Right now we're basically in the peak of construction. We have about 2,000 people working on site, and basically we're getting close to the 12-month mark to achieving first gold. To get there, really the critical path is the grinding circuit, which we expect to receive and do the installation to be able to start commissioning in August, targeting first gold by the end of September. So that's really the remaining critical path that we have. We've made great progress on all the infrastructure areas. The power plant essentially has all the gensets in the powerhouse now. So we're progressing with the construction of the power plant to energize the site. So things are tracking nicely, and a lot of the project is de-risked as well from a cost point of view, with about 65% of the project committed at this point.
Based on the construction going on right now, are you still exploring in the area? Are you still looking to grow resources and reserves? Can you give a little bit of color on that?
Basically this year we committed to a strong exploration program across our three assets. Oko West has been a project that's been delivering great results from the exploration point of view. Now with the acquisition of G2 Goldfields, the focus has shifted to completing the infill drilling on the Ghanie and Oko main deposits. So the intent is to complete about 55,000 meters of infill drilling before the end of this year so that we can roll that into an updated feasibility study and expanded project as part of that feasibility exercise. So we have 10 drills turning at the moment. Once we complete that infill program, there's multiple targets along several mineralized trends that we want to follow up on to keep growing the resource.
So this is Oko- Ghanie and Oko West that you're talking about and doing a combined project on that?
Exactly. We know that, as you know, that was the extension of the deposit. It is one deposit, so it is basically a 5-kilometer strike length of continuous mineralization with multiple open pits at surface that essentially connect up, and then multiple undergrounds. One being on Oko West Block 4, and one being Ghanie, which is going to be another solid underground contributor to the overall project. Our intent is we have this common infrastructure that we will be able to use for an expanded project. That is really what results in these great synergies that we have by making this one larger project. The target is adding 2 million tons to 2.5 million tons per annum of processing capacity, allowing us to get up into the 500,000- ounce- per- year production mark.
We really view that as creating really a tier one asset, when you think of that production level, low operating costs, and actually a very long mine life really in front of us.
You said there is an expansion potential over here in terms of processing capacity. Have you started talking about what kind of CapEx, or in terms of what that would mean, in terms of when you would start spending that as well? Because I believe you are doing a study right now, and then based on the study, you are going to go forward-
Yeah.
-with the CapEx.
We're not putting any firm numbers out until we advance a little further in the study. But the concept is we're adding a ball mill, adding additional leaching capacity, additional power plant units to energize the larger site. It's basically pretty modest initial CapEx to fund that expansion. And the intent is really to keep the existing construction team on site. And then once we commission the, call it Phase 1 of our project, start generating cash, that construction team will just continue for another year executing on the expansion. So we don't have to remobilize the team, and the permitting process as well is very straightforward with the government, given that they're seeing this as one and the same project. Obviously with some addendum ESIA studies for the additional footprint impact. But that makes for a much larger and more capital-efficient project.
Got it.
We intend to generate the results of that updated feasibility study mid-next year, combined with the resource conversion that we're doing right now.
Got it. Are there similar expansion potential at Tocantinzinho as well that you're working on in the background or more exploration upside there and expansion to increase production profile?
Yeah. So we essentially two weeks ago produced an exploration update on TZ and Gurupi. What we've been finding at TZ is really some of the extensions at depth of the ore body. We've had good success now identifying mineralization at least another 150 m below the existing final pit limits. We see that as being a potential for another pushback and extension to mine life more than an expansion itself. We also have a very large land package, a little more challenging terrain in terms of exploring. But essentially we're continuing to look for additional deposits on the land package, and should we be successful, and our expectations are over time we will be, that would be the catalyst for potential expansions of the processing capacity at that point.
Got it. And then just moving on to Gurupi, you mentioned Gurupi as well. Looks like that's the next project in the pipeline. Do you think that the resource grows, and really, what's the vision for the operation ahead of this upcoming technical study, and timeline?
Yeah. Obviously, the Oko project is going to be a fantastic project. The focus is right there at the moment. What we're trying to do is build the next leg of growth post-Oko. When you think of the 500,000-ounce potential of the Oko project combined with TZ, we're getting close to about 700,000 oz. And so looking to expand with Gurupi, and we're targeting a production level that would be higher than TZ, so in the 200,000-ounce range. And to get us close to 900,000 oz, pushing on to 1 million ounces of production. What we're doing right now is a lot of exploration drilling to essentially find extensions to the known mineralization of the three deposits that we have. And also, we've been successful now in identifying a new deposit area on the Chega Tudo trend, which we highlighted with some of the exploration results.
And we're finding mineralization over a 5-kilometer strike length that we now have drill tested. The intent right now with this PEA is to show some resource expansion to help us fine-tune what we think the ultimate potential of what we want to build is. And so that is part of the PEA exercise that we're looking to complete for the end of the year, this year. But basically, Gurupi is what we call advanced exploration, but there's been a lot of historical work, so we're not starting from scratch in terms of a lot of the technical work that we're doing on the processing side. But we are looking to make a larger project than what was contemplated in the past.
Yeah.
Good stuff. I wanted to ask you a question on M&A, but before we get to M&A, I wanted to ask you, in terms of the inflation that we are seeing because of what is happening in Middle East, any sort of supply constraints as well, is that impacting any of your operations, and how are you mitigating those impacts?
We have not seen any main challenges with that. Fuel prices are a bit higher, obviously. We have not had any shortage of supply. A lot of the procurement that we had done for Oko West was prior to the conflicts in the Middle East. So a lot of that pricing has been locked in prior to what we are seeing right now. So, it has been pretty modest from what we have seen.
Good stuff. Then just again, moving on to M&A. Is M&A on the table right now? Given the increased scale of the combined company now, are there any opportunities that you are looking at right now, or you are looking inwards in terms of all the projects that you are building right now?
Yeah. We closed on the G2 Goldfields transaction at the end of July, so I think we have been obviously very active on the M&A side.
By the way, congratulations on that.
We do not feel like we need to be out on the lookout at this point. We have a lot on our plate to create value for shareholders. I think if we think of M&A, it has to be something that is more attractive than what we think Gurupi will be. In terms of timeline as well, it would have to be something that would be easily permitted and constructable such that it can be the third leg of growth to our story. What we feel right now is essentially that Gurupi is a project that does not attract a lot of value currently in our share price. We do see the PEA as being a catalyst to expose what this project can be and what its potential value should be as well.
You have got a good pipeline already built up. In terms of exploration, in terms of regional exploration that you might be doing, is there any other deposits or projects in the back pocket that you can start talking about?
No, look, I think one thing that is going to be a major focus post the G2 Goldfields transaction is really the exploration of that land package, which is now basically a district-scale land package that we consider to be one of the most attractive in the world. Also, it is going to be a major major mining camp. A lot of that, we are looking to explore over the coming years. We have done some small land deals, what we call basically just picking up small claims that are missing in the land package surrounding the Oko West project. That is the extent of our focus right now when it comes to adding additional ground or M&A at this point. Like it was the case for Gurupi, that was a project that we had looked at two years prior to acquiring that.
On the M&A side, we're always scanning what are the interesting projects that could fit our portfolio. But we're no emergency or necessity to add another asset at this point.
Got it. And you touched upon this, but what do you think the market is not understanding or that understands the least about G Mining right now?
Yeah, like I said, Gurupi is one. Also, I would say exploration upside is not something that's been factored a lot in the story at this point. So I think that's one thing that we're focusing on right now. And in all honesty, we didn't really spend much on exploration until we got TZ cash flowing and generating cash flow to actually fund our exploration programs. So this year we're spending, including the infill drilling with G2, up to $60 million this year. And we'll likely be maintaining a strong exploration focus in the coming years, especially at these gold prices. And when you're exploring near operating mines or where you're building mines, that becomes very value accretive in our view.
Good stuff. One of my last questions, if we reconvene this same session that we are having in the next 12 months, what are the three achievements would make you consider the year a success?
Yeah, obviously, next year is going to be a very catalyst-rich year. Obviously, with getting the PEA out for Gurupi, we should be, at this time next year, either producing first gold or very close to producing first gold at Oko West. That's a huge de-risking process when you're building a project of this scale. In our view, this is going to be a year where we're going to generate a huge inflection point in terms of cash flow generation. That'll be a nice re-rating process that we expect to happen in the course of the next year. That'll be clearly the objective over the next 12 months for us.
Got it. Maybe I'll ask one more question as well. You mentioned that you're about to hit that free cash flow inflection point as well. Is that a moment when you are still going to focusing on exploration and development, or is there a thinking of capital allocation as well in terms of dividends or share buybacks? How would you look at that?
Yeah. We did announce an NCIB that we put in place, and that's something that we're looking to act on over the coming 12 months. Essentially because we see our valuation being attractive based on a P/NAV multiple and the current gold price environment. That's the immediate priority in terms of capital allocation. With the cash flow generation that we expect to be generating with Oko West, we'll be able to fund, obviously, the expansion of the Oko project. If we forecast the CapEx for Gurupi, that will also be something that can be financed through cash flow at that point. We'll see when the time comes, but that's when we'll be putting in a more formal capital allocation strategy once Oko West is up and cash flowing. Yeah.
Perfect. We, I think, are coming to the end of the time. Are there any questions in the audience? Oh, I see a question there. If we can get the mic over here, please.
Could you distinguish between G Mining Ventures and G Mining Services? I was a shareholder in Equinox Gold and meticulously read the Greenstone documentation, which was your feasibility study. When you have the mining services, sometimes your clients maybe don't execute your studies as well as you would. Would you halt G Mining Services so that your clients don't detract from your wonderful reputation?
Yeah. G Mining Services is a separate business, privately owned, engineering and construction company. Obviously, we have a Master Services Agreement with G Mining Services. To be honest, that's been a bit of our secret sauce of being able to attract the teams that we need to execute. When we do that, we transfer them over to G Mining Ventures, so there's no conflicts of interest. Yeah, when you're a services provider, you're often not making all the decisions on behalf of your client, and that's the way it works. So you do your best to put forth the best project possible and work in line with your clients to deliver the best projects. But I think Equinox Gold was an example with the Greenstone project. That was a successful build.
Mcllvenna Bay was another one that G Mining Services worked on with Foran Mining Corporation over the last couple of years.
Maybe we have time for one quick question. Okay. I think that's great. Great presentation.
Thank you very much.
Have a great discussion. Thank you very much, Louis-Pierre.
Thanks.
Appreciate it.
Great meeting you.