been a state that has built some of the biggest gold mining companies in the world, including Barrick and Newmont. Moving to slide 18, the Nevada company will have a high quality portfolio of assets, a especially once we close the Getro project acquisition with more with more than 2,500,000 ounces measured indicated resources 2.1 inferred. And these deposits include some of the highest grade, both open pit and underground deposits. I think you'll find anywhere in Nevada. The portfolio in I-eighty will include 1 producing gold mine and 2 development assets, And it's in a state that is very favorable for mine development.
In fact, right now, it ranks 2nd globally in an Investment Attractive index. The high quality projects are fully permitted. The, obviously, the South Arturo joint venture with Nevada Gold Mines is in production and the phase 1 and phase 3 open pit opportunities are, and the heap leach are fully permitted for development. The mine, 2020 is the 1st full year production for the new El Nino underground mine. And we believe that in the future, both phases 1 and 3 will be built.
McCoy Cove is at a feasibility study level. We are permitted to go underground and move that into what we hope will be a future full development And the Getchell project, which produced about a 1,000,000 ounce of gold, represents 1 of the highest grade potential heap leach projects I think you'll find anywhere in North America. The the IAD company will bring great value to the premier shareholders but also to Equinox as a 30% owner, I believe it will represent significant value to them that should be factored into their part of the equation when when do you look at the new company? My plan is to be the the CEO initially of the company and, hopefully mentor some of the the team that we're bringing in to ultimately take over. We're building not a ground up new team, but we will have some new members.
And I think we've assembled a great quality team that will be operating IED goal that will be, headquartered out of Reno, Nevada. Moving to Slide 19, the projects are all in Nevada. As I said, the South Arturo production guidance of 2020 was 34,000 to 40,000 ounces on a 100% basis. However, we've already exceeded that production for 2020. And Barrick has been a very solid partner and a very solid operator.
The McCoy Cove property represents 1 of the highest grade gold deposits, I think, of over a 1,000,000 ounces that you find anywhere in North America with an average grade of over 11 grams per ton. And with our partnership with Nevada Gold Mines, we believe we have a segue for processing as the several of these projects, our, our open pit and heap leach opportunities, but also there is the refractory underground potential. The team that we've assembled has a great success of deal making, proven developers, working with, Nevada Gold Mines, obviously, is key to us where I believe where they're only operating partner in Nevada And as you can see on the right side, very significant portfolio of projects when you look at the peer companies, such as Corvus, Liberty Gold, other U. S. Focused companies, I believe, with our production and our permitted development opportunities, that IAD should command a premium amongst those companies.
Quickly on slide 20, just go through each project. South Arturo is producing mine in partnership with Nevada Gold Mines. It's the, I believe, what I call it, the last remaining piece of the north carlin Trend the operating part of the North Carlin Trend that the Nevada Gold Mines doesn't control on 100% basis. And in the third quarter had production of just over 7000 ounces of gold. We continue to advance the phase 1 and phase 3 open pits and the heap leach options.
And there's significant exploration potential as we identified recently in the down dip drilling of the Elmenio Mine that is continuing. McCoy Cove is a 100% held by Premier's in the BI 80. Located them in the Battle Mountain Trend. It's an underground deposit that was found adjacent to, 2 open pits produce over 3,000,000 ounces of gold and 110,000,000 ounces of silver up until 2003. And we have completed the PEA that showed very robust economics.
There's very strong expansion potential because the cove, or what we call the gap deposit as part of the cove portion of the project remains open down dip. The Getro project is being acquired from Wadderton. It is host to both open pit and underground opportunities. The Pinson mine is under care and maintenance and represents a high grade near term development opportunity. And with the, the support of Equinox, we expect the company to be well funded going forward.
In terms of the timeline on Slide 21, the merger was announced today. We expect the mailing and all meeting materials to go out in January. That will include the the filing of our listing of the I-eighty company and we expect the closing to be, sometime late in the first quarter hopefully late February or early March, and the company will be listed for trading with, with a financing being completed immediately in advance of that listing with, the very strong support of what who will be our major shareholders Equinox. And I'll pass it back over to Christian for Slide 22.
Yes, just on Slide 22, just in summary, we're really pleased to be here today. And, I think that this merger, this transaction really is in line with our strategy and we'll unlock value for both sets of shareholders here and expose both sets shareholders to exciting growth stories and more focused companies. So with that, you know, unless Ross, unless you have any concluding comments, I think We're happy to open up for questions.
Certainly. You. The first question comes from Dalton Baretto with Canaccord Genuity. Please go ahead.
Thank you. Good morning, and congratulations, all. A few quick ones from me. First of all, Centerra's 50% stake of Axalta Orion Was that available to Equinox?
And if
so, did you guys consider betting on it?
I'll answer that. Uh-huh. Do you want me to answer that? Yeah. That's something that, Premier had announced early in the year that we made an offer to Centerra, with the support of another partner.
So we as everyone knows, a bit of an overhang on Premier as being the lawsuit that was filed by our partner at the end of 2019. And the project is being sort of stalemated since then. And we made the offer earlier in the year it was, was rejected by Centerra. However, we continued to push on that initiative with that same partner, and that partner was Orion. Until we were able to agree to terms to move forward with the transaction.
I think, I think the fact that it came out of the court case was pretty important, for Equinox, but really the Equinox discussion started pretty late in the process. And I think it was I think I can't speak for them, but it was the fact that there was a good chance that the project was going to come or had the opportunity to come out of court that brought their interest to the project. And, and we closed a deal with Orion and I believe that Orion and Equinox have a good relationship, and I'm sure that they'll be talking sometime in the future.
Okay. And that's that's sort of a good segue into my next question. So Premier and Centerra, the whole fifty-fifty JV didn't really work that well from a decision making perspective. What's the dispute resolution mechanism gonna like between Equinox and Orion? And or are you guys completely aligned going forward?
I'd like to say that we're pretty aligned here. And obviously we're the operator and, I've worked with Orion as a, call it, a financier and supporting work call it more passive partner in the past. So, but there's also a management team there that will actually get on with the project and that certainly dovetails nicely with our philosophy and what we've done with our other projects is there's a strong management team with great experience. We've been taking it forward and they'll have the leadership on the day to day and we'll be supportive of them. And we have technical services, etcetera, here in Vancouver, which, I think, will support them in a big way as well as the financial balance sheet position.
And Orion is our more financially oriented partner. So I think it's a lot more straightforward than having 2 operators at a fifty-fifty JV type level.
Okay, great. And then a question, the feasibility study that was announced this morning, are you guys completely happy with it and you're ready to move forward or is that something you guys are going to want to take a look at?
Yes, I mean, we've obviously done our due diligence, done our site visits, our technical team have gone out and taken a look and are happy with it. Obviously before we launch into official construction, we do want to spend some time with the team. We haven't had enough time with the the local team just getting the grips with all the detail, but, we've done extensive due diligence. They're very happy with it. And, you know, this if it closes in Q1, give us a number of months here to get our heads around it and sit with the team and go to Ontario and, break bread.
And, we'll get going, but it shouldn't be an extensive delay.
Okay, great. And just one last one for me. This is 2 years in a row now. You've announced a material transaction on December 16th. Should we expect this to be an annual production?
Why not?
Depends if 16th is a weekend next year.
Thanks very much guys and congratulations again.
Yeah, thanks. Thanks, Dalton.
The next question comes from Oveis Habib with Scotiabank. Please go ahead.
Thanks, operator. And you and Kristen, everyone, on Equinox and, congrats on the transaction. My first question is for Kristen. So you've currently got a couple of projects on the go. You've got Casa Mountain.
You've got obviously Los Filos expansion, and Santa Luz as well. How does hard rock kind of fit into this development pipeline now in terms of advancing hard rock into construction. And you spoke a little bit about that. In terms of, you know, timelines, but does hard rock kind of push out expansion, of loss heroes?
Mean, like I was saying earlier, we've been roughly putting one mine into production per year. I don't think we'll continue on that pace indefinitely here. But Santa Luz is well into it, you know, a quarter the way in or so. It'll be up and running and physically complete around the end of next year. And like I said, once we close this transaction and get a chance to get our hands around it and work with the team locally, almost dovetails with the end of Santa Luz, and getting this up and running.
So it sequences nicely. And then Castle Mountain phase 2, like we said, we have a couple of years at least of permitting, maybe it's 2 to 3. And roughly on the end of building hard rock, you'll have Castle Mountain ready to go. So in a sense, you're kind of running through that nicely. So the only one that probably had some overlap would be Los Filos.
And Los Filos is a multi sort of 3 stage expansion where we're opening up a new under or new underground and a new open pit, that'll happen irrespective of anything else we're doing, the capabilities in country to do that and the teams there locally focused And, the CIL plant, we haven't come out with the new study on that, but there's flexibility on timing of that to sequence it and overlap it somewhat with these other projects. Again, a strong dedicated local team. And, you know, our style and our approach has been very much, you know, setting up Each project has almost been independent team that's strong. It's not being run centrally. And then we give support from the central location here.
So we are capable of having some overlap between projects.
That sounds good. And then just in terms of again, you mentioned, obviously, you've got 8 producing mines, 4 growth projects, with the closing of this transaction, would you consider any sort divesting of your smaller assets? Is that kind of on the table?
Yes, I think it doesn't change what we've said year, I think when the legal merger happened, you know, 1 or 2 of the small assets may be available along the way. We did mention that we wanting to invest the capital and the time into the larger assets with the higher returns and basically focus on those. And there's lots of exploration upside around a number of these projects spend our time and attention there. And I think give ourselves a chance to actually get ahead around the assets again and continually enhance the portfolio. And again, similar to what you've seen probably at Pan Am when I certainly, when we were doing an endeavor when I was there and what we were starting to do here after the legal merger is continually enhancing the portfolio and maybe you do sell a smaller one to someone who can focus on it, give it the attention and capital and money it needs and make a good go of it.
And we've kind of been able to do that with some of our spin outs and selling of assets along the way here, and Greg's done a great job of putting those out in the market and surfacing some value.
And thanks, Christian for that. And then just shifting gears just in terms of Mexico and Los Filos, just any update you can provide us on the Los Filos blockade?
Yes, sure. We continue to have, I call it, quite intense discussions with the team locally and the local community. We are making some progress here. It's not quick, but we're making progress. And I'm, I'm, encouraged by that.
Some of the, the sticking points that I had mentioned on previous calls, I think we're starting to tackle and actually get through. We'll continue to protect our legal rights. We'll continue to work with the community. Both sides us and the community want to get back to work and both sides of made that clear, but we also need a long term stable partnership because we're going to make a big investment in that, that, site if we get this resolution here in the near term, and, we want them to be our partners. So we're, we're very constructive and I can't tell you exactly the timing here.
Hopefully, it's very soon, but, you know, we'll get to a resolution here. I'm confident in that.
Perfect. That's it for me, guys. And again, you and Christian, congrats on the transaction.
The next question comes from Kerry Smith with Haywood Securities. Please go ahead.
Thank you, operator. Question, can you just explain to me, or maybe you and Kim, just how the JV works and the management committee works at Hard Rock. Like, is it like five people on the management committee of which 3 are representatives? From Equinox too from from Orion or just how how is it structured? I'm trying to understand exactly how you see you get paid.
I'll I'll I'll
Do you answer that? The the current
the current structure is a
a four man board, 2 from each, each company. And each company has equal representation, the the project itself or the company itself is managed by Eric Lemmon Tang, a very, very experienced mine builder and operator, who, has great success throughout Canada and building successful mining operations. And they've done a great, great job bringing this project from an idea that we had years ago to a fully permitted project, but it is straight up equal representation And it was that equal representation at the end of 2019 that I think led to the, led to the dispute that was that was brought forward at the end of last year, as a result of one partner, ourselves wanting to move forward immediately and one partner not, I believe, not wanting to move it forward on the same timeline we did. So so that that's resulted in a deadlock. And I think now with Orion having, signed the deal to acquire the position from Centerra and now with us, the premier Equinox combination, that there will be 2 partners fully aligned to move this project forward on an expedited basis.
And, I think as I said earlier, I think the match of Premier Equinox is a match made in heaven and, and look forward to working with Greenstone Greenstone team and Orion going forward.
Okay. And then do you have a rotating chairman that has the deciding vote on that 4 man committee where it rotates every 2 or 3 years between one company or the other? How do you how do you resolve, a stalemate, let's say, on a decision?
Stalemate, if there is a stalemate, the dispute mechanism is that arbitration is immediate, if the two partners that if the board of directors can agree, it goes to the senior executives of each company to see if a resolution can be made. Which always worked until December of last year. We seem to always be able to resolve it through that mechanism But if there is a a stalemate, the the the agreement provides for arbitration being the sole remedy. And, that that that remedy was bypassed with the court case. And and so it resulted in the project being stalled.
But like I said, I believe when you do have 2 partners who are completely aligned, it should work. Our agreement is essentially identical to the one that Agnico and Yamana Half for the Canadian Malartic project. And in fact, our agreement was crafted after the same agreement. So it it does work. I I've always been a guy who says partnerships are are good and they work, but I guess they work until they don't and that resulted in the stalemate.
And now Centerra obviously making a decision that it was time for them to exit the project and And we look forward now with the new partners moving this project to development on, as I said, an expedited basis. But there is no casting vote in there's a rotating chairman, but that doesn't provide for a casting vote.
Gotcha. Okay. Now, I think, Kerry,
just quite simply, simply from our perspective, there's 2 aligned partners coming in same time well capitalized and there's a strong team in place, which gave us a ton of comfort. So, we're pretty excited about that.
Right. No, no, I agree that you've got aligned partners. It should, should work, but as you had said, as it works from it doesn't work, right? I just want to understand how how it's stretching. That was all.
Okay. And then, maybe a second question, if I could. What will the board representation be on I-eighty going forward? Will Equinox have 1 third of the board representation, or how will that work?
Currently, we have not fully constituted that board. It's part of the the agreement that we have with Equinox I believe they're entitled to put one person on the board. But we're happy to have their contribution and and being the largest shareholder and hopefully a long term big supporter of that company.
Similar to what we're doing at Solaris,
Right, right. Okay. Okay. So that seems pretty straightforward. And then just last question maybe for you and again.
On Mercedes, since I didn't follow Premier, How do you get to 80,000 to 90,000 ounces a year? Is that can you pull that many tons from the underground to deliver those tons to the plans, or how do you actually get there?
Yeah. The project has very significant, expiration upside. And the what we were doing is we were pulling ore up until the COVID shutdown. We were pulling ore from portals. We had a lot of machinery working, a lot of equipment to get more out of multiple port portals.
Some of the deposits like, the old Chrome door, mine working, we were getting, lower grades and more spread out mineralization. So our costs were climbing. And, and during the the COVID shutdown, we looked at what we're doing right we're doing wrong and saw that trying to push the current deposits to 2000 tons a day. That's the nameplate capacity on the processing plant was was a mistake. We're we're taking too much dilution.
We're mining parts of ore bodies that weren't, weren't in good shape. And during the, in 2019, we discovered what we call the Lupita extension deposit. And during the COVID shutdown, we're able to develop that deposit that is adjacent to the Lupita and dilutive mine workings. So when we restarted, because Mercedes is a project where people come in and out and under the new, operating regime, we have to have people stay on-site for 2 weeks between changes. And without a large camp, we couldn't bring enough people in even if we wanted to be 2000 tons a day.
So we had to implement, a a mine plan that had lower tonnage less people on-site, and we operate the mill in batches. But we are having a continued success in developing and drilling repeat extension We're drilling off a deposit adjacent to that called San Martin. And on the main Mercedes Benz trend, we're having success in delineating the Marianes deposit. And in the future, assuming the world goes back to normal, and we can bring people in and out every day. We can have more go on-site.
And, hopefully, we'll develop Marianas and the San Martin deposit, and that will allow us consider going back to 2000 tons a day, which would bring the production back up to the, I'd say 70,000 to 90,000 range. Depending on what grades you're mining in which year.
Thanks Gary.
The next question comes from Daniel McCunvey with Rossport Investments. Please go ahead.
Looks like we lost him, maybe.
The next question comes from Ryan Thompson with BMO Capital Markets. Please go ahead.
Hey guys, congrats on the deal and thanks for taking my questions. I think most of my questions have been asked, but can you just clarify what the capital structure of the new I-eighty is going to look like how many shares are going to be outstanding And how we should be thinking about, valuation on the $75,000,000 proposed financing?
I'll speak to that. So Premier currently has just over 230, 230,000,000 shares outstanding. The planned ratio. It doesn't mean like set in stone, but it's essentially getting close to set in stone will be point 4 shares for everyone, which will result in around 100,000,000 shares being outstanding for I-eighty 2, their current premier shareholders. On top of that, there will be the 30% ownership, by Equinox.
And we will, between now and the time of the financing sit down with the Equinox, go through the economics of each project. There there are now the 3 projects, going into it, including Getchel. We do have technical reports. We're just in the final process of completing a pre feasibility study for our portion of Arturo. So there will be a good backup for what valuation it'll have in the future.
And with that, we'll agree to a price to what the financing will be done for the additional 75. And at the end of At the end of that, I expect somewhere around 150,000,000 shares outstanding and cash balance of somewhere around 100,000,000 over over CAD100 million. So the company would be in fantastic shape coming out of the gate with good assets and, a great Porter, and I believe that will bring tremendous value to Equinox through their ownership by doing that. And and big shareholders, O'Brien currently owns over 13% of Premier. I believe that, Sprott, Tokaville owned close to 10% and I'd like to like to believe that they would those companies have supported Premier since basically overlap decade will continue to do so as well and we'll have a continued very strong shareholder base.
Okay. So just so I'm clear, so there's 100,000,000 shares going to existing PG shareholders and that's 70%. So if I do 100 divided by point 7, does that imply about 42,000,000 shares are going to, Equinox. Is that right? And then there'd be the financing on top of that?
All right, I think.
Okay, great. Okay, thanks. That's, that's all that I had.
The next question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.
Thank you very much. Congratulations to Equinox premier in Orion for cooperating solving the structural and capital raising problems to create value for everybody. I'm so happy.
Thank you.
Ewan, with regard to I-eighty or the Nevada company, as you get the infusion property or use of the capital, will it be the restart of the getchel pencil Pinson operation or will the money go around to a plus or a group of the properties?
Well, I think with the closing of the Getulac position, it will move into being a priority because, it it is under care and maintenance. So the pinson underground is under care and maintenance. We believe with some additional drilling, we can, define reserves. And, are are very significant reserves, more or less on the lines of what we're doing in El Nino. And that would be ramp access the the thing that we'll have to do in the interim is see if there is a transaction that we can negotiate with Nevada Gold Mines for processing for that asset.
And we'll also be moving the open pit. The open pit at, at Getchel is almost 2 grams per ton representing, I think, one of the highest grade deposits of its type defined anywhere in Nevada, but that will is expected to take a couple of years to permit, but schedule would be the, the 2nd priority of the South Arturo, assuming that they're, or not fair, Nevada Gold Mines, decides to proceed with 1 or more of the other pits of the heap leach. So I think we'll be well capitalized to advance those projects towards towards, fruition with, McCoy Cole, which is not fully permitted for production. We'll continue to advance that project in the feasibility process, and that would be the future growth asset.
So it would be Gotcha and McCoy Cove principally as opposed to the, gold banks, further northwest project.
Yeah. Actually, we terminated our agreement with, with Kinross a bit ago on Goldbanks because we weren't having the level of success that we are hoping. So the focus will be on the 3 core projects.
You know, and I apologize. I was studying your g your legal agreements. But to what extent Is there feedback or impact between the Sierra or Ryan transaction? And the, Equinox premier transaction. That is, if there's some litigation or higher bid that reprices the Centerra sale, is that a benchmark that influences or propstate repricing of the Equinox premier transaction.
Do you do you wanna I mean, I would we view them as Equinox. So they're separate transactions here. And, obviously, there was a a deal done between, certainly Centerra and Premier, which obviously involved Orion, but these are separate transactions.
Yes, I'm sorry, I was just wondering if you could try talking to mute. So sorry about that. The the agreement that was signed was a definitive agreement. And for that agreement to happen, for an agreement for the sale of the property to happen, it it needs premieres. Approval because of the, ROFR, the ROFR or ROFO, rights that each partner has for each other's interest.
And we we had to provide security as part of that Premier had to provide security over its property as well to be part of that. And the only way we would provide security is if it was Orion by that property. So I think the I think it's a pretty solid solid agreement. And, I think that the 300,000,000 that is being paid for is a is a good value for the project.
The next question comes from Daniel Mackenzie with Rothport Investments. Please go ahead.
Sorry to drop off. Ross, Christian and you, and, congratulations on
the deal. I like what I see. I like the cooperation. And you and I, I like the name I-eighty because it reminds me of a lot
of speeding tickets. Just on the, on the development of of Hard Rock. I realize you guys sequenced it in with the rest of Equinox's projects, but how fast could you get started breaking ground on that, if it became a priority? I mean, I think the way to
think of it is, this thing closes around the end of late Q1, you know, it's probably in the second half of twenty twenty one. I don't want to promise any earlier. I mean, I guess theoretically, it could be quicker, but I think, second half of twenty twenty one, so say Q3, Q4.
Okay. And are there any there was just a feasibility study completed, I realized that. But is there Is there more work that you would look at before doing that, I. E. Looking at the underground, or is that something
you would look at down the road?
Gonna let Doug Reddy's here, our Chief Operating Officer. So he'll take that one.
Yes, we've obviously done, due diligence work and and been through the various studies on on hard rock when we see opportunities, and there are areas that we would love to be able to, go through in-depth with the team that has, inherently, come to know the project so well and to do they've done an optimized feasibility study. So they've derisked it a lot, but there are things that we wanna sit down and talk to them about opportunities that we like to look at. And for them to consider. So we'd like to do that before we, get too much further down the road. But of course, let's close it first, and then we'll, we'll get going with that.
Okay. Great. Thanks very much guys.
The next question comes from Andrew Weekly with Smith Weekly Research. Please go ahead.
Good morning, everyone. Hey, well done on this to both companies reaching an agreement on this transaction. Assuming completion in 1Q 2021, following on to the prior questions. I just want to confirm that the critical path here is immediate construction of Hard Rock, of course, with the proper timing there. And will that be going simultaneous with Los Filos, Castle Mountain expansions and also with Santa Luz construction all progressing to 2021?
Yeah, hi, Andrew. I'll take that. It's Christian. What we see happening here is basically Santa Luz will pretty much be coming towards completion before you're probably doing a heck of a lot of work on the ground, at, Hardrock in late 2021. So there isn't really, I call it, overlap on those 2.
And then Castle Mountain phase 2 is, you know, 2 to 3 years of permitting. So that kind of gets us into construction there after you get hard rock done. So I would say those are sequenced almost rather than anything in parallel between them. And the only one that I think has some parallel overlap will be Los Filos, and that's got 3 parts to it that will run independently. And we've already kind of got underway with the underground development and the open pit development there and stripping at Los Filos and it would just be the timing of a CIL plant build So that's the only one I think that would have overlap.
The other ones are sequential.
Yes, that's great. A lot on your guys' plate, but this is beautiful. Thanks for everyone. Merry Christmas, and stay safe.
Thanks, Andrew. Same to you. Thank
you, everybody. I'm gonna have to cut the call short because I need to get Christian on our BNN interview. So thank you to everybody for dialing in today. There were a few questions that we didn't get to. My apologies.
I will get back to you by email. I'll turn it back to Christian and Ross and you and now for closing remarks.
Ross, do you wanna close?
Yeah. I I no. I think it's it's been a good call. I think people have had a general view of of kind of how we look at this. Can't wait to get to closing and, and, unlocked.
We've got a a fantastic project. Great partners now with Orion. And, we're just really looking forward to getting this closed, and we hope we've made a convincing case to everybody as to why we wanna do this deal and, and just contribute to building an incredible, goal company global globally significant gold company with Equinox Gold.
Thank you for calling in. Operator, you can disconnect the call.
This concludes today's conference call. You may disconnect your lines.