Welcome to the Equinox Gold Twenty 19 Corporate Update Conference Call and Webcast. As a reminder, all participants are in listen only mode and the conference is being recorded. You're participating online. You can submit a question using the submit question tab at the top of your screen. We will now join you with the meeting room in Vancouver where the
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looking at our mind. I'll tell you that. He's he's been asked for 2 days if he if he was there.
We're now live. Ross is telling the story of his first Grand Beatty. So I think we may as well get started. Everybody on the is dialed in. Everybody on the webcast is dialed in.
I'd like to welcome everybody please to the Equinox Gold Corporate Update. Just a reminder, of course, that this is being recorded. So please ask your questions clearly into the microphone. And also a reminder that we will be making forward looking statements today. A number of cautionary statements.
So just a reminder that you should look to our website and to all of our continuous disclosure requirements to, the full appraisal of the cautionary notes. And I'm now gonna turn the website over to Ross Veady for opening remarks.
Thank you, Rillyn, and thank you again, everybody, for joining us today and everybody who is, who's, joining us by, by web. It's a good chance to update everybody at the same time on what we're doing. We've just put out our, results this morning for Q1. And, we can talk to all of that on a, on a media basis. And this, of course, is the 1st, annual meeting for a whole year of Equinox as our very 1st year of operations in 2018.
And, you know, it was a pretty busy full year. We, we did a lot of stuff. And today, we're going to kind of go over what we've done, what we achieved, where we're planning to go in the, in the near term. So I'll go over a few things to begin with, and then I'll turn over the, the podium to Christian Malawi, who will go into some more depth of things, and then maybe we'll come back for Q And A. So just To start, of course, we have this wonderful team, a wonderful operating team, a wonderful board.
It's a solid team. It's pretty much full now. We've We've got our whole team for the US, especially, pretty much flushed out our head office team pretty much complete. And, we've made the new changes to the board with Greg stepping off as a board member maintaining his position as, as, as key member of the management team and president of the company, Greg Smith, that is. Sam Dreyer joining us as a board member and then subsequent to today's meeting, Mohammed El Sowaidi, from the Mubadala Investment company, which just spent $130,000,000 buying a convertible debenture that will convert it to almost 20% of Equinox he will be joining the board after today as well.
So that's our board. 8 wonderful, wonderful people, better governance this year, we have 2 independent board members joining us. Actually independent is, is, is, is mom an independent or independent? So just Sam, just sound on the, on the independent side, and they'll have it independent because they have a right to convert into a big position. And I just have to tell you what a great board they are.
They've been, it's been a tremendous team this last 12 months, and I know it'll continue. Next. So, I'm just going to talk a couple of just general slides about, you know, you know, why gold and why Equinox Gold and why now and things like that. I have a conviction that we are in the, you know, sort of 1st, let's say, 3rd or 4th innings of a gold bull market. It really began in, you know, right about here, January 2016, after 5 years of down markets from 2011, now we're sort of bumping up here when you follow this, any Charles will tell you the next, the sort of critical thing is going to happen later this year.
And going to see quite a dramatic, push one way or the other, and I'm convinced it's going to be an up push. But the interesting thing is even though we have this sort of, the start of a, of a secular bull market, I think, in gold. The junior market, as demonstrated by the gold miners index, has just been nuked. It is disassociated from the gold price, and it's stuck. And it's actually in a declining trend as people just lose interest in the gold space, lose interest in the junior space, even though the gold price is actually doing okay, it's not doing badly.
It's 12.80 or 12.90 gold, 1300 gold. That's a pretty good price. Most gold producers are making pretty good money at that price. But the junior space has just been hammered. And this is unusual, it's not likely to last.
It will correct either by gold going down or the junior space going up. And my bet is that the gold price is going to stay static or or improve in the year to come. And there's going to be a significant correction upward in the junior gold miners. Generally speaking, And inside that space, you're going to see outperformance by those companies that have superior growth prospects I think in that whole space, there's nobody who has better growth prospects than we do. This is another slide of just how much capital has of junior exploration space, particularly in producer space, just in the last few years.
We've, this is a number of finance that have been done by Canadian precious metal equities, this year, 8 last year, 24, raising relatively small amounts money compared to the last, you know, 10 years. I mean, it's just hardly here. Now what this means, a lot of this has gone into the cannabis space, crypto space, So what this means is if there's no capital that goes into the resource space, this means that there's not going to be any new mines developed, any exploration done, And that will have a knock on effect in production in years to come. You can't explore, you can't discover, you can't discover, you build. You can't build.
You don't grow your production. So, most metals are going to see, and it's the juniors who make all the discoveries. Mean by and large, most of the big discoveries have been made by smaller startup companies, and, and if you lose that, the discovery space The majors are all busy buying each other, but they're not actually discovering new mines. And they're not growing that production space that is so critical to keep, keep, keep the industry demand sustained. So gold supply will be ultimately impacted, and that will be another bullish factor for the price.
So let's just, go back and see what did, what have we done in the last year? You know, we started basically December 31, 2017. Just over a year ago. We started with a development asset in Brazil, a couple of, noncore assets in other places in South America, Mexico, the elk gold deposit, small gold deposit in BC, and then this Castle Mountain project. So when, when Equinox is formed, new Castle and Trek Mining brought together 2 development assets, Castle Mountain and Aurizona.
But we had big ambitions to build a big company. So what were our targets last year? 1st and foremost, to build Aurizona? We were we had all the financing in place to build it. Had to go and build it.
And that meant putting the team together, going down there, getting things going again. It was a brownfields build because, of course, we with the mine that was in production until just a few years ago, we were just going to make it better. And that's really what we focused on for the last, 16 months, and we're there now. It's built. We did a Castle Mountain prefeasibility study that we finished in June last year, and that showed the potential to build a 200,000 ounce a year mine for 16 year mine life, a big, big mine in two stages, phase 1 and phase 2.
And Christian will talk a little bit about where we are on that. We also set a target of getting into production quickly. One of the good things for a company sector is pretty, pretty hammered. It's in pretty bad, pretty tough shape to raise a lot of money, which means not only valuations are good, But there's very few very little competition for for getting good assets. And we we had a competitive situation last year in, in in different things we looked at, competitive opportunity to buy this Mesquite mine from New Gold.
We were the winning bidder, We got it at a really good time at a really good price, and we think that's going to be a really excellent asset for us over the medium term. So we, we achieved that last year. We set it to monetize some of these noncore assets. The Corey County Mill was sold. We had an option deal to sell the elk deposit.
Which we hope to realize on this year. We spun out all the car for assets into Solaris that Greg will that, Krishna will talk about in a minute. So we've we we we hit that target squarely, and we set out as a goal to grow reserves and resources. And again, we hit that metric very, very successfully the number, when we started in 2017, we had, we had reserves of Reserves and resources, total reserves and resources of 7,900,000 ounces. We ended last December 2018 with 12,800,000 ounces, a great big step up in the right direction.
So we've really hit every single one of those targets in 2018. It was a very busy year And this really is more than anything what demonstrates the potential for production growth for this company. Last year, we've had 1 mine, Mesquite mine, which we had 2 months of production, 26,000 ounces, In 2019, of course, we'll add Aurizona. It will be there imminently. We were really crushed, this morning we expected to pour our first, our first bar and, we had a seal fail or something like that happened yesterday in the process, and it's so much for that.
I mean, that's it's been like that for weeks now. We've been imminently about to, to, pour the first bar and there's always been a little net that's prevented it, but it literally will be any day now. And, right, Jim? Good. He's never said that before.
Actually, he said that for days. But, anyway, we're big sick leave there in Arizona. We were really hoping to be able to announce it this morning, but, but it didn't quite happen, but it's it's imminent. And then, of course, the next thing for us to do is to build Castle Mountain. We're hoping to make a production decision on that in Q3 and, and get that going by next year.
So very happy and impressive growth from 26,000 ounces, you know, 0 2017, 26 last year, approximately $230,000,000 to $265,000,000 this year and next year at least $300,000,000. And then really from existing assets, we have visibility on over $500,000. So between, you know, $140,000 a year or so from Brazil, plus 200 from Castle Mountain plus 140, 150 from, from Mesquite per year. You know, we're at 500, But really, I'm hoping we exceed that a lot. This excludes a little footnote there that it says excludes the Arizona underground potential.
From my standpoint, that is the real home run at Aurizona. It's getting, an underground miner that will produce in conjunction with an open at mine and double the capacity to Arizona to take that number well over 600,000 ounces from existing assets. So that's really our Our focus right now is to continue to build production, continue to grow our reserves and resources. The bigger we can make this company now The better it will perform, not only if gold is static, but also it will be a standout winner, if gold really moves the way I think it will. And why do I think gold will move?
Well, I just think that there's I mean, it's I just think we're in the 9th inning of a, of a bull market and other other, financial sectors. It's on fumes right now. It's been sustained by one off tax Reform, it's been sustained by massive amounts of borrowing, both federal, municipal, corporate, personal, the juice is just gonna run out. And when that runs out, I think we're gonna have a correction in major markets. You're gonna see a real big move in gold.
Mean, there's a whole bunch of other reasons for me to be bullish on gold. Those are just some of them, but, I do see, quite a market coming. When it comes, I don't know when it's going to happen. It might be next week. It might be in 2 years.
I want Equinix Gold to be the best positioned of the junior intermediate mining companies take advantage of it in terms of reserves, resources, and production. And if we have great combinations of those, we're going to outperform, and that, of course, is our objective. So With those introductory, remarks, I'm going to turn it over to Christian to go into the weeds a little bit, and then we'll open up to questions.
Turning on to the individual assets and mine sites, I'll spend a little bit of time on each, but focus mostly on Aurizona because that's the most topical one today. Looking Mesquite being our first producer here, Mesquite was acquired at the end of last year. It's a long standing producing mine. It was through Newmont in the 80s 90s and then Western Goldfields in the thousands. And basically, it's been producing between 120,000,001,450,000 ounces for many years.
It's produced over 3,000,000 ounces. So it's a big heap leach run of mine in California down near the Mexico and Arizona border. So looking at what it's done this year and what the plan or what I did last year or last quarter and what are the plans for this year. So 25,300 ounces, basically for first quarter. A little bit at the lower end.
Mesquite tends to start off in the lower quarter in the beginning of the year. I think the last 5 years, it's done between 25,030,000 ounces. And they stop stacking in December for those not familiar with that mine. It has a cap on the number of tons that can move. So they actually stop stacking partway through.
So little bit of catch up in January as you start stacking again. The other things that we've been doing this year is we've been increasing the percentage of non oxide material going up on the pad. I think it had 10% or 12% last year in the final quarter. And this year, it's been about 50%, 60% in the first quarter. So we've had a lot more dependence on that.
And the two things about the non oxide remember if, you're back in the new goal days listening to them is it is a lower recovery and it's a longer leach cycle. So it does take time for that to come through slightly higher grade than some of the stuff they've been putting through last quarter. So we expect to see as the year goes on, will improve. We're probably at the lower end of where we'd hope to be at this stage. Costs are reasonable, $8.73 all in sustaining cost per ounce.
I think our guidance was 9.50 to 1000, so not bad there. Revenues, we sold about 27,000 ounces. So that's the revenues of 35,000,000 What do we do in this year? Well, key focus for us since we've, gotten both the asset was, how do we extend the mine life? This is along in the tooth mine.
We didn't pretend it was, Castle with a 16 year mine life to start. So two things that we've been focusing on are there are a whole bunch of mineralized waste dumps from the Newmont days, etcetera, as well as some leach pad material that's basically got materials similar grade to our current ore. It was mined in a time when their cutoff grade was much higher than it is currently. So we've been drilling that off. We're probably 50% or so all the way through that We actually started stacking that material just recently in the last few weeks.
Our goal is to actually use that to extend mine life, but also to smooth out any of the ups and downs along the way. And then also, there's a few exploration targets. We'll be freeing up some extra area in and around our pits and some identifiable ounces that we want to explore. We need a few dollars to do that. So Scott, who's not here today is actually in Brazil.
We'll be doing some of that hopefully later this year. And then also there's some new concessions and permits that are in and around the old pit. Some of the room across the highway that's been moved once by the previous operator. I think there's 6 new concessions there. We're in the process of trying to permit those.
We'd love to stick a few holes in there this year. Actually look if this ore body extends across the highway. It's been moved once all indications are that it should be pretty interesting. And then the third thing on there is obviously we want to with Castle Mountain as much as possible. Tom Renality, who's here with us today.
And if you want to chat, he's here after the meeting. Tom's back there. Yeah. Basically, Tom's come in recently only, like, a month ago, and his job really is to coordinate the 2 mines. How do we make this a really operation.
They're two hundred miles apart. There's going to be synergies in, in people, systems, equipment, suppliers, all this stuff. We may even be able to process some of the gold down skeet when we get Castle up and running. So, there's lots of opportunity there, but we need to be thinking as 1. When you turn on to the next slide, Really, Aurizona is where I want to spend most of the time because that's what all the questions have been recently.
As Ross said, we're probably a few months late on pouring gold, disappointed with that personally. I'm a big shareholder in the company. It's been disappointing to see a share price lag over the last few poor as Ross is imminent. I said early May, just to cover my bases there. But the mine is constructed.
I mean, basically, I'm not sure exactly the date of that but you can just see everything is there. The new mills are shiny. The Rom pad, which isn't on this picture, is basically full. We've got 3 months of ore sitting up there already. We're ready to go actually been putting ore through the SAG Mill over the last week.
So it is going through the system. The inertia is starting. We're just dealing with a couple of things that, you know, I get questions why the delay I don't have one big major event I would blame it on in a sense, but we've had exceptional rains over the last sort of 3, 4 months. I think we've had 1 year's worth of rain in Northern Brazil over the first 3 months of the year. Not saying that's caused a total delay, but it certainly slowed us down.
I'm looking at, I think, Quebec's getting a bunch of rain this is getting more rain right now. And, we've been able to deal with that. You have to be careful with the electricals at the end, so it's probably slowed that part of it down. The other parts are, you just have your normal startup issues, you know, pumps gone, gone off some valves that needed changing out, a few false start a couple of pieces of equipment, but no major events were imminent. We're almost there.
And gold is going through the system now. So, expect to tell you any day that we're pouring gold. Terms of commissioning, it's ongoing. Most of the actual system has been turned over from Acenco to EPCM. Almost all the contractors have been actually demobilized from site.
So Our operating team is there. They're actually working night shifts now. So things are really moving on nicely at this stage. This is just a good picture. And I want to emphasize this to people.
I mean, we're in the rainy season, so it is a little tougher to mine right now, but we already have 3 months of ore sitting up there. So we don't have to be concerned with that rain at this stage. And our plan is to manage through those rainy seasons with this ore. So we've got it there. We had great control and reconciliation to our model done.
It's reconciling positively, which is nice to see now. We just need to make sure the guys that are mining it, dig it out with as minimal dilution as possible. But we're pleased that we've got that startup material there. We'll be into the dry season in the next month or so. It'll be starting.
So, we had a good head start on that. I do want to give some kudos to the team down at site. We've got 1.8000000 hours with no LTIs. That's pretty good for, construction project in the middle of nowhere, basically. Team has done a fantastic job to have no LTIs.
And the other thing that's been great is we've got 2 awards in the last 2 years. We've made a real effort with the communities and programs and put in place there. This one in particular is mostly about some of the artisanal mining areas where they've actually destroyed the land. We've actually reclaimed created areas for gardens and basically for animal grazing, etcetera. And locals will run it.
They'll manage it. We'll help them. And then they sell a lot of back to us and into the communities. And we've got some really nice awards for that. So good job to the team down there.
Looking at the upside, and Ross mentioned this, I want to start the underground with a couple of other areas. The things that really excite us, this is the 1,000,000 ounce deposit in Piaba here in the middle. We've been exploring, and we've done a little bit exploring historically in the Tatajuba deposit. You can see the long strike length there in the light pink. And basically it's another 4 or 5 kilometers right along the same strike The grades and the drill holes there have been slightly better, actually, in terms of grade.
And it's all near surface material that we've discovered recently in drilling, but also historic into drilling. So once we're in production and we can allocate some capital back to this, we're excited to get back to there because if we're going to double the mine life here, the first place we want to go obviously into Tata Juba. But also, we've had some nice hits in the far east as well, some really high grade holes. It might be some small pockets of gold. Obviously, the ocean's there.
So go on to the same strike length. Then we have parallel structures, Piaba North Trend. The Artisanals have cleared a long 3, 4 kilometer trend right there. They've been finding nuggets anywhere from 2 to 4. We've even seen 2030 kilogram nuggets in the system at Tatajuba and Piaba North.
So there's definitely some goals in system. And then you go on our property, and we have another sort of 1300 square kilometers. And 20 or 15 kilometers away, there's a couple areas that are early stage that we're excited about could be part of a new actual area for us. And ultimately, we see this as a camp and a district. This is not to 1 7 year mine life area.
We see this as either spanning production, extending life or multiple actual operations here. And the look at the underground, which has kind of really come up recently in terms of our real understanding analysis of it, we've done a bunch of work this year resource went out the new resource. We've doubled the resource underground and also been able to get more confidence. And from limited data and drilling that we've had to date, we've done a PEA study in internally on this, and we brought it up to over 1,000,000 ounces. And it's at two grams, but there is a core of that that's about three grams per ton.
We plan to do more drilling. We want to make bigger, but we do see this as a potential to really supplement the 2 or 1.5 gram material in the Piaba deposit or maybe it's the 1.5 plus gram material in Tatajuba. Supplementing it with some underground material as well that's slightly higher grade. So that's where when Ross referred to, we could make this sort of a slightly larger scale operation. Then we turn our mines back to California again.
So, Castle Mountain. Once we're done with Aurizona, which is really imminent here, we want to look to Castle Mountain. That's the next exciting growth phase of this company internally. Phase 1 is basically ready to go. The engineering work is done.
KCA has been helping us down in the U. S. With the team here and as well down in California. We've done the drilling work that Scott's done to identify the first well, in the actual PFS studies of 3 year mine life, we've actually identified.
Sorry. I just wanted to point out to everybody here who's looking at the screen. This was a mine, of course, that was operating in the late, late 90s for what, 8 years, 7 years? Almost 9 or 10. It was a, it was a heap leach mine.
This was a pet, the old pet, and then they, they leached. But then they reclaimed it. It closed down, then they reclaimed. And then it was sold and it was sold again, and then we acquired it through Newcastle. This is an old leach pad here.
It looks like a hill. They did such a beautiful job on the reclamation. I mean, you can go by there. You wouldn't even know it was an old mine, except for the pet. Those old leach pads were perfectly reclaimed.
They were, they were graded it. It's just a model for what a mine can look like when it's reclaimed. And that's why, you know, mining is often criticized as a, as a, as an ugly thing. And it is true. It is ugly.
And it is impactful when it's running. When a mine is closed down, it can be restored very, very truly to, to bring back, original vegetation in large part and, in some cases like this, topography that looks so similar to the original topography, you'd hardly even notice it was a minor leach pad when you when you go by it. It's just amazing how well they did it. And that's, of course, what we will do when mining closes after 20 or 30 years, we're going to hopefully be in business here.
Yes. So we've done the engineering. We've done the drilling work for phase 1, and we think that could be a 6 or 7 year mine life, not 3. There's material there that's sort of low hanging fruit for that, plus maybe some more in situ gold, which we haven't even gutter heads around yet. So we've got a nice starter kit ready to go about $50,000,000 of capital.
Maybe it's a little less than just some synergies, but $50,000,000 of capital. So a small bite sized chunk relative to, other mines that are produced about 50,000 ounces a year. So we're ready to go as soon as we basically present, to the board the go ahead and, are ready to go in Q3 as we say here. So just looking, stepping back for those not as familiar with this project, it's, as well in California, obviously, near the Nevada border of an hour 15 from Las Vegas. On the road on a paved highway effectively with a little bit of dirt road at the end.
It's 4 hours north of Mesquite. So it's a really nice connector along paved highway there. So we can really share in the skills knowledge and other things. But it's 3,600,000 ounce reserve. This is a big project already.
In your mine life on a good cost base. So we're really excited about this. Again, a big run of mine heap leach operation similar to Mesquite, but it's also got a small mill that you need to be patching onto it that'll produce about 30 percent of the gold at 3.3 grams. So it's got the high grade component, and it's got the big low grade, heap leach component to it. This will ultimately become almost like super pit, but effectively that's where the goal would come from those old historical pits and expanding them.
We currently have the permits for phase 1 for all things. We do need ministerial permits basically for the air quality emissions as well as water discharge for this phase 1. Those are expected say quarter 2, quarter 3 this year. We really don't expect any challenges with those. The water discharge, we have to prove that we're not discharging into the environment, which this will be undisturbed so that shouldn't be a problem.
Air quality emissions, while the equipment's got more efficient, and as well, we're not crushing on this 1st phase as well. So there'll be slightly less emissions as well in that, in that sense. But that's the 1st phase. The real exciting part is 2nd phase 200,000 ounces a year, and that's what we really want to get to. But what we've allowed ourselves with phase 1 is at least a couple of years running this becoming a good corporate citizen, again, showing everyone that we're creating jobs good to the environment, part of the local fabric.
And Then we are also in the background, just increasing or expanding the permitting. So we've currently got an environmental and facts statement that has an area of disturbance that allows us rate phase 1. For phase 2, we keep that same environmental impact statement area, but we do need to update it. So it allows us to disturb a slightly wider area within that that'll take us a couple of years. We're in California.
We're pretty open to that. And the second piece is obviously we need to expand the water and probably double the water capacity for phase 2. That's something that at the moment we've identified probably 5 to 7 areas we want to go and explore essentially and drill for water. Some of those are right within our permits, some are within land we own side of the permit in the monument. Some is further down even.
So we're going to keep, exploring those as we get the permit to actually go and drill, which we hope again is sort of 3 this year. And then we'll continue to identify that water source. There is lots of water in the area. There's a big, aquifer that runs through south of the project. The question is, what's the easiest place to access it with the least amount of challenges regulatory wise?
Now stepping back and sort of changing gears, looking at sort of quarter 1 results we put out today, we'll have out the MD and A and Financials today as well. So if you want to read in greater depth, first quarter really is about 2 things. Basically, production at Mesquite, which is mostly here, and then continuing to build Aurizona. So, the first part is obviously on, production. So again, we've already talked about the upper items on the production, the cost.
Operating cash flow from operations almost $7,000,000. Sustaining capital is a small number, about $2,800,000. Most of that's waste stripping at Mesquite. We've probably spent about $25,000,000 on Aurizona CapEx in the first quarter as well. At the end of the quarter, our cash and cash equivalents are about $24,000,000.
It doesn't include $16,000,000 of restricted cash, which part of that's for some bonding in Brazil, but also, the portion is for the Arizona project financing with Sprott, which has now been freed up since the quarter end when we refinance brought out. And basically, Mubadala's money paid them out. So we've got another $7,500,000 to $8,000,000 have come in from freeing up that money. So turning to the next slide. One of the key events, and this is not technically in the quarter.
It's a subsequent event, but I think it's a really important piece to our quarter in a sense. There's lots of disclosure in the financials that'll be out. But basically, we'd always plan this year. We pretty much telegraphed it to market. We wanted to mature our capital structure actually refinance our balance sheet.
We thought we'd be doing the second half of the year as we were just finishing off for Arizona, but the move out of the guys were kind enough to come along and spot an opportunity to really partner up with us And they said, we can take out that sprott debt effectively. And now we've got a 5% coupon, piece of, debt that's basically replaced at 10% coupon. So been able to cut that coupon in half. We've also been able to free up the structure completely. When you bring that in and you put in a revolving credit facility, we can now move funds between all of our sites have the ability to do hedging, bonding, anything we need to do within a normal capital structure for a midsized company.
Previously, in the first quarter, basically, we had siloed financing for Aurizona and siloed financing for Mesquite, you couldn't move things between there. You had different sets of lenders and competing interests. Now we have aligned interests. Mubadala is sitting at the top level with us, very aligned at growing the company and supporting us as we grow. The second level is obviously the corporate revolving credit facility, Scotiabank, BMO, ING, and SocGen have, stepped in where our lenders on Mesquite and actually increased to slightly to $130,000,000, but they've just taken a Mesquite loan and converted into a revolver.
So it allows us to borrow and draw, and payback as we see fit. And at the moment, it's $100,000,000 drawn as soon as we hit, commercial production at Aurizona would be $130,000,000. So a much more flexible balance sheet, much lower cost of capital. And at this stage of our development, I think it's a very good structure. I mean, the key four points here, reduced interest costs, deferred principal payments, increased their capital availability, and just the flexibility within the system, which can't be understated.
And totally shifting gears, so that's kind of on the, the Equinox side, but this is an important piece too. It is consolidated currently in our financials, but we still own 40% of Solaris Copper. Last year in August, we, basically funded out. 60% of the shares went to shareholders at the time. The other 40% stayed with us as Equinox.
It's a private company for now. Really, the goal here was to put the copper assets into a separate vehicle, allow them to ultimately get their own valuation in due time as we delivered on these assets. No one was buying Equinox stock to buy these copper assets at these earlier speculative stage, stories. But now there's a real interest. We had a lot more interest since it's been a company.
Greg's running it currently in Federico has been very active in it as well. And our focus to date really has been on Warinta. A really exciting copper porphyry that Dave Lowell discovered many years ago. It's in Ecuador and, basically, we said we would take this company public again as soon as possible. The goal is second half of this year.
And the two events we really wanted to hit before we took it public We're essentially getting a partner for Riccardo in Chile. Freeport's now in there with up to $130,000,000 they'll spend on drilling there. The second one was basically unlocking Warinta. So Federico and Greg have done a great job in actually advancing that. The two things that have happened there are we now have 4 or 5 permits to drill.
We need the 5th one, which let's say, Q2, Q3, we hope to have that this year. And then the second part ultimately was getting a community agreement, and we've got that community agreement subject to public hearing, which is now required in Ecuador. We're hoping we'll be having that in sort of June or certainly in early Q3. Once we have those 2 items in place, we then have the story. We have the ability to then take it back to the public markets and allow people to actually trade their shares publicly.
Then when we look to pulling it back together on Equinox, for the story for us and what we've been telling the market is, we're still said, we were a developer about a year ago, purely a developer. Now, we have one asset in production, a second one on the cusp, and then a third project in the pipeline. We're still trading in that sort of 0.5, sometimes 0.6 range, which is more around that junior sort of developer, almost junior producer, space, but we're starting to move up this curve. So without the gold price changing, if we can deliver this year, really the goal is to continue to move that multiple curve. And there's no reason we shouldn't be able to.
If the gold price moves, well, great. That'll be the cherry on top for sure. And what do we set for ourselves to help achieve that and move, basically move up that curve? Well, some of them are pretty obvious that we've already been talking about, but Mesquite we've got, it's currently in production. We're going to look to see if we can extend that mine life.
We're doing some exploration, drilling some historical dumps. Aurizona, wrap it up commercial production pretty obvious. We need to get on with that. We're almost, almost there. Explore there.
We'd like to get back to exploring I think really the exciting upside in equity story at Aurizona is actually, you know, all the exploration around it and then continue with the underground studies. So we're going to optimize that underground study. Castle Mountain will be our shift in terms of our construction focus. Like I said, we have 2 ministerial permits we need. We need to construct and to assess the financing, whether it comes from cash flows or current debt providers, we're going to look at our alternatives for financing that.
And then we want to do the feasibility study for phase 2. So it's got a pre feas on phase 2, but basically feasibility study level for phase 1. And then corporately as well. Let's not forget about that. So we're going to finish closing the financing.
Basically, we've gone through 1st close. The funds have been released to repay sprott. There's still a small amount in restricted cash. I think it's about $11,000,000 from Mubadala. And as soon as we get the security registered effectively, is the main, gating factor on that.
Those monies will be released. We expect those in May. What are we also going to do? Well, we're looking at, listing actually in the U. S.
And on the TSX. We're currently only TSX V. I think we may be the largest TSX V, certainly mining company out there. And certainly our liquidity is one of the key areas that I think is important for us to be focused on. This space right now, as you've seen, all those passive funds have really dominated in the last few years here in North America.
They continue to dominate. We are on none of the indices right now. Really want to get into at least the GDXJ to get started. But I think our key gating factor at the moment is daily liquidity. I think it's around a $1,000,000.
So a U. S. Listing, TSX list will help get us out visible. Got lots of U. S.
Shareholders at 2 U. S. Projects. I think it's the obvious next step for us. This year, then the index inclusion.
And then ultimately, we haven't really talked a lot about this in the last little while. And I know Ross may, he'll probably have a few questions for him, but we've talked about growing. We have a target. And even if you look at the next page, I'll kind of conclude on this. We've set this long term goal of being a 1,000,000 ounce producer.
Ross talked about building a big company, well, a 1,000,000 ounces is a good size. We have about 500,000 that we can get to within our current portfolio. How do we get to that 1,000,000? Well, we probably need to add a couple assets along the way. Mubadala has joined us to be a partner along the way with that, and we're really excited about looking at opportunities, as Ross said, in space right now when valuation is still pretty reasonable out there.
Our goal will be in the second half of this year really to put our head up again and start looking forward. And certainly Greg's key focus be looking at other opportunities out there to consolidate in our space. Maybe turn it back over to Ross for the questions.
Thanks very much, Christian. I think we will open it to questions now. So, thank you again all for coming and please feel free to ask questions and we'll do our best to answer them.
I'm just going to turn
it back to the operator quickly to remind people who are on the phone and on the webcast how to ask question. So while she's giving those instructions, we will get everything organized and then we'll alternate questions from the phone, questions from the room, and questions from the webcast. Operator, please go ahead.
Certainly.
Are there any questions from the room? There must be at least one question
Yes. Oh,
we've got one. Remember, please wait for the microphone
to come. Robin's bringing it to you.
Thank you. My question is, there's a lot of excitement with Aurizona with the, because it was a mine that was a brownfield project, was shut down 4 years ago. And so there's an excitement about how it's going to be, operated better and all this exploration upside I'm just wondering if you can just sort of summarize what is it that's from an operational perspective is going to be better than what was how it was sort of operated before? And on an exploration front what's being done now that wasn't done or wasn't done as well as before. Thank you.
So I'll certainly take the operational side if you want as a geologist, take the other go for it. But, the operational side, I mean, when you look at the historical operation there, it was built during 2000 and 8 and 9 during the financial crisis I think they built it for, I'm going to say 50,000,000 dollars, $60,000,000, but a very small amount of capital. There really wasn't a crusher there. It was sixty year old asbestos for Quebec. So I'd say the plant was undersized and certainly undercapitalized.
And they mined out, actually, the soft doors there and did okay, actually. When they started getting to harder rock builders of certain scale and size, they weren't able to process it. So what we've done is we stepped back and said, what would you build if you had a complete greenfield and how much of the plant can we use. And so what we've done is we ditch the part we can't, but we spent $150,000,000 approximately to put in place, a plant can handle all materials. So whole crushing system, which it didn't have 2 mills, which can handle a ballmill of saginals, which can handle the hard rock has a lot more power capacity as well to crush and grind materials.
So, we are capable of actually mining everything now. So it's a huge difference and I think, you know, they had planned to expand and plan to do it, but don't forget we hit that financial crisis. So, you know, it's easy to always to, give previous management a hard time, but they didn't have the money and the funding available to actually do that. We set up and said, we're going to do it first time. Interestingly, one of the good examples is we put in a ball mill.
We don't need the ball mill for, I think, I'm going to say almost 2 years. We've got soft material, but we said we're not going to take shortcuts when we put it in. So that's how I think we'll be able to operate better in a sense. The plant is fit for purpose.
And then there were the, harsh financial reality of a very burdensome royalty that
Sandstorm had that was
really just punitive and fatal that see. And then the glorious, problem of, gold going from $1800 when they started up to $1000 when they were really going. That didn't help. And when you lose those kind of value, progress, it's very hard to pay money. So that hurt them and a ton of other mines in Brazil at the same time, in fact, the set of mines globally.
So, we're going to build it right. We've got a long term plan. We have built it right, long term plan. We have a modest royalty now. I think we're having a, we're going to have a sustainable rate on the gold price.
I think from an exploration front, I mean, I don't think we see anything different than they did. They just didn't have the money and the time to be able to go and explore we're going to give ourselves that runway.
The thing that I love about Aurizona, really more than anything, is it's not just a, as Christian in this presentation, it's not just a 7 year mine life that we have right now modeled in our feasibility study. It's a camp, and it's going to be, I'm convinced, when we get it running and running, on a sustainable basis as per the feasibility study, which should happen, you know, very soon. We will add Tatajuba, Piaba, North, Piaba, east, all kinds of other exploration targets that will come in with reserves that will be able to feed into the, the open pit operation extending the 7 year life a long time. I don't know how long. 20, 30 years, something like that is my guess.
But equally important to me is the potential underground, that is, the shocking thing I saw when I went there for the first time in June in June last year, I I went through every single section, cross section, across the deposit, and And I had no idea, but I saw that it had been heavily drilled. I think 200 drill holes had been put in by previous operators below the open pit, and every single hole hit what looked to me like an economic width and economic grid around 2 grams per ton over significant widths, like 10 to 20 meters. I mean, astonishing numbers and continuous subvertical, just exactly the kind of orientation you want to have for a large tonnage, bulk, mineable, low cost underground mine. It just it just looked beautiful. And so when we when we kind of got over the big thrust of getting, the open pit going, and the construction going, we started to look at it more closely.
Scott Heffernan did a a great job on this, our expiration VP, he started putting together all of the, underground zones with, with a consultant, independent mine consultant, and, came out with a, resource of, about 1,600,000 ounces at around 2 grams per tonne, which is a pretty good grade for a bulk underground mine. And, you know, that's a multi, a multi year and probably multi decade mine life. And, and that I think will be added to the open pit to bulk up the production to some higher level. It could be doubled. I mean, who knows?
We haven't had any real studies, but, but I just see the potential is there for a long life operation at Arizona spending decades. And that's kind of what we're planning for in all of our organization and construction decisions have been founded upon.
Thank you. Operator, can you please take the two questions that we have on the phone?
Certainly. The first question from the phones comes from Andrew Mikitchook with BMO Capital Markets. Please go ahead.
Good afternoon, guys. Congratulations on, moving along Arizona and, and starting off, Keith here for the year. Just a two part question. With the slower leach kinetics, at Mesquite, you guys expect that to essentially catch up in the balance of the year? With much stronger production in the balance of the year as this all kind of gets rolling.
And then second part of the question is for Aurizona, Should we expect that once you guys are well into commissioning or maybe in commercial production, you guys would size 2019 targets for that mine?
Thank you.
Thanks, Andrew. I'll take that From Mesquite, first off, we do expect the year to improve as we move forward. We do expect to catch up and that's the land here. We've now got more flexibility certainly with the waste dumps and old leach pad material, but also removing other pits as well. So, that is the opportunity.
I mean, we knew that the first quarter certainly would be weaker. Leach connects and maybe a little slower than we'd hoped, but, the plan is to catch up. Absolutely. As for, for Aurizona and I think you said, we're asking about resetting guidance for that. At this stage, we don't see that.
We certainly factored in there could be delays when we're looking at guidance in that. We'll see as it ramps up here in the next sort of number of weeks. And then we'll reassess for quarter 2, but at the moment, we don't see that as, sensible thing to be resetting guidance on that. We certainly considered that when we were starting up.
Our next question is from John Slodnik with National Bank Financial. Please go ahead.
Thanks Ross, Christian. Really, and thanks for taking my question. Yeah, Andrew covered off, I had
a question on guidance, but wondering
if you might be able to give
a little color on your expectations for commercial production at Aurizona?
In terms of commercial production or Arizona, I guess you're asking about timelines. I mean, certainly if, we would say we're pouring gold imminently here, we expect in the sort of couple of months, certainly month or 2 months to be in the commercial production. So we've given ourselves sort of that this quarter, I think is what our aim is.
Perfect. Yeah, and I'll tell you,
my other question was answered already.
Are there any questions from the room with a quiet crowd?
You're letting us off.
All right. Well, I've got two questions from shareholders online. The first question is a shareholder in Canada. For the acquisitions that you spoke of, especially to reach your target of 1,000,000 ounces, would you strategically prefer larger mines or relatively midsized mines that have some expansion upside?
Yes. You know, it's right today. It's not the really the best time to be talking about where we're going next because We've obviously got a lot of work to do to get Mesquite running like a top, getting Aurizona running like a top, getting the construction decision made on Castle Mountain and getting it going and making sure any well. And then we'll look at where to go next. We've got so much opportunity with our existing assets alone we really don't need to look at anything else for the time being.
We're going to be very opportunistic. It's impossible to define with any certainty, what sort of criteria we're looking at producing, non producing size, jurisdiction, etcetera. We would like if we do anything, it to be a synergistic, to be logical, it to be something that the market will reward us for in terms of these are smart people. They know what they're doing. That was a smart deal.
We'd really like that to the bottom line conclusion. The way we got rewarded when we bought Mesquite. It was a smart deal. It was a bright price. It was an opportunity to signal, great synergies, perfect fit, adds value to Castle Mountain.
Castle Mountain adds value to it. It just was well received. And that's the kind of deal we'd like to do again if the right one comes by from the sea of opportunities is out there, most of which we would not even look at, let alone do any due diligence. So that's kind of where we're at on that. Ask the next, ask that question, probably in Q4.
And maybe we'll have more, more ability to answer it, with more definition.
Can I just add though that in terms of size, which is one part of that question, is we prefer larger rather than smaller? I mean, it takes similar management amount of time to manage you know, 150,000 to 200,000 ounces annual production versus 40,000 or 50,000 ounces. So, you know, 100,000 ounces and greater is sort of been a unwritten target for us in terms of annual production?
I think also the, the, the, you know, we're not interested in growth for growth sake. Just to get bigger is not the objective. It's to get bigger and better and more profitable. So scale truly is important in this business. In fact, it's important in almost every business, especially public markets.
With a larger company, you have much more income to offset your overhead with. You have much more liquidity. You are excess the larger capital markets. You are, more resilient if things turned down. With multiple assets in multiple jurisdictions, you can have a problem in 1 and a great situation happening in another.
And yet, you know, 3 months or a year from, from then, you might have exactly the opposite situation happening. So multiple assets really does make good business scale really is important. And, and that's why I think any sensible company that's trying to build a real long term business, should try to become as big as you can within reason and provided that you're not just, say, issuing a pile of shares just to get bigger that doesn't make any sense. You've gotta have a value proposition that informs every single deal you do. If you do have a logic and it really is a a 1 and 1 is 3, you should be doing it.
And very much where we stand right now, I think.
Another question from online. What do you see for the mine life at Mesquite?
Mesquite currently has a My Life, under the feasibility study that was done last year of 16 years.
Mesquite, how
can I help you? I beg your pardon. I'm sorry. I was thinking Castleman. Mesquite currently has a short My Life, a few years under current reserves and resources.
And then another few years of leaching where it will be in operation. It will be generating cash flow, but it won't have actual mining. So every single ton we now add from either successful exploration in Greenfields areas or making, making larger mining areas of existing, pits or taking making ore from waste, which is exactly what we've done this year, quite successfully. In other words, drilling in areas that were waste at a gold price of $300 an ounce, 20 years ago. But at $1200 a month, that waste is today ore.
And that's now adding to our long term we've got 100,000 ounces so far this year. 100,000. And, that's recovered or recoverable, nearly recoverable, or so that'll be, that's almost full year already and we expect to have significant increase to that by the end of this year.
Are there any questions from the room? All right. Operator, we have a question on the phone from a private investor. And since it's such a quiet room and phone, can you please remind people how to ask a question just in case they forgot.
Our next question comes from Glenn Zetser, a private investor. Please go ahead.
Hi. My name is Glenn Seitzer, and, my brother Robert and I, were investors in the Augusta Group stock Augusta Mining, Arizona Mining, New Castle Gold, and now of course Equinox. And our question is, we wanted to know if Richard Warky is still a major stockholder.
Yes. I can answer that, absolutely unequivocally. He is a large shareholder. He participated in our last equity financing pro rata to his existing stake, and we're delighted to have him. We have some very solid long term high net worth investors like Richard, Lucas Lundin, myself, in the company, and combined with Mubadala, which is a very, very pocket massive Sovereign Wealth Fund in Abu Dhabi.
We have a tremendous, financing capacity in the company should we need it to buy or grow or, or, or do whatever our future, holds. It's a fantastic shareholder base and Rich is absolutely part of it.
Great. Really happy to hear that. Thank you very much.
We've got three questions online. The first one, your underground mine at Aurizona, do you consider that as midterm target less than 3 years, or is that a longer term target for you?
Yeah. It will be defined within 3 years. Quantified defined will be drilling there hopefully later this year and then continue to drill and define it further. Do some economic studies. We would not probably start, development there within 3 years.
So it's going to be a midterm, midterm situation.
Another question from online. Are there any metal streams or royalties with 3rd party companies such as Sandstorm on the other properties other than Arizona?
Yeah, I'll take that one. So there is the 3% on Aurizona with Sandstorm. There is, I think it's 2.5% on Castle. With Franco Nevada. And on, Mesquite, I think there might be some small ancillary like
What is it, Peter? Average royalty rate overall is also about 3%.
Alright. One more question online. Do you expect additional equity dilution with your plan to capital expenditures and exploration expenditures, or do you hope to use internally generated cash flow?
The latter.
Are there any other questions from the room? Alright. Well, I guess that there's there's no more questions on the phones either. So I will remind people, that this webcast will be archived on website. So if you do think of questions down the road, you can email me or you can go back and listen to the archive.
And now I will hand it back to Christian too for closing remarks.
Nothing more to say. I think we've, we've had a good session here. Thank you all for joining us once again. And if you have any questions you'd like to ask privately, phone him. Thank you all.
Or just come up.