Good morning and afternoon, ladies and gentlemen. Welcome to the OceanaGold 2021 First Quarter Results Webcast and Conference Call. At this time, note that all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. Note that this call is being recorded on Thursday, April 29th at 5:30 pm Eastern Time.
I now would like to turn the conference over to Elisa Howell. Please go ahead.
Good evening and good morning. Welcome to OceanaGold's Q1 2021 results webcast and conference call. I am Elisa Howell, Investor Relations Manager for OceanaGold. I am joined today by Michael Holmes, President and Chief Executive Officer of OceanaGold Along with Scott McQueen, Chief Financial Officer and other members of the executive team, including but not limited to Jim Whitaker, Executive GM of Haile David Wei, Executive GM of Asia Pacific Region Craig Feebrey, our EVP of Exploration and Development Sharon Flynn, EVP, Sustainability and Sam Pizzukhi, Senior Vice President of Corporate Development and Investor Relations. Before we proceed, note that references in this presentation adhere to International Financial Reporting Standards and all financial figures are denominated in U.
S. Dollars unless otherwise stated. Also, know that the presentation contains forward looking statements, which by their very nature are subject to some degree of uncertainty. There can be no assurances that our forward looking statements will prove to be accurate as future results and events could differ materially. I refer you to the disclaimers on forward looking statements in our presentation.
Michael, over to you.
Thank you, Alissa, and good evening and good morning to all. I hope you're all safe and healthy. It's a pleasure to be here with you today to provide an overview of our Q1 results and share the many exciting growth opportunities we have underway. Delivering on our commitments is a core value at OceanaGold And our quarter one results demonstrate that we're on the right path to deliver operationally as well as advance our organic growth. Profitability improved quarter on quarter on the back of higher average realized gold prices and improved margins despite mill challenges and lower gold ounces sold.
I'm particularly proud of our operational teams To adapt it and overcame normal course of business disruptions that affected mill throughputs during the quarter. The teams quickly evaluated the challenges and then executed Solutions. As such, we're on track to achieve the consolidated 2021 guidance. We're also on track and on budget as we advance our own organic growth projects. Total capital investment during the quarter of approximately $70,000,000 were focused on and included Martha Underground Development and Haile Pag Waste Stories and TSF Expansion.
We ended the Q1 with $196,000,000 in the immediate available liquidity and have structured our balance sheet to ensure our projects progress on optimal timelines, irrespective of the DPO status. Our ability to deliver long term value to shareholders is predicated on the prudent capital allocation and the path is very clear to my team. We are focused on delivering on our commitments and we are excited about our future that will deliver long term value for shareholders. While many of our peers are seeking growth through M and A, We are growing significantly through prudent investments in our assets, leveraging existing infrastructure, personnel and our track record as a responsible mining company. We expect to bring online 3 new underground mines and expand our existing open pit operations, all in geopolitically stable jurisdictions.
With our 4th quarter results at Investor Day, We announced our inaugural 5 year outlook, which you can see here, forecasting 75% higher production at 25% lower all in sustaining costs. We are delivering margin growth, which for shareholders translates to real value over the long term through the development of our high quality assets. What's also very exciting about this chart is that we have significant upside potential. The outlook does not include Didipio and restarting Didipio is a key catalyst and priority for us. We expect that once the FTA renewal is finalized, the operation can contribute up to 120,000 ounces of gold And approximately 12,000 tonnes of copper annually.
At 1st quartile all in sustaining costs, Didipio will be a significant source of free cash flow moving forward. Moving on to Slide 5. Responsible mining is fundamental to the way we do business and part of responsible mining means prioritizing the health and safety of our workforce. The COVID-nineteen global pandemic continues to impact many of us in our daily lives and it is a reality that we are addressing at each of our operations. As at the end of Q1, approximately 121 positive cases have been recorded amongst our workforce since the start of the pandemic, including 11 at Haile and 9 at Didipio in the Q1 of this year.
The Philippines and Didipio Host and Adjacent Communities are still being impacted by COVID-nineteen. And as such, In the spirit of Bay and Ehan or Unity, we're doing everything we can to assist locally by providing medical supplies, COVID-nineteen test kits and household care packages, including sanitizers, protective face masks and rice. At the site, we continue to enforce strict health and safety protocols, including mandatory and precautionary quarantines in an effort to reduce the transmission of the virus. Our health and safety record is one of the best in the industries, but we strive to do better. We saw an uptick in the total number of recordable injuries in the Q1.
In response, Each operation is reviewing the injuries in detail to prevent reoccurrence. Across our business, we're focused on key programs that have delivered a sustainable reduction in TRIFRA over the last 8 years. And these include the management of principal hazards, fostering a culture that supports safe work practices And increased focus on occupational exposure and work environments. We also continue to progress key initiatives this year in ESG, including the development of our 2020 emissions reduction targets, alignment with the global tailings standards And delivery of our 1st modern slavery statement reporting on future improvements in our supply chain processes. I will now turn it over to Scott McQueen, our Chief Financial Officer, who will review our Q1 financial results.
Thank you, Scott.
Thank you, Michael, and hello, everyone. The next few slides summarize the key highlights of our Q1 financial results. As illustrated on the summary table, the 1st quarter results reflect improved quarter on quarter profitability. This is despite lower gold and some milling throughput constraints at both Bays and Haile. As will be discussed later, our operational teams rose to those throughput constraints that impacted the Q1 have now been resolved.
1st quarter revenue came in at 149,000,000 The quarter on quarter reduction makes lower gold production and sales.
This was partially offset by higher realized gold price
With all of our New Zealand dollar gold hedge closed out at the end of 2020. EBITDA benefited from G and A with 50 percent reduction in cost at Didipio, which totaled $4,500,000 in the quarter. While still negatively impacted by realized non cash currency translation losses, the impact this quarter was reduced to the prior quarter. Accordingly, the stronger realized gold price and improved margins, plus lower depreciation and amortization expense resulted in an adjusted net earnings of $21,800,000 or $0.03 per share fully diluted. Concurrently, operating cash flow increased to $47,600,000 and excluding net working capital changes equated to $0.09 per share.
As expected, investing cash flow increased to $71,900,000 in the 1st quarter, Reflecting Haile Waste Storage capacity expense, increased Macraes pre stripping and a continued underground development of Martha. Financing cash flows for the quarter consisted primarily of finance leases with no drawdowns on the debt facility made during the quarter. Turning to Slide 7 and some information on our capital allocation strategy. As of March 31, our cash balance was approximately $146,000,000 and our net debt stood at 163,000,000 This cash balance represents the planned investments in organic growth projects as we progress the development of 3 new underground mines to production over the next 2 years. We continue to actively monitor and manage liquidity as we move through the peak growth investment period in 'twenty one.
For the next year, we continue to prioritize the reinvestment of cash flow into our high margin organic growth projects, which we believe represent top tier investment returns that will deliver long term value to shareholders. As we move beyond this peak investment period, we expect to deliver that inherent value as well as return free cash flow to shareholders. Moving on to Slide 8, which includes some additional detail on our capital investments during the quarter. As already noted, our 2021 capital investment program is focused on the advancement of our organic growth projects. For the quarter, capital investments were just under which was largely flat quarter on quarter.
Over half of that total was allocated to growth investments, including $15,000,000 from lifts and pad construction at Haile $17,000,000 for the continued development of the Martha Underground, which totaled just over 2,300 meters during the quarter. At Macraes, approximately $4,000,000 related to the development of the Golden Point underground, which is on track as planned. Sustaining capital expenditure was just over $24,000,000 for the quarter and included $16,000,000 in pre stripping. Approximately $11,000,000 of this related to activities at Deepdale North Open Pit at McArthur with the balance primarily Haile. Exploration spend totaled $5,800,000 with the majority related to projects and targets at Waihi.
However, it did also include some resource conversion drilling at Golden Point Underground, conventional drilling, the Horseshoe Underground at Haile. As mentioned, we are building 3 new underground mines, 2 of which will be online Martha Underground and Golden Point. Organic growth projects are progressing consistent with our guidance issued earlier and remain on track to be delivered as planned. I'll now turn over to Michael, who will provide more details on the operational performance during the quarter.
Thanks, Scott. And on to Slide 9, where we'll discuss the improvements we've seen at Haile this quarter and particularly year on year. At Haile, 1st quarter gold production of approximately 44,000 ounces was 10% lower than the Q4 of 2020. The lower quarter on quarter production was due to the lower mill throughputs related to the processing of the saturated saprolite ore. The saturated ore block shoots to the primary crusher resulting in lower mill utilization rates and a 20% reduction in the mill feed quarter on quarter.
The operations team worked quickly to resolve this by utilizing the previously planned Sagin ball mill liner replacement shutdown To redesign and rebuild the primary crusher chutes, which thus far has effectively mitigated the blockage and we believe is a more robust design. If you compare the current quarter to last year, gold production was over 50% higher, largely due to improved mining productivity. Over the course of 2020, full commissioning of the 19 Komatsu 730 haul trucks increased hauling capacity by 30% And the successful implementation of the management operation operating system succeeded in delivering Haile's best quarter yet in total mining movements, up 24% year on year and 7% quarter on quarter. Our current run rate would put us at a total mining movements of approximately 40,000,000 Ton in 2021, best in 2020, and a reduced mining unit cost. Going forward, we expect to move a lot more material, which proves up which provides upside for production and potential unit cost reductions for this year and beyond.
During the Q1, generally higher grades from SITE Phase 2 helped to offset the reduced mill utilization rate. And we expect marginally lower recoveries related to fee grade to course correct through the balance of this year. We continue to expect $150,000 to $170,000 ounces of production in 2021 at Haile, Which is 60% over which was delivered in the over 60% of which will be delivered in the first half of the year as we complete the mining and snake Phase 2 and reached the high grade ore portions in Ledbetter Phase 1. Total capital expenditures for additional tailings and waste storage facilities are in the range of $60,000,000 to $70,000,000 as well as additional capital for the development of the Haile Underground. Portal development for the Haile Underground is expected to begin in the second half of this year and the project remains on track for first production in quarter 4 2022.
This timeline is predicated upon the receipt of the supplementary environmental impact statement currently expected by mid year 2021. The SCIS will allow continued development of our existing HAL footprint, Expansion of the TSS and PACE cells and full development of the Haile underground. Turning to Slide 10. Macraes Doll production of approximately 34,500 Ounces was impacted by a material rainfall event in early January that prevented access to primary ore sources in Coronation North Raven Pit And Fraser's underground for approximately 2 weeks. As a result, mining activity was focused on waste movements as well as pre stripping activities In addition, the unplanned outage of 1 of the 3 existing Save Mill Motors in early February Reduced throughput capacity across the balance of the quarter.
The refurbished Saginaw motor was back on-site earlier this week. With the refurbished motor installed and the completion of the planned re back of the Auto Club, the plant will be fully operational at the end of this month. Despite the impact of quarter 1, full year guidance at Macraes is unchanged. With the mill restored to full capacity, the team at Macraes Confident that the adjustments made to the mine schedule will deliver on full year with an improved second quarter and a stronger second half. As you can see in the picture on the lower corner of the slide, Golden Point underground development is well underway.
First production is on track for quarter 4 this year. Progressively, Golden Point Underground will replace production from Fraser's Underground. Golden Point Underground, along with additional open pit opportunities at Deepdale, Innos Mills and Gaytan will be the primary sources for the Macraes mine life extension to 2028. Moving on to Slide 11, And Waihi produced approximately 4,000 ounces in the Q1 prior to shutdown of the processing plant for replacement of the existing SAG mill and general maintenance. The new SAG mill was delivered to site in early April and will be installed before the restart of the plant currently expected in late quarter 2.
With the restart, we expect to begin continuously milling of ore from the Martha Underground and deliver 35,000 to 45,000 ounces of gold production this year. Ramp up of gold production will continue And we target a production rate of 90,000 to 100,000 ounces per year from the project over the next few years. Development of Martha Underground continues to progress on budget and on schedule. And in our view, this is a producing asset with significant potential upside. During the Q1, we announced the first resource at Master Underground of 620,000 ounces Our goal is grading 4.3 grams per tonne.
And in 2021, we expect to drill an additional 27,000 meters. Moving 10 kilometers to the north of Waihi, we continue to believe that Wharakiraponga, our WKP project, represents a promising opportunity within the Greater Waihi District. WKP is a major discovery with an indicated resource of 421,000 gold ounces, an inferred resource of 717,000 gold ounces, grading between 12 grams 13 grams per tonne. And that is all based on 35,000 meters of drilling on the primary primarily on 1 of the 3 veins thus far. We expect to deliver an updated pre feasibility study for this project in the second half of this year and continue to define the potential of this high quality asset.
Turning to slide 12. We consider AZIPO an integral part of our portfolio And its restart is the key focus for us in 2021. We remain in dialogue with the representatives at national and local levels on the renewal status. Currently, the FTAA is with the Department of Environment and Natural Resources for endorsement to the Office of the President. The current expected time line for resumption to full operations could be up to 12 months post renewal.
This is primarily driven by the time required to rehire and reorient our workforce, which may also be impacted by the COVID-nineteen. Didipio is currently held in a state of operational standby, poised for transition to full production. Once fully ramped up, Didipio would produce approximately 10,000 ounces of gold and 1,000 tons of copper per month at 1st quarter of all in sustaining costs. Now looking to the future. On Slide 13, you will see our key initiatives for 2021.
Excellence in ESG and a commitment to responsible mining remains fundamental to the way we do business. We have operated a sustainable business for the past 30 years By applying robust ESG practices across the company. And we know this is critical to ensure we deliver to the communities in which we to deliver value to the communities in which we live and work. Delivering on our commitments is a core value for OceanaGold. And for us, that means achieving our 2021 production and capital guidance, while successfully delivering organic growth.
As of the end of the Q1, we are comfortably on track to achieve both of these measures. Advancing our organic Robust organic growth projects is a key to delivering shareholder value. And as I stated before, our organic growth projects are on track and on budget with 2 of the 3 new underground mines coming online this year. And as discussed, the restart of Didipio remains a significant near term catalyst of the company. Didipio has the potential to be a material source of cash flow.
It is why we continue to employ a small crew at the site to keep the operation in standby. We continue to invest in the community and I continue to Dedicate a significant portion of my time and effort as CEO to its restart. We look forward to the day we return to normal operations and can contribute To the Philippines COVID-nineteen Economic Recovery. Turning to Slide 14. Advancing our organic growth is key to delivering long term shareholder value.
And we're doing this in 2 geopolitically stable New Zealand and the United States. As mentioned previously, in the Americas, we are progressing earthworks for Harajale underground and expect to begin the port of development in the second half of this year upon the receipt of the SCIS. The equipment is ordered and the mining contractor has been selected and the project is on track for 1st production in Q4 of 2022. Martha Underground remains underpins the Greater Waihi District as we currently see it. The project is on track for continuous milling to again late in the Q2 and delivered 35,000 to 45,000 ounces of gold this year.
As we develop the Martha Underground project, We continue to invest in the drill bit. The majority of our exploration activities are in New Zealand, where we plan on drilling over 80,000 meters with 10 drill rigs in place this year, 4 of which are currently active at the Martha Underground and 2 at WKP. It's early days, But we believe the Waihi District represents the largest value creating opportunity we have in our portfolio. Moving to the other island, Macraes' mine life extension to 2028 is supported by Golden Point underground and open pit expansion opportunities, including the deep delve and layback of existing open pits. Golden Point Portal development is progressing on plan and on track for 1st production in the Q4 of this year.
In summary, we're focused on the future and bringing our organic growth online, which we believe is critical to creating shareholder value. Oceana Gold is a resilient and dynamic gold mine with a strong sustainable future. We are excited about our 5 year plan and beyond that delivers increasing margin and real value to shareholders. The acquisition we made at the low point of the gold cycles have created a platform for us to create value through our own organic growth Thank you for joining us today. And I'll now turn the call back to Alyssa.
Thank you, Michael. Sylvie will now transition to Q and A.
Thank And your first question will be from Hovis Habib at Scotiabank. Please go ahead.
Hi, Michael and team, and thanks for taking my questions. Just Quick two questions from me. The first one at Hale. Now mill throughput, as you had mentioned, was lower due to some challenges with, I guess the floor of the saturated saprolite ore to the plant. Now I believe this has been rectified during the quarter And also grade was hung in pretty well compared to Q4 coming into Q1.
Can you give us a little bit color on again, just want to double check that this situation with the flow has been rectified. And How do you see kind of grades coming in the next couple of quarters? Is it going to be fairly flat? Or do you see Great kind of tapering off. How do you see the grade profile looking like at Hale?
Yes. Thanks, Hamed. Yes, we have fixed and have resolved the problem. We were trying to sort of manage through it and decided to do the redesign of the primary crusher and the apron feeder and the shoots. And we managed to take the opportunity of doing that during the mill shutdown for the reline.
So that's been resolved now and plant True put is back up to the levels that we were forecasting, which is great. And we believe that, that solution is now a long term solution for the process plant. Yes, the grades were able to sort of as we've done that and with the lower throughput, we're able to sort of The better grade material through, we'll see sort of the grades for this quarter We'll be relatively flat, but the throughput will be increased. Then there'll be a reduction in the grade profile in the 3rd quarter and then a slight increase in the 4th quarter. So as mentioned before 60% of our oil production will be linear in the first half of the year.
Okay, perfect. Thanks for that. Just another quick question on and then just moving on to Didipio. In regards to the approval, we started off negotiations with the DNR, then the File kind of moved to the Office of the President. Now I believe the file is now back to the DNR.
Has there been any changes or any sort of additions, Connections to any sort of agreements. Is there something that they're working on or any other additional color you can provide As to what's taking the DNR so long to get approval across the line?
Yes. Look, thanks, Mason. The frustration for us is the transparency of the timing of the process. But as previously mentioned in some other Announcements. We did work with the FTA Renewal Committee Technical Working Group, which was a combination of the Mines and Geosciences Bureau, the Department of Environmental and Natural Resources and the Department of Finance.
And we renegotiated the FTAA terms and conditions and that sort of happened sort of over the Christmas New Year break. And now basically it's just been going through the verification process and the sign off process. And so it's basically now Just into the Office of the Secretary of the Department of Environmental and Natural Resources, which is the last signature that's required before it goes to the Office of The President. So through the technical working group, it sort of went through the undersecretaries that were working with us and the directors that were working with us It did go up through the different departments for secretarial sign offs. So we've got that from the Department of Finance and now it's just with the As I mentioned with the Department of Environmental Natural Resources to the Office of the President.
There has been complications within the Philippines with regards to COVID Offices being government offices being shut. So that has impacted the timing.
Okay. Thanks for the color on that, Michael. And that's it for me. Thanks.
Thank you. And your next question will be from John Tumazos at John Tumazos Very Independent Research. Please go ahead, sir.
Thank you for taking my question. Which quarter will CapEx peak this year? Sequent years production rises, costs fall. What might be a plausible year where net debt would fall to nil? Are we 4 years away, 5 years away?
We all like you to be strong and well capitalized.
Yes. Thanks, John. Scott, I'll hand that question to you.
There's a microphone there. Hello, John. I hope you're well. Thank you for your question. Capital will peak this year in the next quarter.
We're expecting about 60% of our capital in the first half. 3rd quarter will be similar to the 1st and the 4th quarter, the lowest CapEx, CapEx remaining on track with our guidance. You're right. Our plan is predicated on delivering these projects with the peak Capital year this year, capital coming down next year, Martha Underground, Golden Point going into production, production going up, margins increasing as you note. I would suspect expect and it's called price dependent of course, John, but expect that we would be targeting to be, As you said, net debt neutral within 3 years certainly.
And we'll be doing everything To achieve that as soon as we can, delivering on our objectives.
Thank you. We're all rooting for you.
Thanks, Joe.
Any further questions, sir?
Thank you. No, I'm fine.
Thank you. I apologize. We do have a question from Farooq Ahmed at Raymond James. Please go ahead.
Hey, guys. I thought I would just jump in here with a question. A couple of things. One is at Hale In your press release, you put out a comment saying, I guess, a bit of a warning that while the guidance is reiterated, It could be adversely impacted by the COVID cases that are going on there. Can you just give us Some insights into what you're dealing with in terms of workforce availability and What would have to happen for you not to be able to maintain guidance at all from a workforce perspective?
Yes. Thanks, Farooq. I'll hand it I mean, the COVID has been managed exceptionally well on-site, and we've seen some great reductions of cases. Unfortunately, it's just had another uptick in the region, but I'll hand that over to Jim Whitaker. He should be able to give you a little Color on just exactly how he and the team have been managing the situation.
Jim?
Yes. Thank you, Michael, and hi, Farooq. Thanks for the question. As Michael noted, the numbers have Come way down after this Q1 in South Carolina in around Kershaw and Lancaster County as well. They're literally down to the single digits of people that we have off-site, either for presumptive cases or for confirmed cases.
So the numbers have come way off. That has helped our ability to plan work and obviously through the reduced absenteeism. We've kept our same policies in place as we had all the way through last year. We also kept our same policies in place with respect to vacations, which is helping the situation a bit because Now we're into the vaccine cycle in the United States, as you may know, and people are taking time off To go out for a half a day and to make sure they get their vaccine. So we've really been doing a lot of communications and promoting that to make sure that people are out there and looking for getting the vaccine.
With respect to impact on operations, it's really more of a cost impact that we saw through last year And some complications with absenteeism, not having people in seats all the time. I think we're through the worst of that. But again, it is kind of a crystal ball. We're hoping that we don't have this famous 3rd wave that some people are talking about, but what we see Through this month is very, very favorable for what we're trying to do with the Hale business plan.
Okay. That's great. Thanks for that color. And then maybe just to round out that, how are you in terms of your workforce In terms of filling out your workforce at Hill, have you kind of reached full complement there?
Yes, we've been at Full Complement for a while. The challenges of Haile, more Specifically in the open pit mining operation over the past year have been rotation. We're still doing a lot of work On looking at what we need to do to bring people into the company that want to stay with the company and also working through Conduct issues such as health and safety, which we hold at very high priority. So we're at full complement. The next And actually through the month of May is very critical for the underground group.
We have left The contract for the underground contract miner, to be able to reduce risk on the schedule, that's looking very good, but It's indeed we're actually going through a hiring cycle right now. It will be a very, very busy month in May and into June.
Great. Thanks for
that, Jim. And then, Michael, maybe just one follow-up question on Didipio kind of add on to I think OVAS's original question. It sounded I guess when I read the release and just hearing your presentation, it sounded to me that you're a little more upbeat or maybe even A little more certain about the outcome at Didipio. Am I just reading and hearing things that I want to Read in here or is there something you can tell us about how things have gone? I mean, it sounds like the Department of Finance has signed off.
What can you give us some color into kind of what the discussions have been with the DENR and what they're telling you in terms of Their willingness to sign off imminently?
Yes. Farooq, I think there's been a couple of changes within the country that We're seeing the announcement of the President with regards to mining within the mining industry within the Philippines and The opportunity that we've got of advancing that for a COVID-nineteen recovery. And so there's been some announcements from the President with Regards to the open pit band and the EO 79, Q2 'seventy nine. And I think that's an important view for the country and that I mean the Department of Finance and I think quite a few of the other departments of the DNR have been working with the Different departments to sort of move that forward. I think from our point of view, when you look at the technical working group, it was made up of the different departments.
And they're all sort of quite happy with what we've done with the renewal and it's just a matter of now just going through the process of sign off. And so as we've been going through the process of sign up, we've sort of seen that the Department of The Mining Sciences Bureau directors come out with some positive sort of statements within the Philippines breadth as well as the direction of the President with regards to mining industry within the country. So look, again, we don't have a clarity on the timeframe for us is something that we've never had. And that's been one of the most frustrating things that we're still dealing with. But we believe sort of we've done And the working group with us have done what we've done and it's now just sort of to the signature point for the Department of Environmental and Natural Resources before it then goes to the Office
Okay. Thanks for that. Thanks, guys. These are helpful answers. I appreciate it.
Thank you.
And currently, we have no further questions registered. Please proceed.
Thank you, operator. We do have a handful of We'll start with the first question for our management team. Question 1, Will the pre sold ounces from last year be accounted for in the Q2 2021 at $19.25 per ounce or thereabouts.
Thanks, Alicia. I'll take that one. Yes, I will. The presold ounces were The cash was received and the revenue was put on the balance sheet that unwinds through the P and L as revenue at about $19.20 as we deliver those ounces across
Okay. Thank you, Scott. Second question, at what share price would you look at doing buybacks?
Yes. Look, thanks, Melissa. I think at the moment, we're sort of focused on our organic growth. And so the free cash that we've got in the balance sheet and the way we set it up business through last year and beginning of this year It's all going back into the organic growth, which we see as the long term value for shareholders. I think the question When the Didipio comes back online and we do get that free cash flow generation, it's just it's how we then sort of utilize The cash flow from that and what's the best way of doing that and we'll review that once the video comes back online.
Thank you, Michael. The 3rd question, turning to Didipio. Assuming you get the FTAA renewed, you won't have any production for up to 12 months. Is that correct?
Yes. Thanks, Lisa. No, that is not correct. So Didipio, we've still got Concentrate currently on the ground, so we'll be trucking the concentrate out. Total value of that's around $50,000,000 to $55,000,000 worth of concentrate on the ground.
And we'll get sort of payment for that within up to 6 weeks, That 90% payment of that in the 1st 6 weeks and then the remainder will come as we finalize the assay. It will take a period of sort of 2 to 3 months to get the processing plant and the people Yes. Reemployed and trying to back up here, the processing plant is back up and running. And we will then be utilizing the stockpile, The 90,000,000 tons of ore stockpile we have to start feeding the process plant, and that will then assist with The delivery of tailings for the Paystel plant, but we'll be supplementing that as we sort of ramp up. What we're saying when we're up to 12 Production is up to 12 months, that's production at the full rate.
And so we were actually ramping up production of 1,600,000 tonnes. So It will take us about 12 months to get back up to that full production rate of 1,600,000,000 tonnes from underground. And of course, That gets supplemented through the process plant where we mill about 3,800,000 tonnes. So there's another 2,100,000, 2,200,000 tonnes that comes from the stockpiles So initially, it will be processing the low grade stockpiles and then we'll continue to feed the underground ore as we ramp up the underground to the 1,600,000 tons, which will take up to 12 months.
Great. Thank you, Michael. Our final question of the day What is your working capital cost with Didipio's start up?
That's it's basically the Didipio was cleared out from underground. And so the start up costs aren't that Right. The working capital should be around that $3,000,000 to $5,000,000 for the start up. It's more about the employment of the people and the training of the people. We'll have the concentrate, as I said, that will be sold within the 6 weeks.
We'll move that off-site and sell that. So that should be Positive cash of around about $50,000,000 to $55,000,000 and then as we ramp up the process plan and then get The operation into full production.
Okay. Thank you, Michael. And I was mistaken. We have One more question and that is can certain capital expenditures
I'll take that one if you like, Michael.
Thank you. Thinking about that.
The organic growth projects Can be deferred, but our priority is to deliver on the optimal timelines and that's the way we set up our balance sheet with that intent. 2021 is our peak capital investment period and when we set our plans in 2020 was at a record high goal environment with a very bullish outlook on mine. But that said, our plans for this year were set at We started the year with $205,000,000 or so in liquidity, and we set up our balance sheet expecting expecting softer gold prices and at current prices that drawdown could be circa $125,000,000 but we're still in a good position. Gold price is $100 Either Way, it's about $30,000,000 and we have levers in our control. Before we would look at the timing of those projects in terms of additional short term cash flow through prepayments or additional debt options etcetera.
So we've got options on the table and we're well positioned to manage Should the gold price drop, but that's average $1793 for the 1st 5 months and we continue to monitor that closely.
Thank you, Scott. That is our final question of the day and concludes our webcast and conference call. A replay will be available on our website later today. And on behalf of Michael Scott and the rest of the team, thank you for joining us. Bye for now.
Thank you. Ladies and gentlemen, this does indeed conclude your webcast and conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines.