Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold Corporate Update regarding pro forma guidance. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. If you are participating through the webcast, you can submit a question in writing by using the text box in the lower left corner of the webcast frame. I would now like to turn the conference over to Rhylin Bailie, Vice President, Investor Relations for Equinox Gold. Please go ahead.
Thank you, operator. Thank you everybody for joining us this morning. We will, of course, be making a number of forward-looking statements today, so please do visit Equinox Gold's website, Calibre's website, and our various continuous disclosure documents that are filed on SEDAR+ and on EDGAR. I should note that all of the dollar figures that we reference today will be in United States dollars, unless otherwise noted. I will now turn the call over to Equinox Gold's President and CEO, Greg Smith.
Thanks, Rhylin, and good morning, everyone, and thanks for joining us on the call today. With me today on the call are Darren Hall, who's currently the President and CEO of Calibre Mining; Ryan King, who's the SVP Corporate Development and Investor Relations at Calibre; and then Rhylin Bailie, VP of Investor Relations at Equinox Gold. As we reported yesterday, we are approaching the completion of our business combination with Calibre Mining. While the transaction has not yet closed, we have been working closely with the Calibre team on planning for integration of the two companies. Darren's been spending time at our mine sites and with our teams, and I'm looking forward to having Darren join as President and Chief Operating Officer of the combined company on closing.
And just for clarity, for everyone on the call, where Darren and I refer to "we" or "our," we are talking about Equinox Gold today and then the merged company post-closing, but until the transaction is officially closed, the two companies remain independently managed. So with the merger almost complete, we are focused on entering our next phase at Equinox Gold with a stronger, more diversified portfolio of assets anchored by two high quality, long-life gold mines in Canada. Ross Beaty will remain chair of the board, I will continue as CEO, and as I said earlier, Darren will step into the President and Chief Operating Officer role. Darren will also be bringing over his proven operating team from Calibre.
Yesterday, we also issued pro forma consolidated 2025 guidance for the combined company of between 785,000 and 915,000 ounces of gold at all-in sustaining costs of $1,800-$1,900 per ounce. These numbers exclude production and cost from the Los Filos mine, and also from the Valentine Gold Mine, which remains on track to begin production in Q3 of this year. On a standalone basis and excluding any production from Calibre assets, we expect Q2 production at Equinox of 135,000-145,000 ounces of gold, of which 45,000-50,000 ounces is from the Greenstone Gold Mine. On closing of the merger, we expect the combined company to have well over $350 million of cash.
Combined with robust production and operating cash flow through the second half of the year, we are in excellent financial position to complete the construction of the Valentine Gold Mine, while continuing to focus on reducing our leverage. With that, I'll turn it over to Darren to provide some further details and insights on what you can expect for the remainder of 2025. Darren?
Thanks, Greg. Turning to slide four. Firstly, you know, I see significant opportunity to create shareholder value across the consolidated portfolio of assets upon closing the transaction, which as Greg mentioned, is expected before the end of the month. I believe a reset of short-term production and cost expectations for the Equinox assets is necessary to establish a credible foundation to enable long-term shareholder value creation.
The revised guidance primarily reflects a slower than planned ramp-up at Greenstone, which has faced some challenges, including lower loading fleet availability, which has impacted mining rates and delayed access to higher grade. Year to date, 2025 grades have been below expectations, in part due to higher than anticipated dilutions and issues in and around voids from historical operations. Milling rates and gold recoveries are improving, but are lower than initially forecast.
As a result, Greenstone guidance has been revised to 220,000-260,000 ounces at an all-in sustaining cost of $1,700-$1,800 per ounce. Integration planning is well underway, and we have, and will continue to, deploy additional equipment and operational expertise to support Greenstone and the consolidated portfolio. This includes the relocation of David Schummer, Calibre's Chief Operating Officer, to Greenstone.
A comprehensive plan to address the ramp-up challenges will ensure we are aligned and delivering into clearly defined expectations. With the detailed improvement and delivery plan well underway, we are seeing positive momentum in mining rates, with May performance 25% higher than Q1. We expect continued steady quarter-over-quarter improvements at Greenstone, with higher grades and stronger production in the second half of the year.
At the Valentine Gold Mine in Newfoundland, commissioning is progressing well, and we remain on schedule for first gold by the end of the third quarter. With an experienced operating end team in place, who have significant commissioning experience, we are confident in a smooth and efficient ramp-up.
It is also important to note that production from the Calibre assets remains strong, and we anticipate that another 70,000+ ounce quarter, positioning us well to deliver into the higher end of production guidance. Looking to the future, our focus is clear. Operational excellence and disciplined execution will be the driving force as we work to unlock the full value of our combined assets. With that, Greg and I are happy to take questions. Thank you, Rhylin.
Thank you. Operator, can you please remind everybody how to ask a question?
Certainly. Once again, to join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. If you are participating through the webcast, you can submit a question in writing by using the text box in the lower left corner of the webcast frame. We will pause for a moment as callers join the queue.
Thank you. While people are joining, I'll take a few questions from online. First question that came in was: how does the reduced production guidance affect the pay down of debt? Do you need to do, raise any equity or increase your borrowing?
Well, I can take that, and as I said earlier in the call, we're actually closing with a fairly meaningful cash position in the company. And even with the revision to our guidance, we've got, you know, very robust production and cash flow expected in the back half of the year. So, you know, combined, you're in that sort of north of $1 billion of liquidity in the system, and that gives us plenty of flexibility to complete the construction of Valentine, and also continue to focus on reducing our leverage. We have been continuing to deliver into our gold prepaid, so we have been continuing to satisfy those liabilities, and we intend to continue with that as we go through the year. So no, no need for additional financing.
Perfect. Thank you. Operator, can you please take some questions from the phone?
Certainly. The first question comes from Anita Soni with CIBC. Please go ahead.
Hi, good morning. Thanks for taking my questions. So firstly, can we talk about the stockpile level and what that is currently? So the average grade, the total tons, and then sort of the higher grade bucket, and what that, tons and grade on that.
Darren, do you have that detail? I don't have that detail here.
No. No, sorry, Anita. No, I don't have that information in front of us, but happy to get on a call and walk through those specifics in terms of inventory. You know, what I can comment on, though, is that there's a significant inventory in front of the primary crusher. There's no shortage of available material.
Our focus, really, at this point, is to get mining performance to a point where we're seeing the material movement, which will then allow the folks to focus on quality and segregation to minimize dilution and losses in and around the voids. That's really the focus. It's a bit of a self-fulfilling prophecy here, that as we've fallen behind on material movement, it drives a focus on moving tons, and it's probably been a little bit distractive from the quality issue.
I think as we look through the balance of the year, we'll see grade improve as a consequence of delivering into expectations on material movement, which allow people to focus in on quality.
Okay, so moving to the equipment issues, when you're referring to loading equipment issues, you're just talking specifically about the shovels, right? Not the haul trucks as well, or?
Yeah, no, it's, it's really about, you know, the a rate determining step here has been about loader availability leading into. We've seen improvements in that performance recently, but we also have a fifth shovel, which will be commissioned here by the end of the month, which will provide a significant level of spinning reserve to be able to offset any further availability issues, if there are.
We're not anticipating, so we'll have that, that how do you say? The resilience, if you will, in terms of the loading fleet. The focus specifically now that the Davids have, when I say the Davids, it's Schumer and Newhook, and Simon, the mine manager, is focused on how do we ensure that we're getting the most material moved, and that's focusing on trucking fleets.
Pretty quickly, the bottleneck is gonna move from loading to trucking, and we're implementing double-side loading on the shovel units. We're augmenting with additional auxiliary support equipment to be able to maintain a level of quality in roads and loading positions so we can see, you know, great speeds, reduced operating delays, which will result in more material moved. So no, I mean, I think we've broken the back of the historical loading equipment availabilities, and additionally, with the commitment that Equinox have made to the additional loading capacity, we'll have plenty of reserves. So that issue is well behind us.
Okay, so you feel like the loading issue, the shovels are not the issue right now, but now it moves to the haul trucks. And in terms of the equipment-
Well, it's not so much the issue moves to the haul trucks, the opportunity moves. It's that, you know, what was driving the rate to separate was loading equipment availability. Through the back of that, we have additional capacity. Now, the opportunity that sits in front of us to be able to exceed what was anticipated for the level of spend is to be more productive with the trucking fleet, which will, you know, unlock significant amount of value as we go forward.
Okay. So as we move to the trucking fleet then, what are the key issues in terms of the trucking fleet? So is it downtime in terms of availability? Are they going through more maintenance than expected? Are they just waiting around with the shovels? Or like, what's the key driver there?
Yeah, and it's less an issue than it is an opportunity. There's not a problem with the quality of the fleet. This is about how the tool is being utilized. So what we're now very much focused in on is eliminating wasted time. So this is looking at operating delays. This is making everything more efficient by double-side loading, by increasing speeds, which requires having good floor conditions, which is a level of quality in and around drill and blast, bench control, having support equipment around shovels so that, you know, you can move everything much quicker. That's really the issue. So it's not about an issue with the trucks, it's about how you utilize them and set up the environment that allows for that fleet to be as productive as it can.
So, you know, we've deployed additional resources that are specifically focused on this. There's two gentlemen who have arrived in the last month that are specifically focused on this. They're folks that, that Schumer and I have worked with for the last 30-40 years, that are very, very experienced in this, to be able to help Simon and the team reduce those operating delays, increase, increase those level of efficiencies, which will drive volume for a similar level of spend, which will be very accretive from a cost perspective.
Okay, I had a number of questions, so let me just list off a few of these, and my apologies to the other analysts, but hopefully some of these answers will help other people as well. On the unit costs, I'm just trying to understand the longer term value for Greenstone. And I... You know, one of the things that has been has caught my eye over the last few quarters is that the mining costs have increased, you know, as mining continues, which is not the norm. I'm just trying to understand, you know, how these mining costs—like, what do you think the longer term mining costs are?
Are you confident in the prior technical report and the numbers that they have there, or do you think those mining costs should increase? Similar, similar question for the processing costs. You know, they went from $7.40 in Q3, and the last quarter came up to $15 a ton, US. So, just trying to get a handle on what the longer term value proposition on the cost side is, given that you just, you know, increased the cost guidance this year by 30%.
Yeah, and I-
This is from Greg.
Sorry, go on, Greg.
Oh, Darren and I are not in the same room, so we can't, we can't, like, make eye contact to see who's gonna answer first. Why don't I, I'll just make a couple of general comments, Darren, you can jump in if that works. So Anita, one of the things that on a unit cost basis that you'll see in the context of a ramp up like this is that, you know, we've through the back end of last year and into Q1 here increased the fleet size, increased the headcount, and but did not see a commensurate increase in the material movement, in part because of the availability issues that on the loaders and the shovels that Darren had mentioned.
You're ramped up to be at full capacity, but you're not yet at full capacity, and that has an effect on the per unit costs. On a like, sort of overall cost basis, Greenstone is actually tracking quite well. Processing, a lot of the costs or incremental costs that we saw earlier this year and probably will still be experiencing in the near term, has been on really working to dial in the processing plant.
We've had a number of different groups coming and helping us. We've had more downtime than we anticipated, resulting in more maintenance and lower throughput. On a per unit cost, you get the same issue, where the overall cost has maybe some minor increases, but it really reflects on a per unit cost.
I'll stop there, Darren, and you can jump in there.
No, no, Greg, I think you covered it. But I think, you know, if we think about mining, and I guess I'll differentiate in my simple mind between spend, Anita, and cost. You know, spend is the amount of money that goes out the door, and then we unitize it into a cost. You know, if we look at the cost to run a truck or the spend to run a truck, right? We have an operator, we pay for the operator. Whether that truck is or isn't productive, it costs us the same for the operator. So the fixed cost, cost portion of those costs is significant. So looking at eliminating waste and improving efficiencies will lower our unit cost.
So I'm comfortable that, you know, what we have seen historically is very much on the end member of what we will see going forward in terms of unit costs. That's on the mining piece. There's incremental costs associated with moving more material. As you, as you blow more stuff up, you're gonna consume more, more explosives, for example, but you don't have any more drills operating, right? So the, the variable portion of the cost is very, very low.
On the process end, I think Greg covered it, right? Is, is that, you know, the, the cost, the plant runs, costs the least to run when it's running, right? When it's down, that's when you spend the most money. So as Corey and the team work through reliability in the process plant and we see less down, we will see unit cost per ton favorably impacted as well.
That's what we're seeing. As we continue to work through the gremlins, get consistent and reliable tonnage through the plant, it will positively impact those unit costs. So I think that, you know, we're at, in the very early stage of what is a very long life Tier one asset, and we're very—we're very, as I say, embryonic, if you will, in terms of our cost profile.
I think that looking too critically at the last couple of quarters of costs and trying to then foreshadow what it means for the long term is absolutely premature in my mind. So I look at the opportunity that sits there from getting more volume for the same spend, will positively impact both mining and processing costs, and then the grade will then drive the cost per ounce.
I'm gonna wrap with one last question and, then leave it for other analysts and get back in the queue. But could you just tell us what your guidance for, to the 220-260, I think it is, what, like, the key drivers? So what's the grade you're assuming for that on average for the year, I guess, is the biggest question in my mind. What's the average recovery rate, and what do you think, you know, the mill is going to get to average in Q4? So we can try to figure out what a ramp would look like in terms of the main drivers.
Okay.
Yeah.
Okay. And what we've done is that, you know, we believe that looking forward in H2, you know, we've taken a very deliverable look at setting guidance from a physical perspective. To be into that midpoint of guidance and around the 240, we would anticipate grades in the, you know, approximately the 1.2 grams per tonne in Q3 to 1.4 in Q4. So that's significantly lower than what would have been foreshadowed before, because we don't want to disappoint, right? So from a grade perspective, looking forward for the balance of the year, it's in that 1.2-1.4 type range between, you know, from basically Q3 to Q4.
So, the mill throughput is forecast to be in that, you know, 23,000-24,000 tons per day or thereabout, for the balance of the year, right? It ramps up during the course of the year, but there is a kind of a trend up. You know, recoveries are basically consistent with what we've seen in the last couple of months as well, going forward. So, you know, again, I think what we've done is taken a prudent reset to creating an expectation that we know we can deliver into, so we can regain confidence in the product, which is Greenstone going forward.
So then, just the last follow-up there was, you said the last couple of months. We don't know what the last couple of months are. Could you clarify what the recovery rates have been in the last couple of months?
Yeah, better than, better than Q1. And in that, you know, 83% ±85% range, right? Creeping up as we go forward.
Okay. Thank you. Thanks for answering my questions.
Yeah, no problem.
Thank you. The next question comes from Mohamed Sidibé with National Bank Financial. Please go ahead.
Thanks, Greg and Darren, for taking my question. I guess maybe shifting the focus a little bit to Brazil, with where you have also pretty high driver, an increase in total cash, that's in AISC there, but the production guidance was overall trimmed by, you know, less than 5%. Or could you maybe help us understand what are the key drivers of the higher cash costs in AISC there?
I'll make a general comment again, and then Darren can jump in. I mean, excuse me, in all cases, obviously the change in the denominator being the gold production, has an outsized effect on the per unit cost, right? The cost per ounce. So that's obviously part of it. That makes up a big piece of it. We did, in Brazil overall, look at cash costs being a little higher than anticipated, sub 10%, but higher than anticipated. And then looked at just introducing a bit of a buffer.
We are dealing with a few things at Fazenda, for example, where we're gonna increase some of the stripping, and this is to manage around some of the voids in the new open pit. And then a few other areas in Brazil where, at Aurizona and where they're increasing some of the material movement, this year. So it's not, not this, you know, sort of fundamental change. The denominator has the biggest effect, and then it's sort of one-off issues that we're taking a provision for this year as we move into the back half of the year. Darren, anything else?
No, nothing to add to, Greg. I mean, and the other thing I'd layer on here, Mohamed is, is that, you know, we've got an asset base that has always set itself up for, you know, kind of, you know, higher end levels of performance. And with that, it drives the behavior within the organization. We have people absolutely focused on delivering into that. But we thought prudent, you know, Greg and I have discussed over the last couple of months as we worked through this, is that recalibrating those expectations into things that allow people to be able to deliver into, will allow them to develop a, a more success-based culture. And nothing breeds success like success.
So if we can start to have them have some wins they feel confident in, it makes them, it allows them to make intelligent risks and make intelligent decisions in the business about going forward. So, you know, I think that's a little bit of this as well, is that not just reframing the product externally, but also taking a little bit of the heat out, that allows people to then, you know, not worry about not delivering into, even though they're absolutely focused on it, is that giving them a little bit of cushion will allow them to actually perform better, if that makes some semblance of sense.
Thanks for that color, and I guess I'll shift gear to back to Greenstone, and just, I think you mentioned that in Q2 or in May, you're seeing a 25% improvement in the mining rates. But as you exit the year, is there a target that you have in mind that we should think about as analysts in order to model in terms of mining rates exiting 2025?
Yeah. I mean, again, if I think about it, you know, if we look at our budgeted rates were around the 70+ million tonnes a year, you know, I think that our installed capacity, so I'm not guiding the number, but I think about, you know, what I would feel is a good result, is probably around 225,000 tonnes a day. So that would put us at about, you know, 80-odd million tonnes a year. I think that's kind of a very comfortable position to hang our head in terms of deliverability, so I would like to see us at that annualized rate or the capability by the end of the year.
Now, there's some things we need to consider in that, and making sure that the volume that we can move is accretive, that we maintain within our permit conditions and those sort of things. But I think the installed capacity of the fleet, Mohamed, should be in that, you know, 225,000 tons a day.
Great. Thanks a lot, Darren. And then just final question, I guess, on Valentine. I know you didn't provide a guidance for that one, but just looking at the ramp up there, I know the initial few years of the mine plan are expected to be higher grade than the reserve grade. And I know in your Q1 call, you mentioned achieving in-pit capacity by Q1 2026. Could you maybe give us some color on one, when you expect to get to nameplate capacity there, and how we should think about grade? And then ultimately, you know, any color you can provide on the cost front, given what we've just seen at Greenstone? Thank you.
Yeah, no, absolutely. And, you know, happy to have a more in-depth discussion to bring you up to speed as well with Valentine, given that I don't believe you've covered it historically, or Calibre.
Right.
So happy to do that with you, Mohamed, at your discretion. But no, comfortable in our ability to deliver into metal by the end of Q3. We'll see ore going through the plant in the latter part of August. So, and that's really the key here, is to get tons through the plant. Once tons are through the plant, then, you know, we can produce a button or a bar of gold, you know, whenever we like, for the better part. So we're comfortable with that. In terms of ramp up, you know, we've got a quality team in place, that they've been in place now for over a year, led by Jason Cyr at Valentine.
A great team of people who, you know, uniquely all have a level of commissioning experience as well. And what we have seen is with the additional time that's been provided by the delays in delivery, has given the operating team more time to get prepared for operational readiness to ensure that we have, you know, we're in a good position to have a nice, smooth ramp up. We've also factored that in terms of redundancy and pumps and things within the designs as well, which has driven into some of the capital that we've allowed for.
So I think we're setting ourselves up for longer term success. Coming into grade, we provided updates for both. There's two pits that provide the majority of the ore in the short term, it's Leprechaun and Marathon. We provided grade control updates to both of those, one in February of last year and the other one in May.
Leprechaun showed an 18% positivity with respect to grade against the reserve model. Marathon, for a fixed volume, which is what we are in a mill-constrained environment, it was actually 45% higher grade. So, you know, as we see it today, we're comfortable with the grade.
There is no absolute, obviously, until you put it through the mill, but all indications are that we don't see an exposure with respect to be able to deliver into the expectations on grade. Q4 will be, you know, will be a ramp up period. Q1 will continue into the ramp up period, but I would expect to be, you know, close to nameplate by the end of the first quarter, given, again, a relatively simple design. We've got quality equipment being put in place.
If you look at the press release, there's a link there you might wanna have a look at, where we commissioned the primary crusher here a couple of weeks ago. We've inched the mills. We'll be able to spin the mills here by the end of June. In terms of the motors, we can't put them under—we can't spin the shells until we have load, so that'll happen in August. But no, all of those things are leading to a you know, a pretty comfortable ramp up, I believe.
Great. Thanks for that, Colin.
Thank you. The next question comes from Jeremy Hoy with Canaccord Genuity. Please go ahead.
Hi, good morning, Darren. Thanks for taking my questions. On Greenstone, the press release, in talking about the grades, said the lower grade was in part due to the dilution, and then here on the call you mentioned the voids. Can you comment on reconciliation so far, appreciating that it is early in the mine life?
Yeah, no, and I think that, you know, again, the reason we talk about those things. And it's kind of a, there's two parts to this, Jeremy. The first one being is if you're falling behind on material movement, what it drives you to, it drives you to quantity versus quality. So we've probably seen the team focus on, arguably, what is the right thing to do is that when you're 25% historically behind on material movement, you're focused on getting as many tons as you moved as you possibly can. As you do that, you fall away from a little bit of the focus on quality. So we've probably seen additional dilution associated with trying to get tons moved rather than the quality of the tons, one.
Secondly, as you're trying to push volumes, your ability to manage in and around those voids becomes more problematic as well. So you end up moving material around a lot through blasting, which means you end up with ore losses as well into the voids. So once you end up with what would be, you know, kind of reasonable grade material, and you blow it up and you lose it into a void, it basically becomes, you know, lower grade or even waste by the time it dilutes its way out. Your ability to be able to pick that material up again becomes significantly reduced. So that's where I kind of allude to the, you know, as we become more efficient in our mining practices, what allow us to do is then focus on the quality issues as well.
So that's the interplay there between volume mined and voids. So yeah, that in essence is what we're focused on, and as we continue to mine more material, we'll see that positively impact grade as well, because we'll be able to focus on quality.
... Okay, yeah, that's clear. And, yeah, I mean, I know there was the issue, mining that island initially early on, which you're now through, when there was the winter maintenance issues with the shovels, and so, sounds like there's a bit of catch-up going on. As for how the mined material is reconciling to the resource, are you able to provide any comment there?
Yeah, no, it's underperforming with respect to the resource model because of the issues I just mentioned, right? If we were reconciling okay, I mean, obviously the plans and the forecasts that would've been historically presented were based on those estimates. We have been falling short with respect to the estimates because of the way we've been interacting with the estimate, right?
As we go through and we better understand what our dilution, what our recoveries, and in terms of recoveries, in terms of ore losses in and around, we'll be able to refresh and revise what that look-ahead grade looks like. But, you know, is there a material issue from a fundamental floor perspective? No. Is there always gonna be challenges with respect to grade? Yeah.
As we work through the ramp up over the next 6-12 months, yeah, we will continue to develop a better level of understanding in and around the ore body model. But I'm not particularly concerned about the ability to be able to deliver into the longer term average grade of what Greenstone has represented.
Okay. Yeah, no, I appreciate that color. And so I guess we could expect to see slightly higher tons at slightly lower grade, just attributable to that dilution and additional material taken around the voids, as you said.
Yeah, I think so. You know, again, if yes, I think it's, in short, would be a, you know, reasonable assumption if I was coming into this unknown looking at it, is that, you know, looking at on average, average is a safe way to look at it, because then there's only upside in terms of whether we mine more material and can operate higher on the grade change curve and realize those opportunities. It presents us with flexibility and optionality, as opposed to always running on that, on that to, you know, have to deliver into expectations.
Understood. Okay, thank you. And you do remain confident in the resource going forward?
Yeah. Yeah, there's always gonna be dips and weaves as we go through. But, you know, again, it's a long life asset. There's lots of potential here. You know, it's gonna be a long life, high quality asset. You know, and again, being able to estimate so early in, ±10%-15% is, you know, it's too early to tell, right?
No, totally understand. Okay, thank you. Changing gears a little bit, you've left Los Filos out of 2025 guidance and understand that it is in development status. Is there any update or could we expect to hear an update anytime on, you know, progress in discussions with the communities there?
I'll jump in on that one. Jeremy, it's Greg speaking. No, our comments that we made at the last quarter are still valid. You know, we are in a suspension of operations at Los Filos. Certainly, you know, our preference is to ultimately have an agreement with all three of the local communities. We've got an agreement with two of them now. But, I wouldn't expect any necessarily any movement on that in the near term, and certainly would not include production from Los Filos in your near-term forecast.
Okay. No, understood. Very clear. Thanks, Greg. Thanks, Darren, appreciate you taking my questions.
Thanks, Jeremy. I've got lots of questions from online that I think have been answered in some form, but one that hasn't come up yet is, what is driving the increase in growth CapEx at Greenstone?
Oh, I can... I'll take the first cut at that, Darren. A couple things that are included in there, and the primary one being that we have added, for this year, the construction or the commencement of construction of the Ontario Provincial Police police department. That initially was going to be something that would have been done in cooperation with third parties. Because of the timeframe that is required to get that complete in order to continue mining on our existing mine plan, we need to get started sooner than those negotiations were able to be completed. So, the company will step in, fund that construction.
It's likely that in, you know, the next year or so, that building could be sold, but we need to get on with the replacement construction ASAP. So that's, that's the primary driver of that increase at Greenstone. We've also added in some of the costs associated with the increase in in rolling stock, and that shovel in particular is in there now as well.
Perfect. Operator, can you please go back to the phone line?
Sure. The next question comes from Anita Soni with CIBC. Please go ahead.
I had that growth capital question, but that replacement for the OPP unit, how much is that? Sorry, I recall that it... Maybe this is a really old number or I'm wrong, but I thought it was like $11 million.
Yeah, we've added $25 million into the budget this year for that, Anita.
Then, just in terms of, another question, I, I think the, on the throughput rates, you were, Darren, you were talking about 22 to 23 to 24 K ton per day. What's the expectation for 2026 in terms of like... I just wanna confirm that we are still targeting a 27 K ton per day plant?
Yeah, no, I think that's where we wanna end up. I mean, you know, again, if we, we're gonna be a sliding scale as we go through the year, but I think that, you know, given that, you know, Corey and the team are gonna find little gremlins and things they need to fix, and this is a, a large volume plant, is that, you know, ramping up to 25,000 tons a day through the course of this year is probably reasonable.
And that looking at, you know, what it looks like longer term, I think where there's no fundamental design flaws with respect to, what's required, I mean, we've allowed for some capital. We're starting to see very good indications of things like tailings pump capacities. We've got some capital included for those sort of things, which is a very good indication.
There's probably $8 million in what we'll call mod squad related activity as well, so that we can get into some of the learnings out of the last winter, to make sure that we can winterize and put in place a reliable level of reliability, if you will, as well. So I think all of those things will lead us to that 27,000 tons a day.
You know, again, if we're gonna recalibrate expectations, let's make sure that we allow ourselves a level of prudent reserve. And doesn't mean that internally we're focused on this. This is, remember, our external voice here, not our internal voice. You know, we're absolutely unrelenting on doing everything we possibly can to extract as much value as we can from this asset.
You know, again, the whole context of this call today and what we're doing is recalibrating expectations, so we can get your confidence in our ability to deliver into expectations.
Yeah, I guess my questions are driving at, you know, the outlook, you know, beyond this year. You've given us some parameters for this year, but as we... You know, in 2026, there was, you know, a technical report that was delivered on October 1, 2024, so, about, you know, nine months ago, that had 450,000 ounces for 2026. And so I'm trying to frame, you know, what does next year look like? And, and if we're going from, you know, 84% recovery rates to, you know, 91% recovery rate in 2026 and 1.6 gram per ton material in the mill, are those reasonable expectations for 2026?
Yeah, no, I think that, you know, as. Yeah, it's still early in the life. As we go through and we continue to learn and we continue to understand what that 2026, 2027, and longer term looks like, we'll be absolutely transparent in providing those updates as we go through. But, to sit here today and foreshadow that, it would be premature. And, you know, again, we talked a little bit last evening about the tech report in 2026, and, you know, again, that's a very aggressive estimate, at 460,000 ounces, there's no doubt.
So, you know, but you look at, even if you consider an average life of mine, 10 million ton process, and you take an average reserve grade, which we feel comfortable in, at a recovery of, you know, 86%-87% even, somewhat being conservative, it still provides a very robust, production profile there, and the amount of cash that's gonna be generated is significant.
So average reserve grade, 10 million tons per annum, 86% recovery rate is what you're sort of ballparking? Not necessarily-
No, no, I'm just... No, I'm not, I'm not, I'm not, I'm not foreshadowing anything.
Okay.
I'm saying if you use those tech report bases and put it in there as a- and just said on average over the life-
Yeah.
that gives you an arguably conservative base in the short term. That's all I'm saying, right?
Okay.
You know, again, as we get more granularity into what mine sequencing delivers and how we can accelerate grade and do those sort of things, we'll absolutely provide that clarity. And whether that be vis-a-vis or an updated technical report, or whether it be just through these sort of conversations, you know, we'll make sure there's an absolute level of transparency and confidence in those estimates.
Okay. Thank you, Darren. Thanks for clarifying that.
Yep, appreciate it. Thank you.
One more amalgamation of questions from online here. Lots of questions about capital allocation priorities with gold prices where they are, and also about portfolio optimization post-transaction close.
Well, I can start, I guess, with that question. I mean, we're gonna focus on getting the transaction closed here first. The combined company will have a fairly large asset base in terms of the quantity of mines in the jurisdictions that we have. And all I'd say is, both Calibre and Equinox in the past have been commercial around both acquisitions and divestments when it makes sense, and I think that that's something that will always be the case for this company. So, you know, that's always something that will be top of mind for us, what makes sense to optimize our portfolio going forward.
In terms of capital allocation, I think it's fair to say that in the very near term, the focus is on getting Valentine construction completed and wrapped up, and also completing the ramp-up of Greenstone. We've got a number of other assets in the portfolio that represent some future growth, including our Castle Mountain deposit or project in California, the Aurizona Underground, and others. So, you know, we always look at what makes the most sense, what's gonna provide the highest return. Obviously, focusing on our largest, longest life assets is gonna be a priority for the company. Darren, anything to add to that?
No, Greg, I think you covered it well.
All right, perfect. All the questions that came in online, I think they were all answered during the call. If they weren't for some reason, either Ryan or I will get back to you by email today. Greg and Darren, do you have any closing remarks?
You know, from my perspective, I just appreciate everyone joining the call today and would reiterate that we are available for further discussions. You can get in touch with Rhylin at Equinox or Ryan King at Calibre. Of course, Darren and I are also available. Darren, anything to add on your end?
No, no, just again, thanks for everyone taking the time, and, you know, please, if there's any questions, don't be shy. Reach out and, you know, we'll be glad to address the questions. We, you know, we'll regularly contact and interact and provide people with updates to this, but, please, don't let any ambiguity creep into the system here as we go forward. It's an exciting time for the combined entity, and, you know, I'm here to support, and, Greg and I are absolutely focused on surfacing as much shareholder value as we can through share price escalation, so.
Could not agree more.
Perfect. With that, we'll wrap it up. Please, operator, can you please conclude the call?
Certainly. This brings to a close today's conference call. Thank you for participating. You may now disconnect your line.