Good morning, my name is Julie and I will be your conference operator today. At this time I would like to welcome everyone to the conference call to discuss the exciting combination between G Mining Ventures and Reunion Gold. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question-and-answer session. This call is being recorded. I will now turn the conference over to Jesse Louis-Ernsting, G Mining Ventures Vice President Investor Relations. Please go ahead.
Thank you, operator, and thanks to everyone for attending this morning's conference call to discuss the transformational combination between G Mining Ventures and Reunion Gold. The presentation accompanying the conference call is available for viewing through the webcast and for download from our website. We will be making some forward-looking statements during our conference call today, which are subject to several assumptions, risks, and uncertainties as disclosed in each of G Mining and Reunion Gold's public securities filings. Actual results could differ materially from those projected in the forward-looking statements, so please carefully read the disclosures related to forward-looking statements and risk factors in each company's recent filings available online. Our remarks today will also refer to certain non-IFRS financial measures such as, for example, free cash flow and AISC. Various disclosures and limitations with respect to these non-IFRS financial measures are also included in those filings.
Please note all figures are U.S. dollars unless otherwise noted. Joining me today from G Mining, Louis-Pierre Gignac, President and CEO; Dusan Petkovic, Senior VP of Corporate Strategy; from Reunion Gold, we have Rick Howes, CEO, President, and Director. All will be available during the Q&A session of the call. I'll turn the call to Louis-Pierre Gignac to make some opening remarks.
Thank you, Jesse, and good morning to everyone. Today we're thrilled to announce the combination of G Mining Ventures and Reunion Gold. This marks a key milestone in G Mining's journey and an important day in terms of creating a new leading intermediate gold producer with an objective of producing over 500,000 ounces per year from the Americas. In October of 2021, determined to create shareholder value, G Mining acquired the Tocantinzinho project nearly a year after the formation of the company in 2020. A positive feasibility study, non-dilutive project financing, and a formal construction decision soon followed in quick succession over 2022. 19 months later, TZ Construction is 89% complete with commercial production anticipated in the second half of this year. Over this time, our market cap has grown from CAD 136 million to over CAD 1 billion.
The combination between G Mining Ventures and Reunion is a logical, compelling next step on G Mining's journey and creates a leading intermediate producer that checks all the right boxes. G Mining brings to the table both great development capabilities and soon-to-be cash-flowing assets that can fuel growth. Our strong management team has demonstrated a track record of accelerated value creation. The principals behind G Mining have executed four successful mine builds in South America excluding TZ, three of which were in the Guiana Shield region, delivering these on time and on budget using our unique self-perform approach to project development. We are owners first, management second. The Gignac family and other insiders will own a combined 7% of the pro forma company, fully aligning us with fellow shareholders. G Mining's flagship TZ project in Brazil is 89% complete with commercial production expected in the second half of this year.
Once ramped up, TZ is expected to produce on average 200,000 ounces per year over the first five years at an attractive lower quartile AISC. Today we're transforming our portfolio with the acquisition of Oko West. Oko West is one of the highest-quality undeveloped gold projects globally, with significant potential for further resource expansion. From G Mining's deep South American experience, we know that Guyana is a top-tier mining jurisdiction. Having just met President Irfaan Ali of Guyana yesterday, he expressed his support of Guyana's mining industry and especially the expedited development of Oko West. We look forward to creating Guyana's next leading gold producer. Leveraging the anticipated strong free cash flow from TZ, which is expected to total over $700 million over the first four full years of production at current gold prices, Oko West will be well-funded through development.
Additionally, G Mining can leverage our established systems, team, and construction equipment from TZ for the eventual construction of Oko West, reducing development timelines and leading to cost synergies. I will now hand it over to Dusan Petkovic, SVP of Corporate Strategy at G Mining Ventures, who will walk us through the details of the transaction and strategic rationale.
Thank you, Louis-Pierre. On this slide we outline the key details of the transaction. A newly formed parent company, the new GMIN , will acquire all of the issued and outstanding shares of G MIN and Reunion. Concurrently with the transaction, assets in Oko West will be spun out to its existing shareholders as the newly created Gold Explorer, or SpinCo. G MIN and Reunion shareholders will receive common shares of a new parent company, equivalent to Reunion shareholders being issued 0.285 G MIN common shares for each Reunion common share outstanding. The number of common shares issued will be equivalent to the company undergoing a four-to-one share consolidation upon the closing of the transaction. In addition, Reunion shareholders will receive common shares of SpinCo.
That is an estimated consideration of $0.65 per Reunion common share, a 29% premium to Friday's closing price, and a 10-day volume average of both companies, excluding the value for SpinCo. La Mancha, GMIN's largest shareholder, has committed to support with up to $35 million of new equity investment. La Mancha will subscribe for a minimum of $25 million of G MIN common shares, priced at $2.28 per share, being the five-day VWAP from the last close, subject to TSX adjustments. Additionally, La Mancha also intends to purchase up to an additional $10 million of G MIN shares in the open market. G MIN has agreed to temporarily waive La Mancha's standstill obligation, allowing La Mancha to increase its ownership beyond 25% until the closing of the transaction or termination of the subscription agreement.
La Mancha's decision to make purchases of G MIN shares will be at its discretion and will be subject to market conditions, the price of G MIN shares, and applicable securities law and stock exchange requirements. Concurrently, Franco-Nevada will subscribe for $25 million of G MIN common shares at the same pricing as La Mancha's subscription. The transaction is subject to customary court, regulatory, and exchange approvals. The transaction will also require approval of 66 2/3 of Reunion shareholder votes cast and 66 2/3 of G MIN shareholder votes cast, as well as the approval of a simple majority of GMIN's disinterested shareholders. The transaction includes customary non-solicitation covenants, termination fees, and senior officer and director lockups. The board of directors of G MIN and Reunion have unanimously approved the arrangement.
The directors and senior management of Reunion, as well as Reunion's two large shareholders, La Mancha and Dundee Corporation, representing approximately 29% of Reunion's common shares outstanding, have agreed to vote their shares in favor of the proposed transaction. The directors and senior management of G Mining, as well as G Mining's three largest shareholders, La Mancha, Eldorado Gold Corporation, and Franco-Nevada, representing approximately 60% of G Mining's common shares outstanding, have agreed to vote their shares in favor of the proposed transaction. The transaction is expected to close in Q3 of this year, and upon completion of the transaction, excluding the $50 million U.S. equity placement, existing G Mining and Reunion shareholders will own approximately 57% and 43% of the combined company on a fully diluted in-the-money basis. In addition, the combined company and Reunion shareholders will own 19.9% and 80.1% of SpinCo, respectively.
The transaction has robust strategic merits. It combines Reunion's high-potential Oko West project with G Mining's strong balance sheet and unique financial and operational capabilities, significantly de-risking the project's development. This transaction sets the stage for the creation of an Americas-focused leading intermediate gold producer with a robust and expanding production profile. The combined company will be led by a best-in-class management team that is uniquely positioned to drive value creation at Oko West. The Gignac family-owned G Mining Services has executed multiple world-class projects in the Guiana Shield region, on time and on or below budget. From the Omai Gold Mine project in 1994 to Merian Phase II in 2018, the principals of GMS have been continuously involved in the region, generating industry-leading returns for its stakeholders.
The development of Oko West is strategically positioned for success with the goal of minimizing equity dilution, supported by anticipated strong cash flow from TZ during a period of record-high gold prices. Additionally, La Mancha and Franco-Nevada have committed to invest $50 million, with potential for additional $10 million open market purchases of G MIN shares, to ensure the new company's financial stability and accelerate development and early works of Oko West. G MIN is positioned for significant re-rate driven by near-term catalysts and an enhanced profile in the capital market. The company plans to fast-track from technical studies to construction decision on Oko West, building on extensive prior work by Reunion and leveraging the strengths of the G MIN and GMS teams. We believe that successful project execution at TZ and Oko West will command a premium valuation.
We also believe the combination will enhance the combined entity's scale, investor base, trading liquidity, leading to index inclusion opportunities, boosting its growth profile and market presence. G Mining is strengthening its position as an intermediate gold producer focused on the Americas, using its buy, build, and operate strategy to set the stage for future growth and regional consolidation on this newly expanded platform. Oko West is one of the highest-quality undeveloped gold projects globally, and we believe we're just scratching the surface of a significant new gold camp. G Mining can develop this top-tier asset using the anticipated robust free cash flow from TZ. The addition of a high-quality development project like Oko West accelerates our growth trajectory, diversifies our asset base, and enhances shareholder value through increased market presence and financial strength.
This transaction will lead to the next step in executing the strategy of becoming the next intermediate gold producer, leading to further re-rating potential as a repeat or winning formula to develop this project. G Mining is uniquely positioned to accelerate the development of Oko West project toward production, leveraging our South American operational experience and the synergies from TZ's system, infrastructure, equipment, and expertise. The expanded asset base will strengthen G Mining's balance sheet and cash flow to support our continued growth in the Americas through further acquisitions and exposure to exploration discoveries through SpinCo. Now I'd like to turn the call over to Rick Howes, President, Chief Executive Officer, and Director of Reunion Gold, to review the benefits for the Reunion shareholders.
Thanks, Dusan, and good morning, everyone. We firmly believe this transaction offers a compelling opportunity for Reunion shareholders and are very excited by the opportunity to combine G Mining and Reunion. There are a number of points I would like to highlight. First, Reunion shareholders will receive a substantial premium of 29% without accounting for the value of SpinCo. Shareholders will continue to have a significant exposure to Oko West's future operational profile and exploration upside. In addition to 43% ownership in an emerging intermediate gold producer producing profitable ounces in a historically high gold price environment, I believe there is a tremendous future growth trajectory for the combined company, including the substantial exploration upside at both Oko and TZ from their 996 sq km land package.
The development of Oko West will be significantly de-risked from an execution and funding perspective through the anticipated strong cash flow generation from TZ and the strong pro forma balance sheet. Shareholders will participate in a larger, more liquid gold producer with some of the highest quality assets among peers, and therefore greater market presence and investor appeal. They will also benefit from continued control over all Reunion Gold's projects other than Oko West by the well-funded SpinCo. Now I'll turn the call back over to LP to present the new pro forma company.
Thanks, Rick. Our management team's expertise is a cornerstone of our strategy. The management team have experience, capabilities, and a proven track record after having acquired, engineered, fully funded, and constructed almost 90% of Tocantinzinho in under three years. We're now ready to repeat this process with Oko West and, in the process, create significant value for shareholders and the country of Guyana. We will also benefit from the guidance of a pro forma board, which is expected to comprise a total of 10 members, including Louis Sr. as chairman, myself as executive director, and our common director, David Fennell, to be appointed as vice chairman. Throughout the history of G Mining Services, we've believed in and consistently delivered on value creation through flawless project development and execution using a self-perform model.
After successfully building several gold mines for third parties, we're glad to now do it for our shareholders at G Mining Ventures, first through the development of TZ and soon with Oko West. Oko West is poised to become the next great gold mine in Guyana. It is one of the highest-grade open-pittable deposits with an indicated resource of 4.3 million ounces grading two grams per ton. Metallurgical test results have shown good recoveries above 90% across all material types using a conventional and simple flow sheet. Guyana is one of the best mining jurisdictions in the world with a straightforward permitting process and strong government support, putting Oko West on an accelerated timeline for development. The majority of the resource for the open pit is already in the indicated category, and there remains significant exploration upside along strike south of Block 4 and underground in the south and central zones.
Current drilling activity is focused on further resource definition of the underground resource to convert inferred to indicated. The Guiana Shield is known for having some of the largest gold deposits in the world, which have continued to grow over their mine lives. Rosebel has produced 6.1 million ounces over nearly 20 years and still has a resource base larger than the mineral resource estimate just prior to commercial production. Likewise, Merian's current resource base is higher than Newmont's original estimate, replacing depletion of 3.2 million ounces of gold. So far, Reunion has already demonstrated resource growth between its two resource estimates in 2023 and 2024, and we believe will continue to grow but already provides a solid foundation for a robust project. Turning to our Tocantinzinho project, the total project is currently 87% complete, with detailed engineering, procurement, and power line complete.
Construction is 89% complete, with balance of plant and infrastructures completed and commissioned. Total spend to date is $433 million, which is 95% of project total, and are tracking in line with the feasibility study. We're targeting commercial production in the second half of the year, and once in production, TZ will become Brazil's third-largest primary gold mine, producing on average close to 200,000 ounces of gold per year for the first five years, at a time when gold prices are at all-time highs. Our updated feasibility study from February 2022 incorporated the inflationary environment we were in. It contemplates a simple open pit operation using conventional gravity, flotation, and CIL processing at a throughput of 13,000 tons per day. The study was very robust, expecting to produce 175,000 ounces per year over the 10.5-year life of mine.
The estimated development capital of $458 million and an after-tax NPV of over $1 billion at $2,000 gold. The projected strong free cash flow profile from TZ will enable us to accelerate development at Oko West. Our commitment to responsible mining practices and community and government engagement will remain a cornerstone of our business philosophy. We will apply this expertise in the permitting process for Oko West and leverage off the considerable good work completed by the Reunion Gold team. We plan to rapidly advance Oko West with a projected timeline to reach commercial production within approximately three to four years post-acquisition, leveraging existing equipment, infrastructures, and operational synergies.
Along the way, we'll explore value enhancement opportunities such as resource model updates from additional drilling, mine plan optimization to maximize value from concurrent open pit mining and underground mining, early works planning that will allow us to advance rapidly into construction, which will be facilitated by leveraging systems and equipment available from TZ. The combined entity will be well-funded with a healthy cash balance of almost $150 million, which includes investments from La Mancha and Franco-Nevada and proceeds from in-the-money warrants. Additionally, the development of Oko West will be underpinned by the robust Free Cash Flow anticipated from Tocantinzinho, which will mean minimal equity dilution on a go-forward basis. The combination establishes a pro forma resource base exceeding 6.4 million ounces in the Measured and Indicated category and 1.7 million ounces in the Inferred category, with additional exploration upside from both assets.
With an objective to potentially produce approximately 500,000 ounces per year, the combined company can be among the top producers in the region. I will now hand it back to Dusan to conclude with capital markets rationale.
As a pro forma $1.5 billion market cap company, we will immediately have enhanced scale, improved market visibility, and relevance. This transaction is transformational for both G Mining and Reunion Gold as the combination significantly de-risks Oko West's development. Leveraging G Mining's operational prowess and financial strength ensures its value is fully realized. With the combination, we anticipate a continued re-rating of our stock as we execute on a multitude of near-term value-enhancing catalysts, such as commercial production of TZ, ramp-up to nameplate capacity, stages of development and construction at Oko West, all while continuing to demonstrate operational and financial discipline. The combined company will be supported by some of the leading mining investors as shareholders and enjoy unparalleled research coverage from 14 trusted institutions. The enhanced capital markets presence will also broaden our investor appeal, which we believe will lead to increased trading liquidity and potential index inclusion.
In conclusion, the combination sets the stage for both G Mining Ventures and Reunion Gold to become a leading intermediate gold producer. With significant production scale, diversified asset base, and strong financial positioning, one with all of the attributes needed to continue delivering pure leading shareholder returns. We expect to complete this transaction by mid-2024, subject to shareholder and regulatory approvals. Further details and updates will be made available through our press releases and on our website. That concludes our formal presentation. I'll now turn the call back to the operator to open the call for your questions.
Thank you. We will now open the floor for questions. If you'd like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you'd like to withdraw your question, press star two. Again, to ask a question, press star one. Your first question comes from Matthew Murphy from Jefferies. Please go ahead.
Hi. I haven't modeled Oko West before, and just looking through the technical report, the pit model was based on 16,000 or 17,000 tons of throughput per day. Is that the sort of number you're thinking about?
Yeah. In terms of the number, we're looking at something a processing rate somewhere between 6 million-7 million tons per annum. So I think that converts to what you're talking about on a ton per day.
Yeah. Okay. And how did you go about thinking on valuation on this deal? Do you have any sense of what kind of price to NAV ?
Obviously, I mean, this was subject to a lot of negotiation between the two companies. But yeah, we believe that this deal will be accretive to shareholders and especially to all shareholders on a long-term basis as well.
Okay. Thank you.
Your next question comes from Don MacLean from Paradigm. Please go ahead.
Well, good morning, guys, and congratulations. It's an ideal combination. I guess I've been a proponent of it for several quarters, sometimes getting myself in a bit of trouble, but it makes for a very attractive intermediate up-and-coming. Just, though, from a timing perspective, Rick, maybe can you just give us a bit of color in terms of what the Reunion board's thinking was proceeding with this transaction just before the PEA was to be released? Generally, we see these things take place after a PEA that brings all shareholders and observers onto the same playing field, but we don't have a technical PEA at this point.
Sure, Don. Morning to you, and thank you for that compliment. Yeah, I think ultimately you cannot control exactly when these opportunities like this one come your way. We did early on form a special committee of independent directors and disinterested directors of the board, both considered this and unanimously determined the transaction was in our best interest of Reunion. And our shareholders will own 43% of this combined company, so we took comfort in the fact there's a significant ongoing participation in the de-risking and advancement at Oko West.
Yeah. Yeah. I guess in the good old days, a PEA that had really good news would have resulted in the share price going up. And I guess in the last couple of years, we've actually seen the opposite take place. So as an outside observer's perspective, you never know exactly how the market will respond to a PEA. It's just helpful to have all the information before one makes one's decision, but it is an exceptional combination. And maybe just one last question because presumably this puts Reunion in play theoretically anyways. Can you give us a sense of what the breakup fee would be?
Yeah. The breakup fee is 3.5% of the equity value of this transaction.
Okay. Quite normal. Okay. Well, congratulations, guys. I think it'll make for an outstanding intermediate.
Thank you, Don.
There are no further questions at this time. I will turn the call back over to the presenters for closing remarks.
Okay. Sounds like there are no additional questions. Thank you to everyone for joining today's call and for your insightful questions. We're excited about the opportunity this combination presents and look forward to sharing our progress in the coming months. For further inquiries, please contact me or Doug, and a replay of this call will be available on the website shortly.
Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines.