Gold for a fireside chat. We're just going to jump right into it. Renaud, I guess my first question would be, did you have an original presentation before?
Yes.
Yeah. Sorry about that.
He was on, and then it disappeared.
Appeared. Okay.
Here we go. Okay. Yeah. I'm good. We're good.
We're good?
Yeah.
Okay. Sorry, did you want to do the presentation first?
Yeah. No, no. Go ahead.
Okay. All right.
I'm just going to use this mic.
Okay. All right. Sorry about that. Just to begin more broadly, gold prices remain supportive, but the industry is seeing a bit of inflation. Can you just talk about how labor, consumables, development capital are being impacted by those factors, as you think about all these technical reports that we're going to dive into a little bit later, but as you think about all these technical reports and how that factors into the assumptions that you use to underpin them?
Let's start on the capital side. To be very frank, I think this company is not about building anything new over the next three years. We have very great plans of extensions of life of mine. [Simplywise] mostly mining scenarios and pushback and maybe a little bit of tailing. No, we do not see us very impacted. It's on the cost side we need to be very resilient. I like to say that if you're looking at our portfolio, you're looking at how Coté Gold is on the grid, the Westwood is on the grid, Nelligan will be on the grid. Those are not assets that would be down the road, very impacted with the power generations.
I'm pleased to say that we have a great scenario on the table for Essakane as we extend the life of mine to increase the solar generations as well, moving from 16 MW maybe to 25 MW. I think we're very well positioned to offset what could potentially, I'll talk about what I see potentially underground, potentially Essakane down the road to limit our exposure to fuel consumptions and power. I think we're very well established here too. We feel that like any other company, we need to be very careful in how we grow this company and manage our costs. But I think Côté being only in the second full years of operations and where it's going remains a lot of upsides of reducing costs that would offset, as I said, on the grid. And the Westwood is about the same thing too.
Our future is about incorporating the eastern corridor, which would triggers higher productions, lower costs. When it comes to Canada, I think we have great plans to offset what potentially could be. Given take Côté Gold every $10 of barrel impact by about just $7 an ounce and I think we have greater plans in offsetting. We continue to look at our business roughly at about $2,100 reserve. We believe in the gold price, Ben, in the long term, the $3,600, $3,700 we're currently using, better the $4,000, maintaining the margin. We don't see anything in particular that it's derailing at this stage as we're comfortable that we have great plans everywhere to offset. What we see at this stage is mostly around potentially fuel exposure at Essakane, and I think we're going to have great plans starting next year to offset.
And the labor cost, I think CPI has been pretty much the 3%, and we see this remaining. Not overly concerned about and well equipped to offset.
Okay. Just diving into Côté, which has been the focus for the company, I think for the last two or three years at this stage. But you've got a consolidated resource update for Côté and Gosselin coming out. Sorry, that's been showing that the resource is meaningfully larger than what it was previously. Could you just talk about the integrated study and what you're looking at there and some of the assumptions behind it?
Yeah. Of course, the decision to build Coté was based on about roughly 10 million ounces of resources. Ended up in a conversion roughly at about 70%-75% at 7.5 million reserve. By the time we commissioned Coté, we have pretty much doubled the resources. We just published a 20 million. We still see this asset capable to convert probably in the same ratios, towards a 70% of it, give and take the depletions of 2026. This is where we're going to focus here. You have to look at the next study as a kind of an updated of the 2022 scenario of a 36,000 moving to 40,000 tons a day, focusing on optimizations, focusing on bringing more throughputs and lower costs, and looking at a business about $2,100 reserve which should normally be towards a 70% conversions. That is a first pass.
We recently announced that we're going to postpone a bit the view on expansion. I think more we look at it, more we see potentially other scenarios. It's not about rushing, it's not about growth for sake of growth. We're going to be very disciplined on this and spend the next couple of years to continue to optimize the asset. But I think we're due now to update our long-term view on Coté from the 2022 scenarios when it comes to cash capital and production profile. But that's going to be a meaningful exercise, expecting, obviously, a significant increase of reserves and highlighting what we see possible with the current plan and some additional capital. That's the first pass. We're not going to sleep on a switch. We're going to start at our baseline environmental.
We're going to look at the potential of expansion down the road and start right away in 2027 to study the baseline and the water, dust, and all those things that are necessary to accelerate permitting. But I think it was a decision, a disciplined decision to say, "Okay, let's focus now on optimizations." We definitely see this asset capable to go to the 40,000 tons a day and reducing the cost. And once we're comfortable what we could do, we could look at the future. This is what we highlight in this upcoming scenarios.
Thanks for that summary. Just moving to Essakane. You flagged a mine life extension study for next year. Where do you see the best opportunities to add years at that asset? And how do you weigh committing further capital in Burkina against returning cash to shareholders?
Well, on the back of the decision, late 2025, early 2026, to return 100% of the capital, I thought we find a good strategic way to justify. This is a massive cash flow generation. This year, roughly at $ 4,300-$4,500 an ounce, this could be up to $700 million-$800 million of cash flow repatriated in Canada this year, and it is all going to the share buyback. We have done roughly $400 million in the first half. We have another $400 million to repatriate from the dividend of June exercise. Might not do it completely this year, maybe a little bit next year, but the objective is minimum probably $700 million and completing up to. At 4,500, we would have repatriated everything this year. Starting next year, about the same exercise in 2027, focusing on cash flow. But we want to start preserving the life of mines.
We are going to start pushing back towards, you are looking at the resource statement here, we have over four million ounces in M&I, and much less in the reserves, and now we are going to be incorporating those new phases. I talk about how do you manage costs? You are going to be deeper. You want to manage power. We are going to incorporate as well expansion of the solar farm for, quite frankly, a pretty good case study here and try to limit our exposure. That imply as well one thing that has never been looked at. If you are looking at the trend here, pretty much four kilometers of trend, all the phases has taken place in the strike. But we are going to be starting in 2027 to look at more like the underground potential of it.
You look at the central zone, they are all limited by data constraints. You are at the bottom of the pit, you are high grade at the bottom of all those pits, and you are 40-50 meters width at the bottom. We know those cases in Canada, what you could do. We are going to be studying this and with the view that maybe down the road, you could incorporate cheaper mining, less need for power, less exposure to fuels and so forth. It is not going to be highlighted in the upcoming National Instrument 43-101 next year. We are going to be shooting for an extension life by 2034, 2035, all within the strikes of open pit. But that could be a little bit like the last stretch within the fence, we call.
The next for us is to look at the underground potential, which I believe is a huge potential for Essakane down the road to incorporate cheaper and less exposure to certain element of fuels and others and power.
Okay. Thank you. Just moving to the next asset. I was thinking about Westwood. You pointed out further underground expansion there as well. Could you talk about your process right now in terms of that expansion and what you're looking at?
Well, rest assured that the first thing first is I think we feel extremely comfortable now that we have stabilized the asset. We are very confident this year to achieve our guidance, cost, and production. I think it is fair to say that for 2027, 2028, we would continue to mine at about the same rate, depleting the surface pit and continue to mine the central zone where there is more systematic but a different recipe. That is what has worked.
We see the asset for the next couple of years to remain probably between 120,000, 140,000 ounces at or sub CAD 2,030. The eastern corridor that we see here that it is circled, this is a different setting. This is much wider. It is a little lower grade, but it is wider. It compares a little bit more with the western side of LaRonde of our neighbor, Agnico Eagle Mines Limited.
Has never been looked properly, but now with the exercise of drilling more. We are, this year, injecting about $ 30 million. We are going to continue this. We are going to highlight the new National Instrument 43-101 next year. That is going to highlight the incorporation of the eastern corridor. What is going to be a game changer, the mining will return more underground. East of that fault, it is a complete different system. It is much wider. We could do probably even transverse type of mining there.
We see this asset potentially as we move towards 2030 to be 100% underground, maybe towards more the 200,000 ounces, increased production, lower cost, and just more efficient mining as we move forward. Very, very pleased with that one from where we were in 2023. Not just an increase of valuation, it is really feel that, I think technically we understand the mine and looking at the future in a very positive way. This year, next year, continue to drift across in several level, delineation of ounces, taking some stoping at each of the level, proving the concept. So when we come out with the tech report next year, late next year, it is going to be proven concept, not just a wish or hope, right?
Okay.
We take the time, discipline, but the future of Westwood looks extremely promising.
Sticking to that region of the world, talking about Nelligan and the complex there. Last year at around this time, you consolidated the Nelligan district with the Monster Lake, the Philibert, and Chevrier acquisitions. Can you just talk about what your plans are for that and the timing of that?
Short term is drilling of the newly acquired. We feel very comfortable with Nelligan. We continue to look at the extensions, but I think Nelligan is very well understood, and we know there is projections in the down plunge that could be potentially underground. The Monster Lake, which is the underground component of it, is showing at a high grade and continue to show high grade as we drill. We are growing the ounces there. Mid-term next year is to come up with the first PEA that would showcase the Monster Lake, the Nelligan open pit. Now we are drilling the Philibert, which is one of the newly acquired to also incorporate. We want a first PEA without the stretch, showing at a very early days the tremendous potential of this.
We definitely see a scenario where we could be towards potentially the 400,000 ounces at a very early stage. After the PEA, as we move to the PFS, we are going to continue to drill others and maybe eventually incorporate some by-product to the scenarios as well. But I think the target of 2027 is a first PEA grounded with reality.
Incorporating two pits, one underground, towards 400,000 ounces, and we own 100% of it. All the deposit in Canada, it is probably one, if not the lowest royalty structure. Pretty much has nothing on it. It is clean. So it is huge potential. This is a camp that has a lot of coppers as well, and eventually could benefit of incorporating some. The metallurgy works extremely well on their flotations. A perfect scenario to potentially incorporate some base metal, but on a step-by-step. What we are going to show next year is going to highlight tremendous potential, but very early days that could only improve down the road.
Okay. Just a quick question on the timing. When you picture this startup, what sort of broad strokes, like mid to late 2030s or a bit earlier?
Yeah. I think 2033 would be a very good date. We are still probably more towards 2034. Kind of match this Essakane's 400,000 ounces, try to stretch it towards 2034, 2035. Everything goes well, we could extend, and eventually those ounces would be replaced by the same volume, but in Canada at a much better concept.
I think my final question, just big picture capital allocation, M&A. How do you see all of those playing out for you in the next 12 months- 18 months? I think, are there any key things that investors should be looking for in terms of capital returns, in terms of acquisitions or-
Rest assured that I think it is fair to say that the true value of this company is yet to be known. I mean, Coté, I think we are getting close to understanding the potential of Coté. I think it is important that we show as well the potential of the extensions of Essakane, the first scenario for Nelligan. The next 12 months for us is really execution, and it is really about putting all those new study out there and really showcase what is this company down the road. The value creation of it. This is how we see. We believe that we are creating optionality for our shareholders, and if we are patient and we do not rush again, that we have values to show down the road. This is what we see. A lot of drilling, a lot of focus on growing Canada and smart extension.
This is really what is. M&A, not a priority because quite frankly, what is the true value of this company? And I think there is much more to be shown here.
Well, I will close by saying that I think you are probably more on the target side than an acquirer, but you never know.
It is always a good place to be when your product is loved, and I think as we advance with another 12 months of work and showcasing those studies, our 40 million ounces presence in Canada hold a lot of value, and quite frankly, is not quite understood.
But where do you draw the line in terms of trying to daylight all that shareholder value, but also, if you were a target saying, "Okay, we've done as much as we can and it's time to. This is the best offer on the table." How do you think about that?
At some point in time, you work for the shareholders, but my message here is that there is much more here. I'm not talking about the priorities to extract all this value. The priority is understood what is the true value of this company before you go too fast.
Okay. All right. I think we're up on time, so thank you very much, Renaud.
Thank you.
It was great.
Thank you.