Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold Conference Call to announce the results of the Castle Mountain Pree feasibility study. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity I would now like to turn the conference over to Roland Bailey, Equinox Gold's Vice President of Investor Relations.
Please go ahead.
Thank you very much for joining us today. I just wanted to remind you that, of course, we will be making a number of forward looking statements, so please refer to our and I'm now going to turn the conference over to our CEO, Christian Mila.
Thanks, Rylan, and welcome everyone today. So a very exciting day for us here at Equinox. We've been working hard on this for the last 6 months to get the Castle Mountain prefeatibility study. I do want to say a thanks to Mark LaDuque and David Lang who've led it and, done a fantastic job along with the rest of the team of getting a a really good study out here in a short period of time. So turning to page 3, you just really want to summarize it and pull it all together here.
It's a very large increase for us in terms of reserves, you know, we had a 1,000,000 ounces of reserves at the end of last year and this merger was completed to create Equinox Gold. Now we have 4,500,000. That's a 350% increase. It's a very big number. So excited to have that on our, on our books now, and we can officially talk about that Castle will be a long life low cost mine with a net present value of over $400,000,000 at 12.50 gold.
So it'll be a producer for us at over 200,000 ounces for, you know, almost, the whole period of that 16 year mine life that we're defining at the moment. And really, it's a game changer for Equinox. As you can see on here, the grass really do change things for us. And we've now defined 2 great cornerstone mines and projects here within Equinox. And, I think it's quite unique, and we'll show you why we go through this.
The other piece that's, really, really pleasing to us as well is that both of these have a nice defined project. Castle Mountain now has a 16 year mine life, but there's lots of upside to come from Castle Mountain as well. And, we won't focus on the exploration here, but certainly we won't spending some time and exploration over the next few years and showing where the upside can come from. So the 16 year mine life for us is just the starting point So we now have a foundation around which we can build a mid tier gold producer and we think we've really defined it nicely here. And turning on to page 4, I do want to start looking at actually the Castle Mountain project.
So on the history here, this is our 2nd Brownfield project in Equinox. He's the past producer. Viceroy produced a 1,000,000 ounces of gold here in the 1990s and shut it down in the early 2000s when the gold price was low. It wasn't due to lack of ore or lack of gold. It was the gold price environment at the time.
So in a sense to our benefit here. And when you look at the map on the right here, for those not as familiar with it, it's in San Bernardino County in California. It's right on the Las Vegas border, so close to suppliers, an hour a half, hour a half, hour a quarter from Las Vegas on the road. So very accessible, great for labor and for supplies, in a great jurisdiction. San Bernardino County has been very, amenable to mining.
And, the BLM office has also been very supportive to us in both needles, Sacramento and also nationally. So We think we're in a great mining jurisdiction here, great location. And as well in the last 6 months, maybe 8 months, certainly the U. S. Investment climate has been very positive as well.
The corporate tax rates gone from the mid-30s down to the low 20s, which is obviously makes the project more profitable. It's also improved in terms of regulatory environment. I think the efficiency and sort of the reception and responsiveness of the regulators has been very good. And we've been pleased with that so far. Having been involved project for the last 6 to 8 months.
And now I just really want to dive into the actual project here. And I'm going to turn it over to David Lang COO here on page 5 to run through the project, then I'll bring it back home and bring it all together towards the end.
Great. Thank you, Christian. This is David Lang. So let's talk about, how we're going to get Castle Mountain into production. We have a find restart strategy, which puts us into a position where we should start commercial production in early 2020.
It's got 2 phases. We've got a phase 1 in which we'll be, producing one of mine heat, beach material, lower grade material from was stockpiled from previous operations. It was material that was stockpiling 1 of the old pits. And if you have a look on the diagram on the right, you'll see that there are three pits named, near the Orobel Foreisy, Orobel, Jumbo, and JSA at Southstones. But the material that we're mining for phase 1 will be prazilo that was stockpiled in the JSLA pit, and we'll put that on the heap.
Key permits, in place for phase 1. I will talk about those a bit more later. We're looking at 45,000 tons a year during the average for the 1st 3 years. And we'll start, we're planning on starting ore stacking and commissioning of the plant and so on in late 2019. So let's take next year.
And phase 2 is the full restart of the castle mountain project. And that includes Rom E bleaching, one of mine E bleaching and milling of higher grade ore, which is something that's well known to this project It was done by Wi Fi back in the day. They had a heap leach and a a milling of of higher grade ores because we we know that we have a higher grade ore component. And data collection for permitting is in process. It's underway.
We will advance the debt, and the expansion will give 203,000 ounces a year for 13 years during phase 2. So that's a nice bump in production. So turning to Slide 6 is a, is a site plan, again, to orient everybody. So if you look on the top right you see the main trend pits, which is actually a combination of the Orobell, Jumbo and JSL pits. To the south of that, we get the south derms pit.
Is a final configuration. You get the waste dumps on either side of the pits, and a crushing area in between the waste dump, the northwest waste dump in the south end of Pitts leading to the mill area. And then the ultimate heap is, is on bottom left and that's southeast southwest corner. And the ADR plan is obviously the very southern boundary of the the plant. I draw your attention to 2 things that we'll touch on later on in this, on this diagram.
1 is the heap configuration includes a mill fines area, which is the top of the ultimate heap, at the northern end, which is where we'll deposit the, we'll dry stack the fines the mill. And the other is the dashed gray line around the facilities, which you've labeled as the mine site boundary. That's important permitting point of view, there is an area that we can operate in. And we need to do, to do some work in there, but it's certainly a part of our permit at this point So approved mining boundary. Next, we move on to Slide 7.
Just to take a look at the overall economics of the project, at 12.50 gold, we're talking about a reserve of 3,600,000 ounces Christians already alluded to, 203,000 ounces a year during phase 2. And after tax, NPV 5 percent of 406,000,000 and a life of mine after tax cash flow of $865,000,000. And actually the pretax cash flow is over $1,000,000,000. I mean, it's generating a lot of cash. And our all in sustaining costs, very nice, $7.63, dollars an ounce.
I think other interesting stats are that the The script ratio is 3.6. It's not perhaps the lowest, but we've got a nice grade for heap leach to accompany that with grade 0.56 grams per tonne. We've got average recoveries of 78.5 percent, initial CapEx, 52,000,000. That's for phase 1. And for phase 2, we're looking at CapEx of $295,000,000.
For the sustaining CapEx, we're looking at $142,000,000, and that obviously includes expanding the beach pads and, includes closure costs. What else we got on this one? We've got you haven't talked about the IRR. The IRR is just over 20% at 20.1%. So a robust project We're very happy with the outcome.
I think it's a happy situation for us. Moving on to the next slide, we can talk about the capital costs a bit, which we've touched on, but you can see here that we have For the phases, phase 1, phase 2 into sustaining, we'll see how we've broken it down. We have, in the phase 1, we have very little mining equip because we're using contractor mining for phase 1, and we'll talk about that a bit later as well. And we basically got leach pads in the ADR plant and the infrastructure, which are the main components of our phase 1 CapEx. The phase 2, we go we transfer to owner mining, obviously, that brings in a whole lot more mining equipment and therefore mining capital.
We also have a script program that we need to carry out to get, to open up the pits and get the ore. And then we've got the significant cost in the, in the mill CIL plant, which is $42,000,000. But then we need to expand the beach pads and the and the absorption, desorption and recovery plant. So there you see the breakdown of the costs for phase 2. And then sustaining capital, you can see we've got replacement mining equipment to acquire and expand the beach pads, that's another $50,000,000 as we go through and stack almost 200,000,000 tons of of ore for leaching.
And closure costs at the bottom there of $20,000,000. So we've gone through that and haven't mentioned perhaps the CapEx Cassidy and associates did the did the feasibility study for us with a whole host of our consultants assisting them. And we're very happy with the outcome of their their work. And we move on to Slide 9, where we've got a simplified circuit OOCE for you. So there's two streams in this one.
As we've talked about before, we've got the milling circuit, which is the bright red arrow. And that's a pretty standard, 3 stage crushing circuit into a mill parity gold circuits, carbon in leach, and then, we take the carbon down to the elution circuit down the bottom, on the bottom right. And the mills get the mill fines get, filtered and stacked at the northern end of the heap leach facility. The, the pink stream, the run of mine ore from the mine, that goes directly to the run of mine and leached and gains up in the, in the carbon columns, which also then reports to the, to the ADR plant to produce Moving on to Slide 10. You can see here from the production profile, there's a nice chart of the production profile, the yellow line you'd expect is gold production.
It's a little bit up and down, but it's still running around 203,000 ounces a year during, during phase, phase 2. You can see the mill tons in the orange and the rum tons. You can see what portion of the mill tons are, which vary from year to year. On the data on the right, you can see our throughputs we're talking about in phase 1 throughput of a stacking rate of 12,000 700 tonnes per day and phase 2 with 41,000 tonnes a day, and the mill plus ROM in that case for phase 2. The average recovery for our rig is 79 or 78.5.
And you can see the rest of the stats there, including the interesting one, which is the average mill grade is 3.23, which I think therefore illustrates why it's been so interesting for us to carry on with putting the mill in place because the incremental recovery from 22 to 94.23 grams is substantial. So we're happy to spend the money on that plant. Production profile. We've talked about that. And then, obviously, we've got potential for mine life extension with exploration potential to the north, east and west of the known resource and we'll see a map on that a little bit later.
Moving on to Slide 11. Talking about a low cost high margin operation here, you'll see the the doughnut for the all in sustaining costs. As you'd expect being run a mine operation, the bulk of the cost is in the mine processing is the next biggest item and the rest obviously declining in importance. And importantly, we can see from data that we've been analyzing that we're in the bottom 10% on the cost curve, which is an fantastic place to be. And you've got a long life when you've got a nice low cost base.
Average mining costs per tonne, which I've always really keyed on, we're talking a $1.39 per tonne mined, $2.11 process. That's a combined mill and rum, and the G and A is $0.80, So moving on to the next slide, which is Slide 12. Obviously, we've got some really strong flow coming out of the operation and see once you get particularly into phase 2, and you'll see that by year 5, we're really producing a lot of cash, and that that's all too good. We're very excited by looking at that cash flow and looking at an average of $99,000,000 a year during phase 2. And obviously, the green line shows our cumulative cash flow.
Moving on to the next slide. So what are our next steps? Permits and and water, the feasibility are always the ones that that that come So in terms of our status with phase 1, the run of mine, Naheapleach, we've got a, a record of decision from the, from the BLM. To mine up to 46,600 tonnes per day of ore and waste. We've got a conditional use permit from San Bernardino County, and we've got enough water to do phase 1.
So the next step is to read to get some some ancillary ministerial permits, which are more administrative permits, if you like, because we have the record of decision, which allows us to mine. And we want to advance the engineering to support the 2019 section program and get the first underway and early production, production in early 2020. Then phase 2, phase 2 is, it's important to note that we're going to stay within the existing mining boundary. In the earlier diagram that we showed you, there was a gray. Dash line around the facilities.
Here, you can see it in bright green. And that's, that's a that's our mining boundary and we can do things within that that we do need to change our EIS EIR to accommodate the expansion. So what's changing? We're increasing throughput to 41,000 tons a day. We're increasing the area of disturbance and we're increased.
We need increased water extraction. So we need to make some changes to modify our record of decision and conditional use permit based on those things. But all within the area that was originally included in the EIS and EIR. So to support our application, we've already started and Fauna studies to, to, to see what's changed. And what we've detected is that there are no material changes in the mine area compared to operations.
So we're in good standing there, okay? And then we need to permit and drill additional water sources or acquire water from other sources. In order to supply the additional water that, that phase 2 will, will require. And obviously, the last step in there is to advance a feasibility to support Phase 2 construction and production. Moving on to, to Slide 14.
And this one. Let's talk about the, the exploration upside. There's really 2 big areas of real great interest in terms of a upside. If you look at this in the center of the diagram, there's an area labeled East Ridge, and there's a blue oval, there's very interesting, intercepts that we've had along there, both in road cuts and some drilling. We've had, you know, 65 grams over thirty five meters 1.1 grams or a 32, 1.3 grams of a 62, 1.6 732 Meters.
Those are really interesting intercepts. And then close enough to the pit boundary that we can see easily expand and provide more area. And the other one that's really exciting is a Northwest rim where there's some really interesting steps that we need to go and follow-up on. We don't have a lot of detail on that at the moment, but they are very interesting in steps on the northwest rim, which need us to have great interest in exploring that. So moving on to the next slide, it's 15, and I will turn it over to Christian.
Thanks, David. Nice update on the project there. Now just going back to looking at Equinox and how the project fits into our strategy and our way forward here, So as you can see from the study, really we've done a PFS and completed that to, to come up with a project to build, not to sell, This is definitely a project that we plan to put into production in the next sort of 18 months here as we move past the completion of Aurizona. So we're really excited to have that in the pipeline now. And then this slide shows here on 15, you know, it fits in perfectly for what we were trying to build.
This is a low CapEx in density project. The total initial capital divided by the average annual production is sub $1500 And, you know, it's a little bit higher than Arizona, but Aurizona basically was half built. So we do have to put the full plant back in place here at Castle Mountain. But nice attractive IRRs and returns on these projects. And we think with mine life extensions, you just continue to move these bubbles or balls to the right hand side of this graph.
So 2 cornerstone brownfield projects fit nicely into our, into our profile and into our strategy of building a mid tier gold mining company in the next couple of years here. And really, the clear identified upside potential will enhance that. And I think some really interesting takeaway from this graph is when you look at the other comparables and the other bubbles or balls here, a number of them tend to be bigger than, than Aurizona and Castle, which our market cap and those bubbles represent the mark caps of others. But we have 2 projects that are now well defined. The values have been defined Arizona will be in production by the end of this year.
Castle Mountain will be in production by the end of next year, and our market cap is still less than these peers. So from a value perspective, I think that's a really exciting point to be at now that we can talk about the overall valuation of this company and look at the two projects that support core value of it. Turning on to 2016, just on this theme a little bit further here, the 2 unique and sort of rare assets that we think we have of scale are near production. And when we look at the pipeline of sort of the single asset, developers at this stage, We've got 2 of these assets in the pipeline in the next couple of years here. So the scarcity of quality gold projects in pipelines, I think these days, is becoming quite acute.
And we've got 2. So we're really happy with the assets we have, and we're certainly looking to add more as we move forward with the strategy. Turning on to 'seventeen, bringing together the valuation a little bit more. So now that we have this PFS, it gives us a good starting point to look at the value and the net present value of our assets combined, which we couldn't do up until this point in a very, demonstrable manner here. So $406,000,000 for Castle Mountain at 12.50 gold and $200,000,000 for Aurizona at 12.50 gold give us the 600,000,000 of value in that left hand side of that graph as you can see.
And then there's lots of upside that hasn't been factored in. And at the moment, our enterprise value is give or take $350,000,000. So at a quite a discount to our current value of our 2 core projects. And when you look at the box just above that graph, We think most of those items are not factored into our valuation currently. So Aurizona has got the Piaba West, additional resources, which we plan to come out this summer.
It's got additional underground resources, which we plan to come out with when our resource update is, is, brought to market. And also, we're drilling at Tatajuba currently. We hope to have some news on that later this summer as well. So there's lots of upside coming from Aurizona. Castle Mountain as David alluded to, there's the Eastridge Northwest Frim.
There's some higher great shoots below the pits that we're also going to follow-up on. So again, there's a bit of upside there. And then as well as we announced, not too long ago, we are spinning out our copper assets into Solaris Copper. We've also got Elk Gold and Coricancha. So those values, we believe, are really not factored into our overall valuation.
So it's quite a compelling valuation story. I think at this stage, And I think the market can now actually define that better. Turning on to Slide 18, just want to conclude with this slide here. It's been a really busy year since we created Equinox. And the team around here has been working very hard.
And, kudos and thanks to everyone for that. And We've got Aurizona in construction at the moment. We've continued exploration there. We plan to have that pouring gold by the end of this year. Solaris Copper, as we said, is being spun out in August.
The Castle Mountain PFS has now defined that project and a timeline and a plan to get that back into production at the end of 2019. And really, we expect to have a pretty catalyst heavy year, from now onwards here. Resource updates for Arizona should be coming out in the near term here in the next couple of months. There should be on Tatajuba coming out and then 1st gold port at the end of 2018. On Castle Mountain, we just run through the feasibility, pre feasibility is done.
We plan to advance the permitting and the phase 1 engineering and as well as the phase 2 feasibility study. And exploration, we'll get back to you in due course here as well. But something to highlight on the actual project that we really didn't cover in this presentation was just the overall resource here. At the beginning of the year, we had 4,000,000 ounces in measured and indicated category. We now have 4,300,000.
We had 1,600,000 in deferred, we now have $2,200,000. So a nice increase as well as adding some definition to the project. There's a nice resource that's coming together there and still some upside. And then ultimately in terms of long term growth, you know, the plan here is to build that mid tier gold producer in in the shortest time possible here. And, think with these 2 core projects, we really have the base and the the foundations for that.
So please keep an eye on all the catalysts coming over the summer and certainly into fall as we get back into production here at Arizona. And, in the next week or so, we should be having our AGM on July 26th. And we'll be having another webcast then. And, Ross will be joining myself, to give an update on, on the growth strategies, the market, and also the business at that point in time. So Hope you can join us at that point in time.
So right now, I think I'll turn it back to the operator for questions here.
And just a reminder, if you wanted to submit a question and you're online, you can just click the submit a question button that's at the top of your screen. Please go ahead, operator. We've got a few questions on from the phones.
You. You. Our first question comes from David Meadelec from Macquarie. Please go ahead.
Good morning and thank you for taking my questions. I have 3 questions. First question, on the metallurgical test work for the Ram heap leaching, could you provide some more color on the scope of the test work completed, the variability of the recoveries documented reagent consumption, the leach curve profile and any other key factors.
Sure, it's David. In terms of reagent consumptions, I think you'll see it's been very consistent and it's, it's confirms what was being achieved historically. And I think it's in the deck in when the appendix, and I will dig it out, what was in Kentucky or pages. In terms of the test work, there were 6 columns done, big diameter, four foot, four foot columns to confirm the rum leaching. Now in our view, I mean, we've done the test work confirm that there's been a load of, there's a huge massive of, of metallurgical data and test work from the project that's been accumulated over the years.
And we basically have a 40,000,000 tonne test heap leach out there. So we are very happy and more importantly, our consultants, KCA. Are very happy that we have a huge body of knowledge which supports the metallurgical performance that we are predicting.
Okay. And, just on the leach curve in terms of the kinetics, what are you expecting?
We are budgeting or the cash flow is looking at extraction over 6 months. But I think the curve is actually showing something more like 60 days.
Okay. And You said, 6 tests, four foot columns in diameter. What was the height and the rock? Size of those columns?
I don't have those at hand.
Okay. Okay. Okay. And my second question, For the expansion beyond phase 1, could you provide some more color on the selection of 41,000 ton per day for phase 2 potential optimization opportunities and if sequentially scaling the RAM heap leach via more phases was considered?
Right. In terms of the overall, capacity, we just figured it was, it was a reasonable size I think it wasn't it. We did actually a whole bunch of trade offs looking at different sizes and different throughputs and different configurations of the circuit. And this one gave us a good return and with a reasonable amount of capital. Okay.
In terms of upside beyond this, there are a number of things that could done to, to increase the throughput through the run circuit, particularly because that's not particularly constrained. And if you go back to the map on page, I think it's page 6. You will see Can we turn to Page 6 on the presentation? You will see that on the left where the ultimate heap leach pad is laid out. There's actually still quite a lot of space to the left, to the south.
West. So there's there's plenty of space to expand the heap leach facility. So it's a question of of scaling things up gathering throughput. Or in or in life. Great, great.
Great.
And my final question on the mining costs, for phase 1, is it supported by contractor quotes? And for phase 2 owner mining costs, how are they derived and what oil price you assuming?
The phase 1 is indeed supported by contractor quotes and phase 2 is from a, from a 0 base And the oil, the diesel fuel price was $2.38 a gallon U. S. Ghana. And we've benchmarked that with other operation in the area and feel pretty comfortable if that's a good question. You're welcome.
Thanks, Steve.
Our next question comes from Raul Paul from Canaccord Genuity. Please go ahead.
Hi, everyone. David, I think you touched on this a little bit when you spoke about the optimization, but specifically wondering So for the phase 2 plan, it looks like you'll be placing anything below 1.3 grams on the run of mine leach pad. Higher grade materials on that goes to the CIL. It looks like a relatively high cut offer CIL. So Did you look at the option of lowering the cutoff grade for the CIL maybe looking at a bigger CIL than 2400 tons a day?
Yes. Look, it's it's an interesting question because it's it's a classic trade off and it's something that certainly we can revisit. Will be there for the feasibility study. But we looked at it in the engineering economics with an engineering economics approach. And we said, okay, what is it going to take to have a breakeven grade, a crossover grade, factoring in, not just operating costs for the CIL, but also the capital cost.
Because obviously, if you build a bigger CIL, so your capital cost and therefore your capital charge, if you like, goes up. So we balanced, we had to balance the 2 and Mark did some very good work to analyze. What would be the most appropriate crossover, a point for the CIL and Ram. And we're pretty careful that that's a good point. You know, it's something that can be be rejaked and so on, but I think that it's it's as good as any that the analysis is there.
It's been done in a in a in an appropriate manner. So I'm happy with it.
Okay. Thanks. And then just on the other hand, what about maybe adding 1 or 2 stages of crushing as well in mind, at least for phase 2, do you see any benefits to that?
Not really. We've looked at it and it certainly one of our options when we, when we were doing the study. And we, we finally gave a conclusion that in terms of ultimate extraction, it doesn't make a, any difference at all whether it's rum or you give it a 1 or 2 stage crush. What does change is is a little bit is the, is the lag in getting the production. And we would rather have a little bit more lag and, and a whole lot less CapEx and a whole lot less operational complication.
Okay. Thanks, David. And then last question, just again, clarification on the mining costs of maybe $1.37 for phase 2. It looks like it's mostly your own equipment, but it's still quite low compared to what I've seen for other large low grade operations, you did mention the reserve 0 base, but could you maybe discuss some of the factors that help keep mining costs low?
Well, let's start with we benchmark against particularly relevant operations, which are, Marigold and Mesquite and looked at their public data and so on and we're pretty, I think we're right between the 2 of them in terms of mining costs. Okay. The other side of it is that fuel costs are pretty competitive We got that from quotes. The other is that we're at the, at a nexus in, in certainly a continental U. S.
As mining and mining suppliers and equipment suppliers and spare parts suppliers and so on in skills and having component rebuilds and on, we are surrounded by the most fantastic infrastructure you could hope for in terms of mining project, all of which contribute to driving down driving down costs. So I think we're pretty comfortable actually. We talked a lot of consultants. We talked about other people and pretty happy that we were on the money with the with the mining costs, given that it's location driven to a very interesting degree. Very long holes.
Fair enough. And is this mostly a softer oxide material than they were does it also include a component of drill and blast as well?
No, it's all drill and blast, but I think it it's not particularly difficult drill and blast. There's no reading, except in the phase 1 material the back, the field material, the stock raw material in the JSLA, that is not, well, we might blast it a little bit. Shaked up, but the rest of it is Aldrin and Blasi.
Okay. Thanks. Thanks, David. That's all that I had.
Our next question comes from Andrew Mikitchook from BMO Capital Markets. Please go ahead.
Good morning. I had a couple of quick questions. The mine plan excludes a small reasonably, a reasonable still chunk of, of measured indicated, but then there's a very large inferred. It's also obviously not included in this PFS. Can you comment at all on whether any substantial quantity that excluded material are already in the pit, or easily accessible specifically not deep and difficult to add to a mine plan with more drilling?
Some of it is certainly Andrew and one that can point to immediately is the inferred in the JSLA fill, that, that is absolutely totally accessible. We just hadn't got to fully drilling that to bring it up to an indicated or measured category. And I think there will be areas, but there's not sort of a big big chunk that is, that is available. You'll see that we ran, we ran, I think it's about inferred, not the So, no, I wouldn't say that it's a very particularly big chunk that, that is inferred and that we would, you know, it's an obvious target for a quick drill campaign. It's more distributed around the place.
Okay. And
then just in terms of the the schedule for, I think it's year 3 in your appendix. There's a very large capitalized waste program, even a large waste outright noncapitalized, which would be above your 46,400,000 tons per day cap, I think, or very close to it. So just to be clear, you would have to have that permit in hand by year 3. Is that correctly interpreted?
Yes, sometime during year 3 in order to achieve that, yes, that's correct. Okay. I mean, if the cap is, that's a daily rate. It's actually the cap is manual.
And the just last question on the CapEx, that fleet that you're buying in year 3 or 4 for the expansion. That is an outright purchase. That's not, that's not assuming, some sort of at least to own plan?
No, that's an outright purchase. It's based on quotes from the suppliers. We've included in that CapEx, the mining equipment for year 3 and year 4, because we'll be needing it in year 4. So we said, okay, we won't we'll probably be paying for a good chunk of it in year be. And obviously, in our plans, in terms of financing, ultimately, we will certainly look at leasing, but the costs that you see there are for purchase.
If you'd like, the whole study is a 100 percent equity basis. There is no debt, there is no financing, there is no leasing. In the model you can see right?
Well, between that and the previous questions, that takes care of the ones I had on my list. Thank you very much. Richard. Thanks, Andrew.
Please. Screen. Our next question comes from Kerry Smith from Haywood. Please go ahead.
David, have you done all the condemnation drilling to make sure that the location of the waste pads isn't going to impact maybe some future resource growth opportunity. You kind of have the waste wrapping around the bottom south end of the pit and I'm just wondering about what's been done for condemnation.
I wouldn't say that all the drilling has been done, but it's something that we can do over time because we're not going to go and put the material there until until later on. So we've got some time to go and do that. So it's not something that particularly stresses us out.
Okay. And then the high grade zones that you plan to mine out of the pit, I'm not sure what the average which would be, but are you considering some kind of smaller fleet to mine those high grade zones for the mill more selectively or will you mine them with the fleet that that you intend to use for the Rome?
We'll mine it with the same fleet, but that is that we have a relatively low relatively small benches. You've got twenty foot, twenty foot benches in the pitch 6.1 meters, which gives us the selectivity where we're looking for. I mean, we're looking at the opportunity to manage costs in the waste areas by doubling that making forty foot benches, but we feel that the twenty foot benches is adequate to get the sensitivity we need for, for the, for the aggregate. And it's been shown by the previous operation that was adding.
Is that what that's what they did as well?
That, right.
Okay. Okay. And David, on, in the slide deck on Slide 24, you show the mine planning year 3, you show 8,000,000 tons of ore. So is that is that incremental tonnage from year 2 to year 3? Is that coming from your fleet that you bring in and you start using it to move ore tons out onto the leach pad.
Is that why that number is higher?
Yes. And if you look at the next chart, on page 25, You see that year is going to do is contract minor only. And then year is C and 4 is a mix of contract and owner, and then we go to to 100% quota.
Okay. Okay. I got you. Okay. And just so I'm clear, what is the conditional use permit that you have, the one that you have from the county, what does that actually cover?
It's the permit that you have to get from the county that allows us to operate in the area. So it's the same as the BLM record decision based on the county.
And is it conditional on achieving certain milestones? Like, I'm just confused by the workstation.
I know what you're looking for. Conditions associated with using it, if you could just dust emissions and that sort of thing. It's not, it's not uncertain milestones. Don't be confused by the terminology.
Okay. Okay.
It's beautiful to speak.
Yeah. Yeah. Yeah. And, just on the water, What is your, as of today, what is your conceptual thinking in terms of where you think you would access the incremental water needed to go from phase 1 phase 2. I know you need permits, but just where it would come from?
Is it from the basin to the south that we looked at when we were there? Or just where do you think you'll get water from?
The basin from the south is certainly the most prospective area that we have in our sights. And we think that that's a fair, a fair place to go. And I will also say that, you know, we've hired on some, California based water consultants and water experts, both in terms of water, in terms of geohydrology and in terms of water rights. And access to water. So we're busy on multiple fronts.
And we don't really want to discuss it in too much depth, but I would say that we're very encouraged with what we're what we're seeing and what we're finding. And we are pretty happy that we'll get the, the water we need ultimately. So I think we're still pursuing it on multiple fronts. Okay. I
think, Barry, the way to think of it is there's multiple locations on our permitted area that we'll be looking at. There's also some on some private lands. There's also some that are obviously within the, the monument preserve that are interesting and there's other sources. So we're kind of go through list of priorities with the consultants there and attack them sort of in sequence or parallel.
Okay. And you had talked at one point about the possibility that you could swap land with with the government to sort of get land under the monument, let's say, or the preserve to be able to use it to expand your footprint. But now you're not planning that at this point was for phase 2. Is that because you feel that that might be a bit more challenging to do than what you originally thought, or is it just you could fit it all into the footprint? You don't need
We don't need to do shoe horned it all into the into the footprint, which is definitely great. And And that's, and that's really the motivator there, because you start introducing land swaps. You need to introduce more risk into transactions and delays, and we don't need it.
Okay. Okay. And then just my last question, if I can, just the contingency seems kind of a bit low for PFS. What was the rationale for the percentage contingency that you use?
It's 2, 3 components really. One is that the, the plant, all the plant stuff is 12%.
And
the mining equipment is 5%. And the free strip is like normal with operating costs doesn't have a contingency, so it's 0.
Okay, okay. Okay. And then the mining efficiency is lower because it's based on actual quotes. Is that why?
Absolutely, correct.
2 goals. Okay, okay. Okay, that's great. Thanks very much.
You're very welcome, Karen.
Welcome moment. We only have one question from an investor in Europe. Just asking, so how does Capital Mountain fit into your strategy of becoming a a mid tier producer?
Well, I think,
the way to think about it is, you know, our goal is to put together good, scalable minds in good jurisdictions that can produce 100,000 to 300,000 ounces of gold per year, so of some scale. And the first one being Aurizona will be almost 150,000 ounces of annual production, lots of upside and potential longevity to that mine once we get into exploring further. And then Castle Mountain probably fits in even better in a sense that all it'll be a 200,000 ounce producer for give or take, 15, 16 years there. So, if it's really nicely into it, so our profile, ultimately, is a good 300,000 to 400,000 ounces of production without any expansion, which is potentially possible. So I think that does fit us into that mid tier space really nicely.
Okay. It looks like Carrie's back with more questions. So operator, please go ahead.
Yes. Our next question comes from Kerry Smith from Haywood. Please go ahead.
Thank you. Just one more, David. What, these minor permits that you need for phase 1, can you kind of characterize what they are just so I understand, are they just sort of normal course permits that you need as you move ahead with the project or is there anything in there that might be problematic?
We feel there's normal course and One of them, Kerry, is doing a dust emission study to make sure that we're not outside of the limits of our permit. Okay. So it's not something that we, that we, I guess, absolutely have to do, but we do need to make sure that everybody's clear that our new plan does not produce more emissions than what we're allowed in the permit. So we've almost finished with that with that study. And it's, it's fine, which is not surprising because, production rate is a little lower than what was being produced before.
And there is no crushing plant, which is a big source of dust. So it's that sort of thing. It's more belts and braces to make sure that that we're not, overstepping any of the conditions in our existing permits.
Okay. And one last Can you maybe talk about the contingency plan that you might have if the phase 2 permits got delayed by a year or 2? What would you
access to keep running, to keep running phase 1. And we can keep going for quite some time while we, while we sort out any permitting issues. It's obviously not our preferred scenario. We are pushing to make sure that we get things on the schedule that we are putting forward. But it's not something that's going to kill us if, if we don't meet that, that schedule exactly.
Go ahead. I was
going to say, Gary, we, we can go for certainly 7 or 8 years, intentionally longer. So there's certainly a plan in the background if need to be to go on for a period of time.
That would be sort of at that 45,000 ounce a year rate is what it would be for those extra years then?
I think the overall rate is slightly lower. I think it's in that sort of 35 to 40 for the full 8 year period. So it's slightly lower at the end of the life
Okay, okay. Okay, that's great. Thank you very much.
You're welcome.
Our next question comes from David Metalik from Macquarie. Please go ahead.
Yes. Thank you, operator. One more question for me. Just touch on the the expiration, what are the plans to follow-up on East Ridge? Has the program been developed or are the results still being reviewed?
We have a plan, have a budget. So we just need to get our roof and and and I'm at it. So, I mean, it's up to the border, which way they want to go in that, in that sense, they and And in terms of the projects, do we actually need that ore right now? No. We've got 16 years worth of ore.
I think we're okay. But it's always better to have small.
Right. And one more, if I may. Just on the variability of the recoveries, is there much geometallurgical zone donation, or do you expect it to be pretty consistent throughout the life of mine for the run of mine?
We explained to be pretty consistent to now have been asking and getting the feedback from geological group and throwing in the the metallurgists in the mix there to see if there are any any zones or domains, and it all behaves very, very similar. They've they've really had a good, a good go at it.
All right. So that's all the questions we've got today. Just a reminder that the webcast will be archived on our website, so that will include the slide deck and the audio. So give me about 30 minutes, and I'll get that up there. You have any other questions, please don't hesitate to get in touch.
And for now, I'll hand it back over to Christian for closing remarks.
Yes, thanks very much, Rillian. You have you very much for joining us today. As you can tell, we're really excited about the plan and the way forward here with Castle Mountain now being our 2nd cornerstone asset. So, we have a really busy year, that's already gone by to the mid year already. And then going forward for the next 6 months, we expect a lot more news and a lot more excitement here.
Now we have a very defined project that fits into our profile of becoming a mid tier gold producer in the near term. So watch this space and, please join us at our AGM either in person or on the call or webcasts, on 26th July. Thank you very much for joining today.