All right. So we're ready to begin. So we're assuming that the webcast is live now. So the next few hours, we're going to walk you through the slide deck, which is available on the webcast link for those of you that are on the webcast. But welcome, everyone, to the 2019 Investor Day for OceanaGold.
It's a pleasure to be here with you guys today with members of the Ocean and the executive team. We've got a few that are also online as well. So we want to keep them somewhat interactive. We want to go through quite a bit of material, but we do want to spend some time answering some questions that you guys might have. So the agenda is fairly standard.
Just going to run through the key areas of the business. Obviously, it'll be a quick introduction, go through just some of the performance we've had and the highlights over the past year or so. And then we'll get straight into across the financials around growth, which obviously has been a big theme for Oceania Global in the last couple of years and will continue to see organic growth, that is, and then exploration, operations, and then we'll wrap up. So we expect that this will go about 3 hours, and then we can send
you home. So I'll turn
it over to Nick Brooks now. Thanks, Ed. Welcome, everybody. It's good to be back here in Toronto for another Investor Day. When was the last time we did it, sir?
It was June of 2017. Yes. So 2 years ago. Publicly today, of course, and Sam is lots of loans. I'll come down the right hand side with the Colonel Sanders.
Michael is our Chief Operating Officer, and he's been with us since 2012. Besides him is Cody Witherman. Cody
is our Hooker and the
SVP for Hooker Development, joined us about June last year. I think, and there is Matt. Cody comes from we've used you as a barrack and to fill out the QSR team. And beside Cody is Mark Hedberg, our longest serving employee in the company, and Mark is our Chief Development Officer and is out to law firm's technical and project related. In Australia, we've got Scott McQueen.
Scott's on the phone. Scott has been and the 3 year period since 2016. Sharon Flynn, APC for special performance in external affairs. Sharon joined in 2017 and has made a good difference to our company and the way we operate since she joined. And of course, Craig Kibbe, who's Head of Exploration, who did pay for exploration, who joined from Goldfields in 2015, We've got a lot of international experience.
So I'll just check with the team in Melbourne and Brisbane, if they're on the line.
Yes, we are in Brisbane.
Okay. That's good. So also in the room today, we've got Marcelo Ramos, VP for Business Development and Brian Pratt is Brian. Brian is Manager for Business Development. And Brian and Marcelo are both in Denver, and very busy.
As I told the investors the other day, they're going to be a little bit lower in Bagdad. So, we're pretty busy. Business profile, it's just a really important point about 4 operations in 3 countries within across the Pacific. We have a solid operation platform operating platform in the field and in the Philippines, and we are building a solid operating platform here in North America through Hial and other investments. So the establishment of the office in Denver was really strategically about 12 months ago to make that a better base out of view.
It's a good morning job, a lot of people are sitting there with experience, with consultants And it's a good time frame for us back on the other side of the decision. We have a very solid reserve base of 6,000,000 assets and resources of 1200,000,000 assets and 12,000,000 assets with resources. So without a run rate of 5000 to 600,000 ounces a year, which we can achieve every year for the next 5 years, I think, We've got a good long life business that we're building. And we continue to invest heavily in exploration now, spending $50,000,000 on exploration this year across the business. So it's a good time to be time involved.
Okay. So the achievements and the highlights, I guess, over the last 12 months, for the 7th year in a row, we've achieved production and cost guidance. It's given us a degree of credibility in the market that we're very proud of and well deserved. We've had exceptional performance at our Macraes operation. Last year, Macraes did 200,000 to 23,000 ounces, the 2nd time in its history for 28 years and produced over €75,000,000 of free cash flow, an outstanding performance from what many consider to be a rate of success.
So it's a percentage of the quality of our portfolio, the diversity of our portfolio And really, this is a strong company. And of course, the strong environment with social performance, I mentioned the impact that Sharon's having on the business, but we really are institutionalizing the way we view our communities and our governments and manage our environment. And that's a big difference between what many people do, which is rely on 1 or 2 people. So this is becoming the right very much part of the way we do business. On the financial side, again, another positive return on invested capital every year since 2011, so 8 years in a row.
The only gold company on the planet can say that. The only gold company on the planet can say that the return on invested capital every year, Craig, is. Now when you get to see that, they are quite amazed and quite pleased. We have to come back in conversations that I have with investors return on invested capital to really important measure, particularly for the generalists, and of course, between voters in our industry and our market. $121,000,000 of free cash flow generation across the business, so that's operating cash flow minus core capital.
Interested our margins really strong again, cash balance and growth and net debt reduction over the past 12 months. On organic growth, we have some terrific potential within the company when we went through a lot of that to play. You would have seen the resource in the meeting with us this morning about the increase in resources that Martha undertook. We need to realize, which is a seriously good operation up to over 200,000 ounces a year in about 5 weeks' time. And it has the potential to be the best asset in the company.
So better get on the bus. The Haile Train expansion is going well. Many of you were down there just last week, seeing the progress we've made. And the process plan is really starting to hit the stretch, which is wonderful to see. When we are ramping up the open pit, we have had a few challenges with the out of the past 6 months, but we've turned the corner there.
And the crude and labor is not a problem for us now. We're getting getting lots of interest from people working in Nevada coming to work for us. Some in South Carolina, we're not so selling recently, So that's a pathway to 200 barrels worth of oil. And of course, the underground pit is also less important. Then on exploration, a big focus around over the past 2 years.
I mentioned that that's an increase in the Martha Underground resource, is now after 1,000,000 ounces, and we're only about halfway through the drilling program. Significant initial resource is WKP, which is I'll have a test on this at the end of the day, Raq Apunga. So if you remember that, you'll get a bonus. So 635,000 for the quarter. 1 grams
per tonne initial reserves and the
damages started. That's a sensational start to these venture discovery with 10 kilometers from existing process to have the capacity. It's going to be a great fit model in the future. And further exploration success in Macraes, which is extending the mine life here, we're now looking at developing the 2nd underground mine at Macraes deposit. Okay.
So last year, we had
a good year.
We certainly came home with a full sale and knocked it out of the park in the 4th quarter with our share price. I think we were oversold in the first half of the year for whatever reason, and people started to really realize the potential, not just the performance of the company, but the potential of the company. And so with a rising positive sentiment towards growth, we really did get a bit of tailwind going up last year. It continued to perform fairly well. Next one.
So thinking about consistent performance, and this is not our data. This is from a friend to RBC. Of all those companies, and there's probably you've probably encountered nothing, we've seen about 30 companies there in the gold space. We come number 1 in terms of silicon on production and cost guidance. It's one point for deliver on cost and it's one point for deliver on production.
And so every year, 5 years, we've got to 20 points out of 16. And each company's last agreed to equal, just on a couple of occasions. So we feel very proud of that. And it's just well deserved to have a team. So now I'll hand over to Scott to go through some of the explanations.
Thank you, Mick, and good afternoon, everybody.
It's early in Melbourne, but afternoon over there, I believe. Just looking to Slide 10, please. Here, starting off here, we've got a slide that's a recap of 31, 12, 18 for those of you who were on the recent webcast call, but it's certainly worth a quick review. Across 2018, our strong cash flow drove a material reduction in net debt and put us in a solid position liquidity position at year end. You can see there at the top left that we ended the year with $158,000,000 of liquidity and a 59% year on year reduction in net debt down to $69,000,000 That included a prepayment of $60,000,000 off our revolving credit facility and paying $24,000,000 of dividends to shareholders.
We also announced a system where the Board has approved a further dividend in early 2019. With regards to our current a bit more information on our current bilateral facility with our fixed bank group, which includes Citibank, CBA, HSBC, Natixis, TNT and Scotia. Our current facility limit is $200,000,000 It's due to step down to $150,000,000 at the end of 2019. Obviously, we prepaid that $150,000,000 already. The final bullet is $150,000,000 which is due at the end of 20 6th December.
We've always maintained fairly aggressive amortization schedule. That's consistent with our approach to prioritizing the repayment of debt and maintaining lower gearing. But given, I guess, the expanded organic growth opportunities that we'll talk about throughout the presentation, and you're probably already well aware of, especially in New Zealand, over that period, but no doubt we'll probably revisit that schedule in due course. Moving to Slide 11. Again, this is a familiar slide, and we've been highlighting this for a while.
But it remains important, I think, because it illustrates the delivery of several key elements in our approach, those being that we like to run, obviously, a high margin business and with a focus on disciplined capital allocation. When you combine those, we'll deliver solid return on capital, which is probably the best measure of performance at the time. Specifically, on the left, you can see the EBITDA margins that the business has generated over the last 8 years. It remains strong and consistent and well above the peer group. When you combine that sort of performance with quality underlying earnings, and you may recall we have put a slide up in the past that shows AG36 near the top of the industry in unadjusted NPAT, so in terms of what I recall, quality earnings.
So if you have quality earnings and strong capital management, that will manifest itself in good return on capital results, and we can see that on the right, where like EBITDA margins, our return on capital over the last 8 years has been consistent positive, as Nick mentioned, the only one that can claim that technically and above the peer group. So I think it's always worth revisiting those 2 key measures and we focus on those business and they'll be important to focus on as we continue over the next 3 years in what will be a fairly significant capital growth period in the business. So moving, talking about capital, we've got a couple of slides here which will talk a little bit more about our capital profile
to give you a bit
of sense of our set of beyond what we've guided already. So if we move to Slide 12. This, as I said, provides a bit more of an indication of what our forecast capital profile looks like. I'll point out at this point, obviously, this is to give you a general sense of the trend and the profile of our capital and doesn't constitute specific guidance beyond what we've given in 2019 already. We'll first graph the highlight of 1 on the top left there.
Certainly,
it gives
you an overview of the general profile of the total capital spend, which you can see indicates steady decline over the next few years, which is peaking in 2019. And that covers, obviously, the organic growth projects, which you can see down on the right bottom right, which is the GGO underground, which sort of rolls over the next 2 years and before completion. Haile expansion, which runs across the whole period, but it's heavier from 20 19, 'twenty. There's a little bit more on the next slide on that. And there's continued development and progress in the master project over the next 2 to 3 years.
So there, you can see that profile certainly you described in the overall profile more so than the sustaining capital of the exploration. In terms of exploration, it's pretty close as you can see. We've got a strong commitment to exploration as a key tenement to growing the business in the medium to longer term. And that period of the next 4 years includes continued drilling at MATA, also Macraes, where we're working steadily on life extensions there and also our organic growth sorry, our Greenfields program, which includes drilling at WKP in Argentina and also in Nevada through various joint ventures. A strong commitment forecast there in terms of retaining our exploration.
In terms of sustaining capital on the top right, the forecast is fairly flat. We have 50% to 70% of our sustaining capital over that period will be free strip at Haile and Macraes. And that as we transition through the various bits between the frays and up and down the strike at Macraes sorry, at Haile, the pit of home on the strike at Macraes. That's probably an area that's increased for the bit, Macraes in particular, where we've, through sustaining capital, have managed to extend the life substantially there with our current plant looking to move out to 2024. That comes at the cost of some sustaining capital.
And also included in there is probably the other major element of the additional equipment that we've raised. We've run that equipment pretty hard for a long time, and that needs to be replaced over time to support that expanded life also. So a declining profile over time, but we have a couple of years, particularly 'twenty and 'twenty one in front of us, where we've got some exciting projects that we're going to have to invest in the growth of the business. In Slide 13, this one, as I said, gives you a little bit more definition around what's happening at Haile. And as illustrated, you can see the bulk of the expansion spend at Haile concentrated both in 2018, 'nineteen 'twenty period.
We've already obviously submitted and spent the 2018 chart shown there. The key element to this has been previously discussed. It includes the planned upgrades that support high throughputs, including yards and tower mills, which are in late stage as we speak, and pebble crusher, which has already been completed and commissioned. Moving on will be the tail, picking the feed well upgrade and the final destruct unit, etcetera. Includes PAG, expansion, CSF upgrades and other infrastructure works, WAN and Germany, etcetera.
And I think Craig and others will cover that a bit later on, Mark, I suspect, sorry. And the key element, I guess, there is the change slight change in profile compared to what we had forecast a couple of years ago actually in the NI 40three-1 101, and where we had a bit of a steeper profile on a higher total capital forecast. The big change there is adjusting our plans around the fleet, which we've moved to leasing with the original NI-forty three-one hundred and one assumed we would be purchasing that fleet. We're going to be leasing that fleet. There's more details provided on that later, but those leasing efforts will kick off this year.
As Nick said, that project all those projects are tracking as per plan, and that's been a budget, which is good.
With that, I'll hand back
to Nick to provide some more information on where we're headed.
Thanks, Scott. So we'll have a bit of a discussion here about strategy. So our vision is basically to be a larger mid cap company with 6 or 7 mines producing over 1,000,000 ounces. It gives us more robust business, more diversification and importantly, driving the efficiency of our current operations, making every asset spread as much as we can and applying the disciplined capital. We've put a lot of work into technical excellence through Mark and his team, through Michael's team and recruiting people with really good mining skills and giving them leadership training.
Leadership training is a big part of the focus of the company. Last year alone, we put 135 people through leadership training. On the technical side, we've built the performance through the use of technology. And the Didipio Underground has been our first foray into this. That's what it's new to the business, but it's a really strong push, I think, from us to really upgrade our the way we operate underground.
There's a 30% increase in productivity opportunity required in our key parts of the process through underground mining. And Didipio will talk a bit more about that.
I'll tell
you that automating jumbos, automating production doors, automating the loading units, things that can operate through grid breaks and through basket and all that sort of
thing, which can really improve the performance.
In addition, we've got analytics. Some of you would have seen what we're doing across the different sites, pulling data together from all of our sites and using the IPs and the whole company to improve the performance of our operating plants and indeed our underground operations. Organic growth, we are very focused on organic growth. And I think you're starting to see I know you're starting to see the truth of that effort. Now particularly at Waihi, the numbers are starting to come through, and it is a big focus in regards to driving.
We've got 300 grand loss in Oceania. Once the video is done this year, we have 300,000 barrels to build on the supplement in the next 5 years. So and they're also very much in focus. And then the 4th aspect of it is, of course, the M and I piece, where we do in terms of the growth of our business partner make us more relevant to the generalist in the biggest team of things and give us a more robust asset base of diversification, both geopolitically and from a production perspective. All of that is on the teams, but having high quality assets that deliver margins due to true cash flow, Effective management and organization, so we work on that a lot as an objective of how we manage the business, how do we manage across time zones, the whole philosophy of decentralized people, pushing the accountability out to the sites and you're holding those people, we consider the most important people in the business if it's even holding them accountable for the results and maintaining a robust balance sheet to underpin all of that.
So it's pretty simple. Mining is very typical, right? You don't need to either complicate it. But you do need to have really good people with great technical skills, and you've got to have good assets that can deliver the cash flow. Okay.
This is the result of that same strategy that we've been applying for the last 5 years: 10% increase in collection per share, 20% increase in EBITDA per share, 190% increase in earnings per share over the last since 2012. And finally, the Gulf prices going down 24%. So we have delivered, and we're going to keep on what we're doing, okay? All right. Now we'll get on to the M and A.
Thanks, Katie. Sure. Look, this company has a great history doing good M and A. And two examples that we have on the board are the 2015 acquisitions that Oceania did. You can see in the first bar, basically the purchase price.
And in the case of Remarco, it has the purchase price plus the cost to build in there. So it's basically our full cost to take the asset. And then it's and the second bar shows sort of the present value of that asset. In Wahid's case, we pulled $180,000,000 of cash flow out of that. And despite Sam's efforts, we still only got $130,000,000 dollars of NAV on line.
We think that's going to go up considerably over the next few years. On Remarko, we have there's a value add to our shareholders through M and A, through Village and M and A. You can see the similar charts on resources and reserves in the case of Haile. And we, as Mick pointed out, one of the reasons we've been successful in M and A is because we have a highly skilled technical team. Our exploration group is world class and our project team is world class.
And that's one of the competitive advantages we see for ourselves in doing M and A. And we've looked at a lot of projects and we continue to look at a lot of projects. The transactions are the ones that we see we can really bring value to shareholders. And that's sort of what our M and A strategy can continue to be going forward. We have some strategic investments in Nevada.
Will speak in a little bit more detail on our exploration portfolio and our pipeline. But we've made 2 acquisitions
of equity interest in GSV in
Legacy in Nevada. These have been very good investments for us. They're an option. The GV is an option value for us as well. Craig will talk about some of the joint venture work that we're doing in both Argentina and Nevada.
Prefer joint ventures to strategic interest, the interest because it allows us to get more ownership and investments if they do not have value. And our cost structure is basically investing $1,000,000 a year or $1,000,000 over a time period and earning into equity interest of 75%. So that's sort of our structure and that's we view the marketplace as an area where we can this wasn't available for us a few years ago. And now there's something set up in next phase, we view this as a time to be a countercyclical and that's when we have some leverage Thank you. So the organic growth, just another view, the 3 big hitters.
The end, the Martha Underground project, we just saw the resources on Waihi. We're going to 400,000 odd ounces, 470,000 ounces in the quarter. We produced 430,000 ounces with 1 200 and 20,000 ounces sequenced. And now we've got a follow-up agreement, keeping the NANDs as we're slowing. So it is a real story.
I picture on the left hand side. We'll show you a slide later on but what it was like in August last year and what it's like now. So we can see this picture starting to emerge this around LUNC. It's a waterfall beneath that sort of widening. The WKP, what I've seen since January, I've already talked about that.
And we're putting another $8,000,000 to $8,000,000 that's $10,000,000 I think it is U. S, into drilling and finding the real extent
of this resource, which is
I think it's no, I'm not going to be too bold in saying it's a multimillionaire's discovery. And of course, the expansion project on file, very pleased with the progress in last year in the process, Paul. We're making some testing in terms of getting that open pit ramped up. We have seen exactly terrible weather over the last 6 months, which is affecting our mind, and we do think about that. But we have turned the corner.
And now the pivot is to the occupancy underground at Kala is progressing very well. So Daryl, we'll go into the The figure that you see in front of you there, it's one you've seen before, but shows they were active around the Americas and Asia Pacific. The result of the work has been adding ounces and building the resource base at Waihi, as Nick mentioned, through the Martha underground project and more recently, the discovery of WKP. The growing resource at the Golden Point underground target down at Macraes, part of the Round Hill project and through extensions to known mineralization as hail. Each of these, I'll talk to in more detail later in the presentation.
In addition to our operations, we've perhaps been set about the past 2 to 3 years establishing a pipeline of projects in highly prospective gold belts with track record of production. This is primarily on high grade main deposits, principally low sulphidation at the thermal and orogenic systems. This approach, we added 2 joint ventures in the Teixeira de Masif of Southern Argentina, which is highly prospective for high grade epithermal vein deposits, just like those that we're mining at Waihi. We have completed several drill programs with our joint venture partner, Mirasol Resources. On both JVs, we have been drilling gold mineralization and we continue to look at exceptional projects in this extensive gold drop.
In April 2018, we also established an exploration office in Reno, Nevada, close to equity investments in GST and New Legacy and have to date entered into 3 new joint ventures, again focused on high grade epithermal vein systems, and we'll continue the first round of exploration on each of these in the coming summer. Overall, we're excited. The results we have been achieving across our sites and more recently, the ability to build a pipeline of new joint venture projects. Momentum we've achieved, we're now increasing our resource base through substantial drill programs across each site and importantly, exposing ourselves to significant value creation through discovery. In 2019, we've again budgeted between $40,000,000 $50,000,000 as was highlighted earlier, and we'll drill approximately 150,000 meters of drilling, which has been fairly consistent over the last few years.
But for the first time, we'll have more than 20 drill rigs turning on our operation in addition to those rigs on our joint venture projects. Please move to the next slide, 22. For those of you familiar with the areas, our joint ventures are located in the Great Basin, centered on the data on the left hand figure, and the projects are highlighted by the red triangles. The Highland project is a joint venture with Surbala Gold, Ostrin Teak and Fat Lizard are both of which were Naples Gold. While on the right hand figure, Santa Cruz Province in Argentina, our 2 joint ventures are with Mirasolbui Resources as shown in the brighter red colors.
I'll now hand over to Sharon. You're going to stop right there, Sharon.
Just a couple of questions.
First one on the capital estimates that we're showing. Does the growth capital include the capital relief for the Guaje Open Pit for Phase 1 at this point? And the second question is on your JV agreement that you have with the companies. Does your exploration capital spend over the next 2 to 3 years include your commitment to what you need to spend on this project? Scott, do you want to cover the first question there on the capital?
Yes, sure. And yes, Suraj, the forward estimates have what, at this point, we believe will be required, including the Martha Phase 4 company.
And then Craig, on the joint ventures. I think that's a question for Scott actually.
Was that yes, make sure I got that one, Ken. The question was, is the capital F that includes the potential lending on the JVs. Is that correct?
Yes,
correct. No, not beyond 2019. We don't include that. We don't have an absolute commitment to do it. And in the grand scheme of the total numbers, it's not that material.
As Terry said, it's in the order of $1,000,000 a year or less to JV.
I think the way to describe that is we have an option to cut these loose in the very early stage. And we would look to do that if we got any indication that wasn't what we were looking for. I mean, Craig needs to talk to this, but I think the point is we have an option to get to 75% on a whole bunch of leads that we've screened down from a much larger number to these ones that we view as highly prospective than what we're chasing. So
yes,
1st phase is up to 50% in 5 years, up to 75% in additional four or something and you can kind of lose them any time, right, one year at a time roughly. I mean, they're all little bit nuance from that. But generally, that's good luck, same color. Any other questions? Well, you have more opportunity to ask questions.
We'll take one more before we move on. Andrew? I think we're really well positioned to do something. We've got that balance sheet. We've got a lot of debt to the company now.
And we're certainly aware of what opportunities are out there. And we've got to be ready to act at the right time. But what we've done for years now, we have a very thorough approach of due diligence and assessing the screening prices. And some of those things just don't make the grade. So we've got to be really focused on what it is we want, what we're targeting and go down that path.
It's obvious. There's more things becoming available. But I think some of these will be you're going to wait to get the phone call as opposed to knocking down the door. And, Cody, do you want to add something? I think the answer to your question is we are being quite proactive.
We I doubt there's going to be an opportunity that would make sense to us that we wouldn't get a phone call, right? I mean, people know that we're active. We're in the space and we're talking to a lot of people. So I would say, yes, we're going to be we're going to look to do good deals for our shareholders. And but definitely, it's a great time to do this.
And there's still a few towers that need to play out before you can kind of see
this see more happiness to pay as a pivot.
Again, we've looked at a lot of things we can do over the last several years. We've only transacted on 2 major acquisitions, a couple of strategic investments in PGTs. So where it makes sense, but we're going to create value is when we execute. If the value isn't there, we will not execute. Yes.
I think important to us is our costs, right? At all city costs, we're not looking to buy in the mines. We have all city costs of 1200 and things like that. Just because we're for sale doesn't mean to fit our portfolio. And we do like I said before, we view ourselves having some our technical expertise as an advantage, and we do model that in our due diligence effort.
I think we if you look at our portfolio, we have 4 assets that, in our minds, are kind of 200,000 ounce producing assets or will get there. So we're working on that. And in the case of with you, you can make up the proper and get you to a kind of free cash flow of worth as worth a $200,000 actually sort of a We would love to bolt on 1 or 2 more of those. That's what it's asking about 5. So all in sustaining costs and not destroying our cost base by blending assets through higher cost.
Jurisdiction wise, could we have made any secret about wanting to diversify away from the Philippines? That doesn't mean sell the Philippines. It means water it down as a percentage of our portfolio through responsible acquisitions. So we look to be transacting in safe jurisdictions. And in the event that we bought into Latin America or something like that, it would have to be we would have to see very good value for our shareholders.
I think it's very much on the radar. So it's got to make sense and yes, I'll be more looking at those things. In answer to time, we're going to move on. For those of you that are on the webcast and want to ask a question, you have to queue up on the telephone. And I think you have to press star and 1, and then you wait for instructions.
I do have a queue in front of me. I do see when people are queued up. So I promise you, we'll answer your questions. But for now, we're going to move on. We're going to move on to Sharon, who's going to walk through some of the good work that we're doing on the ESG funds.
So Sharon, over to you.
Thanks, Sam, and good morning, good afternoon, everybody. Nick mentioned in his that OceanaGold is committed to institutionalizing our environmental and social performance. And we do that through a set of governance arrangements and policies that we refer to as our responsible mining framework. Responsible mining to us is not just a tool to manage risk, which is an excellent way to figure out where you need to focus and prioritize management of your impact. But it's also an opportunity to build trust with communities, with governments and other stakeholders and how we do manage our environmental and social impacts.
The focus on risk and opportunity really gives us the ability to engage consistently with the stakeholders who are who have concerns or who live next to our operations, For example, an example of how we balance risk and opportunity is around water. We have strong focus across all of our operations to managing water to ensure quality and quantity. But at the same time, we also participate in initiatives around watershed management and watershed protection that require us to be outside of our operations and working with stakeholders to figure out better ways to preserve and conserve water. The same can be seen across how we approach rehabilitation, very strong commitment to rehabilitation, rehabilitating land successfully, but at the same time, example, in Macraes, we're engaging in conversations to understand land values with local farmers and with local governments. So moving on to the next slide, Slide 25.
This commitment and permanent structure is really embedded throughout the business from the Board, from the Sustainability Committee at the Board level, all the way across the sites and operations. This, as Mick pointed out earlier, is about driving accountability across our operations for ensuring this performance. This responsible mining approach has been an excellent way also to deliver on ESG ratings. ESG ratings companies and agencies take a look at how institutionalized sustainability commitments are across mining companies and the structure that we have in place and that we're working to strengthen has resulted in some excellent holdings. We point out on this slide that MSCI, which is one of the top rating agencies, we've ranked in the top 3 against the 10 largest precious metals peers.
And those ratings results from the rating agency going through all of our policies and standards and taking a look at how we actually manage performance across the business. Next slide on Page 6. Environmental Management, fundamental. We have a comprehensive set of environmental management standards that we've been strengthening. We have ISO certification on our Digipio mines, but we also just launched a new set of integrated management standards that have an independent statement of conformance to ISO.
So we're always looking to align with benchmarking best practices across the industry. We also have a focus on understanding what our material environmental risks are. Those are not new issues in the mining industry, primarily water, biodiversity management, closures, cyanide, climate change, greenhouse gas emissions and also tailing storage facilities. And I'll pass it in a second to Mark who can talk a little bit about our CFF approach. In addition to the focus on the key top environmental material risks, sites can also choose huge risk assessment to identify particular material risks for their sites.
For example, Waihi and New Zealand really focuses on noise and vibration due to the location which is right there in the town of Waihi. So Mark, did you want to talk a little bit about our TFS approach?
Thanks, Sharon. Just briefly, other core operations, all we have, current savings and savings downstream construction. So some of them aligned like the ones that Hale is aligned downstream construction. The other ones at both Macraes, Didipio and YH, downstream construction. We do have some upstream construction at the place, but both of those are being decommissioned at the moment.
So we haven't actually placed any tailings on the upstream portions of the downstream construction at Tecnocraes in the last qualified years. And we're just in the process of actually recapping those at the moment, so that they're basically becoming new. So in terms of also the investments themselves, most of the embankments are more than the Factor and Safety. So, they're all water retraining structures. But we also generally budget those impairments with waste rock as well.
So, we're very confident in our savings impairment environment. And that's the way we're going forward. We're in actual fact looking at various other options like drive that sales and
Yes. Thanks, Mark. Slide 27. Nick mentioned earlier that we have a leadership development program at OceanaGold, and 135 people last year participated in that program. That program reaches not just the senior level, it drives down to the superintendents and supervisor level and it's an excellent way to align the values and principles that OceanaGold has with the performance of our people.
We have also started a new focus or renewed focus, I should say, on diversity and organizing a exco level diversity committee to really focus on increasing the number of women in the business and also taking a broad approach to diversity so that we understand what it means to operate within societies and communities that actually have a different set and a diverse set of people and that we need to actually make sure that those diversity is represented in our business. So we're going to be having some particular focus on the diversity issue over the next year or so. I'll pass this then over to Michael, Michael Holmes.
Thanks, Sharon. So Juanicipalbon, I've already talked about the increase in resources there. So we've gone up from just over 400,000 ounces to 2,000,000 ounces after completion in the 3 years since the announcement. These measures have indicated in the top to insured resources and do include the numbers that we saw this morning in the press release. So we announced it now in the market underground for 998,000 to be precise.
And of course, the 625,000 ounces in 2020. One number I'd like to quote is it's cost us $12 an ounce, discovery costs for that drive. That's pretty cheap. So I credit to Craig and the team that Wahoo is a very well We've got 5 rigs at Wadi and 2 out of battery type. You say 10 rigs within China and Ocweni.
More consensus, analyst consensus ranging from a low of minus $2,000,000 which is in that position, to $429,000,000 which now leads to the $130,000,000 So I think you can see there's a great opportunity for investors to get on board the train that is driving. The guidance for this year, 60 to 70,000 ounces, all in sustaining cost of €75,000,000 to 1.25 on the back of lower production. We are coming towards the end of the Perenzo mine and the sprays that come off us over the next 12 months. We'll be winding that up. And the tons mined, 500,000 tons of just over 5 grams, 5.3 grams.
And unit cost sort of the underground mining cost there $55 to $60 a ton, that's down about 20% since you bought the mine from what Newmont was that is costing them. And for our Q and A and purchasing, really those costs are functioning in light tonnage type in the light tonnage right in the middle. And then you've got the capacity on the right side. Could you just move on to the next one? So the picture on the right was August last year.
The targeted sites from geological information, previous drilling, gold workers and drilling to date. And the cost of gold is what we've converted to resources and these are the 2 exploration drives in the 920 and the 800 level. And so this morning, we announced a resource of 1,000,000 ounces in the market underground. And you can see how the gold is filling out and increasing. The Rexbane is starting to fill out nicely.
The Edwardbane is filling out nicely. So look how much has grown. So the exploration target has grown. And this is based on geological information. So we're very excited about the success we're having at Mark Runge brand and the intercepts certainly support that.
Our strategy for development at this early stage, development of the Martha Underground is to go through different areas first. So a rapid development plan to get into these different areas like REX or maybe deeper down. 70% of the resource so far is the plan. Thank you. I'm on Page can you just go past 32, please?
Thank you. 70% of the resources so far is in PISCO and DARE. It hasn't been touched before. It's all undermined. 30% is in and around old workers.
And our plan is to maximize drugs to cemented hydrocarbon. With the current concept. And we're doing some catch work on that at the moment, which should, you can see a clear sighting on that. And that way, we can maximize the resource extraction around what it's called. And that's more durable.
So this is really exciting. This is exciting, the Royal vein and this Edward vein. We don't know the strongest part of that yet. So now I should hand over to Craig to talk about the geology around this. Thanks, Lucas.
I think you've done a very good job describing it. I'm not sure what there is to add to this except for, as you've described, we're very excited about the potential that still remains within the geology. These are very large piece of veins that are labeled there on the left, the Martha Empire, Royal and Edward. These are the major structures and there's a significant amount of mineralization in between these, which are important things in their own right, both in width and the grades that we're seeing. And you can go and check those in the press release.
A lot of those are listed there. So there's a long way to go here. I think we're very excited about the prospects and there's still a lot of potential to keep adding resources. I think it's been exciting the last few years, but certainly the next few years are going to be even more exciting with an exploration perspective in adding ounces. I think we could just move on to WKP, Mitch, if that's okay?
Yes. That's Slide 33, I think. Yes. Okay. So this is an overview of our tenement holding from Waihi.
We're standing 70 kilometers or thereabouts to the north, and the tenants are shown in the various colors. These areas cover approximately 30,000 hectares, so quite a big holding. Importantly, the gold province has produced over 12,000,000 ounces of gold and 52,000,000 ounces of silver and remains, in my opinion, very underexplored. Most of that gold has come out of Waihi, Karangahaki and Golden Cross. WKP, I think, will be the next major center there, as Mick mentioned, with respect to his expectations.
Our pipeline of projects with different levels of exploration and understanding from extensive areas of sinter outcrop at our Dome Field projects in the Bering North, indicating centers of preserved hydropline activity and drill mineralization at both Ohui and White Cluffs and 2, of course, our newest discovery at WKP at Harake, which is only 10 kilometers north of Waihi. In February, we're very pleased to announce a growing high grade resource at WKT, which includes 234,000 ounces at 18 grams per tonne gold as indicated in reports and 400 or just over 1,000 ounces at 12 grams per tonne gold as an inferred resource. Of course, there are a number of significant drilling assets as listed here that supported those resources. Move to the next Slide 34. This is the planned view of the geology at WKT.
Dark beige color around the river in the north is the host rhyolite lava. Outlying this or moving out from that color is younger rhyolite pyrotrastics predominantly and younger still and the site flows shown in green. Now there are 3 major figure veins have been identified to date and are shown as the pink traces, the East Graben vein on the right hand side of the figure, tea stream in the center and the Western Bay to the left. Historical drill traces are shown in light gray that might be a little difficult to see there and drilling by Oceania Golf in black with the focus on the East Kvaerba domain. The red arrows represent strike extensions based on field mapping and ground geophysics.
Important to note, we're going to start to realize the potential of these 3 veins and the prospects in general. We know, for example, that all three veins have economic mix and grade of mineralization, and the sector has been drilling today with a quickly growing resource of a traditional grade on the scrubbing vein. So really, this is just a little window, a little area of focus that we've been working on. We've had our hands full drilling these carbon veins. We drilled a few additional holes into Tstream and the Western vein late last year.
And we're very excited, as Mick demonstrated earlier, the potential of this area and what lies along strike as well. Next slide, please. Looking here at an oblique view of the resource model on the left and the long section of the East Graben vein, looking from the east to the west. Of note, the majority mineralization currently defined is on the East Graben vein and parallel structures in both the footwall and the hanging wall. Heat Stream also contributes a small amount of the resource.
In the long section on the right, the main lithological units are shown with the rhyolite lava with the preferred host, the light beige area where all the real test points are seen. And this is not what we've tested up dip and remains open for about 100 to 200 meters as well as areas in between the drilling and the long strike at both ends of the structure. On this long section, the drill piece points, about 20 in total at the end of rylai, as shown as grade times width. The significance of the pierce points greater than 50 gram meters, continuing along strike approximately 1 kilometer in this section. The high grade indicated resource is located in that cluster of holes on the left side of the long section, the cluster of purple holes.
This year, we've allocated 14,500 meters to continue drilling this vein in particular, although we'll put several more holes into Seastream and Western Vein as we proceed. Obviously, the expectation here is that we increase this resource by the end of the year. Now I'll hand it over to Mark, I think, to talk about our plans for Martha and WKC.
It's Craig. Firstly, you would have noticed in our press release a couple of weeks ago that we did receive the permits for the Martha Underground project. So that big announcement is there for us to explore. So we're currently planning rapid development down to those areas that we talked about. Also, continuing to drill the expenses of those virgin areas.
It's basically detailed planning is underway now, and we're putting together a team of people to actually move that along as quickly as we can. It's a very exciting project for us. Also, with WK3, we're putting in a we're continuing to do the exploration work. But also, we're replying for a mining permit out that area. So at the moment, It's an exploration permit.
But we have eliminated enough resource to allow us to apply the government for a mining permit. And that's the 1st step in the process of developing this consumer model. We're continuing to do studies on it. So we've done a pretty feasibility study on the or scoping study, I should say, on WTP. And that's the level of work that we need to do to do to today mining pool.
But the exciting thing about all this is how do we put these things together. So, we start Martha Underground. We have potential around the Martha open pit and we have WKP. And what's that going to look like for the trucking moving forward? So this year, we're doing a pre feasibility study on putting those 3 deposits together, what that would look like as a decent.
With WKP only being 2 kilometers away, then processing the WKP materials through the process part, make sure we're seeing it in the world. We've had we can practically be able to do that. We have the ability to actually expand that with the current equipment, both at quality, but also highway of tailwinds our purchase plan as well, which is in hearing
Thanks, Mark. So one last slide, on Wazhi. And then we get to the phrase, we'll stop there to take some questions on the New Zealand operations. But obviously, you just got through a few slides where we capture the exciting things that are happening for us at Wazi. It is a fantastic asset.
We've talked about how much free cash flow we've generated so far. I think we only spent $100,000,000 in the acquisition with Newmont. There is a lot of value already at Waihi that we generated. There's a lot of value we've created, and there's more value we expect to accrue. And Mark and his team are working on the feasibility study.
We'll have more information in the second half of this year. But we can see that Waihi, in 5 years' time, roughly, could be a 200,000 ounce a year producer. And we do believe that at that point, it would actually be the best operation in our portfolio amongst the 4. So when you look at this slide here, when you look at the analyst consensus, we sort of gave a flash back to some of the previous companies that have acquired over the last few years, to ensure Richmond, Insebro and Claude and the valuation of these companies and their assets were given during the takeout. And you compare that to where Wannie is trading at in terms of consensus valuation.
We're showing a growing resource that continues to grow production that will get up to 100,000 ounces initially just from Martha Underdown and then grow to what I just situated, which is basically in 5 years going up to north of 200,000 ounces and the cost structure level moved on. So you make that comparison, if you look at Lakeshore, for example, it was worth $685,000,000 is what Tahoe paid for that. And you look at where Wahoo is sitting at, and there's definitely a disconnect between the valuation for Wahoo and these other companies and projects that are out there helping out there. So this is I might suspect that this is an important slide and it's something for you guys to consider going forward. So we're going to move on now to Macraes.
And like you said, we'll stop there, and then we'll take some questions. So I'll turn it back to Nick to kick things off on Macraes. Yes. So this is the range of consensus from the craze from $60,000,000 up to $373,000,000 with an average of $156,000,000 As you know, the price has been going there for 28 years. It's produced 14,400,000 ounces for their debt, nearly 5,000,000 ounces over that time.
Last year, we had a very good year, 200,000 ounces, the 2nd highest production of nickel, produced $75,000,000 from cash flow. So that's contributed to our portfolio after capital. We continue to have exploration success there. So we're now eyeing the mine life going out to 2024. That production model is around $160,000,000 to $170,000,000 for that price of the year.
And there is a big resource there. So measured in the cloud of
resources of some 3,500,000
ounces at $1500 gold for I think it was $2,100,000 So we're almost at $2,000 New Zealand gold today, if Scentra helps. And we're getting close to that magical number. So I think the crisis is going to be here for a long time, and we need to think about that in the current markets and the retail is trying not to be managed, of course, but that's true right to show an uptick trend. Trend. Thanks, Mick.
Good afternoon and good morning, everybody. Just looking at 2019 metrics for Macraes, as Nick said, it's 175 to 190 is the guidance, slightly down a portion of performance last year, and that's just due to the growth of Coronation North. We've had a solid oil and sustaining costs with the exceptional year last year backing that up again with from the open pit, it was about 50,000,000 to 55,000,000 tonnes mined and around that 1,000,000 tonne mark. You can see that the strip ratio of the open pit still quite high. But we mine that for a very aggressive dollar per tonne mine of $1.10 to 1 point dollars The grades, as I said, mentioned, the activity coming off a bit and that's due to some of the other bits that will be mined through the year.
So last year was predominantly Coronation North. This year, it will be Coronation North for the Coronation as well as some of the material out of phrases. The underground still producing about 2,000,000 to 2,100,000, still going strong there. And we're processing that 5,700,000, 5,800,000 tonnes. That's in line with guidance for that covered between 82 and 84.
So solid another solid year for Macraes and really exciting. If we go to the next slide, it just shows you sort of the top northern part of the trend. So it's a 35 kilometer a shear where jaws placed along that shear. We're on to our 13th second peak. So it's been 28 years, we've climbed out 13.
So predominantly mining from Coronation North to the North Pier. The next one down is Coronation. We'll be taking some out of that. Going forward, we'll look into detail and considering that project as well as from our competes, looking at the Fraser's web streams in North Korea. And then looking from the underground point of view, we have Fraser's underground, which is just off the Fraser's web area there, found it.
And then looking at the Golden Point underground and Crater, we're talking mid time about that. So again, still targeting our organic mine life extensions, which we've managed to do year on year since the 7th year of operation. So I think for the long years, as we've mentioned there, we have another 5 at least years for that. Still looking at unlocking the reserve and additional mine life that's open pit and underground. Really good still continuing ongoing success.
And the Randell project, which is the area, which we'll be talking about shortly, which is our golden point in its Instinet, an area that's beneath the process time at the moment. And he had to try just to talk about Golden Point. Thanks, Michael. I think we're on Slide 40 now. This figure is a cross section of Golden Point.
Golden Point is a part of the Round Hill project, as Michael just highlighted there, just north of the main and very large Round Hill resource where most of that has been measured and indicated. We've recognized that Golden Point is an extensive mineralization that extends 500 meters down bit along that controlling Heidemcraes shear. And as defined or the shear is defined by the drill intercept shown here, those ground meter intercepts. Mineralization here is some of the better mineralization here at Ukraine. Some of the better intercepts are shown there in this figure on the right, 15 meters at 4.3.
Those kind of grades with that kind of width are somewhat exceptional. So we're excited about the potential of Golden Point and how this may impact on the economics of the Round Hill project in general. The results point to a possible pit layback and we have flexibility there with the new underground mine, the area shown in the dotted box on the left hand figure, both of which, as I said, have potential impact on the economics of the project. We've allocated over 15,000 meters of drilling in 2019. We're well on the way to drilling this, both extensions and infill to convert resources as well as test to further potential down dip in both the Northeast and Southeast of the known mineralization.
I think I'll hand over to Mark to talk a little bit more about Round Hill itself.
That's correct. Look, I think this is probably the biggest good boy tap that we've ever envisaged. So once we finish all the mining that we want to do and exhaust all the other peaks, and then we have the ability to then move the process plant. So we wouldn't move it beforehand. So while the guys continue to find good resources and good reserves in the other pits and also things like the underground at Golden Point.
We can mine that underground Golden Point without affecting process part. We can certainly mine the significant portion of it. And so, we're also continuing to expand and continue to increase the life of the loan, right at the very end, we've got 10 years by life. So when it's all said and done, give us another 10 years. And that's what the Randle project is all about.
It's an extremely interesting project. Gold prices in and around that level that we need for this project. And so we continue to study. We continue to understand it. And while the guys are still doing a great job of finding other resources and reserves, it's wonderful to see on the back to where we are.
So, that's a fantastic growth path.
Thanks, Mark. So we will pause there on June. We're going to take some questions. There is one queued up. Michael said first, you can credit Swiss.
Swiss is queued up to ask questions. So just over, we're going to go over to you to ask your question. Thanks very much, Dan. My first question is with respect to the Martha Underground. I think the target was 1,000,000 to 1,500,000 ounces.
You delivered 1. And whoopsie is pretty convinced that he wants to penetrate. He's saying a lot more extensive than what was assumed. So has the target increased beyond that 1,500,000 ounces? Mike, could you answer that question, Mike?
Mike? Sure. Michael, thanks for the question. Obviously, with all the drilling that we've done, the information is fed back into the models. We look at those again.
We look at further extensions, either long strike up to down dip or the potential for adding more ounces in between the veins. In the press release this morning, we put out exploration target of 5,000,000 to 8,000,000 tonnes, that's 4 to 6 grams. So the target is growing. We have high expectations. As you said, we've put about 1,000,000 ounces into the resource and still 50% of the drilling to proceed.
My expectation would be that when we finish that program, we then revise our targets again and we continue to test those. But I think in general, the answer is yes. We have increasing expectations around the answers that we can deliver. And second question with respect to Mark's comments about the sustainability of the plant, so cannibalizing bits of old plant and care and maintenance. And so that's the first time I've heard you talk beyond filling the existing plant pieces, scope out what you're seeing, what conceptual volume you might think of ultimately processing it?
Or is it
too early to suggest that?
I think it's probably just a little bit early. As I said, we're I'm just hiring a feasibility or pre feasibility study manager at the moment. So it's a bit difficult for me to do a lot of arm waiting. But we have got a very good mill there at Riesen, also good plantation cells, etcetera. So it will certainly have a greater capacity than what the current one has.
Great. That's useful. Thank you. I wonder if you can just step us through what that conceptual plan might be to get through in excess 200,000 ounces? And how contingent
that is
on the cutback five at the Martha Pest?
I think this is a rapidly moving place, Michael, as you can appreciate. We just put out the market underground. The mini mouse is there. A couple of weeks ago, we put out the 600,000 ounces. We'll listen a couple of weeks ago, we put out the 600,000 ounces at WJC.
We haven't put out anything on the Martha assets yet except for the 7,000 ounces at the Phase 4 and also we have a rent that's having 40,000 ounces in the place to repair. Sam alluded to, it's potentially our best asset. And we should see this quality is raising up to 200,000 costs in that
And Michael, it's Michael. Just add a good comment there. Each of these stages are independent in terms of permitting and development. So one is not dependent on the other. And you also look at the economics of all of that.
But the £200 an ounce is achievable even with just smart and underground in WK for a long And one last one, if I may, please. With respect to Macraes life extension, To achieve that, I think you mentioned 4 or 5 years is now what you've got in line of sight to. To achieve that, is that sort of accepting a higher all in sustaining costs than the $1,000 an ounce? Is it compromising grade strip ratio to extend that life to maintain that sort of option on the gold price? Historically, Stifel, the margins at the price has been pretty constant as the gold price changes have been down.
Last year, we had an exceptionally good year with a higher exceptional rate of 1.3 grams. And but it shows how much talk there is in it. But obviously, if the gold price goes up, your pellet growth goes up a touch and the margin stays about the same. So it's really that line life extension with similar margins. And as you see, for our cost for this year, production was 10 percent as it costs actually 1,000.
So we are investing in the future at the moment.
Yes. Okay. Can I just
sneak in another very, very last one, and that's with respect to exploration there? If I recall, maybe it was from our strategy day, Craig was talking about maybe this is the day before the strategy day, and try that, about the discovery at Craig from the change in the direction of the mineralization and how that re added prospectivity of the region. Has that come to any improvement or was it just a one off? So you're referring to Coronation North discovery in 2015, which is a different has a different strike direction to the other deposits. Craig, do you have any comment on that?
Yes. Thanks, Mick, and thanks, Michael, again. Macraes is obviously structurally controlled by the shear, but there are a number of other structural complexities to help mineralization presents itself, both in the hand wash shear and the top work. So, there's variation along those, as I think as Michael mentioned, those 15 pit in terms of their specific controls. We've continued to look more closely at the data.
We're obviously still looking to generate new ideas with new targets. But in terms of breaking the nut for understanding it's better, we're not there, but we still have a very good, obviously, appreciation of controls on mineralization and where we should be putting the drill holes. So you can always come back or queue up again for additional questions. I do want to appreciate that you are on the call. It looks on the guest list that you're the only Australian analyst that actually woke up at 5:30 in the morning for this Investor Day.
So we do appreciate your support on Nick as well. We can see who's online as well. But we do want to move on to the U. S. Because I do want to see if we have a question on the floor on New Zealand.
Just in terms of near term, in terms of Martha Underground, development, but also in terms of development of the deposit. How do you see kind of Correnco kind of going off than Martha coming on in the next, let's say, year? We had this decide earlier that our car parks would be sitting on Martha Underground. But of course, I said it wasn't fast enough. But really, Parenteau and one of the other ones there, the county Daybreak, Pre Spinner.
Yes, so they're going to price off of it. And so we're picking up sort of different pieces around the mine as well, and around other deposits. Probably middle Q3 of next year, we've lost a run out of resources there, run out of reserves from existing mine. So there's kind of 18 months between now and then. And as we decide, that's sort of getting this in new areas.
So to be honest with you, we got the permit earlier than we expected because there was no appeal this time ever. So I think that speaks something to the quality of the relationship and the work that's done at Waihi to shepherd this through the process. But it's not true that it's kind of terminally. We do have some we still have a study study that's been completed, which is given us a line of sight on how to do it. And remember, we're still drilling it out.
So there could be a high additive production in next year, say, for 6 months. But we are very focused on this concept of the rapid development plan. So using modern technology, 6,000,000 rounds on those doing 300 meters a month, not 150, which is often a lot of miles between some of ours, we could get into those areas. So there's a lot of work to do on the planning side of things, but it is possible that we could be producing from these emerging areas, these new areas like PECs within 15 months. But it's going to be tough to ask.
Yes. Craig, just wondering if you're able to give us a breakdown of the recent resource volume trends with this and contributors Sorry, I couldn't quite catch that question. Can someone repeat that? In the recent resource for Wadi, part of the job, that's a big change. What contribution to the, say, the top ten Yes.
The proportion of mineralization is really hinges off the main Fisher veins, so Martha, Empire and Edward in particular. We need to do more drilling at REX and Royal, which is off or mainly get to off that 800 drill drive, which you can see in those figures. And as I said earlier, we shouldn't discount the potential of the mineralization in between those veins, and that would probably continue to be important as we continue to drill. Okay. And really briefly, you said that you had 5 meter average thicknesses at AKP.
What's the fitness range on average thickness for your Empire and Edwards just in terms of understanding the evolution? Again, the typical comment is here. It's quite muffled. Could someone repeat the question, please? Sorry, could I give you the average thickness of the Edward Payne, the Empire?
Okay. Sorry. We don't have the exact number, but it's at that order of 5 meters or thereabouts that keeps and swell considerably. But all of these veins, fissure veins are up around that number, if not more in places where there's significant dilation. Question on WPP, Mark.
I think you said you started initial permitting on it. So I'm just wondering if that contemplates surface or underground approach.
Certainly, definitely underground. Yes, we will.
In terms of the approach to the deposit, it would be like a same kilometer? No.
We're looking at a number of options there. It is on department of cultivation needs. And as we said quarter, when we went through our non employment in Q3, we were turning off private land and tunneled underneath Department of Conservation Land. Land. We're doing exactly the same thing or that's the proposal for WPLAC.
So it will be the summary order of 4 to 5 decline in. The legislation does allow you to have ventilation shafts on the part of the conservation room. So certainly, that will be in the upper part of the mix of the
strategy. I should add that Blackwater was permitted to the mining permit just last year. So within the last 6 months, we've got the mining permit for Blackwater, and that's now under
a joint venture early in the
roaster with a junior company called Tasim Lewis. Just Good question on Macraes, I think, for Coronation North. Can you just give us a sense of your model line like that you guys are modeling for Coronation North? Volume sheet in, so
that into the high ground,
I think it's going to be more material from the other fields. And that's the high grade production. Just wondering what the capping factor was applied for Martha and any potential for upside in the grade and targeting sort of higher grade areas. In terms of RECs, is that a higher or lower grade or in line with company's message at the moment in terms of timing of trade and profile in the country?
The trade with you, Craig. Price?
REX is only got 12 holes in the REX currently, which is quite a standard of drilling to do. Again, it's a reasonable vein there in terms of continuity of geology and the grades, again, vary between 4 and 10 plus brands. And the width of the veins are several meters again in width. So we feel this is it's an important vein. And in terms of its contribution, we still need to do quite a bit more drilling to understand the answers that would deliver.
Similar grades to what we've been modeling this year, 5.5 years? Yes. Yes. Do we just want to cut to the asset for Wahindraib? That's the question.
Yes. In the models, there is a top cut applied, but it's done on a domain basis. So we look at each domain in the model and then obviously the statistics and apply the card. You know what it is? Well, it varies across each domain.
So no, it's that's a variable number depending on each domain and the geostats that drive that. All right. So we are going to then move on to the United States and specifically to discuss Haile. So we're going to turn it over back to Nick to get things started on the Haile discussion.
Okay. So Haile has been
in operation commercial operations now for 17 months. And it's got a NAV of consensus, dollars 728,000,000 and dollars 533,000,000 up to 1.65 Since we purchased the project, just over 3 years ago, we built a 3 or turned out to be a $350,000,000 or $330,000,000 purchase fund and infrastructure. And we've produced to have 250,000 ounces of gold in 3 years from going to site and then basically expand its path. And when you look at it from 2,003, it's pretty good effort. We have had our challenges.
We had our challenges with the process plants. And as I said, we're on 4 days now and might be 4 days. We've had a challenge with the mining conditions there, particularly in the last 6 months. We've had our challenges with wider and skillets. We certainly turned the corner on all the roads.
And we've got I think we've had them in the right direction. So we've also had some significant exploration of debt. But early on around the underground, we see a lot of potential for more underground infrastructure in New Jersey So for 2019, the metrics that we put out, it's 145,000 to 160,000 ounces with an all in sustaining cost of between €50,900 tonnes mine getting up there, so we're ramping up in the process. So we over this year, it's a transitional year for the mining side of Haile as we ramp up from last year's around that adding in tonnes up to 16,000,000 tonnes. So that's the one rate that we're going to be running at the end of this year.
And that will be done by the purchase of new equipment, which I'll be talking about as well. So ship ratio, 5:1. Grades, around that 1.45 to 1.55 minutee. The mill, as Nick said, we've had our challenges, but that's performing exceptionally well. Last couple of days, we've sort of broken our records with 13,100, 14,400 tonnes per day.
Over 3 50 days, you're running at a run rate of about 6. So performing very well and the improvement projects market value to traffic is actually well and so that's going to we went out and saw it last week. We can verify that as well. You can see that the A grade mine is small, is high, and that's because it just what the grade presents itself. So we mine a lot more ore than we are processing.
So we're mining around 4,500,000 to 5,000,000 tonnes of ore issued. So again, the recovery is up to 82% to 83%. Mining costs are slightly higher, as you see, the 230,000, 240,000,000 and part of that as Nick said, working through some issues that we had and utilizing the specialist contract to certainly move some of that science after a little bit material. So once we open up the leases and open up the different ore bodies,
You see
some of the tissue there, you can actually see the barriers to send the South Atlantic flows and the more confident material. Processing cost of demand at that level, and we will see in further slides on and talk about how we manage these sales costs going forward with the reduction of the usage of DFNB, fine grinding as well as the improvements that we'll go through. And the capital, as you said, the operating there and the growth capital that we've got with the finalization of the projects in the mill, but also in the East pay and the PSX that will be filled in the 2nd week from starting that this year.
So just for everybody,
and people that saw it last week, from the opportunities point of view, we just showed Nick's mention there the rainfall impact. So average rainfall around that 4 to 6 inches per month. And you can see there from mid September to December, we got down drenched. So an important part for us, particularly going through a permitting process, is to ensure that no contact water left site. And so to manage that, we did some things that didn't help from a mining perspective.
So we did let the pit fill up with water and we also delivered important to the TSF. But the benefit of that, the opportunity for that is to recognize the and that has ensured that they have grown and cemented the confidence that we can manage the site with no contact water discharge, which has been great. The workforce, you can see, it's exceptionally growing in America and between in South Carolina, so the lowest unemployment rates ever. And so we're dealing with some of that. We have self imposed some of the local fire sort of that we have done through the ramping up of the mines.
But we're also, I suppose now, we look at the opportunities for the disruptiveness of the emerging giant as well as over the period, and that's just recently that over the period of last year, we did a series of job fairs out in the West and really targeting experienced people, particularly the experienced people that the East Coast is their home. So through the ramp up of the mines, we think that's how it's been to the East, look for labor and a lot of labor from the East Coast, we're now ready to come And Jim comes back as half in the last term, which is great for us. So that continues. And I'd say the interest there, as we're ramping up, we are getting 300 feet ready through the door per month. So our losses as opposed to our gains as the losses have gradually reduced in the gains of employment of showing growth recovery growth down that process.
Also targeting ex military as well. So that's the right success out of there. Productivity, still working through that, still upskilling, simulators on-site, replacing the mining fleet, as I talked about, and just looking for own training as well. So just moving on different skills with that, also utilizing contract mines to ensure that they're going to do a job and have had to move the trade material and equipment they've got to utilize in that as well. And consulting point of view just continuing to be sort of in some of the areas that aren't well covered in the whole resource.
And Craig will be going through some of that through the peak and For us, for this year, it's just a plan on the page for 2019. So we will complete Millstone Phase 1. And that's a that is a picture of Mill Zone then. So into the last couple of issues and the people that were there last week saw that. We've drilled mining, which commenced that.
So that's the 3rd,000,000 pit that we're starting up. And so that's we're progressing along with that and that's some of the areas that we need some specialized contractors to move the same material. Smoke pit, we're coming down to we've sort of gone through the head and the neck and coming down to the shoulders of the ore body. So the ore body is expanding out and then coming into that probably a little bit later than what we'd hoped before and that's just due to managing the water inside. Wilder equipment, we've made the selection there.
So we're converting the 100 tonne 777s catapult to a Komatsu float 730e, which is 100 megawatts to 200 tonne. And we've put an order in for 1 PC3000 and 2 PC4000s which will be coming. The PC3000 is coming up on-site soon within this month. PC4000 is in the trade show in Germany at the moment, so that will be taking itself up and making sure I added to us in by August. And then at the end, you'll have the 3rd excavator That's why we'll tell you the pieces of the foot on the side, arriving on-site this month as well.
Contractors order flow to that and then just to ensure the core drilling in the upper zones around the Red Hill, Ledbetter and Haile deposits just for improved understanding. So that is to ensure and to understand that short term more of the short term initiatives in the call. Pretty pictures there on Slide the next slide of the fleet that we're working towards. The reason going for the electric trucks, I suppose, to think about now, it's just a it's a trade handler with the plug and play component. And so it's electric drive motors.
So we basically got the engine of the truck which is driving basically a very large generator, an alternative that just drives electricity for the on the motors. The reason we got from that is that the East Coast isn't a got that much experience with large type mining equipment, whereas, I agree with these guys is most all of this component will actually going to dedicated rebuild facilities. So the engine goes back to Cummins and the electric motors go back to Camacho's centers for rebuilding as well. The 13 trucks over the next 12 months, we do have we have Catapult support here so that we have the guidance, the graders and the oil riders as well. And Newcross and Fenech and Swaddlers.
So upgrading the mine fleet to get us up to that 46 income per month margins, around those figures that we're mining at both sides in the sort of fleet size. So from the plant performance, we've talked about this before and we've looked at some of the costs that have been impacted from the processing plant with the labor requirements, reground maintenance, as has been mentioned, we're looking at the SMB. Basically, they're costing us about $40,000 per week, so the fixed SMBs. So a reduction in that will be a reduction in the $2,000,000 which should not get that 50 cubic ton of the price for the million. Reaching costs have gone up, and that's we've seen that just due to the nature in the U.
S. As well as some of the consumable costs for Protarax as well. So looking forward, manning and getting experience. And as I said, the process and plan is improving every day. And the targets in the record that we've used today will be our standard operating practice tomorrow, and we'll be pushing data there as well.
So we're currently running at a run rate of around about 3.2 to 3.6, and we want to continue that. And we've got a couple of days, but we'll try and make that consistent. Major shot in April to tie in the item. Working through the high throughput will reduce the costs as well as, as I mentioned, the rig beyond opportunities that we have prepared and the automation process. And Mark is going to a little bit more of the technical side of the automation process in the next slide.
So this gives you a rough overview of what we've been doing. We will support the plant. Over the last 2 to 3 years. So, we're pretty much using that much of the plant that we haven't touched since some time grew up. So, we initially, we looked at before the price of fire was cut, we changed a couple of things around the grizzly and the coarse ore bin and the flush flotation units.
Last year, we put in the pebble crusher. This year, we put in the tower mills. Last year, we put in the tail fixture upgrades. This year, we'll be doing carbon scout and automation in the Sur AL circuit and putting in the dual screens. And towards the end of the year, we'll be picking up the tail end.
So you can see that we've been working pretty hard. I think I'll try to remember back when it was, but I think we're standing here probably 2 years ago, probably a little bit later than this, which is in May or April or some 2 years ago and I was sweating bullets. I think I can tell you now this is going to be one of the best plants that we've actually put in. We've made a hell of a lot of changes to it. The automation is fantastic.
You guys are now starting to come along. We've actually got a great bunch of new guys. And our young fleet price is actually in place automation. And for that, we went on the tour. It was worthwhile.
I'm very proud of what Justin and Chris and before him and a young Werner has done. And my Chief Administrative Dave Carr, a real workhorse in actual fact making this plant work well. We said that we would do 3,000,000 to 4,000,000 tonnes 18 months ago or 2 years ago. We're getting there. We had availability issues.
Availability this year is around about 95% to 90%. So we've licked or we're licked all those problems. So very happy with the way these guys are going. And I think we'll be amazed if you come on the tool and make sure you see how well we Yes, so I'll just talk a little bit about the expansion. But I guess we're in the final phases of the regline.
We've installed the pebble crusher. So the front end of the circuit is doing sorry, one second. So the front end of the circuit is 10 to $3,500,000 plus. The tower mill has been installed. The regrind, the Ivan mill is being commissioned as we speak.
And so I'm pretty confident with the installation of a few things at the tail end of the plant that we're going to hit this profile. So we're looking here at hitting around about that 3.2, 3.3 this year, moving it up through 3.4, 3.5 next year and then slowly into our way up to 4,000,000. And for those of you who have been following the story of Oceanic Gold for a number of years, this is exactly what we did at the BPO. It's exactly the same process. It's exactly the same process of what we did at Regions.
We took that from $1,000,000 to $2,000,000 exactly the same thing that we did at Macraes before that took it from $1,500,000 all the way through to almost 6,000,000 dollars This is the formula. Maximize the grinding capacity at the front end of the circuit and then get everything else to match. So you don't spend a heap of money upfront spending extra capacity when you don't need it. So that's really maximizing your asset. This takes a picture of the eyes of Mill, for It's a very efficient unit.
We're extremely happy with how it's been installed at the moment and the support that we've got from Greenfield today. And that will, as Michael said, from the Chow Mill and the Isa Mill, that will get rid of the bug there, which has been the SMDs And we decreased our operating costs by about half a bucket ton. And I can see probably improving even on that. And yes, more stability and also give the supply to grind. So now we'll be targeting a grind of around about 30 microns and that will give us a consistent recovery in that 84% to 86% recovery range.
Just for those who didn't go on the trip, it's proof that we're actually doing. A couple of north pictures there, once again, the Middle East has been all restored. And this is just a couple of graphs just basically going through. This is a step change that happened even when we installed the tower mill with the SMB, we'll go and install the hydro mill as well. So what we're seeing is we're seeing the quotation tailings grade sorry, the final sales we've got steady much heavier tailings and also adverse recent tailings because the grind was tighter and more consistent.
And these stats are just verifying basically the stability of the prices. As I said, there's a couple more challenges that we can see this year, and that's around the sign of the structure. This is the tailwind of the plant after we get the rig on going. We have to increase the final destruct just from a capacity point of view. We're also looking at separation of PIKTA.
We will be producing more concentrate because we're moving towards 4,000,000 tons. So we're just reviewing that at the moment and also some auxiliary works. This side of things like the carbon circuit automation and things like that, let's rely on people and meddling things and more to do with science. And
this is
the way clients order go. Automation is a big thing within the processing industry at the moment. And we're certainly trying to be the fastest following we can. Just going on to the higher expansion now. So we've commenced the permitting and it's on track.
As Richard Michael said, we're looking at the permitting extension by the end of this year or early next year. To flow on from that, it's €200,000 So, I reported C and P. And to those of you who have been to Didipio, we would have met CMP. So I've seen headed up commissioning of the Gipeo underground for 3 years. And we did now the project on a high underground, Horseshoe underground.
So, he's already taken up the mantle and been able to see in the states for a few weeks. And so that's moving along very well. In terms of the resource and reserves here, this is a pretty quick development. So we can record the development down because it's not very far into the first place. Also, we're coming in off the snake pit.
So we're coming in off stage 2 and some way into the hard rock. So development in the ore will be reasonably quick. What we have done here is we drilled out the top part of the ore body into reserve status. And the resource is predominantly down in this bottom leg here. As we develop into that, then we'll drill that out to reserve status as well.
Yes. I'll hand it over to Craig and you'll see from the I'll just put the slide on. You'll see from this slide that there is actually once we get down there, potential of debt is substantial and it gives us a really good opportunity to extend beyond the 7 years or 8 years of the opportunity of the U.
Okay. Thanks, Mark. So on this slide, following on with the underground Seaman Haile, the extensive program of drilling continued since the acquisition in late 2015. The city here is an oblique view from the southeast with the open pit and the drilling assets. The grade is indicated in the legend on the left there.
The reds represent quite high grade, greater than 5 grams. And it obviously highlights several of the underground opportunities drilled to date, cementing with Horseshoe and then Palatino. As Mark just described, we've drilled off the upper portion of Horseshoe. We reported the resources, as we've highlighted, tested some of the deeper extensions around Horseshoe and also completed framework drilling at Palomino. So we're now looking progressing these deeper opportunities once we have the deep drying completed in Horseshoe, and that allows us access biro dual drive, taking a similar approach to what's been described at Waihi, we can more effectively test the deeper targets underground and effectively a kilometer of known mineralization between El Shyu and Palomino.
Moving to the next slide. This slide is not all the drilling, but it's the highlighted drill results of Mauricio drilling. Here it shows the reserve pit outline, mineralization within our 0.45 gram per tonne gold shell and the main geological units, the favorable persimmon fork metasediment host, that's shown in beige and the overlying Persimmon Fork metavolcanic, shown in green. It's now apparent that mineralization at Haile is strongly controlled by several prominent structures that have offset mineralization and puts in place the favorable Permian core metasediments to surface along those three trends shown here with the red lines. Offsets will become more apparent in the cross section, I'll show you later.
That they're critical in both our modeling and targeting offset portions of known mineralization. So the understanding of the geology here has come a long way over the last 3 years and probably more particular since we got into the pit than we could do in pit mapping. It's not to say that folding isn't important here, but really these major structures are proving important in terms of controlling the mineralization, both post mineral but also during mineralization where we see some concentration of higher grades in some of these more favorable structures. If we move to the next slide, you should be looking at the planned view again of the reserve pit along with drill prices and selected intercepts in August 2018. We've drilled around 12,000 meters over that period.
And the exploration program is focused on drilling in and around the footprint of the existing deposits. And the results continue to demonstrate the opportunity to add further resources in these areas and obviously replenish reserves. We had an 18 hole diamond drill program completed outside the 1300 dollars per ounce reserve pit design. And within the resource shell in that Tank West area on the right, It gave us positive results and I'll show you a section along that dotted line AA in a moment. I should draw your attention though to a couple of the other intercepts were south of Mustang, north of Red Hill in that area there.
There's 2 label, 15 meters at 9 grams and 20 meters at 7 grams. So this demonstrates there's still quite good mineralization in the pit walls in outside of the current mine design and these are the expansion opportunities we continue to talk through. So I'll just take you to a cross section, which is AA that I just mentioned through lead weather and tank mineralization. You should be on the next slide now. So the relationship between gold mineralization shown in light red shapes above the 4, 5 gram tonne gold shell or grade from the favorable metasediment post in beige.
That relationship here is obvious. Also shown is the reserve pit outline in black and the major faults in blue, resulting in these block faults rather than fault noses, such as that centered on snake pit. You can see the beige blocks rising up to the snake pit that are obviously mineralized there. The blue lines represent faults and movement along those as indicated in general by those arrows. The mineralization shown as red from the drill cases is in place with intersected outside of the reserve pit, globally, veterans and requests.
And these are most likely going to contribute to additional resource houses and model updates. So I'll now hand back to Mick, I think, to move on to the Philippines activity that we're doing. Thanks a lot, Craig. It's Sam here. So we are we're through the U.
S. Now. So I'm going to pause again. We'll take a few questions from the floor. We'll see some contact in the queue as well.
So we will take your questions as well for questions, I should say. So we're going to start with the floor first. So, Steve, Arash? Thank you, Sam. Just a couple of questions.
First on the cost structure at Yale, what do you expect, for example, the optimization that we have seen on in 2017 had a life of mine average cost of ASU of $700 an ounce. Given the changes, labor costs and taking the current acceleration there, of the cost that you can get to? The second part of the question is, you mentioned about the initial investment. You remark on the capital that you spent in that field to complete that, what would be your target impact on Hill based on the new numbers on the capital revenue that's been held in for a few days. I'll continue to see an overall comment in the last comment on some of the more details.
We have seen increase in input costs. So LIBOR has increased. We've gone from a 3 panel roster to a 4 panel roster to attract people from experienced miners from the list. We have seen an increase in the alley weight also as a result of both the meeting track from the West and the general high demand for labor in the U. S.
Generally. We've also seen
an increase in continuous costs in
the process plant. And we've got a higher currently, we've got a higher cost in the process plant than expected, mainly to do with maintenance at this point. And a lot of the things that Mike talked about, we should be able to engineer those issues out So, yes, we have been. So, there is a high cost profile overall. The mining cost is up.
We're looking at around $2 a tonne with the larger equipment, up from about $1.60 from where we were before. So that's a 20% increase in the mining what is it? A 20% increase in the mining cost. And processing costs are up from about $10 to current balance. So that would suggest that we will be something in the sort of cost savings in the longer term, I think.
Yes, Steve. That's right. Hi, Ron. I suppose what we're looking at is the dollar per tonne will come down from the current rates at the moment as we sort of get into the more the harder rocks. And so at the moment, we're sort of moving the capital in place with the bigger equipment and just the total amount of funding.
So as you said, you're looking around that $4.90 to $2 per tonne mark. We have gone to another handle loss done. At the moment, with the amount of fleet that we'll have, we've been waiting to lower anything up, but we'll get a lot more efficient with that. There'll be a reduction in overtime with additional people. So at the moment, 2 panels and 3 panels contain the overtime.
So the labor rates to the 3 megawatts are slightly higher. We believe that some of those costs will be coming down because we'll have more people therefore less as we've seen throughout the year. There's still a lot of further improvements that we see. We are focusing a lot on dewatering as well. So the dryer pits are easier it is.
The clay move out of the dry months is cheap dirt. It's all freezing. So it's just been handled a bit by the wet nature of the clay at the moment, which is driving cost up in this dry dollars to $1.50 above to below 50% in terms of the free cash flow. And in terms of the return on investment, the return on investment we jumped out of when we did the investment was about 8%. We have seen a bit of a higher capital cost than we did predict.
So it went up by $50,000,000 And we did see
we have seen a sort of 15% increase in
the operating costs or about. So yes, of course, the return on investment is low, but we've also seen some success with the exploration
and increase in the resource and extending the
mine life and we see a lot of potential in that underground development. So we are very happy with the investments, right? And notwithstanding the challenges that we have had in the market. And I think it's looking pretty good, this 200,000 ounce plus, same doesn't want the same plus 200,000 ounce plus target in 2022 and then 22. A couple of questions on Ale.
The technical perspective you were going to replace or bring in 18 trucks. You've got 13. Is your plans still to add 5 more? And in addition to that, how does that change your capital lease payments relative to what they were for Q4 'eighteen? Yes, there is a plan.
So the plan does have the OD Trust outcome as we get closer. So at the moment, also moving the materials to a new surface. So as we get further into the pit, as you see by the diagram, we'll just need to cut lower distances, so I don't get up to that number. The 40 three-one hundred and one is C785, which is 150 tonne class truck and that's on the 2 tonne class truck. It's good to say.
Sure, Michael. I think the plan currently has us taking about 10 trucks across 2019. Capital lease days will be incrementally added on to what we've currently got, I think. And then the other 3 in the near term in 2020 is the final group as required not until, I think, well after that sort of 2023 plus based on the plan at the moment.
Any idea in terms of magnitude relative to where we were for Q4, what the quarterly cap lease rate payment would be? I got off the top
of my head honestly. I'd have to dive into that detail.
I wasn't on the tour to Dale on Friday of there in August. I recall the water treatment plant was up and running. Is that something that you would expect to be bringing on? The water treatment plant is now running. We are discharging from it.
That's the water treatment plant will be continuing to run from now until the Any other questions from the floor? We do have 2 people queued up here on the call. Nothing further on the floor, so we'll turn it over to Hugh and Slifel. You're up. Just 3 questions.
So I was just interested in when you look forward to Haile, the weather events you've just experienced, so the strikes me that everybody designs around historic data sets, but demonstrably being sort of flawed in terms of weather patterns. So has the does the design sort of have sufficient pre board for what future weather events might be rather than that historic data set? And what's changed that might see future disruption being less than what it was in the last quarter With respect to maybe more boards available to develop water and other compromises production, less clay oil. So I'm just trying to understand why future impact modern use as grades. Yes.
I'll start answering that question, Stefano, and then pass it over to Michael. But a couple of things. One is there weren't enough floors installed around these new pits at Slake and Red Hill, dewatering holes. And some of the ones that were installed were actually collapsed at the bottom because of the damage with 16 inches of rain in 2 hurricanes at the Unistice tender and in October. It was pretty significant for that area, which doesn't have a lot of relief.
So the water basically filled up the water table. Remembering that the mill zone, which we had marked out, we didn't have any problems with water as we went down through that. There was deemed to be sufficient, dewatering pause. But of course, an exceptional event like this was challenging. The second thing is this is only the world title sits above Havoc and in the satellite and in the sands above that.
So we there's not that much water down the lower tier in France with the hard rock other than the few faults and decisions. So once that pre stripping is completed, firstly, the problem is removed in terms of the impact on the mining operations. In total, there's 20,000,000 tonnes of pre strip, of which we've completed about, what, 5, 6 of that order. And over the next 18 months to 2 years, we'll finish off all of our pre strip. And every time to come into Ledbetter, which we will start next year.
And Ledbetter is the largest pit in the cities. And once the 3 ships finished there, you basically got the risk of this sort of impact is greatly reduced certainly from a mining perspective. On the tailings facility, we've just got to make sure that we keep as much water out of that tailings, keep as much dry as we can in terms of the water treatment plant. There's plenty of free boards there now. And we'll make sure that, that's the case.
We've started the increase on the next lift on the TSF this year, and that's in the capital program. And that will continue for the next 5 or 6 years. Thanks, Nick. I suppose when you're starting off areas and you've got 2 small working areas and you've got to then what you did. You can spend with a mandate not to release once a quarter, You have to manage the water with the smaller as you've got.
As we expand the mine and expand the ships, you've got more working areas. And we'll be finishing Mill Zone Phase 1. Phase 2 of Mill Zone Phase 2 of Snafe and the opening up Ledbetter, you're actually opening up areas that are above these dumps. So that should be less impacted. So with the deworton that we're putting into this time at the moment we've banned 26 depressurization wells.
And that's around Red Hills Bank and then moving into the first phase of Red Dead. So we'll have the depressurization wells that we're putting. We'll be in the middle of the pit. And as we then take a pit down, we'll expand more depressurization wells. So current program is 26 wells.
We'll be expanding that. But as you add up more areas, you can give more efficiencies to be able to manage the water. And that's what we're looking for going forward. So not only bringing it out from the underground with more that we've got, so that the rain does come, we can handle it better. But also the way that we mine with some of the areas, you can actually reverse the water better as well.
So that's why we believe we can manage it Thanks, Michael. We have Adam Baker, who's on the line. So I guess Adam is an analyst, so he obviously just woke up recently to tune in. So Adam, over to you for your question. Thanks, Seth.
Yes. So the Howell extension, just wanted to ask, are you still expecting approximately $255,000,000 for that? And just wondering how far through the spend for you? That's from the technical report in 27A.
Adam, the slide that we show early on in the presentation, it should come back. I'm sorry, at the beginning. Basically, we'll be spending less than the 220 $5,000,000 and it's a little bit longer in the trial than what the NL 43,101 suggested. So I think it's about Slide 13. Spending roundabout $100,000,000 this year and next year.
And we're really spending around that $60,000,000 for the next 2 years. And then there's already been a $30,000,000 spend in 'twenty one and then some more in 'twenty two. So it's a bit more spread here. And some of that's due to the fact that we are the capital spending that had us buying the fleet upfront rather than the finance lease. And also, they had us building the challenging capital in one crack.
And that will be spread over pretty much so often.
Okay. Thanks for that. I was late in the call, so I missed that one. Yes, given the I've just got a couple of other questions. Given that I guess there's been change to mining plans and whatnot since 2017 technical report.
Just wondering if there's any update on the life of mine strip for the pits, Like given that's changed in 2019 quite significantly, have you got any updated number? Or are you expecting to release any technical report at all?
We're not expecting a relation in the Q2 of the report. What the drilling has done is probably identified some of the inferred to release of the current pits to that was in other inferred or in mineral industry that we probably bought into resource. So we have a pre strip of the what do you call it, the strip ratio
Yes, that's got it from me. Thanks a lot. All right. There was one other question queued up. So I'll take that to you here.
So we're going to sorry, one more question here from the floor. Change in the life of mine cost per ton, is there any potential impact to the life of mine cost for the tailings turn? No. They're independent. We use a contract to build that facility into the material to that, what, waste material to the facility and then the contractor will do that Not really the right answer.
All right. So we'll move on. Next section, we've got about 10 slides. So if you need copy refreshments, please help yourself. We're going to continue with you next today.
Next section is on the Philippines. So I'm going to turn it back to Mick and to kick things off to discuss the Didipio. So, the DPO is really we're really proud of what's been done at DPO. It's been in operation now for just over 6 years and hasn't missed a beat. So, just go back to slide to this one.
There's a slide you're running the control room there. One of the secrets of Paducia, the very, very few people understand is the talent of the workforce is nothing. Absolutely exceptional. We bring people from the BDI either to convert commissioning with the cash expand that hire. So it wasn't that lighting, but another lighting, he turned the royalty village to DPI to Walter.
Sorry? Which is a mother of 10, and she's never left the club and she's been talking to us for a while. So it's a really, really good story. We've got mining engineers doing development on the who's going to record a fantastic job transferred from the open pit to the underground, all women. And we just lost 3 of them to Australia.
One went to evolution with CAL, one went to Consultants, 1 went to CASE 1. They're highly supportive. Market. We see this is a very valid process for the company. Our longer term plan is to bring people from the Philippines into New Zealand, the nice to meet into North America as part of the way to always have this constant supply of high quality people running their operations.
So I just thought I'd throw that in. And it's good to see so many women coming through our workforce down in the Philippines. So here's the consensus, 355, probably a bit of a lot of our plans, but anyway, it's a range and $156,000,000 you put on the buy side and the average of $492,000,000 would be sell it today for $492,000,000 absolutely not. Wouldn't pay for itself. So it's worth a lot more for us than that.
Would we sell it to the right price? Maybe. We'll have to be a pretty healthy number because it is just a redeployment of capital from one place to another and reduce the risk profile. It's a very valuable asset to us. So we're not strategically looking at selling.
The diligence in reserves has held up pretty well. We still got a mine life going out to 2,032. The silver price of 1 gram gold and 33 non copper sands life. A lot of that is step up. Remember, the hand picked up.
And the long term going forward is pretty solid. I will point out the mining costs for which the undergrands for $40 a ton. And we are delivering on that. And that's the good rule of quantities for us to remember. Dollars 1 of gold is $30 of tonne in the plan after recovery, dollars 12 less.
That $1200 per ounce is a far band debt, which was $200 a ton. If you can't make money out of $200 a ton, all right? Now think about that when you look at other mines. So the Didipio metrics for this year, 120 to 130. So the combination of both the underground fees, so we're getting that up to the 1.2 sorry, the 1.3, 1.4 to mine.
And that's a still ramp up process and bringing that up to a run rate of 1,600,000 tons by the end of the year. So 1,600,000, 1.3, 1.4 from the underground and 3.5, which is through the processing plant. So we're going to get 2,000,000 tonnes coming from the Argentine stockpiles, of which we've got around that 'nineteen in terms of this. You can see there the grades mined, both Golden Copper and the grades mill of Golden Copper with the recoveries sort of working through that. As Nick said, that $55 to $40 per tonne for underground mine.
Processing very aggressive there, the $6 to $7 which is what we're receiving at the moment, which is really great effort by the guys on-site. And the capital profile growth in the summer. We want to go into the The underground, as you can see, going down with the decline, we've got the 2 accesses into the portal with fresh air rises all the way down. We've commissioned the water stove. We've had the Capital Pump Station 2.
So we're now in the middle of the reverse. So the Capital Pump Station 3 is in the pit, 2 is down at the 2,180 and 1 is down at the bottom, which we're going to put down at the sorry, 2,280 and 1 is at the 21. So 123 as we go up. As we go up, as in the open sloping methodology, we have some sloping long hole open both the Red Shear area and the Montanard. So the Red Shear stopes are small and we've successfully taken out a few
of those stopes. On a
smaller size, our 40three-1 101, you talked about, I'd say, benching, it might even cut and filling, but we're taking out a 10 meter wide by 15 meter long by 30 meter studs. And that's been well supported and well taken out backfill, and we just can't remind anyone that starts at the moment. So that's how we're going to progress the breccia space. So that should be a little bit of cost saving that from the in our progress we want to run, which is really good. As mentioned, last year, 627,000 tonnes from the underground up to the 1.3, 1.3 speed up pricing to 1.6.
Panel C construction is underway and the important point is to get down to that consideration And we're going to do the same process there. We're figuring out to our water storage stopes. So for stoping there, we'll just get the sludge out of the water and just pump clean water up. So we're pumping around about 500 meters per second as from Shutter Pump Station 2 at this point in time. We will continue to water the decline beneath that area and just to be pumping up from beneath that and then continue drilling at depth as well.
Technology, as we've mentioned, not only in the Philippines, some feedback for the fall. So even though that we lost 3 female engineers, we have projects there that we've named, which has basically taken the grassroots through and fulfilling the roles that we have. And as we've said, get the experience level up by leveraging the value proposition of the Philippine Mining Engineers. So if you're looking at Mining Engineers in Australia, I think Queensland University is pushing out about between 4, I think 4, graduated last year, with about 5 universities in the Philippines graduating around about 25 to 30. So they're producing 150 engineers where it's based on running production of 40 at this point in time.
So that's where we see a great opportunity. As you can see here, we have a program called the DAT, so Automation, Digitals and Process Transformation. And digital is our test case. What we've got here is 2 screens or 2 shots here, one showing the Digipino's OptiMine production information, which we'll show a video on the next slide. That's our fleet partner, Sandvik.
This place tracks the filling of trucks and as well as tracking the production drillers underground service. Diagram shows you the truck drilling being filled real time and then where the truck systems are going to the pipeline. And just a few metrics there on how we're tracking hour by hour. The second part is our surface controlled remote volume station. That fellow can actually apply to the light is underground.
Obviously, there are the shift change. So we'll be trying to and we have to evacuate the mines and fall, which is and take all out of the stockpiles and put them into stocks and put them into the stockpile. The next slide, this gives you, I suppose, a road map of the digital transformation. So this is just some optimal monitoring, especially fleet management and how you manage that utilization, and it also gives you predictive maintenance. So we signed up tonight Sandvik, which basically is a program where Sandvik can operate and monitor all of our equipment and then tell us how we're going with every other Sandvik piece of equipment piece of equipment in the world.
The tablet rollout is basically giving that information in real time back down to the supervisors. So we had Wi Fi Underground so they can get it on the phone. And we actually had a BlueJeans call which was underground the other day. So we can actually send information straight to them and they can pick it up, put it on the tablet, understand what's happening, calibrate it, cruise, training and all that stuff. So if there's a new procedure or change in procedure, we go, what does that procedure say?
Just give up the tablet and can understand the procedures and instruct that further. Line operating system, so that's just your improvement. So that's your continuous your short interval control and continuous improvement with regards to how we're tracking, what's up there, how do we actually manage the meetings better, what's the actual job optimized versus the KPIs that takes us from all that information. Location tracking is more from a safety point of view. So we understand where all our people are, we understand where the equipment is.
If there is an emergency, we can understand where they are. Just in terms of the refuse chambers, which we put out in the 1. This is the electronic tagging and smart refuse chambers so we can actually understand through emergency all that data as well. And then just from business intelligence point of view. So all of this can be put up into a fire system.
So people that were at the on the tour last week could see that we in the process plant, we run the fire in the background. We can pull up the trucking at Didipio from that control room center at Haile. So the right areas in different locations where we are, we can actually pull up all the real time information as we go through. So, PIE is the database platform for that business intelligence and allowing us to see that have the operation. So Mark's group with chief analogies, the chief geologists and the chief mining, you can sort of double its view over the whole site as well as yourself and what provenance we're going.
Just to add another comment to that. This part of the business is working throughout the whole organization on how undergrounds are operating, right? And deep process plants are going this way as well. And then no matter where you are in the world, you can have real time information and data on every single line of the fastest time at any time frame from any airport, from your home, wherever. This is the kind of visibility that we're looking for.
This is how you operate in multiple jurisdictions with high quality systems and people and fully connected. Right, Luigi? Yes, thanks. The plans of our Wi Fi at the shipment of So we're going to just show you just a very quick video or demonstration of what's happening at the Goodfue in the underground. For those of you, unfortunately, in the webcast, you won't you'll hear some nice music, but you won't actually have a chance to play the video.
But we will provide that to you on demand. So we'll play the video now, and I think it's just a couple
of minutes. This is a
funny video. We give our priorities just to understand what the system can do. Yes. So just nothing to point out. Michael mentioned that we're sort of rolling this out in the Philippines.
Don't necessarily want to call it a pilot, but it's sort of like a pilot. And Nick mentioned earlier that we are, over the next 5 years or so, building 3 brand new underground mining operations. So what you just saw there, very quickly in the video and what we talked about in terms of technology and the capability of technology and how that's really going to improve things going forward. We are looking to then employ that at each of these new underground operations that we're looking to build over the next few years.
So those of you who came out
to Hale, you could see the technology and the process plant there where you can basically access all the process control centers for the floor operations that we have. So this is something, again, Nick pointed this out during the strategy slide. It's something that will really the future. It's going to lead towards efficiencies, cost reductions, increased productivity. That's the way of the future.
There are other mining companies that are investing heavy amounts of capital into these technologies. So we're basically fast followers, So we're clearly kicking back off of the real chances of the world, for example. So just we're almost near the end of the Investor Day. I just wanted to walk through a few of the sort of investor overview slides. So investor overview.
We're very happy and proud to have the shareholder registry that we do have. We've got very strong shareholders across the world who are very supportive of Oceania, have been for a number of years, who support the strategy. So obviously, we're very happy with the performance of the company. We have a lot of confidence in Nick, the executive team, our people on the ground. So we do appreciate your support.
There's a number of you that are on the webcast right now. So thank you to all of you and to those in the room as well. Obviously, liquidity has been in Toronto for a number of years now, so strong liquidity here. There's a nice diversity in terms of geographical distribution and shareholders, with the U. K.
Actually being one area where we've seen a lot of buying gold stocks, and a lot of that money has come to us. And we've also been very these general investors have been drawn to the Oceania story for a number of years now. They obviously like to return the best companies don't discuss, let alone put in the slide deck. So we are committed to creating value for shareholders. I hope we gain that appreciation from this slide deck that we are focused on that.
We are committed on that, and we'll continue to drive towards delivering consistent strong returns and maintaining our robust margins. So unfortunately, there aren't there's only a couple of Australian analysts that are on the call right now. So this is something that we continue to face in terms of challenges in terms of the discrepancy between methodology and analysts. You guys here in North America, methodology that we've used for the Australian analysts. And this is unique to Oceania Gold because we do trade in Australia, we do trade in Toronto.
We're dual listed in 2 exchanges. We've got a large number of analysts. I think we've got 6 or 7 now in Australia. We have another 15 or so here in North America. So it is we are unique in that we have these different groups of analysts and we value the business very differently.
So for example, in North America, when you're setting target prices or looking at NAVs, premium is applied to that target price. We're using discount rates of 5%. Whereas in North America, everything all the target prices are typically one time NAV. We're not advocating for one investor over the other. I'm just highlighting the discrepancy in terms of valuation.
Australian analysts continue to higher discount rates as well. So I think most of our analysts are using anywhere from 7% to almost 13% in some cases when we're evaluating the company. So you can see on the probably should have labeled it, but on the left hand side of that vertical bar, that's where the Australian analysts are sitting in terms of their target prices. And on the right hand side is the Canadians. And you can see there's a big discrepancy.
Obviously, global consensus, this is all in Canadian dollars, dollars 4.70 on average as a global consensus, and Canada being CAD5 as a consensus NAV or price target in Australia seeing that for 20 9. And I think the Australian investors, they've taken notice of this. They know that Oceania trades predominantly in North America. The share price is driven up and down by the trade that happened to and then sort of picked up in Australia, so when the market opens there. So we are a Canadian corporation with Australian management and American management and American office as well too, operating a global business.
But the share price is really driven out of North America. And so that when you look at Bloomberg, to look at its valuation, we do need to look at that as well too because we are being driven down by the Australian valuation. I'm not again, this is not right or wrong. I'm just pointing this out. And then just to my last slide here, just on some of the things that we discussed and we engage on.
There is I actually have to change the slides in 2 different spots. These are just some notes, some general teams where when I engage with you on going through modeling assumptions where I've seen issues consistently from analysts, whether this is here in North America or in Australia. So these are some of the key things just to keep in mind when you do go back to your models and you do up the valuation for Wahoo, for example. So mining costs, when we report unit costs for mining, we always include the capitalized position of it. In pre strip, the capitalized underground mining cost is always included in our unit costs and included.
So I've seen in many cases where it's basically, the costs are double counted. You've got the mining cost and you add down the capital cost as well. Keep that in mind, royalties are always included. I know there's some of our peers don't include royalties. So amongst those things that really the world goal capital is defined that should be included in the cost.
So we've always included that. The sustaining capital, that and some of the capital estimates that I saw at the end of last year and beginning of this year were shocking. Sustaining capital, pre strip, maintenance capital, capitalized underground mining costs, we have historically, in the last 3, 4, 5 years, have spent anywhere between $80,000,000 $100,000,000 on on that. And from the slide you saw that Scott went through earlier, that is expected to contribute from the 4 operations, dollars 80,000,000 to $100,000,000 So we hope that you can put that in your models, so sustaining. Exploration obviously is going to vary depending on what how much money we're going to spend in both capital.
We've given you some guidance on that as well.
Didipio, FCA, this is a
lot better than it was 5 years ago in terms of how investors and analysts are modeling it. Before and even still today, we see all the accounting of, for example, corporate tax, which is 30% effective tax rate. That's included in the revenue share. For the revenue share, the forty-sixty split includes all taxes, includes all royalties, excise business, everything is included in that 60%. So no, that will be determined.
And then depreciation costs, again, I've seen some very large ranges. It's fairly simple. It's on a unit production basis. So just go ahead and get your models again, and that's right. So yes, those are just some notes notes, hopefully.
You don't have to hear from me that often. So we're basically going to wrap up now, and then we'll take some questions. I know we haven't stopped after the Philippine section, but we'll just do a quick wrap up, and then we'll turn it over to you for some additional questions. Thank you, Ken. So I'd like to turn out the handsome guy in the middle that has the pink shirt on and all those attractive women around me.
Me. If you look closely, there is one on-site that's snuck in right up the back with a big grin on the sites. That's the infamous David Why, our General Manager of Didipio, who does a fabulous job up there. The core of that picture is really about diversity and really encouraging, leading, coaching and mentoring our women into the
workforce and we'll take a very seriously.
So our priorities for 2019 are continued improvement of safety leadership and a real focus on safety, as I mentioned before. We see safe and leadership as a real driver to performance. And leadership is about becoming a culture, right? Capturing teams, coaching people, mentoring people, doing better than we did it yesterday. This is how we improved our safety performance.
We've sort of plateaued out at around 4 on a backward looking to our 500,000 man ounce, how we break through that last 4. And the way to do that has changed the guidance. Interestingly, the best operation we've had for safety performance is in the Philippines. They are exceptional because they get it. The worst operations is the newest one in terms of safety performance and Haile.
And that's because the culture is still evolving. We do have a strong focus on mine productivity and plant improvements at Haile. We have to get that right this year, and we'll certainly turn the corner and we're on the way up. And as you've seen, a big focus on implementing technology to improve operations, make them more and more and more and more efficient, not just from productivity, but make them safer. Tuck people out of the workplace, take them out of the line of fire.
That's how you do it. On the growth side, we've talked at Morgen about the Martha Underground project. And I hope that you really do believe that this is real now, that this is a 10 year plus operation and it has the potential to go to 200,000 ounces in 5 years' time, and it has the potential to be the best asset in the system. It's really, really low all in sustaining costs and a long line life. So we're going to keep going.
We're going to keep drilling. We're sort of drilling our hearts out at Wyding, at WKP and until we can't find anymore, which is probably a long time away. So we're going to keep building that reserve base at Wydon. We're going to advance continue to advance the expansion plans with Haile, which are going well. And permitting is critical for that, but it is on track toward the end of this year.
And we have a growing footprint in that. And we've started the implementation plans for the underground as we have with the open pit, a larger open pit with the trucking fleet and us pulling the workforce. And the other growth piece around construction of Panel 2 for the EPO. So that needs to get us to 1,600,000 tonne per annum from the underground And we will let that settle into a good long decade ahead. On the exploration piece, we're going to focus on increasing reserves at Waihi, as I said, to increase the mine life at Macraes.
So we do see the potential to increase mine life at Macraes. Last year, we only spent about $7,000,000 on exploration at Macraes, And we've more than replenished reserves. And we keep turning up with new waves, better mine plans to bring more of those out to those reserves as well. Discerning our reserves at Haile, we've got a long mine life there, and we're spending about $67,000,000 to just replacing every resource we have. And importantly, try to, in the longer term, look for more underground reserves and keep our underground there.
And finally, on exploration, we do see a real opportunity strategically to establish ourselves in new gold provinces, each with our key strategy, which is the time to put gold ounces in the bank because in 5 years' time, life is too expensive. We're really pushing hard to keep ounces in
our reserves. And on the
financial front, I will maintain a fiscal discipline. So everything we do in terms of capital expenditure has to give us a return on investment, Maintain our loan leverage. We do have this policy or philosophy of leveraging up when we're in the growth mode, leverage generally in production mode. We heard Scott talk about very short end of production periods. That's what we want.
The banks like it. We'll give certainty. We'll give confidence to them. And we've got a very supportive bank group that's supported on this journey with us, has been since 2012, coming on this journey. So we're going to they'll be there with us when we want to grow.
They've been there with us when we've had some hard times. You remember 2 years ago with the suspension order coming out of the footprint. Because that's what I want to say. That's what our shareholders say. So that's it.
Any questions here on the floor? We've got one on the queue. All right. So I'm going to turn it over to you, Michael Swartzki. Yes.
Thanks, Sam. Just a couple of very quick ones on the Philippines. An update, please, on the license permit extension from 3.5 to 4,000,000 tons. It seems to have been sort of near term for quite some time. And certainly, with respect to the suspension order, where both those things sit, please?
Yes. Okay. Sharon, are you still on the line?
Yes. Yes. Michael can speak to the first question on how can you answer the second one.
Yes. Sure. Thanks, Karen. So the ECC, we'll back out to public comment. And as I was what is it like today?
Fine. We'll be held in that session. So I suppose the involvement with the Environmental Management Bureau is running that session before. So we've done a few already information, education presentations to the community. This one is involving the EME as well.
So for us, that's an important step in the process where the Environment and Management Bureau, which is part of the Alliance and Geoscience Bureau, which is the regulator. So the regulator actually running this process now. So we believe that's a really positive step forward for getting that ECC from the 3.5, which we've been unlimited to over the last couple of years to one that we're actually refined to close, up to 4.3%. This will give us a bit of wiggle room. But that's what we're going for.
So we're seeing some positive straightforward to that.
Sharon? Yes.
So on the suspension order, our appeal still sits with the Office of the President. The Office of it's our understanding the Office of the President works through appeals on a first come, 1st served basis. They are behind a couple of years since we've been broadly at any appeals that would go to the Office of the President. So we're just waiting our turn to be processed by them. The BNER is released in the case of suspension and closure orders, companies either filed with the DNER, Department of Environment and Natural Resources or with the Office of the President.
The DNER just cleared through the 13 or so motions for reconsideration in about December last year. And we're hoping that the office of the President will make the time to divulge us sooner rather than later to be able to address the appeal.
And then simply with respect to exploration potential still at the EPO depth potential, what do you have to see from the Philippines to reinvigorate some exploration? Or is that going to happen as you get deeper anyway? And if you do have success in sustaining that 1,600,000 tonne production rate from underground beyond the depletion of stockpiles, How economic does the site look at that rate compared to the mill capacity? Yes. Michael, we are still doing exploration in and around the site.
We have a drill operating in the radio prospect. We've discovered or Target was discovered about a year ago and Craig's team is on the ground there. So we are looking for future feed. There is potential depth of Didipio, and we have had some success with some deeper holes. And as we get deeper, we draw the water table down, we're going to be in a better position to do more drilling of debt.
So it is very substantial for a Panel 3. We're not sort of we're not putting that one on the wall just yet. We've got more exploration to do there. In terms of the border Philippines, we're not putting any exploration outside of India because it goes to safe Kenya. And there aren't any exploration permits.
We really need to move anywhere in the Philippines at the moment. So what we've got is what we've got. And we'll continue to explore the immediate 9 year. Thanks, Wilksy. Thanks very much for the session.
It's been most useful. Thanks All right. There's no questions on the queue. Any questions here from the floor? No?
All right. So I think we are complete here. Thank you, everyone, for attending. Thank you for those that are on the webcast. I hope you found this to be informative.
We are making decisions for the long term. The market is the market, and we're doing our best to manage the market. The decisions we make for the long term is the business that we're running. And hopefully, you've got a glimpse of all the things, the good things that we're doing here. And more importantly, you've been able to interact with Nick and the team and seeing the bench strength that Oceania boat has.
And I know a lot of you have been through the operations and seen the high quality caliber team have on the ground as well, too. So thank you again. Thanks also to Nick and the team and those who woke up at 4:30 and 5:30 in the morning. From the Oceania executive team who are on the call, thank you to you guys as well. And thanks to most of the analysts for your support over the years.