Good morning. My name is Anna, and I'll be your conference operator today. At this time, I would like to welcome everyone to Lundin Gold's Q4 and year-end 2022 results call. 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. If you'd like to ask a question during this time, simply press star followed by 1 on your telephone keypad. If you'd like to withdraw your question, please press star then 2. Thank you. Mr. Hochstein, you may begin your conference.
Thank you very much, operator, and good morning, everyone. Thank you all for joining us on this conference call today, where Alessandro Bazzoni, Executive Vice President and Chief Financial Officer, and I are going to take you through our results for the Q4 and full year 2022. Please note Lundin Gold's disclaimers on this slide. This discussion includes forward-looking information. Actual future results may differ from expected results for a variety of reasons described in the Caution Regarding Forward-Looking Information and Statements section of our press release. Lundin Gold is a U.S. dollar reporting entity, and all amounts in this presentation refer to U.S. dollars unless otherwise indicated. 2022 was another blockbuster year for Lundin Gold. For the second consecutive year, Lundin Gold has beaten its production and cost guidance, highlighting once again the world-class nature of Fruta del Norte.
For the full year, the company produced 476,329 ounces of gold at an All-In Sustaining Cost of $805 per ounce sold, above the high end of our production guidance of 460,000 ounces and below the low end of our cost guidance of $820 per ounce sold. In a short two and a half years of operations, the company has increased throughput at Fruta del Norte from initial design capacity of 3,500 tons per day to 4,272 tons per day in 2022, which includes the achievement of over 4,500 ton per day in Q4. Lundin Gold is guiding for an average throughput of 4,400 tons per day in 2023.
Recoveries have also improved since operations began, averaging almost 90% in 2022. With the ongoing focus on operational excellence resulting in increased production and lower costs, we are continuing to generate substantial free cash flow and have various options to use this cash flow. One of the avenues is cleaning up of the balance sheet. In line with this, in late December, the company exercised its right to repay in full the Gold Prepay Facility effective January 5, 2023 by making a payment of $207.5 million, inclusive of applicable taxes from its treasury.
This strategic transaction is expected to result in increased net cash flows to provide the company with greater exposure to the positive outlook on gold price and to give Lundin Gold greater flexibility in its capital structure to pursue operational and corporate opportunities for the benefit of the company and its shareholders. Alessandro will discuss this transaction in a little more detail later on. I can't talk about cash flow without touching upon Lundin Gold's inaugural dividend of $0.20 per share paid in September. Starting in the Q1 of 2023, dividends of at least $0.10 per share are expected to be declared on a quarterly basis. The Q1ly dividend will be payable on March 31st for shares trading on the TSX and OTCQX, and April 4th for shares trading on Nasdaq Stockholm, based on record date of March 13th, 2023.
Even after the payment of dividends and the repayment of the Gold Prepay, we will still retain a healthy treasury and continue to generate significant operating cash flow for other value-generating initiatives, such as our near mine and regional exploration programs, future throughput expansion, further debt consolidation, and M&A. Our operational and financial results are underpinned by several key milestones achieved in 2022 that I want to highlight. Early in the Q4, the south ventilation raise at Fruta del Norte was completed and is now operational. Completion of the SVR has resulted in improved efficiencies and enables mining activities on all levels. Our exploration activities expanded considerably in 2022.
Following the appointment of Andre Oliveira, our VP of Exploration, we launched a near mine program focused on targets within and around the existing operation to test the limits of the FDN deposit at depth and along the extension of major structures, particularly the East and West Faults. The near mine program started in the Q3 of 2022, 8,600 meters had been drilled by the end of Q4. Results from the drill program have identified new mineralized zones to the south and at depth of FDN's currently defined mineral resources.
I would be remiss if I did not highlight that during the Q2 of 2022, Lundin Gold published its inaugural climate change report and its sixth annual sustainability report. The inaugural climate change report presented the company's phased approach to aligning with TCFD and established a GHG emissions intensity baseline of 0.12 tons of CO₂ equivalent per ounce of gold produced, making the company one of the lowest GHG emitters worldwide per ounce of gold produced. As I've already suggested, operating results were strong in Q4, highlighted by quarterly gold production totaling 121,139 ounces, comprised of 78,756 ounces of concentrate and 42,383 ounces in doré.
Gold sales sold 119,890 ounces versus 108,476 ounces sold in the same period last year. Mine production in Q4 was 365,250 tons of ore to the stockpile and mill. Mining rate was reduced during the Q4 to allow the mill to consume the remaining oxidized ore on the stockpile and to be able to better manage the ore stockpiles going forward. On the processing side, the mill processed 420,838 tons of ore in Q4 at an average throughput rate of 4,574 tons per day, the highest throughput rate since the beginning of operations.
The average grade of ore milled was 10 grams per ton. Average recovery was 89.6%. For the full year, Lundin Gold produced 476,329 ounces of gold, representing an 11% increase over 2021 at an average head grade of 10.6 grams per ton and average recovery was 89.5%. A total of approximately excuse me, 1.49 and 1.56 million tons of ore were mined and processed, respectively. Operational results in the Q4 were achieved at a cash operating cost of $713, an AISC of $865 per ounce sold.
For the full year 2022 AISC of $805 per ounce sold, Lundin Gold sits comfortably in the lower quartile of the global AISC curve. Although we are seeing some inflationary impacts, the team at site continue to focus on reducing costs through reducing consumption, increasing productivities, and identifying alternative suppliers. Sustaining capital expenditures accounted for $93 and $76 per ounce sold in the Q4 and full year, respectively. The third raise of the tailings dam was completed during the Q4 on time and under budget at a cost of approximately $19.9 million. The conversion drilling program of Fruta del Norte was completed in the Q3, and final assay results have been received.
Results from the 18,341 meter drilling program carried out in 2021 and 2022, as well as data from our infill and mine sampling program, have provided additional data for an updated geological model by enabling better delineation of the distribution of and controls on higher grade mineralized zones within the known resource. The company anticipates updating its estimates of mineral resources and reserves at Fruta del Norte soon and publish an updated 43-101 report before the end of Q1 2023. Based on a new geological model, excuse me, further conversion drilling targets will be defined for 2023 and 2024.
Consistent with previously announced guidance, gold production of Fruta del Norte for 2023 is estimated to be between 425,000 and 475,000 ounces based on an average throughput rate of 4,400 tons per day. The head grade is estimated to average 9.6 grams per ton, with fluctuations expected during the year as different sections of the ore body are mined. Average mill recovery for the year is estimated at 90%. Cash operating costs are estimated to range between $700 and $760 per ounce of gold sold in 2023, with variability expected during the year.
AISC is expected to range between $870 and $940 per ounce of gold sold based on an assumed gold price of $1,650 per ounce and silver price of $18.50 per ounce. The projected increase in AISC in 2023 can be attributed principally to higher unit costs compared to 2022 due to mining and milling with lower grades, inflationary pressures resulting in increased costs of consumables and transportation, higher maintenance requirements as equipment ages, and higher sustaining capital expenditures.
Sustaining capital for 2023 is estimated at $45 million-$55 million and is comprised of the fourth raise of the TSF, anticipated to start in April, the completion of the new warehouse, modifications to the two sewage treatment plants to improve their operations, mobile equipment replacement, the resource conversion drilling program estimated at 7,600 meters, and several productivity projects such as mine dispatch system, improved ventilation system, plus others. Over the next three years, the anticipated fluctuation in gold production is principally due to expected variations in the grade of ore mined and milled, except for variations in gold price and possibly continuing inflationary pressure, which impacts cash operating costs and AISC. The other significant factor affecting AISC is sustaining capital, which is expected to be higher in 2023 and 2025 when a tailings dam lift is planned.
Let's discuss our goals and directions moving forward to continue to deliver shareholder value. Fundamental to Lundin Gold's story is our free cash flow generation. During Q4, we generated $91.2 million and $269.4 million in 2022. This free cash flow has helped build a sizable cash balance of over $360 million, which supports dividends, debt consolidation, near mine and regional exploration, sustaining capital expenditures and other growth initiatives. Lundin Gold's capital strategy ensures that we utilize our treasury as and when needed while maintaining optionality. In line with this, as I mentioned previously, the company recently exercised its right to repay in full the Gold Prepay facilities, payment of which totaled $207.5 million and was made very early in the Q1 of 2023.
As per the terms of the agreement, we also continue to evaluate the option of buying back half of the stream credit facility in June 2024 for $150 million. Unless gold prices fall materially between now and then, doing this makes both financial and strategic sense. The remaining component of our outstanding debt is the senior debt facility, which had a remaining principal outstanding of $182 million at the end of 2022, and is repayable in quarterly variable installments and through a cash sweep mechanism. Based on our current free cash flow generation, unless prepaid, this debt facility will be fully repaid almost two years ahead of its scheduled maturity in 2026. Let's turn to exploration.
Lundin Gold's near mine exploration program commenced in the Q3 of 2022 and is focused on expanding the FDN mineral resource envelope and testing several unexplored targets near the mine. In 2022, approximately 8,600 meters were drilled across 16 holes from surface and underground. The surface drilling program completed 9 holes. Excuse me. Its objective is to explore sectors along the two main controlling structures of the FDN deposit, the East and West Faults. Along the southern extension of the East Fault, a new mineralized zone has been intercepted. Initial promising results suggest continuity of the epithermal system in a southern direction, as most of the drill holes intercepted wide hydrothermal alteration zones with similar characteristics to those found at the FDN deposit.
This newly identified zone is a high priority. The 2023 drilling, excuse me, program has already started with 2 rigs drilling on this new zone. The underground drilling portion of the near mine program focused on the continuity of the FDN deposit and at depth below the current resource envelope. A total of 7 drill holes were completed under the southern portion of the FDN mineral resource envelope. Most of the results obtained exhibited the same mineral hydrothermal alteration to that related to mineralization in the southern portion of FDN's mineral resource and confirmed the continuity of deposit at depth. Underground drilling is being expanded in 2023 to continue to explore at depth. The initial focus will be to the north central sector, with 1 rig currently drilling below the highest grade portion of the mineral deposit where the mine is currently operating.
A total of 17,600 meters across 25 drill holes were drilled under the 2022 regional program, of which approximately 4,490 meters across seven holes were drilled in the Q4. The program has successfully advanced the identification of important indicators that point toward the presence of buried epithermal deposits in the southern basin. Through a detailed geological interpretation of exploration data and additional surface works, several targets of interest have been identified, tested, and resulted in locating new potentially mineralized structures. Perhaps the most interesting target we have identified to date is the Quebrada La Negra target along the southwestern basin border. At Quebrada La Negra, the drilling program identified a new structure associated with the western border of the basin, represented by a wide hydrothermal alteration zones with breccias and/or veins and disseminated sulfides.
The program also drilled an arsenic soil anomaly, where drilling intercepted a major structure with quartz veins, hydrothermal carbonate-silica breccias, and sulfides hosted in Santiago Formation, which is also the FDN hosting sequence. This hydrothermal alteration zone possibly represents the north continuity of the Puente Princesa structure defined in the Q2. Results are pending. Now, I'd like to turn the call over to Alessandro for a more detailed look at the financial results. Alessandro?
Thank you, Ron. Hello, everyone. Before I provide an outline of the financial results for the quarter and the full year, let me review in some detail, Lundin Gold's repayment of the Gold Prepay Facility on January fifth, 2023. As this transaction has several one-time impacts on which have affected our Q4 financials. In late December, as provided under the loan facility, the company delivered an irrevocable notice of early repayment of its remaining outstanding obligations under the Gold Prepay Facility, effective January fifth. The total payment made to repay the facility was $207 million.
The repayment amount of the Gold Prepay Facility was the product of A, the gold price on a predetermined date in late December, and B, an amount of equivalent gold ounces, which was a negotiated number between 9,775 and 11,500 ounces per quarter for the last 10 remaining quarters to maturity of the facility, plus applicable taxes of $16 million and interest of $100,000, which was accrued between December 31st and January 5th.
While the early repayment of the Gold Prepay Facility resulted in a one-time accrual of a finance charge of $128 million in 2022, no future payments at the then applicable gold prices will be due under this facility going forward, including interest and finance charges that would have been incurred over the next 10 quarter until its originally scheduled maturity. Under fair value accounting, the repayment of the Gold Prepay also resulted in a derivative gain of $71 million. The repayment of the Gold Prepay was made from the company's treasury of $363 million at year-end. This transaction is expected to result in increased net cash flow and to give Lundin Gold greater flexibility in its capital structure to pursue operational and corporate opportunities for the benefit of the company and its shareholders.
In the Q4 of 2022, the company recognized revenues of $211 million from the sale of 120,000 ounces of gold at an average realized gold price of $1,814 per ounce. Income from mining operations totaled $92 million. This compares to net revenues of $186 million from the sale of 108,000 ounces of gold, and income from mining operations also of $92 million in the same quarter in 2021. From the full year, 2022 marked record volumes of gold ounces produced and sold from operation at Fruta del Norte, which resulted in net revenues of $816 million and income from mining operation of $370 million.
By comparison, in 2021, the company achieved net revenues of $733 million and income from mining operations of $356 million. The percentage increase in Quarter-over-quarter gold ounces sold did not fully translate into an equivalent increase in income from mining operations due to inflationary pressures affecting operating costs. The results for the quarter were impacted by a significant one-time charge of $128 million, as described above, and derivative gain due to the repayment of the Gold Prepay Facility. In addition, net income was affected by a one-time adjustment of deferred taxes of $24 million relating to a revised interpretation of the application of certain tax laws in Ecuador.
As a result, the company incurred a loss of $68 million after deducting corporate exploration and finance expenses of $142 million, net of derivative gains of $22 million, and an income tax expense of $18 million. Net income for the full year was $73 million, compared to $221 million achieved in 2021. In 2022, the finance expense included interest incurred on the senior debt and the Gold Prepay and the Stream facilities of $30 million, and finance charges under the Gold and Stream facilities of $197 million.
In addition to the one-time charge due to the repayment of the Gold Prepay Facility, finance charges include $69 million incurred under the Gold Prepay and the Stream Facilities during the year based on their scheduled quarterly or monthly repayment dates as the difference between the total amount paid and the sum of the principal due and the balance of cumulative interest accrued at each repayment date. Finance charges only commenced in late 2021, once the company fully repaid accumulated interest accrued on the Gold Prepay and Stream Facilities since inception of these facilities in 2017. Only finance charges under the Stream Facilities will continue in future periods. Net income this quarter and the full year also includes a derivative gain of $71 million due to the repayment of the Gold Prepay, partially offset by the derivative loss on the Stream Facility.
This non-cash item is the result of a variable forward gold price and other financial assumptions used in the fair value accounting of the Gold Prepay and the stream debt facilities and should not be factored in the assessment of our operating performance. The MD&A provides a detailed explanation of the impact of fair value accounting on these two credit facilities and the determination of derivative gains and losses. Lundin Gold generated the EBITDA of $112 million this quarter compared to $109 million the Q4 of 2021. For the full year, Lundin Gold achieved an adjusted EBITDA of $467 million. Again, an increase compared to the previous year.
If we look at adjusted earnings, which excludes the accrued one-time finance charge on the repayment of the Gold Prepay Facility and the gains and losses, this non-IFRS metric was $33.6 million or $0.14 per share in the Q4. On the same basis, adjusted earnings achieved in the Q4 2021 were $77.9 million or $0.33 per share. For the full year, adjusted earnings amounted to $125 million or $0.53 per share. The lower adjusted earnings are due in part to increased operating costs and, as mentioned earlier, to finance charges incurred on the scheduled repayments of the gold prepay and the stream facilities, which only started in late 2021, and the change in deferred income taxes.
With strong production and by controlling costs, Lundin Gold generated free cash flow in the Q4 of $91 million or $0.39 per share. For the full year, the company generated $269 million of free cash flow or $1.15 per share. It should be noted that the one-time finance charge generated by the repayment of the Gold Prepay did not affect free cash flow in 2021, as the repayment of the debt occurred in early 2023. Subject to the one-time impact of this finance charge in the Q1 of 2023, we expect to continue generating significant free cash flow in the future based on its production and AISC guidance and continued high gold prices.
As of December 31, 2022, Lundin Gold had cash of $363 million and a working capital balance of $195 million, compared to cash of $263 million and a working capital balance of $217 million at December 31, 2021. The increase in cash during 2022 was primarily due to the cash generated from operating activities of $427 million and proceeds from the exercise of stock option grants and anti-dilution rights of billion million. This is offset by principal interest and finance charges paid under the loan facilities totaling $228 million, dividends of $47 million, and cash outflows of $60 million for capital expenditures, which includes sustaining capital of $35 million and cost for the completion of the SVR.
The Quarter-over-quarter decrease in working capital is due to the recording of the Gold Prepay Facility as a current liability. Another strong year for Lundin Gold. We are paying down our debt, paying dividends, ramping up our exploration activities, and generating a lot of cash from operations. I'd like to point you to a more detailed discussion of our financial results in our MD&A. Now I'd like to turn the call back to Ron.
Thanks, Alessandro. I cannot stress enough how proud I am of the Lundin Gold family. For the second year running, we have beaten guidance. I also want to mention that our safety performance in 2022 was industry-leading. Our total recordable incident rate for the year was 0.30 for 200,000 hours worked. An admirable record, given that a majority of our workforce have never worked in the mining industry before their experience at Fruta del Norte. That said, we continue to expect more from ourselves on many fronts. I have always said that operational excellence enables our cash flow generation, and we are now using our cash flow, as Alessandro said, to pay dividends, repay debt, and ramp up exploration, among other things. There are a lot of exciting catalysts upcoming. Our updated mineral reserves and resources estimate will be out shortly.
We will be paying our quarterly dividend. Expect updates with regards to our near mine and regional exploration programs. We intend to set GHG emission targets later this year. It is an extremely exciting time for Lundin Gold. I look forward to continuing building on the strength of our team and the strong performance at Fruta del Norte. With that, I'll now open the call to questions. Operator?
Thank you, sir. Ladies and gentlemen, we now begin the question and answer session. Should you have a question, please press star followed by 1 on your touch tone phone. You'll hear a three-tone prompt acknowledging the request, and your questions will be pulled in the order they are received. Should you wish to decline from the polling process, please press star followed by 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Kerry Smith with Haywood Securities. Please go ahead.
Thanks, operator. Congratulations on a good quarter, Ron. Just on the mill throughput, you had a really strong Q4. How has the throughput been? Can you give any sense as to how the throughput has been for this quarter so far? We're almost two months into the quarter. I'm just curious if the mill is running, you know, close to what you did in Q4 or slightly lower or how it's performing.
It's performing the same, Kerry. It's running really well. We are coming up on a liner change in March, so expect to see maybe, some issues. No, the mills team's doing a great job. Our operating time is above budget and the throughput's great. Yeah, it's continuing to run well.
Would this be the only liner change in the year or will there be another one later in the year?
No, we have two liner changes a year scheduled. I think the current plan is March and September. That could change though, because we measure. We go and shut the mills down once a month and go in and measure everything. We have got to now where before we would, we didn't think we had enough space in the grinding area to do both mills at once, but they tried it last year and it worked very well and did it safely. That's what we're doing going forward. We can do both mills at the same time, which helps a lot.
Right. With that, how many days of downtime did you have when you did that last change?
It's a good question. I think it was around 3 or 4 days.
Okay. Okay, great. Ron, just on or maybe Alessandro has the answer. On the buyback on the stream, or the 50% buyback on the stream, that, do you literally have to give notice basically the day of, or do you have to give some pre-notice period to do that? How does the mechanics work?
Alessandro, I'm going to turn that one over to you. Alessandro?
Sorry, guys. Kerry, there is a notice period, but I cannot remember the length of the notice period, whether it is a short notice or it is a month notice. I can get back to you on that, Kerry.
Okay, sure. it's June of 2024, correct?
June of 2024. That's right. It's a fixed amount of $160.
Yeah. Right. Okay. Gotcha. Okay. Okay. Ron, maybe just a general comment on how, you know, the country is running. You had some national strikes in 2022. I'm just wondering if anything is brewing out there that we should be nervous about or it seems like, you know, things are running pretty well, sort of generally in the country.
No, Kerry, that's a really good question. There is a bit of a, you know, potential instability there. There was a referendum that the government had done as part of the regional elections in the few weeks ago. That was all questions were voted against, even though a lot of the questions were structured to vote for. It was essentially a vote of non-confidence of the government. We are, you know, could be in a period of a little bit of instability here. That said, Kerry, we don't anticipate any issues around Fruta del Norte. We've got really strong community, provincial, all levels of local support. We believe if there is some instability or if you're reading about things, it's likely going to be focused on Quito, which really won't affect operations.
Okay. Okay. Okay, that's great. Thank you very much, Ron and Alessandro.
Thank you. Your next question comes from Don DeMarco with National Bank. Please go ahead.
Thank you, operator. First question to Alessandro, just following up on a potential buyback of 50% of the stream. Alessandro, did you say that the costs would be a flat $160 to buy that back?
$150.
150?
$150 million.
Okay.
Yeah.
I guess that, you know, when I'm looking at the balance sheet, I guess the principal is $119, but then the total is $260. So I guess $150 would be fairly close to what that total is, a little bit more than what that total is for 50%.
Um-
If I took the.
Again, the value of the stream, yes. The value of the stream is based on fair value accounting, which includes-
Yeah.
A Monte Carlo simulation, et cetera. It varies dramatically depending on the forward gold price on a quarter-to-quarter basis. What the key is, the fixed price and the remaining number of ounces, equivalent ounces that will be delivered under the stream. That equivalent number of ounces would be cut by half once the repayment is made in June 2024.
Okay. My next question, Ron, just wondering what your thoughts are on the mine plan for the 2016 tech report. I see that production grade throughput's all been above the tech report for the last few years. For 2023, grades are guided below what the technical report estimate was. I'm just wondering, from an analyst perspective, should we model the remaining years at the reserve grade, or will you be issuing an updated mine plan at some point?
Yeah, it's a good question. Look, the mines, our reconciliation of both tons and grade has been above 100%. you know, I think with Fruta del Norte, given the high grade nature of it, the modelers, until if you get underground, tended to be conservative. We have seen variation and better grades than anticipated. Don, there will be a, an updated mine plan that will be part of the 43-101 report that will be coming out before the end of this quarter.
Okay, wonderful. Okay, thanks again, guys. That's all from me. Congratulations on a strong free cash flow quarter and good luck in 2023.
Great. Yeah, Don DeMarco, just to comment on that mine plan, don't forget that That is gonna be at the increased throughput. There's a lot of moving factors in that new mine plan, right, with the increase, 'cause the previous one was done at 3,500 ton per day, now we're at 4,400.
Yeah.
obviously with the potential new re-reserves added as well.
Okay, good stuff. We'll look for it then. Thank you.
Thank you. Your next question comes from Michael Fairbairn with Canaccord Genuity. Please go ahead.
Hi, guys. Congrats on a very strong quarter, thanks for taking my question here. Just one from me. Ron, I wanted to ask you about your thoughts on M&A. Just wondering, you know, if, you know, if you think Lundin may be active from an acquisition perspective over the next little while and, you know, what kind of opportunities may be available or out there that you'd consider at this point?
Good morning, Michael. Yeah, we definitely are active. We're more active than we have been in the past. Now we've got, you know, expansion of the teams. The team's doing an amazing job at site and looking for opportunities there. Andre's built up the exploration team, that's going really well with, you know, expanded rigs going, number of rigs going. Yeah, M&A is something we're definitely looking at. You know, the challenge is how do you add something that's gonna be as good or better than Fruta del Norte? That's the challenge we've got. As, you know, the team's being creative, and as we've always said, as Lukas always pushed us and as Jack is pushing us is you gotta look at a lot of things.
You just never know what might be the rose amongst all the dandelions.
Okay, perfect. Thanks, Ron, and congrats again on a strong quarter.
Thanks, Michael.
Thank you. Your next question comes from Terence Ortslan with TSL Research. Please go ahead.
Thank you, operator. Thank you, guys. Good review, and thanks for the guidance, Alessandro and Ron. Just on the south side of the exploration of the, from the mine, the Newcrest earning agreement. Any inklings from Newcrest with respect to developments they have with Newmont about they're gonna pursue this or not, or are they gonna be? They already paid some of it, I guess, from last year.
Sorry, Terry. Is that the exploration that Newcrest is doing?
Yes.
Yeah. They're, they're drilling right now actually on the concessions to the north. Those had drill-ready prospects. They drilled last year and now they're actually drilling as we speak right now on those projects to the north. The anticipation is that they would then, with this program, have spent a sufficient amount to make to decide whether they wanna take the next step, which would be they would then earn a 25% interest in the, in all eight concessions, and then obviously moving to the next phase of spending. Yeah, they're drilling right now on those concessions.
that's $6 million they have to put in if they-
Correct.
continue with the current plan.
Right.
That happens when again? Sorry. What is the date for it?
That's happening now. They gave us notification last year that they were moving forward into the next phase of the earn-in. That's happening now.
Okay. Yeah. Going back to Puente Princesa and also Quebrada La Negra. Did you say you're gonna put some holes into La Negra in this quarter or next quarter?
Yeah. We've got.
You're still doing drill counts?
We changed drill contractors this year. We went out for bid, we've changed drill contractors, so it's taken a little bit of time to the other one demobilize, but get the new team in. With all our safety procedures and everything, they were on site for a couple weeks going through training and everything. We focused, Terry, first on the near, on the near mine program. We've got one rigs turning there, one underground and two on surface. The focus will shift a little bit to getting the regional program fired up. Yeah, the first holes are gonna be in that Quebrada La Negra, Puente Princesa area.
Just very cursory look, but, you know, look at the millions and the years, it's about close to $800 thousand a meter.
It's a helicopter-supported program.
Yeah.
It is a bit pricey, but, that's one thing that Andre's not only focused on expanding our exploration, but, he's really pushing this year to reduce our cost per meter.
Yeah. Thanks for that. Just coming back to follow up with Kerry's questions about the country. We had, there are some projects pending and nothing much moving. I know they have a huge entourage coming to PDAC next week or two. Are there any opportunities within Ecuador for you to pursue or you want to diversify?
Uh-
away from that, from the geography? Yeah.
Terry, our opportunities are with our phenomenal exploration package, our land package. That's our opportunities.
Yeah.
In Ecuador and with Fruta del Norte. You know, we've never stopped from going 35 to 42 to 44. As to Kerry's point, you know, the mill did 45 during Q4. What more can we do? Now with the SVR up and running. It's giving us more opportunities. We're seeing it improve productivities underground. Yeah, we've got lots of runway to continue to grow in Ecuador. For us, if we're looking for other opportunities on an M&A front, it's outside the country.
Okay. My last question is on the CapEx. The list on the tailings cost you $19 million, I think you said, at the last quarter for the year. The next one gonna be easier, right, which is another $19 million. I forget how much money. The $40 million-$45 million a year you spend, how much is for the tailings expansion?
It's about the same as last year.
Okay. This year will be the same, $20 million?
Yeah. Let's just... Yeah.
The next one is the year after or just 2025?
No, 2025. Yes, 2025, the next one.
Yeah. Right. Thanks, guys. Thanks very much. Great work. Thanks.
Thank you. There are no further questions at this time. Mr. Hochstein, you may proceed.
Great. Thank you, operator, and thank you everybody for taking the time this morning to hear about Q4. Again, just in closing, I can't stress enough how proud I am of the team at site and everything to achieve. You know, if we were in Canada, U.S., or Australia, it would be award-winning safety performance. We continue. Doug and his team at site continue to push on that. All the numbers are great, but that safety performance is probably what makes me and the rest of the team very happy, very proud of what we're doing in Ecuador. On that note, thank you everybody. Hopefully see you, many of you at PDAC coming up. Thanks, operator.
Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your-