Good morning, everyone. For those of you who don't know me, my name is Jody Kuzenko, and I'm the President and CEO of Torex Gold. It is my pleasure to welcome you to what is truly a monumental day in the history of our company as we formally announce the approval of the Media Luna project and release the long-awaited technical report for the Morelos Complex. It was April 1, 2016 that we declared commercial production at our ELG asset, and here we are six years later, April 1, 2022, marking this historic occasion. The technical report provides an integrated life of mine plan and economics for our ELG mine complex and Media Luna project, and it firmly lays out a clear pathway for the future of our operations in Guerrero, Mexico.
We had planned to host this session in person for those of you who could attend today, but unfortunately, due to the persistence of COVID-19, that precluded us from doing so, and as a result, we will rely on a virtual format yet again here today with safety precautions observed for those of you who are in the room. We have a lot of information to cover with you today and only a short time in which to do it. With that said, we will start today's presentation. If you have any questions, please feel free to submit them using the webcast portal. Given the volume of information we will be sharing, we will reserve the question and answer period for the end of the session. We will be making a lot of forward-looking statements today, and we are relying on the safe harbor language in so doing.
Now, here's the agenda for today's session. It's laid out on this slide. We will provide some context and hit the highlights of the technical report. We'll then provide an update on 2022 guidance and an update on our operational outlook through to the end of 2025. We will take a detailed look ahead, what we are going to build, the infrastructure changes, the costs, the schedule, and other implications associated with our go-forward plan. Finally, we will review the economics and our financing plan for the project along with some key risks and opportunities. Throughout the course of this presentation, you're gonna hear references to different nomenclature, such as the Morelos property, our entire land package, the Morelos complex, that's the combination of ELG and the Media Luna project, the ELG mining complex, and the Media Luna project standalone.
The definitions are up there in the top left corner of that slide. I'd invite you to review them as I introduce the other people who'll be talking here along with me today. First, we have Dave Stefanuto, the Executive Vice President of Technical Services and Capital Projects at Torex. It's Dave's team that was responsible for delivering the feasibility study and the technical report, and Dave's team will lead the execution of the project as we move forward. We also have Bobby Davidson, Deputy Project Director from M3 Engineering, our key external EPCM partner in delivering this project. Of course, most of you on the line will know Andrew Snowden, our CFO. He's here in the room to take us through the economics of the technical report.
Dan Rollins, you can't see him on screen, but he's at the back of the room. He's our VP of Investor Relations and Corporate Development. He's also here with us today. Please note that Dan is available, as is usual, to address any follow-up questions you may have after today's session. You can follow up with him directly. His contact information is in the press release and on our website. With that said, we'll move on to the substance of our presentation. We're gonna start here with a slide that'll be familiar to most of you who have followed the Torex story. It sets out the key strategic pillars of our company. With the release of our updated technical report, today marks a major milestone in executing our plan.
It touches on all of these pillars, but especially on the three across the top, optimizing and extending ELG, de-risking and advancing Media Luna, of course, and growing our reserves and resources.
We'll get into much more detail on all of this as we proceed through today's session. The important takeaway from this slide is this. We have a strategy, we have an execution plan, and we have been executing exactly as intended. Today marks another big milestone in that execution. Gonna take a little bit of extra time on this slide. It sets out the highlights of the presentation for you today. It is difficult, no doubt, to distill two years' worth of work into a few key messages, but from my perspective, the main points are as follows. We have more than tripled our life of mine, going from 3.5 years to almost 12 years with the addition of the Media Luna reserve at 3.3 million gold equivalent ounces. Our ongoing operating cost profile remains extremely attractive.
We talk a lot about the cash generating capability of this asset, and that will continue with this project. Over the next five years of production on an annualized basis, it will look a lot like it did last year. From 2022 to 2027, when that mill is full, average annual production is planned to be about 450,000 ounces gold equivalent when Media Luna starts. This puts to rest any concerns about a gap in production as we transition between ELG and Media Luna. We will now become a much more significant copper producer. In fact, copper represents about 30% of the value of Media Luna standalone and 20% of the ELG Media Luna combined production. It makes us a much stronger, I think, and diversified business. The CapEx number is not insignificant. I have seen write-ups about that already this morning.
It stands at approximately $850 million. Dave will provide you with a detailed breakdown on that later in the presentation, so you can see what the drivers are on both the direct and indirect spend. What's important to note here is that we have used real and credible numbers. Numbers that incorporate things such as a healthy contingency and factors such as inflation. Numbers we stand behind. We put out a study for a project we can build, not a project we can sell. There's tremendous upside to enhance shareholder return through exploration, through the support of, through the goal of filling our mill beyond 2027, and we are well-positioned to support funding of the project given the healthy of our balance sheet.
Finally, we have a running start on execution and the right team to deliver the project on time and on budget. Now, with the approval from the board of directors yesterday on the development of our Media Luna project, we've also released our 2022 capital expenditure guidance specific to Media Luna and updated our multi-year production outlook, and I'll briefly take you through both of those things now. This first slide is the production and cost guidance for 2022. Couple of things to note. You'll see that production and AISC guidance for ELG for 2022 remains unchanged. It's early in the year, but we're well on pace to deliver. What has changed is that we updated 2022 guidance for non-sustaining CapEx for Media Luna. You can see the range down there on the bottom left of the table.
It is $220 million-$270 million for this year. For infill drilling at Media Luna, we already noted that earlier this year. It would be approximately $19 million, and it's now on the table to complete the picture for non-sustaining spend for Torex for this year. With the technical report now complete, we've also updated our operational outlook for the Morelos Complex, which includes both production from ELG and Media Luna, now out to 2025. This outlook includes ongoing optimization of mine plans for ELG open pit and the ELG underground. We said we would, and we did, and we are continuing to optimize. You'll see in the top line there an improvement over the first outlook we shared in the middle of last year.
You can expect to see either even further improvements through the balance of this year, in that 2023 and 2024 number as we continue our ELG optimization work.
You can see there, starting in 2024, the benefits of gold equivalent production coming from Media Luna and further ramping up in 2025. Now, this slide sets out the longer term outlook for the combined operations of ELG and Media Luna, called the Morelos Complex. That's what you see there on the left. That's what we have today. With our plans on exploration, we're just getting started. I've already mentioned the mine life more than triples, almost 12 years. You'll see on that line about three down that the average annual gold equivalent production of 374,000 ounces for the life of mine. Remember, it goes to closer to 450 for the period of 2022 to 2027 when the mill is full.
In terms of copper production, 35 million pounds of payable metal over the life of mine and 45 million pounds annually during the period in which Media Luna is up and running. This is a significant driver to NPV. Our base case is run at $3.50 copper. Every $0.50 increase in the price of copper represents an additional $85 million to our NPV. You can note on the right of that slide the ELG standalone case. The reality is that we have underground reserves at ELG out to 2027. However, you can see the cutoff date there, post-September 2025. Without the addition of Media Luna, mining ELG underground standalone becomes uneconomic. You can see on this slide the breakdown of gold equivalent payable by year.
We have relatively consistent production through 2027, and there are two key areas I wanna note here. I've mentioned that we're already looking to improve the outlook in 2023 and 2024 with ongoing optimization on the ELG side. Second, and importantly, exploration and drilling is targeting to extend the production profile. You can see that dip starting after 2027. We have a number of prospects to fill the mill, continue to extend ELG underground. This has been a very good source of reserve growth for us, as was demonstrated with the 20% increase in reserve in 2021 over 2020. Another opportunity is the potential development of EPO. It's possible that we will develop this as a standalone mine. It's less than 500 m from the Guajes Tunnel.
This was 1 million ounces of inferred in the PEA at just under four g/t gold equivalent. Our plan is to drill that off to indicated this year. Of course, the third option is exploration across the broader land package. We've been playing catch up on that as we've underinvested in exploration over the last couple of years, and we're investing in it heavily now. Now this concludes the overview section. I'll now hand it over to the man everybody wants to hear from today, that's Dave Stefanuto, to take us through the specifics on the mine and process plant design.
Thanks, Jody, and thanks to everyone for being here today. On the current slide that we're gonna show, and you'll see this slide a couple times through the presentation, we're looking at the ore mined over the Morelos Complex life of mine. Later in the deck, I'll show you the ore that we process through the life of mine. As Jody has noted, Media Luna is key to the future of the Morelos Complex. It replaces the open pit production, given the higher gold equivalent grades. I wanna talk to a few key points on this. Our open pits are nearing depletion. You will note the dip in 2023 as the Guajes pit comes to the end of life, and subsequently the production in 2024, as ELG comes to an end as well. We'll continue to optimize and access every economic ounce.
However, this will be challenging because it is a higher strip ratio. Our ELG underground continues to give. With the Media Luna project, we will fill the mill, allowing for the extension of ELG production for another two years, wherein otherwise the remaining resource would not have been economic to do so. Another big program of drilling is planned in 2022 to improve this even further. The other issue to note, and Jody's talked about the credibility of what we've built here in our study, is the ramp up. The ramp up is just over three years. We could have taken some more aggressive assumptions, which is typical in the industry today, but we know that large-scale underground mines don't ramp up overnight, and I'll speak more to this later.
Media Luna itself, the ore body, has been designed with six zones.
These zones are accessed three different ways to allow development and access to multiple active mining stopes to achieve the 7,500 tons per day mining rate. The south portals and the Guajes tunnel accesses will also be used for fresh air supply to the mine. The zones are supported by independent infrastructure to allow for concurrent mining activities. Our early development has de-risked the schedule and provided actual cost and productivity information, which accelerates our transition from feasibility to execution and gives us confidence in what we're doing moving forward. Our mining method is primarily long hole stoping with some cut and fill at the end of the mine life. During the project period, we'll probably complete an approximate 40,000 m of horizontal and vertical development over the three years.
This sets us up with a mine with a strike length of 560 m, a depth of 240 m, and a vertical height of 1,325 m, so a very significant size ore body. Investment in this infrastructure really sets us up nicely to take advantage of future reserve growth, both along the strike and at depth. The mine is also being designed to be as efficient as possible, particularly in the material handling system. We minimize mechanized handling by taking advantage of gravity. Whenever possible in underground mining, you want gravity to be your friend, and we've done that in this case. A system of passes brings ore and waste down to five rock breaker stations, four for ore and one for waste.
Two independent transfer conveyors will bring the broken material to respective bins, creating some redundancy so we can do some maintenance without interrupting our production. Our Guajes conveyor, which at a design capacity of 800 tons per hour, does have the capacity to efficiently move additional sources of ore on the south side of the river, so we can really expand the potential of Media Luna in the future. Overall, the system's been designed using well-understood and reliable approaches. Additionally, in alignment with our values at Torex, we've designed the mine with the environment as a key consideration. We will be utilizing a hybrid mine production fleet. This has allowed us to design an efficient ventilation system and improve the working conditions for our employees and reduce our carbon footprints.
Our haul trucks and most of the development equipment will be diesel through the project period, which gives us flexibility to move to different work phases. Our mobile equipment on the production levels will leverage battery electric vehicle technology. Importantly, our fiber backbone will be installed to provide a fast data connection between Media Luna and ELG, which will enable future digital mine production technologies. While upfront capital is a little bit greater with the BEVs, ongoing operating costs are lower relative to diesel equipment, and this was also an intelligent business decision. We know we're building what has the potential to be a multi-decade mine, so we're investing in the technology as the backbone for a longer future. I spoke briefly about the credible ramp-up period for the Media Luna underground, so three years from first stope production ore in April of 2024.
Media Luna is going to be a large underground mine and will take a number of quarters to ramp up. Our team's industry experience has defined the approach that gives us the confidence that this is realistic. This is an area, as I mentioned, that many studies get too aggressive and really devalues the investments. Ramp up is not only dependent on having key infrastructure in place, it's about having a skilled workforce in place at the right time. Operational readiness is key area of focus for us and given the size and scope of production we're planning for. We anticipate commercial production in Q1 of 2025, and as you're aware, a poor ramp up has significant impacts on working capital needs and financing.
The RBC curve that you see in red on this chart actually shows the reality of historical mine ramp ups and how our ramp up curve fits in. At this time, we're gonna provide you a brief video overview of the underground mine. We're gonna take you through the details in a 3-D view of the process plants and the upgrades to the surface infrastructure after we go through the underground mine. We're gonna start the video on the underground mine.
The Media Luna complex is located across the Balsas River from the El Limón-Guajes complex or ELG. Access to Media Luna from the ELG complex will be established through the Guajes tunnel under the river. Ore produced at Media Luna will be transported through the tunnel for processing at the existing ELG facility. The Guajes tunnel will be approximately 6.5 km long and serve as the main conduit for the transportation of people, services, and material between sites. At the deepest location, the Guajes tunnel will be equipped with infrastructure and equipment for dewatering and solids collection. Once on the other side of the river, the tunnel comes back up and connects with the lower portion of the Media Luna mine at the 695 level.
The Media Luna mine will be operating from six main mining blocks to produce approximately 7,500 tons per day and up to 2,000 tons per day of waste rock. Fresh air is drawn onto the production levels from the internal ramp in red, which is supplied with fresh air from the Guajes tunnel and two access portals. The designed infrastructure for the mine enables the provision of adequate ventilation to the various work areas, as well as the materials handling for both ore and waste while making optimal use of gravitational flow to move material without the need for recurring rehandling. In this model, the ventilation infrastructure is in blue and cyan, whereas ore and waste handling raises are in magenta and yellow.
Each mining block is designed with its own infrastructure for materials handling and ventilation, enabling independent and continuous production.
The production levels are connected to the adits through a system of raises, shown in cyan. The materials handling system is designed to deliver ore and waste that is approximately sized for transportation through the Guajes tunnel on the conveyor belt. A total of four ore passes and one waste pass move ore and waste to the respective rock breakers equipped with 400 by 400 millimeter grizzlies. On the 695 level near the Guajes tunnel, we also find the main mobile maintenance shop. The 695 workshop area is a key central facility with considerable traffic flow. A drive-thru design has been applied to reduce interaction between personnel and heavy equipment moving around. The main dewatering station is located adjacent to the main shop and consists of three STILR weir filtering installations.
From here, the filtered water is pumped to the water recycling facility on surface. In order to enable early development of the Media Luna infrastructure, ahead of the connection with ELG through the Guajes tunnel, two South Portal access drifts provide access to the Media Luna mine, both of which are currently under development. The paste plant is located on surface near the upper South Portal. Tailings from the ELG side for the paste will be provided in the form of a slurry via the Guajes tunnel. In the plant, the tailings will be dewatered and mixed with cement into paste and returned to the mine through South Portal upper.
I hope that provides you a good feel for what the infrastructure is that we're developing for the Media Luna underground mine. It's not insignificant. However, it is built for the future. Now, I'd like to talk a little bit about the upgrades that we need to do with our surface infrastructure. We will be reducing our mill capacity down to 10,600 tons per day from 13,000 tons per day. Based on our current reserves, we see the ability to fill the mill through 2027. A few areas of note. This is base case only. We see significant potential to extend the mine life and enhance production post 2027 through our exploration program and take advantage of the available mill capacity that you see post 2027.
The gray area shown on the chart represents our stockpiles that'll be used to supplement the run of mine ore as the open pi ts and ELG underground decline and Media Luna becomes the primary source of feed. There is significant economic benefit by filling the mill post 2027. We're already hard at work on this strategy. A bit of a busy chart, but what I'd like to point out is our ore processing plant has to be upgraded to recover gold, silver, and copper from Media Luna.
The key unit processes that have been added are shown in blue on the flow chart and include a new flotation plant area with both copper and iron sulfide flotation circuits and regrind mills, a new water treatment plant to support the flotation process, and we'll continue to leverage the existing processing plant and mill.
Our flotation plant will be constructed and commissioned in two phases, with the first phase being operational in Q1 of 2024. This provides two key benefits. First, early iron sulfide separation reduces cyanide consumption for our current operations, so there's an operational benefit to reduce costs immediately for us. S econdly, early commissioning and operational experience of the flotation circuit is gonna ensure a smooth ramp-up of the copper flotation cells in the latter stages of commissioning. Final tie-ins and upgrades to the planned circuits are to occur over four weeks in October of 2024. We anticipate that the tie-ins will be relatively straightforward as our team is familiar with the equipment in the existing facilities.
Even though we've planned for four weeks for the shutdown in October 2024, we anticipate that the tie-ins will be straightforward and synergistic with the existing regularly scheduled maintenance.
While ramping up a 7,500 ton per day mine can take multiple quarters, our flotation plant is relatively well understood technology, as is our mill. To support this smooth transition and restart of the mill, the ramp-up of the new flotation area will take advantage of a stockpile of Media Luna ore that will be available in advance. We anticipate achieving design throughput in approximately one month, with planned recoveries from the flotation circuit achieved in subsequent weeks. The upgraded circuit will result in significantly higher copper and silver recoveries while maintaining gold recoveries. Copper concentrate and doré will be the primary revenue streams. It should be noted that the value shown in the lower right corner in the orange box on the screen are expected to be life of mine metal recoveries for the Morelos Complex.
As the open pit winds down and we process Media Luna ores, recoveries will improve as the new processing plant takes effect. Although we have not firmed the payable levels, the values shown are indicative of our marketing study and after preliminary market feedback. One of the most important areas and facilities of the project is our tailings disposal sites. Today, our facility deposits tailings in a filtered tailings disposal facility and will continue until the plant upgrades are completed. Following these upgrades, commissioning of the new flotation plant, the intention is to deposit the tailings into the mined-out Guajes Pit. Our current tailings filter disposal site is considered a risk mitigated approach relative to traditional approaches, where we impound slurry behind dams.
Our Guajes Pit disposal will be similarly risk mitigated as we continue to deposit tailings without the reliance of dams. Further to this, in-pit disposal minimizes the need for an expanded environmental footprint as we utilize an existing developed site, and it lowers our operating costs relative to the existing filtered tailings storage facility. Overall, our water management system has been designed as a closed loop system, maximizing the amount of recycle for process and mine water, and we will continue to be a low water draw site and a no water discharge site with the design of the new tailings facility. We're now gonna walk you through a similar animation as the underground, but for the surface facilities, showing you the significant infrastructure that we've designed and planned for.
The following is a walkthrough of the Morelos property, showcasing the improvements to the complex for the surface facilities as a result of the Media Luna Mine project. Ore coming from the Media Luna Mine is taken to the new Guajes Tunnel portal by an underground conveyor. Once on the surface, the ore will be stockpiled and then trucked to the existing Guajes crusher. Crushed ore will be conveyed to the existing stockpile. In the grinding area, the existing SAG mill and ball mill will still be utilized. The existing ball mill will be upgraded with a variable speed control to improve process control at lower milling rates. The cyclone feed pumps and pipelines will be replaced to account for the modified tonnage throughput, and an additional trash screen will also be installed.
Changes to the existing leaching area, including new pumping systems, along with a new sampler shown on top of an existing leaching tank to better handle lower tonnages. Only minor pumps and piping changes are needed for the CIP/CIL circuit. No modifications are required for the refinery area. A new pipe rack and electrical room will be installed along the west side of the mill building. The pipe rack connects to the flotation area. The new electrical room on the west side will house the new ball mill VFDs. The principal new area to be constructed for the Media Luna project is the flotation circuit for copper and iron sulfide concentrates. This area will contain the flotation cells, regrind mills, thickeners, along with the reagents necessary for the flotation operation.
Maintenance of the area will be completed with a new centrally located tower crane.
Copper concentrate from the flotation circuit will be pumped to a new concentrate filter located within the existing tailings filter building. The filtered concentrate will then be discharged onto a conveyor that transfers the material to a new copper concentrate storage building. Copper concentrate will be stored in eight divided areas to facilitate blending to ensure consistency of concentrate quality. Each divided area will have a screw conveyor to feed material onto a collecting conveyor. The material transfers to a concentrate truck load-out zone adjacent to the flotation area. Slurry tailings will be collected in the existing tanks at the tailings filter building. The tailings will then be pumped to a pad located near the Guajes Portal. From the Guajes Portal, the slurry tailings have two disposal pathways.
One stream will be sent to the Guajes thickener for further thickening, and will then be pumped to the existing Guajes West pit for slurry disposal. The second stream will be collected to a holding tank, where positive displacement pumps will transfer the material to the paste plant located at the south portal area to be utilized in the paste backfill process. Water from the Guajes tunnel will be collected at the water recycle system near the Guajes thickener. This water will be reused in the mine or be sent to the East Guajes pit for water storage. Reclaimed water from the paste plant and the West Guajes pit will be returned to the Guajes thickener and back into the process plant water systems.
A new water treatment plant will remove cyanide to provide a clean water feed stream for the grinding and flotation circuits. Also in the area is a new electrical substation, which will provide additional electrical capacity needed for the Media Luna project.
That video, again, I hope provides you a good understanding of the type of facilities and upgrades that we need to do with our surface infrastructure to support the Media Luna mine. Now I wanna take a few minutes to talk about our ESG and permitting aspects of the project. One of Torex's key strategic pillars is to build on the company's excellence in ESG, and we wanna continue to showcase what responsible mining looks like as we advance Media Luna. We will build and operate Media Luna following the same philosophy that we do at our ELG operation, thereby creating trust and lasting and positive relationships with our employees, our unions, and our local communities.
We also ensure the robust environmental management systems that we use on the north side of our operations on the Balsas River will extend to the south side to ensure no harm to the natural environment. Again, we wanna work towards global ESG performance standards. As an example, the new in-pit tailings facility I referenced earlier will be built and managed in accordance with the principles of the global industry standard on tailings management. With respect to permitting is tracking well, with key remaining approvals being the MIA Integral to allow for integrated operations on both the north side and the south side of the river. The MIA Integral was submitted back in July, and we're in conversations with the regulators targeting approval in the coming months.
The MIA Integral will build on the MIA Modification we received last year, which paved the way for the early works to access Media Luna from both sides of the river. Additional regulatory approvals are in process for connecting to the regional 230 KV power line in order to increase our power draw to the site to support the Media Luna mine. Now I wanna talk a little bit about the Media Luna project schedule and how we intend to execute the project and the thinking that's been put and built into the feasibility study around this. As part of our study, we developed an integrated resource loaded schedule, and it really reflects our execution strategy. The following is just a high level of the schedule and the associated milestones that the project team will be working towards.
Very important is we budgeted for breakthrough on the Guajes tunnel in Q1 of 2024, and there may be some upside to that as we're continually improving our performance on the development rates. This is a key date for us as it signifies when we finally connect our ELG operations directly with our south Media Luna operations. Critical path for the schedule goes through completion of the Guajes tunnel and the conveyor, which is tied to the breakthrough of the tunnel. Following the development, there is some significant infrastructure required within the tunnel itself for the material handling system. This is a key date. We are anticipating approval to connect to the 230 KV distribution system, and this will happen in August of this year, allowing design and procurement of the key electrical gear to continue.
The West Adit vent fan will also be commissioned in mid-2023, which is gonna provide additional ventilation, enabling equipment and personnel to advance development. Our iron sulfide concentrate flotation circuit will also be commissioned at the end of 2023. As previously mentioned, this is gonna be completing a substantial portion of the plant earlier. Excuse me. This assists with spreading out the resource load on both sides for trades, as well as advancing preparation for a larger commissioning effort towards the end of 2024. First development ore from Media Luna is expected in Q4 of 2023, with first production ore in Q2 of 2024. Ore mined from Media Luna will be initially stockpiled and used to wet commission our upgraded plants in Q4 of 2024.
We have planned, as I mentioned previously, a one-month shutdown of the mill to allow final tie-ins.
We think that can be compressed a little bit and allow changeover to the reduced throughput in October 2024, with plant ramp up starting in November 2024. We anticipate commercial production from Media Luna starting January 1, 2025. In assessing Media Luna, the Guajes tunnel and our ramp drives from the south side are still our key focus. We've made steady progress from both the north side and the south side on this development, and we're seeing steady progress on the development rates, and we continue to get further gains. We've just actually mobilized a larger bolter, which has been commissioned, and that's been brought to site to try and improve that performance. Overall, we're budgeting around six to 6.5 m of advance per day in the Guajes tunnel, and this has already been achieved consistently.
The south portal upper is going to allow access to the upper ore body and provide a closed ventilation circuit with the West vent adit to further support developments. Concurrently, on the south portal lower, we're progressing, and at the bottom of the deposit, or when we reach the bottom of the deposits, the crews will begin to excavate the Guajes tunnel from the south side, advancing on two work fronts. To me, this is a very important part of a project. We talk a lot about the technical aspects of the project and the infrastructure, but it's the people that really makes a project successful. We spend a lot of time on organizational design at Torex, and Media Luna is no different. We are leveraging an integrated team, one that Torex will be deeply embedded.
We have long-term relationships with our key partners, with continuity from the original mill construction and build through the feasibility study and now into execution. Our strategy is to execute the work with the right people with the right expertise. This is a bit of a busy slide, but I really wanna highlight the significance of the colored boxes. The yellow boxes represent our service provider and consultants, our professional partners. The white boxes represent full-time Torex employees, and the green boxes represent part-time or support employees from Torex. In a traditional EPCM project, the owner's team provides oversight and relies to a large extent on third parties to plan and to execute, and the owner's team would sit on top or off to the side of the EPCM team.
What I'd like to say is, in this case, we're a truly integrated project team with key management positions held by Torex project employees supported by expert engineering project and construction management personnel from our service providers. This will provide full transparency and accountability for all project activities with aligned objectives. Since last summer, we've been active on the site through our early works program, and consequently, we've advanced in defining our project execution processes. We're not coming into this cold. Project execution plans and procedures have been developed and established and are ready to be finalized. Procurement contracts and cost scheduling management will utilize developed systems and workflows to allow for a quick ramp-up at the start of the project.
More importantly, we have proven processes from our existing operations, such as our current industry-leading health and safety and contractor management system.
This will be implemented on the project site and supplemented as necessary to reflect our unique construction activities, ensuring that we can safely ramp up the contractor workforce with no incidents. Lastly, as part of the project organization, and very importantly, we have early engagement of our operational readiness team. This will allow fast coordination, early coordination, and planning to successfully integrate Media Luna into the existing operation. Part of a successful project, as I mentioned, is the people and recognizing the planning, the transition, recruitment, and training effort required to establish a skilled and efficient workforce. In order to ensure our success, we've onboarded a dedicated project manager to define and implement this workforce transition plan in conjunction with our operational readiness team, who have also been established.
This manager has recently had experience transitioning another major mining operation from open pit to underground, and will work closely with both the project team and our operation teams from day one. I'm now gonna hand over to Bobby Davidson, who's gonna review the capital costs associated with the project. Before I do that, I just wanna echo some points that Jody made earlier. I wanna point out that we always knew the Media Luna project would be challenging. The deposit is situated 7 km away from an existing infrastructure on the other side of a major water course and hosts challenging metallurgy.
It's important to understand that the economics that Bobby and Andrew will step you through later in the presentation, and that are shown in the technical report, are truly grounded in operating costs, capital costs, and ramp-up time frames that are both realistic and achievable. We want to deliver on our commitments. The costs account for the current inflationary environment, quotes from vendors, assumptions on sustaining capital expenditures required to responsibly develop a sustainable 7,500 ton per day underground mine. With that, I'll turn it over to Bobby Davidson, who will review the costs in more detail.
Thanks, Dave. Appreciate it. All right, for the next few slides, we're gonna go over the capital and sustaining costs. The first slide here represents the high-level summary of the total cost of the Morelos Complex, which is ELG and Media Luna combined on the left column, and on the right column is the ELG standalone, which is without the Media Luna project included. We're anticipating to spend $848 million to develop the Media Luna project in addition to the $124 million of sunk costs through the first quarter of 2022. It's expected to spend $545 million in sustaining capital over the life of the mine.
This comes to an annual spend of $46 million, which includes the capitalized stripping. The sustaining CapEx reflects the true cost to operate and maintain a large-scale underground operation, including the mine, process plant, tailings facility, and infrastructure. Sustaining CapEx has been accounted for in areas that are not always addressed in projects. A few examples are mine fleet rebuilds are included with the current 8-year mine life, and portions of the process plant will not be new, and therefore costs have been included to account for an aging plant. The upfront cost of $848 million is what it costs to build this large-scale underground mine, including a 6.5-kilometer-long access tunnel, and make necessary upgrades to the process plant. A worthwhile note is the study has considered industry standard achievable productivity rates in the mine planning.
This has resulted in the estimate that you can see, which includes more equipment and resources but reduces risks. There's also potential room for opportunity to increase productivity through applications of technology such as autonomous mining. We have been very clear on the scope changes relative to the PEA, which makes comparing the FS and the 2018 PEA difficult. A key scope change has been the access tunnel to the deposit. With a single point of access from the north side of the river, it is shown that the current schedule and the PEA schedule is difficult to achieve with only one access point, and therefore more access points to the Media Luna ore body were required, and a south portal area and tunnels were developed.
Yes, the Guajes tunnel is more cost-intensive than an over-the-river suspended conveyor contemplated in the PEA, but the tunnel will be more effective and give us complete access to the south side of the river, an area we see significant exploration potential. Another key difference has been the level of inflation the industry has seen since 2018. This includes higher prices for steel, cement, and other commodities. It also reflects these disrupted supply chains and logistics due to COVID and other factors. We are confident in upfront capital and expect to deliver the Media Luna project on time and on budget. We have done significant engineering to leverage real-time quotes, develop first principle buildups, along with minimizing historical allowances.
The engineering has been done in areas necessary to allow for the feasibility study estimate to achieve a class three estimate as per AACE standards.
The engineering completed during the FS will be used moving forward into the next phase of the project. A key point is the project has deep knowledge of the local and available contractors, including rates, current staffing, and potential for future work based on the existing operations and early works. Current contractor rates are included in the project costs. Media Luna is coming in at an initial capital cost of $848 million. Approximately 60% of the costs are related to the project directs. The key drivers for the direct costs are the access tunnels in the underground mine, along with the process plant and tailings system for the paste backfill and the slurry tailings storage facility. The other portion of the initial capital cost is the indirects, which are driven by freight, EPCM, and owners costs.
The project is carrying $100 million of contingency, which we see as a reasonable level considering overall expenditure and current market conditions. The contingency was modeled in a Monte Carlo simulation utilizing Crystal Ball and taken at a P90 level. The process included input from subject matter experts, which developed the engineering and procurement, which serves as the backbone of the estimate. The other $2 million that you saw was for the expenditures related to the completion of the portal number three for the ELG underground operations. We expect the quarterly spend rate at Media Luna to increase throughout 2022 and remain fairly stable in 2023 before tapering out in 2024. The annual spends will see an increase in 2022, a peak in 2023, and a drop-off in 2024.
One thing to note is that we are carrying about $85 million of upfront capital for underground mine development between quarter four 2023 and quarter four 2024, as we don't expect commercial production to be declared until the first quarter of 2025. This $85 million on pre-production CapEx is based on taking a realistic ramp-up of the Media Luna mine, which keeps this in an initial capital period instead of moving this to a sustaining cost with a more aggressive ramp-up period, which would not have been realistic in our view. Annual sustaining CapEx of $46 million reflects the true cost of operating and maintaining a large-scale underground operation. Not only does this include significant underground mine development, but also assumes ongoing maintenance and investment in the process plant tailings and infrastructure.
Again, many studies seem to underestimate sustaining capital, so we are quite comfortable with the overall levels outlined for the project. Sustaining capital does not include ongoing exploration. However, we plan to continue to spend on exploration to replace depletion and grow reserves. At this time, I'll turn it over to Andrew Snowden to walk through the operating costs and economics.
Thank you, Bobby. Good morning, everyone. Before I move on to a few points on financials and starting on operating costs, just as a reminder for those listening in, you do have the ability to submit questions using the Q&A functionality within the webcast, within the webinar. If you are struggling to see the Q&A option, please just refresh your browser, and that should allow you to submit questions. Starting first here on operating costs. You know, you can see on this slide a summary of the key operating cost metrics for ELG standalone on the right of the slide here. That's just the ELG mine. And on the left of the slide, the entire Morelos Complex, including both ELG and Media Luna.
What's clear from this slide is you can see that Media Luna project really allows Torex to maintain our current low-cost profile and healthy margins you've become used to through ELG. These operating cost estimates that are included here and included within our technical report have been determined on a first-principle basis and built bottom up and developed using the long experience we've had operating our ELG operation and operating within this region of Mexico. The next slide here provides some more detailed analysis on our operating costs by specific areas of mining activity, and I'll just make a few points on this slide here. Firstly, on ELG underground costs.
You'll see a slight increase in costs from the ELG years, which is the 2022 to end of 2024 period to the combined period post 2025. We are looking at potential opportunities here to reduce those ELG underground mining costs looking forward. A couple of examples on the slide here. You know, firstly, we are looking at alternative bulk mining methods to lower our costs, such as longhole to apply that to portions of the ore body, and work is underway to assess that option currently. In addition, right now our ELG underground mine is primarily mined using contractors, and so we are in discussions with some of our key contractors to identify opportunities on that front as well. Next, on processing costs.
You'll see a slight increase in processing costs post 2025, as we start operating our new and more complex processing plant. Those costs are really attributable to the additional elements of the plant which will be implemented through the Media Luna period, and that will drive some higher labor costs, higher maintenance costs, and higher electricity costs. Next on site support. You'll see an increase here in site support based on a ton milled basis. Really throughout the period here, our site support costs on a dollar basis are relatively flat each year.
Because we're now moving to a lower capacity in our mill on a per ton milled basis, that will increase our costs, but there are opportunities to drive economies of scale post 2027 as we deliver on our exploration project. Finally on this slide, just I'll briefly reference the transportation, treatment and refining costs you see here. Obviously a significant increase in the post-2025 period, and that really just represents that going forward, Torex and Media Luna will be a significant copper concentrate producer, and with that comes some higher treatment, refining and freight costs. This next slide shows our annual all-in sustaining costs and margins by year throughout our current life of mine.
Our mine site AISC, you can see, is expected to average approximately $955 an ounce over the life of mine. Through 2027 though, when the mill is full, I will just highlight that AISC is closer to $930 an ounce, and we would hope to maintain that cost profile post-2027 by delivering on our exploration strategy. I will just highlight that this, the cost profile you see here in the all-in sustaining costs do exclude corporate G&A, and this has been running at about $20 million annually at the corporate level over the past few years. What does that look like compared to our peer group? On this slide, we show the industry cost curve, and this is the AISC cost curve from S&P Capital IQ.
You'll see here, based on the S&P, that the Morelos Complex sits comfortably in the second quartile of the cost curve on an asset basis, and this will set the company up well to withstand commodity cycles throughout the life of the mine. Now I'll just move on to the economic analysis. This slide here, you'll see again ELG standalone economics on the right-hand of the slide and the complete Morelos Complex, including ELG and Media Luna here on the left. This slide shows a snapshot of those economic parameters. Most significantly on the Morelos Complex, we highlight here that the combined complex has a combined after-tax NPV of over $1 billion, based on our base case commodity price assumptions.
That NPV does increase to almost $1.8 billion on a spot case using the spot prices as of last Friday. Some of the highlights on this slide, and many of these have already been noted through the presentation already, but I'll just call out a couple of points. You know, firstly, what's clear here, as Jody mentioned earlier, is that Media Luna extends the ELG mine life from 3.5 years to almost 12 years. Overall, the economics are a significant improvement over the ELG standalone case, with Media Luna supporting ongoing mining and value generation from both Media Luna and the ELG underground operation. Even at base case commodity price assumptions, there is significant upside potential beyond 2027 due to the available capacity in the mill that Dave referred to earlier.
Now, this next slide summarizes the incremental benefit of the Media Luna project. Just to highlight, due to the intermingled nature of the complex between ELG and Media Luna, these economics were determined by comparing the cash flow of the current ELG standalone mine with the cash flow of the combined Morelos Complex. The difference between those two cash flow profiles we used to calculate the Media Luna project standalone economics. You'll see here on the slide that one of the key metrics that the Media Luna has an implied IRR of 16%. This is a modest IRR but reflects real world development capital, sustaining capital, operating costs, and the ramp-up curve.
In addition, the base case commodity assumptions used in this analysis, and just the highlights of the pricing we used was $1,600 gold, $21 silver, and $3.50 a pound copper. They're very prudent given current market conditions. If we were to use the March 25 spot case I referred to before, so that's using $1,950 an ounce gold, $25.50 silver, and $4.70 a pound copper, that would increase the base case economics or the base case IRR to 25%. This would be further increased if we were to run with a full mill throughput to the current 2033 mine life. This slide provides a more detailed comparison of those financial metrics under the different scenarios, comparing both the base case and spot case metal prices.
Really just highlights the strong leverage that the Media Luna and Morelos Complex has to commodity prices relative to the base case levels. Base case EBITDA is approximately $300 million a year, increasing to approximately $425 million a year under spot price EBITDA levels. This next slide here just highlights the key sensitivities to the NPV calculation, flexing various different key assumptions. Beyond commodity prices that I just referred to, referencing the March 25 spot case, operating costs are the most sensitive assumption, with a 10% variance in operating costs impacting net present value by approximately $150 million.
This really highlights why we made some of the decisions that Dave and Bobby referred to earlier and walked us through, which although they contribute to some additional upfront capital, they do provide long-term value by supporting our lower operating cost profile throughout the life of the Media Luna project. I'll turn now to some commentary on our balance sheet and our plan to fund the Media Luna build. Firstly, as we've talked about in several earnings calls in the past, you know, our strategy over the past few years has been to get ourselves ready to support the Media Luna build, and we've done exactly that. We closed out 2021 with over $400 million in available liquidity, including over $250 million in cash and no debt.
This strong balance sheet, coupled with the operating cash flow expected to be generated from ELG over the next three years, will be able to support the majority of the required Media Luna capital. At base case commodity prices, cash flow from ELG is expected to be over $190 million per year. If our focus as a company was only on Media Luna and only building Media Luna, we could likely fund the build entirely through internal cash flows. However, to be able to support the Media Luna build, invest in exploration and other strategic priorities, and maintain a minimum of $100 million of available cash to weather any unexpected events, we will be looking to take on some prudent debt financing. That's in the region of $250 million-$300 million.
We're currently assessing various debt options, including a potential expanded credit facility, gold prepay or high-yield debt. Assuming favorable market conditions, we will look to execute on that debt financing through the second half of this year, although we're not in a rush and have flexibility in timing well into 2023. In addition, we have hedged a portion of our 2022 and 2023 production to manage downside gold price risk, and I'll reference that in a bit more detail shortly. This chart here shows the Torex corporate cash projection through the Media Luna build and ramp up on a base case commodity price scenario. Based on that base case assumptions, Torex has a cash deficiency of less than $100 million through the Media Luna build and based on those assumed commodity prices.
This forecast takes the mine technical report cash flows and assumes $20 million of annual G&A with $35 million of annual exploration drilling costs through to 2026, both in line with current run rates. Although an extension of the current commodity price scenario will obviously be significantly more beneficial than the base case assumptions made in this assessment, that will continue to narrow this gap. We are looking at various different debt options that will help us support the Media Luna build and delivering on our broader strategy. The cyan line here at the top of the chart really just takes that cash flow projection and assumes $275 million of debt financing and the associated financing costs over a four-year term.
This highlights that Torex can comfortably support the build, along with maintaining a cash buffer to support any cost escalation while maintaining the company's target cash of $100 million. That would be a very comfortable cash profile, with $275 million of total debt. On a net debt basis, the leverage ratio would be below the ratio of 0.5, so a very prudent and conservative debt level. As mentioned earlier, we did take advantage of stronger metal prices last month and did lock in some gold hedges. We hedged approximately 25% of our production for a 5-quarter period commencing Q4 2022, so Q4 of this year, through until the end of 2023.
We entered into that hedging at an average price of approximately $1,920 an ounce, and we consider this a prudent decision given the capital spend ahead of us here and the favorable metal prices that we've been experiencing over recent weeks, relative to our base case gold price scenario of $1,600 an ounce. We will continue to assess our liquidity forecasts, look going forward to consider whether further hedging may be prudent in 2023 and into 2024. That wraps up the financial portion of the presentation. I'll now turn the call back to Dave for a discussion on key risks and opportunities.
Thank you, Andrew. You know, as we work through the feasibility study and we really get to understand the scope of what we're doing and how we're gonna do it, we really spent a lot of time identifying the key risks and the key controls to manage those risks and the opportunities to further improve the project and the associated economics. This slide highlights some of those key risks, and they're risks that, you know, you'd expect of a build this size at any mine, such as delays associated with mine ramp up, schedule slippage, delays associated with the shipment of key equipment, as well as key permits. Our key risk process consisted of multiple workshops with subject matter experts. These focused on technical, operating, and construction risks, of which 462 were identified.
In addition to this, overall project execution risks were identified in the amount of about 142. A number of these risks have already been actioned through the design of the facility, and all have recommendations and associated controls for mitigations that will be monitored for their effectiveness as the project progresses. Of course, out of all these risks, the most unwanted event would be a serious injury or fatality. We have a very robust safety management system that we will use through the Media Luna build, and that we will continue to be the safest operators in the mining industry. I've emphasized a few times during the presentation that the Media Luna project is an investment in the future.
We're confident, given the indications from our exploration program to date, and the fact that we have a sizable unexplored land package, that we have a long future on the Morelos property. We've identified a significant amount of prospective targets as part of the Media Luna cluster within the mine, strike distance of the existing Media Luna works. This will be the source of additional feed post 2027. In terms of our surface infrastructure, I've mentioned the plan to advance our iron sulfide flotation circuit, which will provide operational benefits and de-risk the project execution. Additional opportunities will be pursued to reduce costs through optimization of our concentrate shipping strategy.
From a mine design perspective, we've included a fiber backbone that will enable application of digital mine planning and management tools, as well as autonomous and semi-autonomous remote mucking equipment to maximize face time utilization.
From a tailings management perspective, we've designed a disposal system that's more efficient, yet equally risk mitigated as the existing filter tailings facility, with the flexibility to expand in the future as the life of our facility expands as well. This table here, we clearly show the available capacity that we have in our mill post-2027, and we already have an exploration and drilling program targeting to fill the mill beyond this time. We've historically underinvested in exploration. Not anymore. Our exploration is a strategic pillar within the organization, and we see lots of opportunities to fill the mill between extending the ELG underground reserves, potentially developing the EPO deposit, and regional exploration opportunities. Our current ELG underground has been underappreciated, part of the Torex story.
We saw a 20% increase in reserves, and current reserves plus cumulative mine represents a 3.5-fold increase over the initial reserves outlined in 2017. We have a significant drill program underway in 2022 to support this continued trend. Step-out drilling will resume in the second half of this year once we complete our portal three and targeting extensions of both the Sub-Sill and the El Limón Deep at depth. We are looking to replicate the success that you see here at ELG underground across the overall Morelos property. The following graphic represents the broader Morelos property and land package, and it shows our property north and south of the Balsas River. For many of you, this slide's not new. We've used it before, and you've seen it before.
What's new is that we're going to start testing the high magnetic anomalies shown in purple through a much bigger focus on drilling now and over the coming years. This year, we have a drilling program budget and exploration budget of about $39 million. High magnetic anomalies have been a great indicator for us with both ELG and Media Luna sitting on top of these anomalies. We see lots of potential regionally as 75% of the land package is unexplored, and we continue to see plenty of opportunity on both sides of the Balsas River. Taking a view from the broader land package to a tighter view of the Media Luna cluster itself that I spoke to on the other slide, I wanna further emphasize the opportunity to leverage the Media Luna assets that we're constructing.
This shows the opportunity within strike distance of the Media Luna mine to grow our reserves and resources within the broader Media Luna cluster. At Media Luna proper, we see good upside along the strike and at depth. Please note the black lines. Dotted black lines represent the south portal access to give you a sense of orientation to the targets. For a long time, there were assumptions made there was nothing left in the pits. Turns out this was not the case, and now we're challenging our assumptions on both sides of the river. At ELG, the focus in 2022 will be on infill drilling as we look to wrap a mine plan around the deposit to confirm its economic viability.
Plenty of other targets have been planned, including Media Luna West, EPO North, and an exciting new area discovered following completion of additional geophysics that we call EPO South Extension. With that, I'm gonna turn it back to Jody for some final comments.
Fix my step stool here, so I don't look like the neighbor on Tool Time. All right, thanks, Dave, and thanks to all of you on the line for your participation today. A lot of information certainly has been shared, but clearly an important day for our company and clearly a lot of important information and details to be shared. Before we move on to the Q&A, I do wanna close for a moment with some of the key themes and the key highlights that you would have heard today in the presentation. Media Luna, it will be a key value driver for us over the coming years. We're really getting to the promised land here. It triples our mine life, and we do see significant upside to extend production beyond that 2027 period.
It maintains our attractive low-cost profile and continues to deliver significant cash flow and revenue that our investors have come to expect from the Morelos asset. Copper, an important part of the narrative. It really does diversify Torex into becoming a copper producer, and we really could not have timed the market better on that one. Importantly, if you've heard anything today, you've heard from Dave that we're well-positioned to execute on the build of the project with the kind of discipline and excellence people have come to expect of Torex. You heard from Andrew that we have a strong balance sheet, no debt. You heard from Dave that our permitting and local relationships are well in hand. We have a world-class team who's ready to go.
On that note, I have to close by acknowledging the group of people you see here and a group of people that you don't see here, and that's our team. I could not be more proud of these people. We're tired. Lots of us have had COVID over the last two weeks. It has been a monumental effort to get us where we are today, especially during COVID, and it really is a testament to the team and the type of team that we are that we're here. The group is unstoppable. The future of Torex is certainly here. The foundation for growth has been cast, and we're now onto the business of what we do best, which is executing on our plan to deliver our project and build out the future at Morelos. Now it's time for questions.
Dan Rollins has been receiving your questions. I have a bit of a list of them here on the screen in front of me, and they're grouped by topic, not by the order in which they came in. I will note that it is not too late to submit questions. Refresh your browser if you need to, and reset them, resubmit them on the webcast. Of course, we will cover as many as we can with the time we have left. If your particular question does not get answered today, just reach out to Dan, reach out to me, reach out to Andrew. Those of you who have worked once with us know that we welcome this, and we are an open shop. Always happy to tell the story.
This first question came in about EPO, and I'm gonna direct it to Dave. How much drilling is being done at ELG this year? What percentage of the 1 million ounces of inferred do you think could be converted to M&I with this year's drill plan? Dave?
In terms of.
Maybe take your mask off, Dave, just for the purposes of answering.
Yeah.
Yeah. In terms of conversion, we're looking to convert about 50% of the resource. In terms of the amount of drilling that is planned for this year, just over 14,000 m, and that includes about 41 holes in the ore body itself.
Good. Thank you. This next question centered around permitting. Always a hot topic, permitting in Mexico. Can you take us through the impact of delays in receiving key permits? We've talked about key permits and key permission as the MIA Integral, the increased power draw, and the MIA Integral permit amendment that we will file to deal with our in-pit storage facility for tailings in the Guajes pit. I'll take that one. Two key schedule related permits are already behind us. One was the MIA Modification to allow us to start construction on the south side of the river. We were worried about that one. We had never been on the south side before. Regulators don't like that when you go into new, untouched areas.
We submitted that one very early, and we got it in the middle of the year last year, I would say about two months, two and a half months off the schedule we had planned. I think that's a reflection of some of the administrative changes at SEMARNAT and certainly COVID delays. The regulators are not immune from experiencing their own issues with COVID delays. We got that permit and then started construction on the south side of the Balsas River. That was a key permit for us. Another key schedule-related permit was the permit to allow us to tunnel under the Balsas River. At the rates we're going, we'll be to the river's edge by Q3, Q4 of this year, so we needed that permit in hand so we could continue tunneling.
We, as of yesterday, now have that confirmation of permit in hand from both SEMARNAT and the water regulators called CONAGUA. In terms of getting the MIA Integral, we submitted that permit application in July of last year. We have been in continuous discussions with SEMARNAT. They have site visited a couple of times, and we expect to have that one in hand, hopefully by middle of the year this year. I wanna emphasize, we can continue with our construction and project plans without that permit in hand. We don't need it for the project period. In terms of the amendment for tailings deposition, we have capacity in our existing filter tailings storage facility out through 2026. Lots of breathing room there in terms of getting that permit to allow us to deposit tailings in the Guajes pit.
The last one I'll talk about is on power. We've been in extensive discussions with CFE and CENACE, that's the power regulator. We're taking this in two stages. Today, we wanna go from 30 MW to 45 MW. We expect that by about the end of this year. The second stage would go from 45 MW to 60 MW later on when we turn the plant on. If we had to, we could use diesel as a backup once we get that built up to 45 MW. We don't want to. It's more expensive, but certainly discussion with the regulators are ongoing on that. I will say we don't need new distribution equipment. We're tying into existing regulatory equipment. What we need on our site is a new substation and a new transformer.
It's not as though new lines have to be built or anything like that. It doesn't certainly guarantee the power permit, but we feel pretty comfortable about that one. This next one is a question for Dave. This is a good one. Wondering if you can provide more detail around the $53.3 million of owner's costs that are included in the initial capital. This appears higher than what I would have expected. Is there anything specific driving that cost, Dave?
We need to recognize that this is a relatively, somewhat of a remote site, so we're self-sufficient on most fronts. Within the owner's costs, we include things like camp services are being managed through our existing operations and owner's team, site security, environmental permitting support, community relations, which is an important part of our success on the project. In addition to that, the owner's team cost includes things like first fills, costs to develop the maintenance systems and processes for the new assets that we're building, as well as picking up the cost of the salaries for the project team members and those people that will be managing the underground work. One thing that we are doing that's a little bit different is we're not relying on an EPCM or subconsultants to manage our underground development and mine workings.
We're doing that with our own Media Luna team, and we're also using our own team to develop the Guajes tunnel. The management costs associated with that fall under the owner's team costs as well, just to give you a bit of a breakdown.
All right. Next question. Another one on CapEx, so I'll direct this one to Dave. Regarding the increase in CapEx, and I'm assuming that the person asking the question is asking about the increase in CapEx from the PEA level CapEx from September of 2018 to now. That's what I'm assuming they're talking about in terms of increase. Can you provide a breakdown or a split between scope changes, scope addition versus actual inflation? That's a tough one, given that the scope is so different in the PEA than it is to what we've presented here today, Dave, but any comments on that?
Yeah. Listen, as Jody said, there is a significant scope change. You know, the original PEA contemplated different approaches on how we were gonna access the Media Luna deposit. There was a philosophy at the time to minimize the amount of the footprint on the south side. Everything was accessed from the north side via overland conveyors, similar to the RopeCon that we have. Very different approach. A majority of the cost difference is associated with changes in scope. Again, it's at a PEA level. When you're working at a PEA, your level of definition and understanding to define your CapEx really is minimal.
I think now what we have is a solid, robust plan, and we have a lot more confidence in our CapEx and the scope that we need to deliver the project, and that's the biggest driver. In terms of the split on inflationary costs, we know kind of how inflation has performed and behaved in the last 2-3 years. It's impacted every mining operation, every project. The cost that we have in the CapEx today are current to the end of 2021. Actually, we received some current budget quotations right into early 2022 to make sure the CapEx was as current as possible to reflect our current environment.
Good. Thanks for that. I'm gonna switch from Dave over to Andrew. We've got a couple of questions on the economics, Andrew. Is there any pre-production revenue that acts as a credit in the initial CapEx number?
Okay. No, thanks for that question, Jody. So the answer to that question is no. The accounting rules actually changed very recently on recognizing pre-production revenue, whereas historically, that revenue would be capitalized and offsetting some of the capital costs. That's no longer the case. Revenue in the pre-production period is now recognized in the income statement as revenue as product is sold. There's no credit there that will be applied to the capital costs. The capital numbers that we've talked about today are total gross CapEx numbers, excluding any credits from revenue.
Another one for you, Andrew, while you're speaking. What is your expected cost of capital on a debt package? We've worked something into the model there, so I'll let you comment on that and then what the expectations are.
Sure. Really it depends on which debt option we end up moving forward with. As I mentioned in my commentary, we are evaluating several different options, ranging from an expanded credit facility to gold prepays to high yield debt, plus some other debt financing paths. The range of those different options I would estimate is likely, at least based on current market conditions, in the 5%-7% range. For the purposes of the slides I talked through earlier, where I had assumed a $275 million of debt, I did assume a 7% interest rate within that analysis, and that was really just picking the higher number of that range to be able to provide the readers and those on the call comfort on our go-forward liquidity profile.
Okay. Thank you, Andrew. I'll go to the next one here, and I'll direct this one to Dave. Are there any opportunities for cost savings as you enter into execution? Hint, the answer is yes. If you could take us through a couple of those.
Absolutely there's always opportunities. There's always opportunities to do things better. You know, when I spoke to the opportunities during the presentation, I spoke to our concentrate logistics. You know, we feel there's some opportunities to optimize that and come up with maybe a bit of a different approach to reduce our costs. In terms of actual CapEx opportunities, absolutely. You know, we've got a strategy to competitively bid a lot of the major equipment. You know, we've assumed certain budget pricing right now, so we think it's a competitive market out there for some of our key costs.
On the development side, there's an opportunity as we transition our existing operations workforce and get them ready for production to maybe introduce them to the mine a little bit earlier and start to transition our development contractor off earlier and bring the operators team in at a lower cost than what we'd be paying a development contractor. In addition to that, you know, we're gonna look at the design. We've come up with some pretty steady assumptions in terms of how we've designed the mine. We do wanna challenge some of the geotech assumptions that we've used to design our mine plan. Maybe relook at stope sizes that'll reduce some of the capital development over the life of the project.
Certainly on a longer term, to really be able to de-risk and hit that 7,500 tons per day in a cost-efficient manner, we haven't allowed for what we know is proven semi-automation and instrumentation that we can build into the mine. We've assumed a certain amount of face time and utilization or working hours. We think there's opportunity there to expand that and really improve the production of the facility. A few different avenues to pursue there.
Good. Dan, I'm gonna get you to scroll up to the next one here. I'm gonna take, Dave, this question on the Guajes tunnel for you. There's questions about the design of the tunnel here. Interested in the Guajes tunnel conveyor, the long one, right? Is that a floor mounted or on the back? Is it possible safe to use the tunnel for manpower and consumables while hauling ore? How does the conveyor connect from the Guajes portal to the process plant, and what is that distance? And then the last one here, while you're on it, is when at steady state, is the Guajes tunnel the bottleneck of the operation? I mean, we do a lot of work at Torex to identify bottlenecks. We use the theories of constraints. The conveyor and the tunnel is definitely not the bottleneck.
It's sized quite significantly to ensure that it isn't.
Yeah.
Dave, over to you to take on some of those questions on the Guajes tunnel design.
Okay. Starting with the first one, is it safe? Absolutely. You know, one of our core values at Torex is people really come first, and we wanna make sure the safety of our workforce. The way the drift in the Guajes tunnel is designed, it's actually wider than a typical underground drift. The conveyor tunnel will be hung from the back, but it will be to the side of the drift itself. We will have protocols in place to make sure that people don't transition below that conveyor, to make sure that there's no possibility for anything overhead to come on somebody during those times. In terms of the second question was, Dan, if you can-
Capacity of the conveyor.
Capacity of the conveyor. Thank you, the capacity of the conveyor is actually, in terms of sizing, based on the actual particle size that the conveyor has to move. And that is based on the 400-mm by 400-mm grizzlies that the ore passes through. Really what we have is an 800-ton-per-hour conveyor, which is double the 7,500-ton-per-day capacity that we have in the mine. There's plenty of capacity in the conveyor. We don't see that as a bottleneck in the long term. The bottleneck in the mine really will transition to the stope cycle, how we can cycle stopes and the production on the various work fronts. That really comes down to disciplined mine planning and execution.
The last one, Dave, just as a reminder, is the connectivity between the Guajes tunnel and the process plant. How we're gonna move ore from one to the other, and how far is it?
Yeah. Basically, the Guajes conveyor will dump onto an ore stockpile pad just outside of the Guajes Portal. From there, it will be trucked to our existing crusher dump to feed the mill. I can't remember the name of the crusher dump, Bobby. The distance is approximately?
1 km.
1 km, so.
Good. Now that we've got Bobby talking, I'll head to a specific question on the CapEx for you, Bobby. How much of the CapEx is locked into fixed price contracts? What are the fuel price assumptions? Everybody's worried about the price of fuel these days for sure. I see $2.20 a ton in the technical report. What is that in terms of price per liter or BBP?
Okay. On the CapEx, the fixed contract, we have our underground mine contractor right now. That's a fixed and locked contract through the development period. That makes up probably roughly 15%, maybe a little higher than that, from a direct level. That is the main contract that we have locked in for fixed contracts at this time. We have some other smaller contracts that are on the surface that are doing works on the surface for roads and ponds that is in place. Then also for the fuel, the 220 is in liters for the technical report, and something we looked at from an average price there. I know it's going up recently, but that's something we looked at from an overall perspective.
Okay. Thank you. Dave, I'll direct these next two to you. It's about contract mining, both current and future. On reducing reliance on contract mining, why is that? Is there an issue with the current contractors? Short answer to that question is no.
Mm.
Can you do it cheaper than the contractor, and are higher mining costs a risk if you go owner/operator? A bit of a commentary about owner versus contractor mining.
Yeah. It's as Jody said, the short answer is no, we don't have any issues with our existing contract miners. However, they are contractors, and they do need to make their own margins to be successful in business. Can we do it cheaper than a contract miner? Absolutely. I think we've seen that in other operations. I've seen it in my experience. We think we can do it cheaper. I think there's just a different sense of ownership when you mine in your own mine. You take care of your equipment better, you maintain it better, and you can control those costs. You really can have full transparency of what it costs you to mine that ore body. That'll certainly set us up for the future too, as we understand what those costs are.
Very important for us to take the lead on that.
Yep. This last one, Dave, is about exploration, and I don't know if the slides are still up, but I've put up that purple plan view slide of the entire Morelos land package. This one is about Esperanza. To orient the folks on the webcast, Esperanza is the mag anomaly you see to the northwest of the existing ELG operation. The reason we like that one is that it's not on the other side of a water body. The question, Dave, I'll give to you, is the Esperanza exploration target in close proximity to the township, or is there sufficient separation that the target could be developed in time without a relocation?
Yeah. It's a tough question. The short answer is correct. We believe that it can be exploited without relocation of the existing community because it is south of the lake. We think we're okay there from a longer term perspective.
Yeah. In terms of community relo, we're definitely fine on Esperanza.
Yeah.
I will say we are very early days.
Yes, yes.
Looking at that target. We're doing some tracking now. I think we're into scout holes later on this year. From my perspective, that definitely won't be the first one that comes into the pipeline after Media Luna.
Correct.
That will take a much longer time to develop and get comfortable with.
Correct.
Yeah. That appears to conclude our questions for the day. I wanna thank all of you who have taken the time to dial in for participating in this session. I wish you all an excellent weekend. Just to emphasize and close, my team and me personally, we're all available for follow-up questions if and as you have them, don't hesitate to reach out. Thank you. Be safe. Have an excellent weekend.