Is this working? It is. Get everyone to take seats, please. I'm going to start off with, first off, I'm Randy Smallwood, President and CEO of Wheaton Precious Metals. Thank you very much for joining us today. First thing, a couple of safety comments. In the event of an emergency, there's two exit doors. One right here, goes downstairs. That exit door right there, which everyone came through, if you go out that door and immediately hard to the right, there's a set of stairs outside on the patio that goes all the way down to the ground level. In the event of an emergency, you know where to go. Whichever door is closer, get there and get down and out. Washrooms are out that door straight across. There's no signs that label I got confused this morning. I was just getting my first coffee.
There's a confused this morning. I was getting my first coffee. There's an image of a male on one wall and an image of a female on the other wall. You can figure it out. Took me a while. Now you know.
Is that a recent photo?
Sorry?
Is that a recent photo?
Yeah, and in this building of all places. I think there was something else I was supposed to say on the list here. Oh, yeah. With respect to the procedure today, we have a whole bunch of speakers, both from Wheaton and from our partners. We have a pretty packed agenda all the way through the day. Encourage questions at the end of every presentation, but we are going to try and keep on a pretty tight timeline that has us finishing off around 12:30 P.M. We'll have a break in the middle of that. Questions, time permitting, at the end of every presentation, but if there isn't time permitting, generally everyone will be around for either the break or the lunch afterwards, and so you can chase them down and get those questions in place when you go forward.
As I said, it's our 15th year at Wheaton. I just about said Silver Wheaton. Oh my God, I'm still batting about 50% on that. 15th year of streaming. Hope you guys enjoy and celebrate. We've got these nice little I think there's a couple of ounces of silver and a bit of gold in here. Beautiful medallions to celebrate the 15th year. Yeah, quite happy with that. 15 years. I was kind of hoping, because I'm sure the lawyers will have something to say about this, but I was kind of hoping that I could just give one blanket forward statement for the entire day and for all the speakers. There will be forward-looking statements made today. I urge you to understand the risk associated with such forward-looking statements. Those risks are, of course, described in the fine print here.
Just urge you to understand that there will be forward-looking statements made. As I mentioned, 15 years of streaming. We've got a packed agenda, as you can see here, all the way through. Really happy to have some of our partners actually come in and speak about their projects or our projects collectively. It is one of the things that I constantly drive about streaming and Wheaton is the fact that we build partnerships. We work with our partners. We continue to work with our partners well beyond the initial deal and the initial upfront payment and such. Yeah, we've got a good packed agenda that has some great guests from some of our partners and also some of our team itself. Speaking of our team, I don't know why I'm the only one on this picture with gray hair.
I'm going to have to get some coloring like everyone else on the team. If I could just get all the Wheaton people to stand up, and I also want John Brough, we've got our director here, audit chair, get him to stand up, too. He's a Wheatonite. Yeah, we've got a full team here. I urge you guys to make sure you meet and talk with them and understand the strength of our company because really it's this team that allows us to accomplish what we have and a real key and core part. Make sure you take the chance to meet them. I also point out John Brough, whose picture I don't think is up here. John Brough is our audit chair. He's also Toronto-based, and he decided to join us today, too. He's one of our strongest directors.
Really happy to have him here with us today, too. 15 years ago, I was working for a company that I guess is now called Newmont Goldcorp, it used to be Wheaton River at the time. Shortly after, we converted over to Goldcorp. For simplicity, I'll just reference it as Goldcorp. We were trying to raise capital to build Our objective was the best gold company in the world, not the biggest, but the best gold company in the world. We need capital to do that, right? We came up with this concept of streaming, and that's really where Wheaton Precious Metals has come from, was this ability to take non-core assets and crystallize it into capital that you can use to then focus back into your core franchise, your core area.
As I said, 15 years ago, the concept at that time was silver-focused, mainly because most silver is produced as a non-core byproduct and therefore available for pulling out of a gold company or a lead zinc company, a base metal company, and putting it in. I mean, people sometimes have asked you, "Any regrets?" I don't think we quite realized the strength of the business model that we'd created back 15 years ago, and it took us a while to actually start throwing some real focus into Silver Wheaton. I can tell you from 2007, 2008 on, it's been a real push to try and build this into the company that we've got now.
Streaming, the simplicity is confusing. People think it's having to try and convince, especially back in those years, trying to explain that no, it's quite simple. All we do is buy the rights to production, as you produce it, we'll make a production payment as that metal is delivered to us for the rights to a portion of your production going forward. It really is that easy. There's an upfront payment, cash and/or shares, usually cash, because that's what's required at that point. Those that have taken shares have actually done very well. In the end, Goldcorp created over $3.5 billion value from the creation of Silver Wheaton. I would argue that the creation of the original Silver Wheaton was the largest capital contributor to what built Goldcorp into the company that it turned into.
Really, it's feeding cash into the partner for the rights to that production, and then as that production is delivered to us, we make a production payment on a per ounce basis that generally covers the costs of producing that metal. It's a very simple model that has got a lot of appeal. Our vision, based on that business model, is, of course, to present the, in our eyes, the best way to invest into precious metals. The streaming model has delivered so much value back to all stakeholders itself. Our mandate, of course, is to do that through the streaming model. We are focused. 100% of our revenues are streams, not royalties, streams. We continue to do that going forward. Of course, the shareholders are the first people that we work for. Low risk, high quality, diversified exposure.
The assets that we invest into, if there's one thing that I think differentiates Wheaton, and you'll hear through the day, we focus on high quality assets, really technically driven as a company and it helps when the CEO is a geological engineer that comes from the corporate development side. Poor Haytham has to deal with me all the time, but somehow he's been able to survive. It's not just about shareholders. Our partners, and that is again, an area that hopefully through the day you'll see the difference. What makes us different than our peers is the fact that we do work on partnerships. We work on ways to try and help. We've this overlying mantra that the healthier our partners are, the healthier we are.
We are driven towards finding ways to continue delivering value back to our partners beyond the production payment, beyond the upfront payment. We have all sorts of ways that we do that. One of those ways is, of course, our neighbors, focusing on our neighbors, where, of course, our employees work. That's not sustainable and, in fact, that's wrong and it's something that I think the royalty industry has had wrong for a very long time. We've started off a very strong CSR program where we're actually putting money back, and you'll hear about a bit later on, money back into the communities where the metal is coming from. That's the communities that are giving up part of their wealth to help us and help the operators and stuff.
We owe it back to make sure that we deliver some value, some sustainable value back to those communities on a go-forward basis. Really proud of the fact that there's three different stakeholders that we really focus on, shareholders, our partners, and our neighbors. Both our immediate neighbors and the neighbors around our partners' operations. The streaming advantage for the shareholders itself. The streaming model is an excellent way. We deliver all the value, the traditional value that comes with a good strong mining investment in terms of exploration upside, expansion potential, commodity price exposure, but we do it with a much lower risk profile. Our costs are fixed, our capital costs are fixed, our operating costs are fixed.
Having that strength, just as I said at the start, I truly believe this is the best way, the streaming model is the best way to invest into precious metals. I do believe that we and our portfolio have built the strongest case for that investment. These are the two key things that sort of drive why mining companies, and I get the question a lot. Why would a mining company be interested in moving this into you? I'll tell you, it's a really easy decision for any of the base metal companies out there because nobody will go out and buy Vale for their gold production at a copper mine when basically the bulk of their revenue comes from iron ore. Even Hudbay, nobody buys them for their precious metals production.
That precious metals production gets delivered into a precious metals company, the arbitrage in value, I always call it our stage one in value creation, is when we take it and bring it into that precious metals company. It actually creates value. Whenever we announce a transaction, our stock goes up, the new partner's stock goes up. That's real value being created. I don't know of any other transaction or style of transaction where that happens. There's that initial arbitrage in value when you bring it into a focused precious metals company. The other thing that drives operators to support this is the IRR, the improvement in IRR. I love the Salobo example, where we supplied close to 80% of the capital for the construction of the Salobo mine down in Brazil. Yet we only take away about 16% of the revenue.
Vale and Vale shareholders, their net expense into that mine was $860 million. That's how much capital they had to invest into the nearly $4 billion that went into the actual asset itself. They only had to supply $860 million of that. Well, last year, their EBITDA from that operation was $882 million. That's an incredible rate of return. That is what shareholders and there's activist movements and stuff like that. That's what they're demanding, is more efficiency with capital and getting a return back to shareholders. This is an excellent way, as I like to say, this is a way to take a good mine and make it a great mine, is by applying a stream to sell off a non-core portion of the revenue in terms of the precious metals as it's varied in these mines. It really does deliver strength back to these assets.
Of course, as I talked about the neighbor side, the sustainability, something that we drive back. Our company is a leader in this space also, and both from the due diligence stage, when we're looking at possible investments to the fact that we are supportive and put money into a number of these communities around our mine sites and help support our teams that are actually operating at these mine sites. We have good, strong policies and practices. We've just signed on to the UN Global Compact and, of course, the World Gold Council Responsible Gold Mining Principles, and we look for partners that share those same beliefs. It is something that we've definitely taken a lead in the streaming space, and I think we're actually taking a lead in probably in the broader mining space itself. We've done a good job.
We've supplied 45% of all the capital that has been put into the streaming space since we created the model back in 2004. As I mentioned earlier on, one of my main regrets was that we never jumped on it back in 2004, and it took us three years to sort of really start putting effort into building this up. It's been said the ultimate compliment is when someone copies you, and we've got a lot of other companies that have stepped into the space, but a collection of partners that really identifies how streaming works for everyone, all the way from Vale and Glencore down to smaller partners, Panoro and Alexco and stuff like this. It's a streaming, it's a method, a source of capital that works for so many across the board.
One of the things we do have here, of course, is the updated guidebook. I have to say, it's a very impressive collection of information. There's quite a bit of information in it. It's not just on the assets. It's on the business model. It's on our principles in terms of ESG. It's on our board. It gives us information. There's just a wealth of information in there that I think in going through that will hopefully provide a lot of the answers that you might need. We, of course, are all accessible in terms of getting further answers or answering any questions and stuff like that, but I do have to say, it is really well put together. There's one at every spot on these tables here.
Yeah, appreciate the opportunity to be able to supply that for you and hopefully help you discover why we are better. I think with that, I'm going to turn the mic over to Haytham, and he's going to start off with a talk on the corporate development aspects of building Wheaton into what it is. Thank you very much.
Morning, ladies and gentlemen. Thank you for taking the time to be here today. For those of you who don't know me, my name is Haytham Hodaly. I'm the Senior Vice President of Corporate Development at Wheaton Precious Metals. I'm going to give you a bit of an overview on corporate development and how we look at things more so than just the space. The first slide, I think you saw this slide already, and Randy went through it in a little bit of detail. What we effectively do is make an upfront payment, and in return, we purchase a fixed percentage of the precious metals. What's key is we make an additional delivery payment at the time those precious metals are produced and delivered.
That delivery payment is, in theory, designed to cover the cost to produce and deliver an ounce of silver, gold, or palladium in our current portfolio. We often find is there's a demand for higher upfront capital, so that delivery payment ends up going down over time, or sorry, during negotiations because of that need for upfront capital. I'll say, the delivery payment has evolved over time. Excuse me. It started as a fixed payment per ounce, and now it's actually evolved to a percentage of spot production payment. What that does is that gives the counterparties some participation in movements in the commodity price and offsets some of the additional taxes that'll actually have to be paid as time goes on. The next slide talks about a little bit of some of the benefits to our precious metal streaming and to our partners.
From that perspective, the first benefit is it actually provides a very flexible source of funding, specifically vis-a-vis debt, for example. Streaming has no fixed prepayment requirements, no restrictive debt covenants, no hedging, no regulatory consents required. Relative to equity, it's non-dilutive versus equity financing, which is always positive, and it's an expedited process with straightforward due diligence relative to most project financing methods. The second benefit is that it's viewed as portfolio optimization. For base metal companies, silver and gold are non-core assets, and we'll talk a little bit more about that in some of the slides down the road. The market generally perceives the precious metal stream as a disposition of non-core asset and not a hedge. It's more like a joint venture than anything else. The third benefit is it creates sustainable value, and you'll hear this probably in more than one presentation today.
Streaming always improves the internal rate of return of a project. It ensures that I guess one of the things we're doing when we look at a stream is we try not to take more than 20% of the revenues. Optimally, we don't want to take more than 20% of the overall operating profit. We try to limit ourselves, and it all depends on the margins of the asset, et cetera. That's to ensure, not because we don't want the additional exposure, but we want to make sure this asset is healthy if commodity prices drop 10%, 15%, 20%, or 25% in the near term. What the benefits it also creates is it gives the counterparty an ability to expand reserves and resources. It gives the counterparty an ability to develop new mines, make acquisitions.
What we've seen in the last cycle was the ability to manage their balance sheet and improve their balance sheet. We saw a lot of over-leveraging in the last cycle. The opportunities that we saw came to us was because of this over-leveraging. Lastly, the benefit to partners is it mitigates risk. It diversifies development risk. What we do as a technical team is we provide support to the company, whether it's during the development stage or whether it's during the operating stage, whether it's before we do a stream or after we do a stream. Every time we look and do the due diligence, we provide feedback to the counterparty. Typically, if we're looking to enter into the transaction, we'll provide that before.
If we're looking to help the company advance so that they can get to the point where they can enter into a stream, we'll do that after as well. One of the important thing is operational control actually stays with the miner. We take no operational ownership or control. We truly look at this as being a silent partner, but we're there if they need us to in the future. I guess one of the most important things is because we don't do a lot of deals, we try to do the best deals. Keep that in mind. Not every stream is a Wheaton stream, and you'll see that again in the presentation.
Because we don't do a lot of deals, we make sure that when we enter into a transaction, the market recognizes that it's a high-quality asset, and that's just one of the reputations we've gotten now. I'm often asked what's the difference between a stream and a royalty. There's a few highlights that I'll go through. First, a stream is a long-term contract for the purchase of a certain percentage of refined metal, whereas a royalty is a registered interest in tenure. In other words, in land, and a royalty gets paid in cash. Secondly, outside of Canada, streaming agreements can allow the mining company the flexibility to handle their own taxes in the host country. The other companies are spending money within the country. They basically have the advantage of being able to utilize that money they're spending on offset taxes that they have.
We, as a streamer, do not. International royalties are viewed as passive foreign income, thus they're subject to taxes in the home country example for a lot of the streamers in Canada. Streaming agreements can provide the mining company with more upfront funds compared to a royalty agreement, whereas a royalty valuation is generally reduced by higher levels of taxation. You've got to basically value the entire tax you're going to be exposed to right at the beginning. We can pay a pre-tax number, which gives them more value upfront, and we make that additional delivery payment down the road, which further helps them. Lastly, it's more capital efficient as a portion of the payment is deferred, which we talked about the delivery payment, whereas the initial payment for all royalty ounces is upfront. You don't get any additional payments down the road.
You rarely see the royalty companies or the assets with royalties rather than streams on them, having people come back and try to help improve that overall asset. How is a stream different than traditional funding? You can see from this table here that there's several reasons. I think the most important reasons I want to highlight are, again, a stream always improves the project IRR. The other two reasons I think are important are a contractual relationship means we can provide support and flexibility, and lastly, it endorses the technical merits of the mine and the project. This next slide, we're going to talk about how we evaluate opportunities. Hopefully, if there's some questions at the end, I'd be happy to take them on this.
We'll start with due diligence, then we'll go over to financial modeling, then we'll go over to evaluating accretiveness, and analyzing the value. We'll go through each of these in a little more detail in the next few slides. The first slide in terms of due diligence. What we initially do is we do a desktop study, and what that involves is us taking the entire drill hole database, putting together our own resources, our own reserves, and we do this in a relatively short period of time. Usually, within one week to two weeks, we have that entire process done. Then we'll rebuild the block model using all this. We'll confirm and assess the economics, and we'll try to put together the economics that we feel are reasonable and compare them to what the PEA or the PFS or the FS, et cetera, actually reveals.
Then we put an indication of value to the company. If the company's interested in moving forward with a stream at that point in time, that's when we do a site visit. That site visit is mostly confirmatory in nature to make sure there's no red flags, there's nothing that we find that's actually going to kill the deal. In that site visit, again, we'll take a review of the metallurgy, the geology, the tailings, the community, social, environmental. We've got people in our organization. It's not me that does all this. I've got a phenomenal team behind me, there's various disciplines that take care of each of these areas. We're effectively all working to try to ensure that we are entering into a transaction that has the least risk to our shareholders.
The second thing we look at, once we actually go through the technical aspect, come up with a production profile, we look at what are we going to discount this at? We take several factors into account when we're doing this. The first is the asset quality. As you can see from the pie charts on the left, 87% of our existing portfolio falls in the lowest half of the cost curve, and we continue to strive to keep that type of exposure. We want the highest quality assets, so if commodity prices drop or something happens, these are not the first assets shut down, but rather, these are the first assets to be reinvested into. That's the one thing to note. Secondly, we look at the life cycle of the mine. We have 19 operating and nine development projects.
We try to figure out where this is going to fall within that area and discount them accordingly. Look at the political risk. Which country is it in? What type of security can we get? Look at the counterparty risk. What's their credit rating? We'll talk more about that. I'm sure Gary will talk more about that in his presentation later on. We also look at the geological confidence. How much of the overall ounces that are there are in the reserve and resource category? What is the mine life of those reserves and resources? As you can see from the last comment under duration of streams, the average reserve life of our overall portfolio is more than 30 years right now.
I don't think there's another streaming company, let alone another mining company, that can say their average reserve life is more than 30 years, at least not on a diversified portfolio such as this. In terms of assessing accretiveness, we always look at accretiveness from an earnings, cash flow, NAV basis, et cetera, but we also look at various other metrics. One of the metrics we look at is we look at the opportunity and say, "Listen, what's the accretiveness on a reserves payable basis? What's the accretiveness on a resources payable basis?" Macaulay duration is a very interesting one. That one measures the average life of the stream, and the shorter the duration, the faster the ounces are actually received, and we strive at that because that means we're going to get a faster return and a better IRR on that project when Macaulay duration is shorter.
Lastly, we look at the production profile and how is that going to fit in our existing profile. Randy went through this slide a little bit, so I'm not going to spend too much time on it, but I will say that the reason streaming works, and the reason you don't see it across too many other sectors, and when you do see it across other sectors, it doesn't always work, is because what we do is we actually take precious metals, which is a byproduct of a base metal mine, and try to basically take the valuation difference between what base metals get for that precious metals in their portfolio and what we would get as a streamer in our portfolio, and we share that difference with our partners to try and create a truly a win-win situation. That's our whole objective as we're doing this.
I guess one of the other things, and I'll say it again, because it always improves the internal rate of return of a project, streaming is always a very competitive method of financing. Once we actually come up with a production profile and factor in the discounting, factor in the commodity price assumptions, we come up with a discounted cash flow. We discount those back to current dollars, we come up with an NPV. That NPV really kind of forms the basis of what we look at from a valuation perspective. One of the competitive advantages we have over those of our peers, historically and still now, is our ability to actually move very quickly. Most streaming transactions, and this is also relative to other forms of financing, whether it's debt, et cetera, most streaming transactions can be consummated within 8- 12 weeks.
We've actually done streaming transactions in less than four weeks, and some have taken, I think there are some that have taken a couple of years, not so much because it took that long in the paper room, but because there's a lot of indecisiveness on the other side. The fastest streaming transaction that's the most relevant to us was the $1.9 billion Vale transaction, which basically started on December 24th, Christmas Eve, and by February 5th, we'd already announced the transaction. In that period of time, which included Christmas, New Year's, and everything else, we actually went to site, went to more than one site in different countries, did the desktop review, did the tech, the legal documentation, did everything within five weeks time. Probably the fastest and largest streaming transaction that's ever been done and probably the best relationship we have.
Now why is Wheaton the premier streaming company? We are, and Randy said this, we are focused on sustainable relationships. Our objective is not just to get as many deals as we can. We truly want to create a situation in which our partners walk away feeling happy. That is why five of our last nine streams have been on operating assets with existing partners. You don't see that very often unless there's opportunities or unless there's a desperate need to do a financing. A lot of these guys come to us because they realize they were treated fairly the first time, and they're looking for financing, and they realize that streaming has a competitive cost of capital. Secondly, quality is of the utmost importance, and I've said this before, we have 19 operating assets and nine development projects.
Our closest competitors probably have, I think, maybe 180 to 500 different assets. Our 19 assets generate more cash flows than any of our closest competitors' primary 40- 50 assets. We are not looking to have quantity. We're looking for the highest quality streams. Not every stream has to be a huge stream that moves the needle. It just has to be a high-quality asset going forward. I would rather string together two, three, or four smaller transactions. I'd be able to probably get a better return on them because I'm taking a little bit more risk because they're probably earlier stage, but I would get fairly decent assets in the process. We've got a strong reputation for technical excellence. My entire corporate development team, I'm a mining engineer. I've got three other mining engineers. Randy's a geological engineer.
He contributes a lot to the corporate development team. We've got a processing engineer. We've got two geologists. We use all our internal technical capabilities. We don't really use outside consultants very often, what that allows me to do is tell my team to have vision, to look at where the opportunities are for the asset to grow, for the asset to thrive, rather than being in CYA mode, where consultants are always trying to think, "Okay, if I put this type of number out there and it doesn't happen, what's the liability to me?" That's not what I ask my team to do. I want my team to tell me where the growth is in the assets going forward. We've got a proven track record of success. We've entered into several transactions.
Every one has actually been a phenomenally cash flow generating asset, which we're very happy with. We've managed to reinvest into those assets. We've managed to restructure certain assets sometimes when it's required. Luckily, a lot of the assets, when they fall in the lowest half of the cost group, they don't require a lot of restructuring. We've got a healthy balance sheet. As I'm sure Gary will go in a lot more detail on this, we've got a $2 billion revolver. We got less than a billion dollars drawn. We're generating $600 million- $700 million of free cash flow. We've got a billion and a half plus resources available to us to do a stream right now. Not to mention that we also hold an equity book that's probably 250 million- 300 million US dollars if we ever needed to.
At this time, we don't see a need to do anything with that book. We're flexible. Streams and just like any mining operation, mining operations mature, which means grades will go down, which means the economics will deteriorate over time. What we try and do is encourage our partners to put money back into these projects through exploration, et cetera, and we'll restructure our stream to try to support that. That way, at least the assets can continue moving forward. As we've said before, our objective is to continue to structure win-win transactions, not just transactions where we walk away happy. This next slide, really just wanted to put things in visual perspective. The mining operations are over on the left, where the gold is produced and then sent to the smelter, refinery, et cetera. The stream is over on the right.
The only interaction that the streamer has with the actual operating, the only required interaction, let me call it, unless they ask for our help, and we tend to provide that quite often, is they provide us with a production report. That production report acts as a reference point for the amount of gold and silver to be delivered. I guess the gist of this slide is that a stream does not interfere with operations. We're not there to help run your operation, but we're happy to help you if you're running into issues or you want some additional advice. We're truly a silent partner unless you'd like to utilize our expertise. There's several different types of streaming transactions.
The most traditional ones are where we enter I guess the most optimal ones that we've seen historically are the ones we enter into a streaming transaction with an existing operator. We pay our money up front. We start to get ounces right away. The type two transaction is where, for a development project, we pay our money up front, but there's a completion test that has to be satisfied. Once that completion test is satisfied, we take the same risk as the counterparty. That's the key. What we realized years ago is there's a lot of different earlier stage projects that don't have necessarily the funding available to them in the market.
Rather than enter into them with equity transactions that are sometimes more challenging to convert into stream transactions, as we've seen in the market, we developed a new structure called the early deposit structure. That early deposit structure allows us to come up with an indication of value on a stream and put up to 5%-10% of that value up front. What we're doing is we're injecting 5%-110%. If it's, call it a $20 million or $30 million market cap company because the company is trying to develop an asset and there's no funding out there, we'll come up with a value, sometimes call it $150 million. We'll put up 5%-10% of that up front. That's almost the equivalent of their existing market cap up front at no dilution, and that's the key.
We'll help them advance from the PFS stage to the FS stage. That's what actually, from our perspective, appeals to the counterparty quite a bit because now suddenly, whereas dilution is a key factor that they have to consider in their overall evaluation of financing, this takes away that issue. What we're also capable of doing, because we're deferring 90% of that cost till down the road, we're capable of putting up more value than we typically would because by the time we have put that other 90% in, the project is more de-risked.
Just in summary, after identifying a potential opportunity, we use the production profile, a reasonable commodity price, and come up with expected cash flows, and then from there, we actually use the appropriate discount rate, and the future cash flows are used to value the stream as if it was in Wheaton's portfolio, which is the maximum price we'd be willing to pay for it. We always try to share that upside with our partners to make it a win-win situation. That concludes the formal part of my presentation. I'm happy to take questions. Yes, Cosmos?
Haytham, you talked about the four steps in the evaluation process. I'm just wondering, based on history, based on experience, which step has ultimately the most.
That's the first step. There's a lot of opportunities that don't even get past me, let alone to my team. Most important thing is trying to look at this project and say, "Where does it fit in our profile? Is it a high cost producer? Does it move the needle?" It doesn't have to move the needle, but is there potential for it to eventually grow to the point where it does move the needle? What we're finding as we go through the technical due diligence is, unfortunately, especially when you're looking at the earlier stage ones, whether it's PEA or PFS, a lot of the work that's been done, unfortunately, was not necessarily done to the standards that we would expect. You do in the reserves, you find that the reconciliation is not there.
You do the economics, you find that the costs are understated, whether it's mining costs or processing costs or capital costs for that matter. That's the stage that typically doesn't give us Cosmo. We look at probably, I'd say 100 opportunities a year I look at, 60 of them or 50 of them probably make it to my team, and of those 50, we're happy if we get one or two done because it means we've managed to find a high quality asset in that portfolio. Any other questions? Yes, Steven.
What appropriate discount rates do you apply in your analysis? What is the range of discount rates you would apply?
Sure. That's like the secret sauce, Steven.
Right.
From our perspective, I can tell you that it's not different than what you guys start at from a typical project. I think most analysts will do for a precious metals NPV is for a producing asset, low risk jurisdiction, not a lot of issues. They'll probably start at a 5%. We'll probably look at something in that range, but if it's a better asset or there's reasons why we are more comfortable within that country, within that, we'll go lower, and if there's additional risks, such as whether it's political risk, environmental risk, permitting risk, litigation risk, et cetera, we'll apply additional discount rates to reflect that.
We start somewhere in the same range, but I can tell you, that's an area of discussion that we go through on every single project between what the corporate development team does, and then the finance team has their own views. We sit down as a group, and we hash all this out and try to figure out what makes sense in the end. Yeah, Mike?
Haytham, hi. Where do you think we are in the streaming cycle now for acquisitions? You mentioned financial restructure earlier. Just wonder what you're thinking on that. Thanks.
What we've seen in the last cycle was de-leveraging. A lot of companies had gotten to the point where they had done mergers and acquisitions, over-leveraged themselves, and they required some kind of financing to bail out their balance sheets. In addition, we saw commodity prices, specifically on the base metals, hit some near-term lows, and that unfortunately put them in an awkward situation. We've seen base metal prices rise, and I say base metal prices because that's more important to us than actually precious metal prices. Precious metal prices drives our underlying revenues, but base metals is primarily where we see the opportunities. I think over the next little while, the majority of the opportunities I'm going to see are probably going to be earlier stage. I'm seeing opportunities probably in the sub-$200 million, sub-$250 million.
A lot of those opportunities, as I've said in the past, we probably have 10 to 15 opportunities on the go. Probably eight of those are sub-$200 million, $250 million, and then there's probably 4-6 that are $300 million-$1 billion. Those take a lot longer to come to fruition. In terms of where we are in the cycle, I think we're going to have to see two things happen or one of two things happen.
Commodity prices, base metal prices have to rise to the point where base metal producers start to look to consolidation, over-leverage themselves, and then decide, unfortunately, that the best way to actually de-leverage is to take out a stream, or we're going to have to see base metal prices drop dramatically, which new projects are not going to be able to move forward, so they're going to look for streams to improve the internal rates of return for these projects. Any other questions? Well, thank you guys very much. Oh, sorry, one more? Sure.
Yeah, sorry. Just wondering if you can talk about trends you're seeing over the past couple of years and what you expect over the next couple of years. Are you seeing vendors becoming more demanding on terms because of competition or wanting buybacks, stuff like that?
Good question. The streaming environment is getting much more competitive, and the issue probably is private equity more so than the traditional streaming companies, in that they're trying to enter into the space and they're willing to give up a lot more than the streamers would. When we look to do a transaction, we look to have an internal rate of return that's at least optimally in line with our weighted average cost of capital. That being said, private equity sometimes doesn't look to do that. They look to make sure they get the transaction at any cost. We're not doing our shareholders any justice if we're coming out with 0% IRR. We're very cautious. We're not into doing buybacks because buyback limits your ability to realize on our growth down the road. What we do is drop-downs now, and that's probably the better way.
Rather than have the company come in and actually buy back an asset after X number of ounces are produced, we'll introduce a drop-down after we've gotten a reasonable return from the existing asset. That's the kind of things that we would look at. Again, we want to maintain that stream for the life of the asset. Last question.
Haytham, rather than looking forward, when you look back, what are some of the bigger learnings for the team that you can celebrate or share? Like Salobo, it seemed like you had assumed a lower gold grade. Are these 10% or 15% that you keep in your back pocket?
Yeah. You know what? We have definitely been advantaged because of the quality of the work that's been done by our technical team. During due diligence, we have found certain opportunities where the grades have been understated in various assets or recoveries. We see ways to improve them, or we can use our technical ambassador program to improve them. From our perspective, I would say looking back, the biggest lesson we learned is sometimes structure plays a pretty important part and security plays a pretty important part. We have not sacrificed neither structure security, and that's worked to our advantage over the years, where we've seen some of our competitors' streams go down the drain, unfortunately. We're trying to hold steady, hold fast to what we know is the right structure and right security. That's probably the area that we've learned the most.
Curt, who's our SVP, Legal, he's here. If you want to chat with him about that, he can probably give you a lot more insight on that later on today. I'll wrap that up. Thank you guys very much. I'm here all day, so if you have any other questions, please feel free to come reach out to me. In the meantime, I'd like to introduce Patrick Drouin, who's going to talk about sustainability. Thank you.
Hello, everyone. As Haytham mentioned, my name is Patrick Drouin. I'm the Senior Vice President of Investor Relations. As part of my role, I'm also responsible for the sustainability program here at Wheaton. As Haytham mentioned, if you look at our portfolio, we've got over 30 years of reserve life, and we've got another 34 years based on resources. Sustainability to us isn't really an option, it's a requirement. We need to get this right. When we look at sustainability, we break it down into four different areas. First off, we look at a comprehensive due diligence, as Haytham has already kind of alluded to. That includes ESG considerations. Secondly, we've got an investment program designed to benefit both our local community and the communities from which we get our precious metals.
Thirdly, we need to have a strong foundation, and that foundation is founded on strong ESG policies and practices. Finally, we try to align ourselves with like-minded companies who also have a focus on sustainability. If we look at the due diligence, Haytham's already alluded to a lot of what we do. Really on the due diligence side, the ESG aspects really are a key driver as well, and we've got 10 principles with which we focus on. Those are available on our website if you want to get more information on this, but they are a foundation from which we look at every opportunity, both new opportunity and also existing streams.
Needless to say, we also focus on engaging with partners who also share our focus on sustainability and have good, strong, responsible practices. If we look a little bit closer at the community investment program, we're the only royalty and streaming company with a formal policy on the CSR side. We focus and we spend 1.5% of our net income on social programs, basically going into the communities. 2/3 of that actually go to the communities around the mines from which we get silver and gold. It's one of these things that we're really focused on. Nik Tatarkin, who will be presenting after me, will go into a bit more detail on some of the specific programs we are involved in internationally. Really, it's something we're quite proud of. If you look at the policies and practices, again, you need to have this strong foundation.
What we found is that we've always been committed to ESG and sustainability, but what we were lacking was formal policies and also probably the proactiveness and the communicating our commitment. We've taken, over the past few years, a real concerted effort to strengthen the formal policies. As you can see, we've introduced various ESG investment principles and due diligence, environmental and sustainable policies. What we've done now as well, is we've got a number of new initiatives in the works that will be introduced in our Q3 Board meetings, where we'll be adopting new policies such as Human Rights Policy, Freedom of Association. We'll actually be putting sustainability as a board committee as well. We've got a Governance Committee currently. The Governance Committee will, from the Q3 on, now be the Governance and Sustainability Committee. We're putting it right at the highest level, right at the Board level.
It is a focus of ours, and we do think we've got a very good foundation now to work from. As I mentioned, one of the things we were lacking, I think, in the past is the proactiveness in really highlighting the sustainability and the ESG focus we have. As Randy already mentioned, we're very pleased to note that we joined the UN Global Compact last week. We're the only streaming and royalty company to be part of the UN Global Compact. This is great. It's the largest corporate sustainability initiative in the world, and we do think by joining this initiative, it really demonstrates our commitment to corporate sustainability. It's not just the UN Global Compact. The World Gold Council has a number of good initiatives as well. We've long been endorsers of the Conflict-Free Gold Standard.
More recently, the Responsible Gold Mining Principles that the World Gold Council came out with earlier this month, we've endorsed those. If you look at the Carbon Disclosure Project, we've been associated with this since 2014, and I'm very happy to say, over the past three years, we've been designated as a carbon-free company basically through our support of a program in Brazil that's an alternative fuel program that gives us offsets for the limited amount of carbon we produce as a company. Finally, the effort and focus we've had on sustainability hasn't gone unnoticed. We're very pleased with our A rating by MSCI on the ESG front, and we're even prouder of the fact that Sustainalytics ranks us number one for precious metals mining in the industry.
Given the initiatives that we're adopting and we're pushing forward in the UN Global Compact, we think those ratings are just going to get better and better. With that concludes my presentation. For the sake of time, I think I'll defer questions until lunch. If anybody has any, you're welcome to ask me. Simona Antolak, who's in the back as well, is very involved with the sustainability program. She does most of the heavy lifting. If you have questions, I'll take them then. In the meantime, I'll turn the floor over to Nik Tatarkin, who will talk more about our foreign subsidiary.
Good morning. My name is Nik Tatarkin. I'm the President of Wheaton Precious Metals International. By way of introduction, Wheaton International is a wholly owned subsidiary of Wheaton Precious Metals, with offices in Grand Cayman Islands. We are the owners of all the precious metal streams that are located from mines outside of Canada. Wheaton International is led by an experienced management team that I have a privilege to run, as well as an independent board of directors, and we carry out activities in a number of critical business areas. Evaluating and entering into new stream opportunities located outside of Canada, contract compliance, metal sales, metal markets research, conducting due diligence with respect to license to operate and country risks. In addition, we collaborate and engage with our streaming partners on the corporate social responsibility projects.
Wheaton International also provides metal sales and contract compliance services to our parent company. That's for the mines located within Canada, and I'll touch a little bit more on all these areas. Slide three details the steps taken by Wheaton International entering into new stream opportunities for mines located outside of Canada. Retaining and utilizing the services from the various teams in Canada, we were able to progress suitable opportunities through to our board for approval and execution. Haytham's talked about this process in a lot more detail, so I won't go through that again. This slide offers a brief synopsis of our contract compliance activities. At its core, our contract compliance team has a mandate to monitor and ensure performance of all Wheaton streaming agreements.
Specifically, this team ensures that Wheaton receives all the answers that it is entitled to under the terms of the streams, and that all the contractual provisions are strictly followed. To achieve this goal, we perform a number of steps on an ongoing basis, including reviews of operating commercial activities, periodic audits, mine site visits, et cetera. We're very diligent in examining every operating report or invoice, and we follow up in a timely fashion to resolve any identified issues. With streams on 19 operating mines and nine development projects in our portfolio and numerous contractual provisions, success of our contract compliance function really rests on the effective use of contract management tools and procedures, and even more so on the communication with our partners. We devote significant effort building and continuously improving our vital processes and systems.
More than anything else, I'd like to highlight that our success hinges on our ability to build and maintain strong relationships with our partners. Metal sales is our principal revenue-generating function. In essence, its role is to coordinate and execute deliveries and sales of bullion. The overall objective is to achieve average pricing that closely matches the market, and to do so in every fiscal quarter. In other words, our goal is to ensure that Wheaton investors participate as closely as possible in the continuing movements in the prices of precious metals. Our goal is to participate evenly in the market and avoid taking any unnecessary risks resulting from uneven incoming deliveries of bullion. To that end, we have a sales program that features limits and controls that are aimed at achieving our mandate while minimizing risks.
We have a dedicated sales team in Cayman Islands that carries out this program on a daily basis. We don't speculate on market movements, nor do we engage in exotic or opaque trading strategies. Our sales program utilizes very straightforward spot-and-forward market instruments, and we clear all our sales through analogous London Bullion Market clearing procedure. On the next slide, we provide a chart presenting our historic sales averages for gold and silver against the market, and I think you'll find that our main sales mandates are well achieved. Slide seven. While our metal sales desk focuses on the day-to-day developments in the markets, our metals market research team endeavors to assess them from a long-term perspective. Accordingly, we have an ongoing analytical effort that continually monitors and analyzes long-term supply and demand fundamentals that drive the price behavior of the metals that are key to our business.
Of course, gold and silver are front and center, our focus, but we also spend a fair bit of time now on palladium and cobalt. In addition, we pay close attention to copper, lead, zinc, and nickel, which are primary metals to most of our streaming partners. Our in-house research team focuses on relevant macroeconomic and geopolitical risks and events that drive appeal for gold and silver as safe haven investments. We weigh their respective likelihoods of occurring, the magnitude of potential impact, et cetera. We perform regular analytical deep dives, maintain continuing discussions with outside experts. We digest a plethora of publicly available research from other providers, all in an effort to put together an easy-to-absorb market view that feeds into our ongoing strategic decision-making. The next two slides, I'll discuss the practices to evaluate mining operations licensed to operate and country risks.
Assessing whether a mine has a social license to operate typically requires an approach that is tailored in a case-by-case basis. No two operations are similar when it comes to their social environment. On this slide, you can see some of the factors that we typically look at when we're doing this work. We pair our review with a visit to site, where we might interview community relations team at a mine, or we engage and survey the communities directly, with our aim being to get a good grasp of mine's standing in its social environment and any potential future challenges. When it comes to country risks described here on slide nine, we have a methodology in place that assesses four dimensions of risk: economic, political, social, and geographic.
We look at measures such as ethnic and religious uniformity, wealth equality, demographics, presence, absence of violence, political stability, control of corruption. We answer typical questions that are: Are the individuals in a country at question free to invest and produce, or are they constrained? Are their political institutions and freedoms well protected by the rule of law? What is the history of the country? What phase in its evolution is it in? Is it exuding stability or is it potentially at a crisis point? What do other research providers think of a particular country? Ultimately, we try to answer the question: What is the right risk factor that we should apply when evaluating an investment in a particular country? Of course, this work and these questions and the evaluations are at a particular point in time.
They are always regularly updated. Last, but definitely not least, a few words to describe our partner corporate social responsibility program. I mentioned earlier in my presentation that we're ultimately in the business of building lasting partnerships, and you hear this from all of our staff, from Randy, and anyone else talks about this, it's very much our focus. This program is specifically tended to achieve that. We're proud to be the first streaming company to directly provide support to mining communities in collaboration with our partners. Next three or four slides provide examples of the specific projects we undertook. We continue to engage to do more and we'll be eagerly supporting additional projects whenever we can find suitable opportunities. I'm delighted to say that we're currently in active discussions on a number of such projects, and I expect that we'll be embarking on them in near future.
As a company, we thoroughly understand that mining has a profound impact on the communities it touches, and that no mining operation succeeds unless it supports the communities where it operates. We feel very strongly that it is indeed not just our moral obligation to support these communities, but it is also a sound business practice. It strengthens the communities, it strengthens the mining operations, and it strengthens our partnerships. Next few slides, here are some specific examples of the work we've done with our partners in Brazil and Peru with Vale, Glencore Antamina, Hudbay. With that, I'd like to thank you for your attention. I'll be also around most of the time there and please reach out to me for any questions. At this stage, I'd like to introduce Wes Carson and Neil Burns to take on next topic.
Thanks, Nik. I'm Wes Carson, the Vice President of Mining Operations for Wheaton Precious Metals, and Neil and I, Neil's our Vice President, Technical Services, and we'll be running through over the next presentation here, really Wheaton's development projects and the early deposit streams. In this section, we'll give a short intro on the development assets, followed by some additional detail on Pascua Lama, Keno Hill, Toroparu, Cotabambas, and Kutcho. Later today, our partners Hudbay and Vale will present on their Rosemont and Voisey's Bay projects. On the map, you can see the locations of our nine development projects, which are shown by the green markers on there. You'll notice the diversity we have in terms of jurisdiction and also in form of our real focus on low political risk.
Also want to point out the diversity of our partner companies, and I think Randy pointed this out earlier as well, that the model really works for everyone. From really the largest diversified companies like Vale and Barrick, all the way through to the small single asset companies like Panoro and Kutcho Copper. This slide shows the potential contributions in terms of gold and silver production from the development and early deposit streams. Both Pascua Lama and Rosemont are awaiting permits, and Toroparu, Cotabambas, and Kutcho are working towards feasibility. Now, on this slide shows really the exposure that we have to significant reserves and resources from our development assets, which will feed our organic growth pipeline.
The majority of the gold in our inferred category is from Cotabambas with 840,000 ounces, and Pascua Lama contributes 184 million ounces of silver in the measured and indicated category. Also worth noting is the attributable cobalt from Voisey's Bay, which is currently at 33 million pounds of proven and probable, 2 million pounds of measured and indicated, and 9 million pounds of inferred. We'll receive our first cobalt from Voisey's Bay on January 1st, 2021. With that, I'll hand it over Neil Burns to talk about the Pascua Lama project.
Good morning, everyone. On September 2009, we completed a deal with Barrick for 25% of the life of mine silver production from Pascua Lama, for a total of $625 million, which included immediate production from operating mines Lagunas Norte, Piedra, and Veladero. Streams in those three mines ceased in April 2018, and the total value received from the silver from those three mines totaled $373 million, leaving the $252 million that you see we're now carrying for value on Pascua Lama. When construction ceased on Pascua, the reserves were downgraded to resources, which is why you see so many ounces in the M&I category.
On the photos here on the right, you can see the project on the Lama side, looking towards the east and towards the west, and you can see the enormous amount of construction that has been completed. This slide is a timeline of the project. It started back in 1977 with the discovery by St. Joe Minerals. In May of 2009, Barrick announced the construction go ahead, and in September of that same year, we announced our 25% stream. Unfortunately, in 2013, construction was suspended. Most recently, I can say we're encouraged by comments made by Mark Bristow on Barrick's commitment to resolving the legal and environmental issues that are outstanding. We remain hopeful that the project will eventually advance. Pascua Lama is a high sulphidation epithermal deposit with gold, silver, and copper mineralization.
The original design was for 300,000 tons per day operation, with 45,000 tons being processed through three lines treating refractory and non-refractory ores. For the completion test, Barrick is obliged to achieve completion by June 2020. Otherwise, we can request return of the uncredited deposit, which is the $252 million I mentioned earlier. A key part of permitting the project was the definition of the cross-border protocol zone, which is the yellow line you can see here on the map, which allows for free passage between the two countries within the zone. The area is very rugged, as you can see from the terrain image. On the figure, you can see the black outline in the middle, which is the ore body, and you can see how it crosses the border with the majority of mineralization on the Chilean side.
You can also see the proximity of the Veladero mine down in the lower right, which is currently in the process of connecting to the Pascua Lama power grid.
Thanks, Neil. We're going to go through the Keno Hill project. Alexco's Keno Hill mine is one of the highest grade silver mines in the world, with production grades of up to 1,000 grams per tonne. The operation consists of several underground mines and a conventional flotation mill, which has a design capacity of 400 tonnes per day. The Keno Hill District has a long history of mining, with over 200 million ounces of silver produced between 1913 and 2013. Over 100 years. Wheaton completed a streaming deal with Alexco in 2008 for 25% of their life of mine silver production for an upfront consideration of $45 million. After our stream financing in 2008, Alexco commenced mining at Bellekeno in 2010 and operated until 2013, when operations were suspended due to the declining silver price.
In 2017, we amended the streaming agreement to production payments so that changes in silver head grade and silver price would be taken into account, and this was really done to improve project economics in lower periods of the metal price cycle. In the 2019 pre-feasibility study, the plan envisions four underground mines, so the Bellekeno, Lucky Queen, Flame and Moth, and Birmingham, which are all located within Alexco's large land package in the Keno Hill district. The current mine plan produces 1.1 million tons of ore at 805 grams per tonne, resulting in 27 million ounces of silver production. Significant resource conversion and exploration potential still exists at both the Flame and Moth and Birmingham deposits, and additional resource drilling is planned as production levels allow for better access to underground drilling platforms.
Alexco has continued a significant exploration program at Birmingham in 2019, with over 7,500 meters of drilling planned. Primary targets are both below and to the east of the current resource. Alexco is currently renewing its water use license for the entire district for a further 15 years and expects to have this process completed by Q4 2019. Surface construction activities began in Q2 2019, and along with a number of upgrades to the mill, will continue through Q2 of next year. Production mining is expected to begin at Bellekeno and Flame and Moth in late Q1 of next year and with Birmingham following in Q3. Mill commissioning and ramp-up are also scheduled to begin in Q2 of 2020, with the first silver production scheduled soon after.
The Toroparu project located in Guyana, owned by Sandspring Resources, is an intrusion-related gold deposit. We completed an early deposit deal with Sandspring in November of 2013 for 10% of the gold production for total cash consideration of $148.5 million. In 2015, we amended the contract to include 50% of the silver production for an additional $5 million. Upfront payments totaled $15.5 million to fund advancement of the project through to feasibility, with the remaining to be paid out through construction. Mining in the area dates back to the 1880s with the alluvial miners. In 2013, a pre-feasibility study was done defining a reserve of 4.1 million ounces of gold, with production of 228,000 ounces per year and a 16-year mine life. In November of that same year, we completed our gold stream.
During 2016-2018, during the drop in gold price, Sandspring continued to explore, and they discovered the Sona Hill satellite deposit. In June of this year, they announced a rescope PEA, which I'll speak to later in the presentation. Also worth mentioning is the investment by the Fiore Group, backed by Frank Giustra in 2015, and more recently by Gran Colombia, who have been steadily increasing their interest and have a strong track record of developing and operating mines in South America. The larger map here is the geology of the Precambrian Guiana Shield that underlies eastern Venezuela, Guyana, Suriname, French Guiana, and parts of Brazil. The smaller map above it shows the continuity of geology that exists between this region and Western Africa, as the two land masses were once connected.
West Africa is host to over 30 current and past producing mines, which were discovered through systematic exploration programs. In contrast, in Guyana, alluvial miners working in river drainages have made all of the gold discoveries. Large portions of the prospective terrain in Guyana remain underexplored due to difficult access because of the dense jungle. On the table here, you can see how Toroparu ranks as one of the larger deposits in the region, and I'll point out it is, in fact, the largest undeveloped gold deposit held by a junior in South America. Further to exploration, Sandspring has defined quite a large hydrothermal halo around Toroparu project, which you can see as the black dots in the middle, with a lot of geochem data suggesting that more than one mineralized system exists.
I mentioned the dense nature of the jungle, and I think it's very unlikely the very best deposit in the area exists within a most accessible terrain. I think there's a lot more out there to be found as they continue to explore. The updated rescoped PEA came out this year in June and included production from the Keno Hill deposit, as well as they changed the processing strategy to start with production from the CIL plant for 10 years, followed by expansion with a flotation plant. Production in the first phase is going to average 175,000 ounces and then increase to 217,000 with the concentrator. CapEx was reduced significantly from $501 million-$378 million. The table here shows the robust project economics, assuming $1,400 gold.
Next, we're going to take a look at the Cotabambas project. Cotabambas is a copper gold silver deposit located in the Andean Cordillera in southern Peru. Panoro completed a preliminary economic assessment in 2015, which envisioned a large open-pit mine feeding a conventional 80,000 tons per day copper concentrator. In March 2016, Wheaton acquired 100% silver stream and 25% gold stream on the Cotabambas project for a planned $140 million investment. From 2017 through 2019, Panoro has continued to focus exploration on increasing the size of the Cotabambas resource. Exploration continues to focus on two main clusters where multiple intrusions of porphyry and skarn mineralization have been found. Drilling in 2017 and 2018 focused primarily on the porphyry potential at the Maria Jose target in cluster 1. In 2019, drilling moved to cluster 2, focusing primarily on skarn potential at the Chaupec target.
Panoro's current objectives at Cotabambas remain focused on exploring for scale-changing potential and increasing the overall resource base.
The Kutcho deposit, located in northern B.C., is a VMS deposit located east of Dease Lake. In December of 2017, we completed an early deposit deal with Kutcho for 100% of their precious metal production. Total consideration was for $65 million, with $7 million advanced upfront to fund their feasibility. Kutcho is a project with a long history. It was discovered back in 1968 by Imperial Oil. Desert Star purchased the project from Capstone in June of 2017, and later changed their name to Kutcho Copper. On December of 2017, we completed our early deposit deal, and Kutcho have since been advancing the project towards feasibility and recently announced results of the metallurgical test work, which actually showed improved recoveries over the PFS. We're quite encouraged by that progress. The map here shows the large Kutcho claim package with current deposits located in the upper portion of the map.
You can see Esso, Sumac in north. The prospective volcanic rocks within this large package are folded and repeat the mineralized horizon several times throughout the project. That's represented by the dashed magenta lines, which indicate interpreted massive sulfide zones, and the orange dots are greenfield targets that have been defined through geophysics and mapping. I want to highlight that the horizons are underexplored and have not seen significant exploration since 1990. I see that the green light is still on, so if there are any questions, Wes and I would be happy to answer those.
You're dealing with a number of PEA studies and early stage analysis of some of these projects. Can you give us a sense on the margin of error that you see within those studies? Say, if you look at % capital estimates and % operating costs on a sustained basis, what would you normally adjust those by when you do your detailed desktop studies?
That's a good point. You certainly see a large gap in a lot of those PEA studies when they eventually get through to fees. You'll see that's why we've only done a few. We've looked at, I would say, close to 100 of these things. The ones that we've done, I would say the PEAs are particularly good, and we've got good confidence in both the resource and the mine plan. We've made our own assumptions, of course, on CapEx and costs. That's another reason that we haven't done dozens and dozens of these early deposits because the PEAs, in general, are extremely optimistic.
Neil, on June 30th, 2020, you'll be asking Barrick for $252 million or ask to extend Pascua Lama agreement.
Yeah, that's a good point, Nick. That is the timing of the completion test, which must be done, and we can ask for the return of the unfunded deposit. That's a tough one because when you look at the value of that stream, it's enormous. The question is whether or not you believe it's going to be built in our lifetimes.
We have an option until the end of this year. There is a 90-day period. We have an option until the end of September to choose whether we want to take $250 million back for that stream or keep it. It's still the best half-built gold mine in the world. We're still optimistic that Barrick will, I believe towards the fact that we will keep the streaming, like the asset, do you think it has potential going forward? We're not fully thinking of possibly taking it back.
Yeah, I think it's encouraging after long drought of not having any news on Pascua Lama since the Randgold merger, Barrick have been actively talking about it. Certainly encouraged by that. I guess that will conclude the questions. Wes and I are both around for the rest of the morning. If you have any questions, certainly don't hesitate to come up and chat with us. With that, I'd like to introduce Christian Kargl-Simard, who is the President and Chief Executive Officer of Adventus. He's here today to talk to us about his exciting company and what they've been doing in Ecuador. Thank you.
Thank you, Neil. I'm going to start with two things about Wheaton. First off, thank you for the invite. We are a company just over 100 million market cap, a lot smaller than the companies following me today, but it's a fantastic opportunity for Adventus to be shown here today at the show. Secondly, I want to talk about innovation and culture and people. You'll see the deal that Wheaton's done with Adventus is innovative. We appreciate that a lot. Secondly, it's a real pleasure to be working with the Wheaton people. They have the right people and the right culture. Let's talk about Adventus. Adventus was formed two years ago. It used to be called Adventus Zinc Corporation. We've changed our name to Adventus Mining Corporation.
Initially, we were working out of my kitchen, looking at major zinc assets out of the majors and trying to build a major zinc business. We looked at $4 billion of deals, and we offered $4 billion of deals around the world, 25 countries, 240 projects, and we struck out building a major zinc business. We fell in love with the geology in Ecuador. The Andes belt is prolific, of course, for copper, zinc, lead, silver. It doesn't stop at the Peruvian border and restart in Colombia. Ecuador is a new frontier, new frontier in particular for copper, and ourselves and SolGold are the two publicly listed companies looking for copper in country. We're building a business focused solely on Ecuador. We believe we are a first-mover advantage, so does SolGold say that.
We're building a portfolio in a different way than any of our peers in the country, which I'll explain in the next few slides. We have three projects so far in Ecuador. The first one is a high-grade VMS district. If you know Sandfire's DeGrussa or EMR's Golden Grove in Australia, we have the most similar projects to that in Ecuador. It's a high-grade VMS with a very high-grade gold kicker, which could work very well for Wheaton going forward. It is in a district that is unexplored. We've just done for the first time an airborne geophysical survey, and we hope to make new discoveries over the next few years. We have a very unique shareholder base, not only with two royalty companies as shareholders, but with two private equity groups and a major industrial group from Ecuador.
We've grown our institutional shareholder base from a couple last year to 24 today and raised $26 million this summer. As we build a portfolio, we're looking for projects with excellent exploration potential. We have two porphyry districts. We've flown this year with 3 million of airborne, and we have 20 copper porphyry targets. We plan to drill the best two over the next few months. We wouldn't have gone to Ecuador without a partner. If you go back 30 years in Ecuador, three groups have been working there the longest. A group called Salazar Resources, led by Fredy Salazar, Cornerstone, and Ross Beaty's Lumina Ecuador Gold Group. We decided to partner with Salazar Resources, so Fredy Salazar, who has discovered with his team 30 million ounces of gold over the last 30 years in the country.
All three of our projects, we have a local partner in Salazar Resources. They've helped us build a team of 150 people, and we've got prospectors on the ground right now looking at multiple projects to add to the portfolio. The most advanced project, Curipamba VMS district, discovered over the last 10 years, has 11 million ton resource of around 5% copper equivalent right at surface. We just put out our economics earlier this summer with a new resource, and we're advancing that to feasibility study while we are exploring the district on the back of the maiden airborne survey. The two porphyry districts, as mentioned, we just did airborne this year. We just received water permits on one of the two, and we should start drilling there in November. Just over $100 million market cap. We hit our all-time high just recently.
We've got $23 million in the bank. We're fully funded over the next year. Over the next year, we're looking to make new discoveries in Ecuador. Our shareholder base is unique in the mining space globally. We have five strategic groups, as mentioned, 24 institutions. This is a company that was formed with Altius, Greenstone, and RCF backing me to build a business somewhere in the world. It's the first company that I know of that has two major royalty and streaming companies as shareholders. The biggest proponent of Wheaton coming onto our shareholder register was actually Altius. Altius is a base metals royalty and streaming company. Wheaton is precious metals, so they actually work very well together.
This group of shareholders here is backing Adventus for about $300 million of follow-on financing. We're very aggressive advancing our projects forward and building that portfolio in Ecuador. We should mention the type of deal that Wheaton did. We do not have a stream with Wheaton, but what we did was, gave them a ROFR on future precious metal streams from the Curipamba VMS district. Any other project that we have in Ecuador or we acquire, we have given them a ROFO on a precious metals royalty or stream. They're incentivized to see us grow in terms of adding additional projects, developing additional projects in country, as well as the development of the Curipamba project. We'll talk about why a stream really makes sense in the Curipamba project later on. We've built Adventus very different than our peers in Ecuador, either gold or base metals.
Getting to know Ecuadorians over the last two years, we think there's a real advantage to be building the Ecuador content, in the country. That means a full Ecuadorian team, Ecuadorians fighting for our projects, Ecuadorians working with the government on our projects. We've taken it one step further, bringing the Nobis group, earlier this year, which is the largest industrial conglomerate in Ecuador. Let me talk about Nobis. They're a household name. Company started around 80 years ago. A gentleman went from nothing to a Forbes 10 by building the largest banana export business in the world. He passed away in 1995. His daughter that you see there has built up the business in a diversified way. They own the deepwater port in Ecuador, the largest commercial real estate holder. They own a sugarcane refinery, et cetera.
It's the first investment they've made in mining, the only company they're going to invest in mining. They'd like to invest $100 million to us over the next few years, learn about mining through us. They've also been able to attract high-net-worth individuals in Ecuador to invest in Adventus, and they're creating a fund. It's like a synthetic listing, basically, in Ecuador, which is attracting Ecuadorians to invest in that fund with the sole purpose of investing in Adventus. We're trying to grow that Ecuadorian shareholder base and really be a partner to the Ecuadorians to build a major mining company, in Ecuador.
We think by having the Salazar as the partner on the ground with the eyes and ears for new projects, Nobis having an influence and deep pockets, and Adventus being the international conduit for money and driving the strategy, that's the way to hedge out as much risk as there is in Ecuador. 8 directors, 4 independent, 4 non-independent, and a management team that we built from people coming over to an entrepreneurial firm from other major companies. Where are our three projects? Curipamba is in the center of the country, near the major port city of Guayaquil. We're surrounded by Anglo American. We're looking for copper porphyries. Our Pijili porphyry, we surround Southern Copper's 1.5 billion ton porphyry. Down in Santiago, in the south, in Loja province, Cornerstone and Newcrest have $100 million earn-in on exploration that was announced earlier this year.
Ecuador has finally become a mining country. In July of this year, the Mirador open-pit copper-gold mine started production. It is a 60,000 ton per day open-pit mine in the jungle owned by the Chinese, formerly Corriente. In November of this year, we expect Fruta del Norte to start production. Two major mines starting this year. We think it is the first inning of what will be a very good next 10-plus years growing the business in the country. Let's look at the Curipamba project. Curipamba is the district, and within the district, we have a VMS deposit called El Domo. You can see there an M&I resource of nine million tons at 5.2% copper equivalent. The majority of this resource is 40- 80 meters from surface, so it is open-pitable.
Just look at the gold grade there, about 3.2 grams in open pit, plus 2% copper, plus 3.2% zinc, plus two ounces silver. This is around a $400 rock, your direct mine gate costs, mining, processing, G&A is around $50. It's a very high margin operation. We think we can grow that resource slightly. Within the district, we have a view that we can get to 20 to 30 million tons of this kind of material. Infrastructure-wise, we've got roads, power. Power is $0.7 a kilowatt hour in Ecuador. Diesel is $1 a gallon. Minimum wage is $400 a month. Metallurgy-wise, we spent the year with one and a half tons of material in Kamloops at Base Met Labs really fine-tuning the metallurgy, two lock cycle tests, and we produce very high-quality copper and zinc concentrates without any deleterious elements.
The deal to get a 75% interest in this district is spending $25 million in the ground. We're just about two years into the five-year deal, and we've spent 14, so we should be earning in our 75% interest within the next two years. It's a 22,000-hectare district, 65,000 meters drilled, about 61,000 meters in the El Domo deposit, meaning the rest of the district is unexplored. The blue circles you see there are geochemical anomalies, anomalous for copper, gold, and zinc. We think those are our next high-priority targets for drilling, but now we're layering on the airborne geophysics, and we'll be turning on two drill rigs in October looking for those next lenses. These are some of the results we were drilling last year. We're up with Ivanhoe and Arrow in terms of the highest-grade copper equivalent intercepts in the world.
Differentiating on this project is these results are typically 40- 60 meters from surface. The bottom right is the outline of the open pit, so it gives you a sense of the topography. No one lives there. There's the odd cow on the property. Came the PEA earlier in the summer, $288 million NPV after tax, less than two-year payback. That $185 million CapEx is now $165 million because Ecuador has removed the VAT for capital costs. There's a major engineering company that's partly building Fruta del Norte right now that is talking about being able to do this project for $110 million CapEx, which would be about a one-year payback. You're looking at about $100 million of free cash flow a year in the first few years of this mine life due to this high grade. Very small mine, 1,750 tons per day.
We're producing around 20,000 tons per annum copper equivalent a year for 15 years at this point. We're hoping to expand the scope of that production, and the mine life with new discoveries. Let's look at the revenue mix. Gold-wise, you're looking at around 35,000- 40,000 ounces of gold by-product credit for the 15 years. If you look at precedent transactions, you'll come to the conclusion that just a portion of that gold stream can fund 100% of the CapEx of this project, meaning no equity required, no debt required, and you're still in the lowest quartile cash costs in the world. There's no other project that I know of globally that is like this. Of course, Wheaton's front seat in the room and is cheering us on to add ounces and advance this project.
Where are we in terms of the steps to development? Nobis, and we as well, believe that this project will be the next major mine built in Ecuador. We could be in production if we really push by the end of 2022, but 2023 is our time frame. The focus over the next six to nine months is making those new discoveries in the back of the airborne, as well as doing the long lead items to develop a mine here, which in particular right now is the baseline studies for the EIA. We put this project within the current grouping of copper development projects that will be built within this cycle. That's the construction path. Secondly, there's M&A.
As you can imagine, quite a few groups are interested in seeing growth within this time period. This project really caters to Australian mid-tier producers. I'm headed to Australia and Asia over the next two weeks to meet with many of them. Let's talk a little bit about the alliance. In Ecuador, an undrilled prospective district is going for $50 million-$100 million earn-in with a major. There have been about seven of those transactions announced to date. We're not a project generator. We want to pick good projects and develop them on our own. With the Salazars' knowledge of the country, we're able to pick up these two porphyry districts for a few million shares and spending commitments. We own these now 80/20 with our partners. We flew airborne earlier this year. We have 20 copper porphyry targets.
We've been grooming the best ones on each project. These are billion-ton type targets. We've had porphyry experts come to confirm our thoughts on these projects. We'll be starting to drill Pijili in November of this year. We haven't put a lot of news out on these projects because we've flown airborne on considerably larger areas than what we own. We're in the current process of acquiring additional land. We could have been putting out great results like SolGold on their secondary projects throughout the year. Just to give you a little bit of snapshot of what we're seeing at these projects, that mountain on the right, which is Santiago, that was drilled by the Salazars in the 1990s when they ran Newmont's exploration, about 15-20 holes, 300-meter holes from surface of 0.4%-0.5% copper equivalent.
At the bottom of the holes, they entered into porphyry. The grade was kicking up to 0.6%-0.8% copper equivalent. Back then, Newmont was looking for Yanacocha. They didn't really drill below 300 meters, so they left this project. We flew airborne on top of this earlier this year. We have a major geophysical anomaly there, and our geophysicist says where Newmont stopped drilling is where the porphyry starts, the supergene zone, and what Newmont was drilling was the leach cap from that supergene zone. There's a very good chance of hitting a big system here. It comes down to what's the grade and are there any deleterious elements. This is the type of opportunity that we're looking for in Ecuador, which could have some very interesting news flow over the next 6-12 months. At Pijili, we surround the Southern Copper's Chauca porphyry.
Chauca is a one and a half billion ton porphyry called the Cobre Panama of Ecuador. They're advancing that to PFS, and we surround them as a horseshoe on the southern part of their property. We're working on the best target there. It has all the ingredients of Chauca, but this time with a good gold component. As mentioned, we hope to start drilling there in November. To conclude, we are platformed for Ecuador. We think we're doing things differently, and we have the highest chance of success over the long term in Ecuador with our partnership with Salazar, Nobis, and continuing to grow the Ecuadorian shareholder base. The Curipamba VMS district, we're pretty sure there's a mine, so that's a backstop of Adventus' value.
We're advancing that El Domo VMS to a production decision over the next few years while we're doing the regional exploration on the back of the maiden airborne. In the alliance, we have these two copper porphyry projects that we're very excited about, lots of news flow coming over the next six to nine months. We're not looking to add 20, 30 projects to our portfolio, but if we can find a project that can compete with the three that we have, we will add a fourth, fifth project to the mix. From a social perspective, when I told our board that we wanted to go in Ecuador, they fell off their seat. They wanted us to really confirm social license to operate, and who are these Salazar, what is the commitment of the government?
Salazars have operated in Ecuador as Ecuadorians with a social license to operate as their number one focus. If we just had $1 million to spend in a year, that would be all on social. We have very strong relationships with our communities in all three projects, and the government has done everything they can with constitutional court, streamlining water permits, removing windfall tax, et cetera. The one thing the government says is that the companies in Ecuador have to develop that social license to operate themselves, which we have done. We are working with Nobis, which has a foundation. It's called the Nobis Foundation. It's similar to the Lundin Foundation, and they're augmenting our already strong social activities in country to advance these projects. I'll stop there, and any questions? Thank you very much.
Thanks, Christian. Neil and I are now going to go through just an overview of Wheaton's operating assets. In terms of agenda on this one, we'll give a short introduction on the operating assets, and then we'll follow up with a little bit of detail on Peñasquito, Antamina, and Yauliyacu. Following the coffee break, our partner companies will also present on San Dimas, Stillwater, Constancia, Sudbury, and Salobo. On the map here, you can see the locations of our 19 operating mines shown by the blue markers. We want to again highlight just the diversity that we have in terms of jurisdiction and our focus on those jurisdictions of low political risk.
Point out just the diversity again of our partner companies, and the model really does work again on these operating assets for everyone from Vale to Glencore down to the small single asset companies like Almina. With the company's original focus on silver, it is not surprising the concentration of assets you see in Mexico with San Dimas, Peñasquito, and Los Filos, and in Peru with Antamina, Yauliyacu, and Constancia. With these two graphs, I will highlight the two key attributes we use to define quality: low cost and long life. On the pie chart, you can see that almost 90% of our production comes from mines that are operating in the lowest half of their respective cost curves.
As Haytham mentioned earlier, these are the mines that not only can withstand any price in the commodity cycle, but they're also the ones that our partners look to continually invest back into. On the bar chart on the right, you can see that based on reserves alone, we have 32 years' worth of mine life, and if you consider the resources, that adds an additional 34 years on top of that. We feel that these two attributes are the key differences between us and our competitors, and I challenge you to find any other precious metals company with assets of this quality. What does this portfolio deliver to us? 2018 was a foundation year for us, during which we restructured the San Dimas contract and added new streams at both Stillwater and Voisey's Bay.
You can see that in 2019, we're forecasting a production of 690,000 gold equivalent ounces, and that our five-year average increases to 750,000, which does not include Rosemont or Salobo three expansions, both of which we believe should be up and running by 2023. When you look at our 2019 to 2023 average production, the split in metals is 51% gold and 42% silver, with a small amount of palladium from the Stillwater Mine and cobalt from Voisey's Bay. The pie chart on the right indicates the breakdown of that production by country. I'll hand it back to Neil now to discuss exploration and expansion potential.
This waterfall shows our strong track record of R&R growth and exploration success. During our 15-year history, our partners have mined over 9.7 million gold equivalent ounces, which they've almost completely replaced through exploration success. In our view, exploration potential ranks up there in importance with cost curve position and mine life, and is something we put a lot of attention to during our due diligence. More importantly, when you look at the company growth on a per share basis, which is how we think it should be looked at, you can see we've done an exceptional job of growing. Originally, we had only half an ounce of gold equivalent per 100 shares, and we've grown that amount to over seven ounces, which does not include the two and a half ounces that have been mined over the same period. This really speaks to our track record of accretive acquisitions.
Over to Wes to talk about Peñasquito.
Thanks, Neil. Newmont Goldcorp's Penasquito operation is located in Mexico. It hosts gold, silver, lead, zinc, porphyry skarn deposit, and is Mexico's largest open pit mine. The Penasquito mill consists of two sulfide processing lines and a high-pressure grinding roll circuit with a combined capacity of 130,000 tons per day. The ore is processed through a conventional crushing, milling, and flotation circuit that produces zinc and lead concentrate. The recent addition of a large Pyrite Leach circuit now also allows for production of gold silver doré on-site. In July of 2007, Wheaton acquired a stream for 25% of the silver production for $485 million, proceeds from which were used to aid in the initial construction of the mine. Construction at Penasquito began in January of 2007, and commercial production was achieved in September of 2010.
In January of 2017, Goldcorp began construction on the Pyrite Leach project, which aimed to significantly improve the recovery of both gold and silver. The PLP achieved commercial production in December of 2018. As most of you are aware, on September 15th, 2019, Newmont Goldcorp made the decision to shut down operations due to the reestablishment of the illegal blockade at Peñasquito. Discussions have continued since the lifting of the previous blockade in June and 14 of the 19 outstanding issues have been resolved, Newmont Goldcorp made the decision to ramp down operations at the mine, as they have been clear throughout the process that a dialogue cannot continue if there is an illegal blockade. In June 2019, following the acquisition of Goldcorp by Newmont, the newly formed Newmont Goldcorp launched their Full Potential program at Peñasquito.
Over the last 10 weeks, a team of subject matter experts has identified upwards of $50 million in quick win improvements, including lowering mining costs by parking 14 pieces of equipment with no impact to total material movement, establishing best practices for ore control, shutting down the near pit sizing conveyor, and tuning the SAG mill control logic. They've also identified additional upside from four key focus areas for 2020, which together have the opportunity to deliver in excess of $200 million in value. I'll hand it back to Neil to talk about Antamina.
The giant Antamina mine, located in Peru, is the world's largest copper zinc skarn deposit. The mine is a large open-pit operation that produces copper, zinc, moly, and lead bismuth concentrates, with the majority of the silver reporting to the copper and lead bismuth concentrates. Antamina has a long history dating back to 1953 with the initial exploration by Cerro de Pasco. In 1996, it was acquired by Inmet and Rio Algom, and the operating company, Compañía Minera Antamina, was formed. First production occurred in 2001, and we completed our stream with Glencore in November 2015 for their portion, 33.75% of the silver production, for a total of $900 million.
Mineralization at Antamina, as you can see here on this section, continues well below the bottom of the currently modeled pit, with skarn mineralization continuing to flank the underlying intrusion, and I'll point at the bottom of the carbonates is yet to be found. Underground resources are currently at the inferred level and sit at about half a billion tons on 100% basis. Underground mining potential is continually being studied, and they are looking at underground mining methods as the potential mining method. In the past, definition drilling of the pit was done from within the pit. You can see on the right-hand side here is a drill rig and underlying section. This in-pit definition drilling was not that efficient because of the vertical nature of the ore body and the difficult angles to drill.
Recently, they have brought in directional drills, which are shown here in the picture, and they're able to now steer holes, which you can see in the bottom figure, into the ore body and hit the ore body perpendicular, which is the preferred angle. It also allows them to drill more than one hole from one parent and allows them to not be repeatedly drilling upper formation. The Antamina land package shown here is massive. It covers 169 concessions totaling over 700 sq km. Our stream, I'll point out, covers all of it. Numerous porphyry, epithermal, and skarn targets exist within this package, with the largest more advanced targets being Pucagaga, Chaihuayacu, and Quebrada Grande.
Now take a look at the Yauliyacu mine. Yauliyacu is an underground lead zinc silver mine owned and operated by Glencore and is located just outside of Lima, Peru. The Yauliyacu mill has a capacity of 3,600 tons a day and contains a conventional crushing, grinding, and flotation process capable of producing zinc concentrate and a bulk copper concentrate, which contains the majority of the silver. The Yauliyacu mine has been in continuous production for over 100 years. In March 2006, Wheaton completed a streaming contract with Glencore for 100% of the silver produced at Yauliyacu for a term of 20 years. In November 2015, Wheaton amended the Yauliyacu stream to extend the term to life of mine and change the annual amount of silver receivable to 100% for the first 1.5 million ounces and 50% thereafter.
The upper portion of this graph depicts the annual attributable silver reserves in blue bars, and the underlying green bars show the silver production. You can see that the continued growth of reserves is with the mine's steady production. Originally, our stream contract was to expire in 2026. Our positive view on reserve replacement and exploration potential is why we decided to renegotiate the contract to life of mine in 2015. During our visit to site a couple of weeks ago, we reaffirmed Yauliyacu's excellent track record for replacing production and continued investment in exploration. With that, I think we've got a little bit of time here for any questions. Anybody has any on the operating assets?
Can you talk a little about the CSR initiatives around Peñasquito, either the company-wise or yourself? Is that just too much of a hot topic?
I think we have, in the past, done a number of CSR initiatives with Peñasquito, not in the last couple years. We are working with them right now on a number of those initiatives. I think as you've seen in the news, they have a $25 million investment that they're looking at putting in to try to move along that social license. It is obviously a very hot topic right now. I think there are a lot of efforts being made, and certainly we have been working with them to come up with a number of those initiatives that we can help with as we move forward.
Wes, Steven Butler. Peñasquito, how long has it been suspended now, or is it currently suspended?
It is currently suspended, yeah. It was last Sunday, it would've been, September 15th, that they actually shut it down.
It was not suspended before that?
No. Well, it was suspended back in, it would've been May, June, that it was.
Okay.
Yeah.
Thanks.
Okay, perfect. Thank you. With that, we're going to break for a coffee break right now. I think in the interest of time here, we'll try to take about 10 minutes and get everybody back at about 10:25 A.M., if that works. Thank you.
[Break]
Did you get your medallion?
I got it.
Good stuff. Yeah.
Yeah.
It is. Oh, yeah. Yeah. Okay. I just want to start off this next round. There was a question that Haytham had earlier on about lessons learned over time and stuff like this. One of the biggest accomplishments that we had last year in 2018 was I talked about how we started this company 15 years ago. You have to remember, when we started this company 15 years ago, I was working for Goldcorp. Our objective was to raise as much capital as we could for Goldcorp. in terms of what they were doing on a go-forward basis. Just realized I had my glasses on. Don't know why I have that. But anyways, the very first-ever stream was on an asset that's very near and dear to my heart, called San Dimas, down in Mexico.
It was the first asset that we acquired way back in the early days of Goldcorp in 2001, or Wheaton River, which ultimately turned into Goldcorp and built forward. This is an asset that has got an incredible provenance. It's one of the largest overall gold and silver producers in Mexico historically. It's been mined since the 1500s, way back in Mexican history. It's just an incredible asset. The stream that we had on it definitely had its share of challenges. Doesn't take much to understand that one, but we did learn a very big lesson in there, and that's what made me think about the question that Haytham got. One of, I think, the biggest accomplishments that Wheaton achieved last year in 2018, you might think it had something to do with tax. That was obviously a big accomplishment.
To be honest, it was San Dimas in terms of restructuring it. Again, I reiterate, and I hope you heard that through the morning session, partnerships. We work with our partners to try and find ways to make these assets the best they can be, to make these companies the best they can be, because we get the benefit of that. We share the benefit of that with our partners. Probably the biggest accomplishment, or one of the ones that I'm the most proud of, was how we were able to work with First Majestic in terms of bringing them on as a new owner at San Dimas and let them apply their in-house expertise that they have from an extensive history in Mexico and apply that to a mine that I think is one of the best in Mexico, definitely historically.
I know that with the work that First Majestic is doing down there, we'll bring it back to the top of mining in Mexico in terms of gold and silver production. Yeah, really happy to have Keith here to tell us about the work that they've done since they took over ownership of that asset last year. I just have to say that we're very happy. Our teams on site have just sensed the new energy and positive direction from the whole First Majestic team down at this site. Thank you, Keith, for joining us, and I'll hand the floor over to you.
Welcome, everyone. First off, before I get into the presentation, just like to thank Randy and the Wheaton team for the invitation. We don't often get to see all of you in one spot like this, and it's a great opportunity for us, and I hope you learn a little bit today about First Majestic, and of course, about what we're doing at San Dimas. Just before we get into San Dimas, I'll just cover a couple of general points on First Majestic overall. We're one of the purest silver companies in the world. Over 60% of our revenue is from the sale of silver. A large portion of our revenue is also from gold. We have six producing mines, around 5,000 employees. All our assets are in Mexico. Wheaton owns. Oops.
Wheaton owns approximately 10% of the company as a result of the collapse of the previous stream, which I'll talk a little bit more about when we get into this. Our treasury is pretty healthy. Our balance sheet is probably the healthiest been in the last at least five or six years. You see the big bump up in revenue there in the Q2 2018. The acquisition of San Dimas closed in May of 2018, which gave us that nice little bump up in production. This is just a map of Mexico showing the assets. The red dots are the producing mines, the blue dots are development assets. Quite frankly, our portfolio has grown so dramatically over the last 17 years. I put the company together back in 2002, 2003, and I built this business through acquiring things.
I think we've done a pretty good job acquiring a pretty decent portfolio of very pure silver assets, standing apart from many of our peers. We're the second-largest silver producer in the country. We're very well-known, very well-respected. I was with the Under Secretary of Mining just 10 days ago, dealing with some issues that we have there. He's a really nice guy in his early 40s. He's been mining for 15 years. I've talked to him on the phone many, many times. What's up with him on a fairly regular basis. It was the first time I actually had a face-to-face meeting with him. I was pretty impressed. I'm pretty happy with the current government. If there's any questions about the political environment in Mexico, I'd be happy to answer that. San Dimas and Santa Elena are two cornerstone assets.
Those are really the majority of the company's production. About 90% of the production is coming out of Well, about 80% of the production, 90% of the profits are coming out of those two mines. San Dimas, as Randy said, this is a very historic mine, been around for at least 300 years and likely longer. It's the largest silver-gold mine in the state of Durango. It's one of the most important mines in the country of Mexico. Just a couple of side facts. We're the largest employer in the city of Durango. We're also the largest taxpayer in the state of Durango. Our influence in this state is quite good. We're happy to be there, obviously, this is a great asset that we've had our eye on this asset for a decade.
The transaction, as I said, closed in May of 2018, but Randy and I had met several times over the last seven or eight years and talking about this asset. We've had our eye on it for quite some time, and when we got the phone call from Scotia back in January of 2017, we were pretty happy to be part of the process, and we finally won the process in early 2018, and it closed in May. Super high-grade mine. This mine's going to be producing for as long as anyone in this room cares. It's got reserves galore, and there's a couple of slides coming up which will show some of the work that we've been doing over the last 12 months or 18 months, in a very short period of our ownership. A couple of other points.
50% of the energy comes from a hydroelectric dam. Part of our next two years of CapEx, we're going to be expanding this dam so that 100% of the energy will be coming from hydro. Pretty important because there's about four to five days per month that this town of Tayoltita is blacked out due to weather problems. Our helicopter is constantly in the air fixing this power line, which is honestly quite annoying. We have to turn on our gensets, which obviously cost us money. To eliminate this need for diesel and also taking the pressure off the town is going to be very good for us socially and also very good for cost going forward when this expansion is complete. Now, talking a little bit about this property. The prior stream that Primero had, they had a cutoff of four grams gold.
If you just think about that for a sec, because this mine was generally or has been historically a high-grade silver mine. Because of the owner's nature of this stream, the silver was actually zeroed out to no value because they're losing money on the silver. They were forced to go to very far regions of this property looking for high-grade gold to pay for the losses that they were making on the silver stream. Of course, their costs were up dramatically, and we've cut costs by, I think Well, the cost per ton, for example, at Primero was $165 a ton. Today, it's about $110 a ton.
What's interesting, Merrill Garcia, who actually ran this mine for 15 years when he was at Luism in and then in the early days of Goldcorp, he has been employed by us for, I guess, seven or eight years. Him and a whole group of other people, actually his children were born in this town. Him and his wife lived in this town over that 15-year period, and he was our VP of operations. When we closed this acquisition, we flew him up to Vancouver because we're trying to figure out, okay, well, what's our go forward plan? We're putting together some high-level plans and so on, and he said to me, he says, "Keith, can I be the GM?" I said, "Are you kidding me?" He says, "You're the VP of operations.
Why do you want to be the GM?" He says, "Well, I'm going to show you what I could do with this mine." Him and a whole group of other people, we've got probably 20-plus people employed by our company in senior management levels that have worked at this mine at some time in their career. We're opening up old areas currently of the main structure, the old Tayoltita mine, which is grades of one kilo, five kilos, 10 kilos silver. That was all uneconomic under the previous stream. That was all left behind by Primero. All that new development is going on now. We're rebuilding infrastructure. We're putting in hydro, or pardon me, we're putting in electric and air and so on and so forth. That's all going to be done by the end of the year.
We're going to see production coming out of some of these old high-grade silver structures in 2020 and beyond. This is something I haven't mentioned to Randy yet, but over the last 18 months, we've been able to add for every one ounce we've mined, we've added three ounces in reserves as a result of our development and exploration programs. Pretty amazing. This is an example. This is under Primero 2018. This is when we acquired it. This is one of the blocks, and you can see 205,000 tons, decent grades, four, almost five grams gold. It's over 700 grams silver. Today, that same block is now over, almost five times larger. Another block here, went from 50,000 tons to 198 million tons, pardon me, or 194,000 tons, decent grades, high-grade silver. This is what we're doing. This is just two examples.
This is throughout the entire mine. You'll be seeing new 43-101s coming out in 2020 describing all this work that we've been doing over the last 18 months. We pride ourselves with technology. We've been able to reduce, as a global First Majestic, I'm referring to, we've reduced our costs over the last five or six years through the adoption of technology. This is something we've done many, many times and throughout this business. This mill is old, and quite shockingly, my first visit there, I couldn't believe how bad shape this mill was. I'm not going to get into a whole bunch of detail on that because I don't have a lot of time, but in my 35 years of being in the mining sector, it's probably the worst-shaped mill I've ever seen in my life.
We've obviously cleaned it up a lot, it needs a lot more work. Over the next two years, these are the things that we're going to be doing. We're going to be automating this mill, bringing in new grinding technologies, bringing automation in, control systems in place, and of course, the hydro dam as well, I've already mentioned. All of these things are going to be brought in, and we're going to be putting out guidance in January of 2020 to let the market know a little bit more detail on the spend that's going to be required to accomplish this. Much of the equipment has already been ordered for delivery in early 2020 and later in 2020 as the progress occurs. This is just, we have an engineering firm out of Montreal doing this work for us.
Very preliminary, this is basically, it's going to be a complete rebuild, replacement of the whole circuits and a picture of that HIGmill is there, here it is again. This picture on the left, I took that photograph myself. That was in Austria in August of last year. We bought three of these. This particular installation is at the Santa Elena mine. It's actually quite amazing. It's the first HIGmill in Latin America that's currently operating, we have 30 people from around the world arriving at this mine, I think next week, to view this because it is actually groundbreaking technology. This is replacing ball mills. This is replacing balls. It uses no steel balls, it uses half the electricity as a regular ball mill. We, as a business, have 21 ball mills in our company.
This is going to replace all of them over time. San Dimas is getting theirs mid-2020. This is what it's done. In a very short period of time, this installation only occurred a couple of months ago, we're seeing anywhere from 5%-10% increase in recoveries on gold and silver. La Encantada is next. One just arrived at actually La Encantada just a couple of weeks ago, that'll be number 2, then San Dimas will be number 3. Driving down costs, increasing production. Okay, here's a bit of a video.
The San Dimas Silver and Gold Mine is 100% owned and operated by First Majestic Silver. The mine borders the states of Sinaloa and Durango and is approximately 150 kilometers west of the city of Durango, and is adjacent to the historic mining town of Tayoltita. The San Dimas land package stretches across approximately 72,000 hectares of land. The mining complex consists of five high-grade silver and gold ore zones, which include the Araña Hanging Wall, Tayoltita, Central, Sinaloa Graben, and West Block. Above-ground infrastructure includes an airport, 2,500 ton per day cyanidation mill, laboratory, refinery, maintenance shop, and a hospital. The mine is the company's flagship asset, contributing approximately 13 million silver equivalent ounces of production annually and is one of the most significant underground mines in all of Mexico. The mine has over 500 kilometers of underground development and more than 3,000 exploration drill holes.
Mineralization of the deposit is typical of epithermal vein structures. The mine boasts a long mine life with proven and probable reserves and measured, indicated, and inferred resources that are regularly updated with new drill data and ongoing exploration analysis. The majority of mining activities are focused on the central block. Mining is conducted using long hole stoping and mechanized cut-and-fill methods. The ore is then brought to surface and undergoes conventional crushing and grinding, followed by cyanidation and Merrill-Crowe processes. Precipitates are melted using an induction furnace to produce silver gold dory bars that are then transported by airplane to refineries in Mexico and the United States. Since acquiring the mine in May 2018, management's vision has been to improve operational efficiencies and reduce production costs using a multi-pronged approach, including installation of HIG technology and a 40% reduction in ore drive development dimension.
To date, First Majestic has successfully reduced production costs by over 25% to approximately $110 per ton. Further cost savings are achieved at San Dimas with First Majestic's own hydroelectric generation system, which supplies clean, low-cost energy to both the operation and the local community. The company is planning to begin a dam expansion in 2020, which is expected to provide consistent power throughout the year. First Majestic Silver is confident that continued success at San Dimas will be beneficial to its shareholders, local residents, and economic partners. Go to firstmajestic.com today to find out more about this and other First Majestic operations.
Okay. I have five minutes for questions, if there are any. If there's not, that's great, too, but there we have way in the back here.
Keith, Chris at RBC. Just wondering of former managements or CEO, COOs, they tried to address safety. I think they actually made it worse. Do you have any comment on that?
There is a piece of news I just received yesterday that this mine, this San Dimas Mine, has won the safest mine in the state of Durango. There was a two-month competition that went on among a variety of different mines, and it came first place. We haven't put that out publicly, but I just received that notice from the government just yesterday. I think we're doing a pretty good job.
With respect to, I forget, they weren't using enough screening or people were going in and prior with open stopes. I guess that's been addressed.
This is extremely competent ground. This is not like an oxide structure like some of the other mines that we have. This is extreme. This is a hard rock, deep, very competent underground mine. There's no risk of any kinds of collapses as far as I'm aware of or concerned of. I'm not exactly sure the issue that you're bringing up. I'm not aware of it.
Okay.
It was under Primero's ownership, there was issues with respect to ground support and some challenges they had there. The comment that I would add that should provide some comfort on that front is the fact that Humberto Garcia was the general manager all the way through first ownership of this asset, and if Humberto Garcia's operations down, it must be improving. It must be driving that going forward. I personally take a lot of comfort in the fact that Humberto Garcia came back in and pushed to come back in and take hold of this asset again. He managed this is his family. This is his home. He knows this asset very well. I know that he is very motivated towards that actual site of it, in terms of continuing to improve, safety performance. It is good ground conditions.
It's very young blocks that haven't gone through extensive alteration or anything like that. I think as long as we have the right team in place, that safety is going to be 100% of the value because the right management in place, they have safety as the number one priority.
Okay, thanks. Good to hear.
I need to get Randy to be a spokesman for First Majestic. Thanks, Randy. There was a question over here, too. Yeah.
Keith, on the Jessica Vein slide, the reserve growth year-over-year looks very impressive. Just wondering how that occurred. Was that drilling or the lower cost or technology combination of all of it?
That's all drilling.
Oh.
Yeah. The new 43-101 will address the economics. That's not addressing the economics. That's just drilling. Drilling and development.
Can this be extrapolated to other zones in the deposit or?
There's dozens like that.
Okay, thanks.
Yeah. It's pretty impressive. As I said, for every one ounce of metal we're mining, we're adding three ounces in reserves. Any other questions? Got one more minute left. Way in the back.
Hey, Keith. Just wondering where it stands. Maybe I missed it. I know there's some issues with the Mexican tax authorities when you picked up this asset and that you guys discussed you were going to be sorting through. What's happening there?
Well, I told my finance team to do nothing about it, actually. Primero won fair and square in court. This is going back several years. They're trying to keep it alive in the court system, yet they never show up in court. Why would we show up in court? We threw the previous government an offer just to get it off of our backs because we know the investment world, obviously yourself, is curious about what the resolution's going to look like. We are as well, but they were prepared to actually sign the agreement, but they were, of course, dragging their heels, and this is February- March 2018. The election was just happening, and then they didn't want to then make a decision, so it went sideways.
Raymond Polman, our CFO, meets with Hacienda on occasion when he's down in Mexico, and they chat about it, and it just goes sideways. We're not in a hurry to deal with it. We have our own internal numbers that we think is a number that's acceptable to us. I'm not going to throw it out in public, but it's a tiny number that we could easily handle. Any other questions? Great. Well, thanks very much for your time.
Thank you, Keith.
Good?
Yeah. Okay. Thanks, Keith. Very excited about what First Majestic is doing at San Dimas. It's a great asset and I expect it's going to be up to the same levels. Next up, last year in July, we closed the transaction on the Stillwater asset with Sibanye. Now, you guys just heard how much I love San Dimas from the geological and the exploration, the ore potential, and stuff like that. I got to tell you, the Stillwater ore body is one of the most beautiful things I've ever seen, and as only a geological engineer could describe it. We did organize a tour after the Denver Gold Forum last year, and I think a lot of the faces that are here also were on that tour. It shows very well.
The thing that really stood out to me was also Sibanye as a relatively new owner in this asset and the impact that they're having on this asset in terms of improvements in operating performance and the likes. We've got Neal Froneman here to tell us about Sibanye and more specifically about Stillwater. Please welcome him to the stage. Thank you.
Good morning, everybody. I heard Randy say this morning a number of times that he refers to the associations that he has with a number of us as partners, and we certainly look upon Wheaton as a partner in our business as well. Nice to be here. 20 minutes is not a lot of time to tell you about our company and of course, more importantly, Stillwater. Let me get on with it. Obviously, forward-looking statements in this presentation. We're probably not that well-known in Canada. What's important from this slide to take away is that about half our revenue comes out of Stillwater. It is definitely the crown jewels in our portfolio. As a company, we have significant reserves. You can see how it's split between the U.S. and South Africa.
We probably also should highlight that we're a top 10 gold producer with about 21% of our production being from gold. That just puts in perspective the combination of metals that we produce. We are probably known as a company that's highly leveraged, 2.5x net debt to EBITDA. What I'm very pleased to tell you is that under the current commodity prices, our net debt to EBITDA will drop to 1x by the end of next year, if not sooner. Leverage will be something of the past, which is obviously something that weighs on the market. Our assets are really predominantly in South Africa or Southern Africa. We've got a small asset in Zimbabwe and of course, in the U.S. We are finished growing in South Africa.
South Africa is a difficult destination to operate. We've learned how to operate there well, and we look forward once we are de-leveraged, once we have reinstated dividends again, to growing in probably North America. Just a little bit about ESG issues. They are very important. We take it very sincerely. We use a tree to really describe the way we think. Our values are in the roots of the tree. It's commitment, accountability, respect, enabling, and safety. That stands for CARES. We talk about Sibanye CARES, the people in our company are the trunk of the tree. Profit is important. If you don't have profit, you don't develop the canopy, and the canopy of the tree is really all our stakeholders, not just shareholders but stakeholders.
This is something that's got a lot of traction more recently in the U.S. with the CEO Roundtable, acknowledging that your social license to operate is very important and dependent on stakeholders as well. We introduced this concept in 2013. From my point of view, I think we are somewhat ahead of the game. Our vision is about creating superior value for all stakeholders, and our purpose is about mining improves lives. Hopefully that gives you a bit of a flavor of how we think. Safety is our most important priority. We operate ultra-deep-level mines, and in 2018, we had a horrendous safety year in our deep-level gold mining business. We had two what we believe were anomalous incidents. Nevertheless, we put a lot of effort into safety and I'm very pleased to say that since then, we've had zero fatalities in our ultra-deep-level gold mining business.
To put it in perspective, we've broken all South African records, which are not great records, but they're still records. We've achieved 7 million fatality-free shifts in our South African deep-level gold mining business. To put it in perspective, our U.S. business is only sitting on 2.5 million fatality-free shifts, which just shows you the amount of that achievement or the significance of that achievement. We will continue to work hard on safety, it is the one aspect when Wheaton was doing its due diligence that we agreed to invest some of the money raised into technology and research. Randy, I'm very pleased to say we've done that. We've invested in what we call the DigiMine research projects at Wits University.
Those are long-term investments with returns that I have no doubt are going to make a big difference to safety, not only in our company but in South Africa as a whole. We are a gold company that moved into the PGMs, I want to say, at a low in the cycle. We did a lot of work on the market, and I'll cover it very briefly. We developed a four-step strategy, which involved essentially buying assets that are contiguous to each other. It is something that we know there's a lot of synergies between assets that are owned by different companies when they are contiguous, and we can extract those synergies, lower the cost structure, and actually take what are non-core assets in other companies and actually get them into the lower half or even the lower quartile of the cost curve.
We acquired Aquarius, a very vanilla transaction of a listed company. We acquired Rustenburg from Anglo Platinum in a well-structured way. We pay for it out of future profits so that the upfront payment was minimum. Stillwater was actually our fourth step in the strategy. When we recognized the changes in the palladium market and the good work that the previous management had done at Stillwater, which we must acknowledge, we moved it to our third step. As you can see, although we have a lot of assets in South Africa, half our revenue is now out of the U.S., which makes us much more of an international company. Lonmin, which was our third step, we moved to our fourth step, and we bought it for just under $300 million. The primary reason for buying Lonmin was to become a full mine-to-market company.
The processing facilities that we acquired in that transaction are worth well in excess of $1 billion. That's actually positioned us very well in the PGM business. We are number 1 now in platinum. We are number 2 in palladium behind Norilsk. Probably the most precious of all the PGMs is rhodium, and we're number 1 in rhodium. I'm sure you're all familiar with the price increases in these commodities. If you look at equivalent ounces in gold, our top 10 position is about a 1.1-million-ounce gold business. You couple that with the PGM business. We are a senior company, and we need to get a senior rating as well. I have no doubt as we deleverage and do the right things, that'll come through. Just a little bit in terms of PGM market outlook.
I'm not going to spend a lot of time on this, but if you operate in the U.S., you need to look at your basket price at Stillwater, 78% palladium. The balance is really platinum and a bit of gold. You need to look at it in U.S. dollar terms. Obviously, for our South African business, gold and 4E PGMs , you need to consider the rand-dollar exchange rate. Of course, with the poor leadership in our country, we've seen the rand weaken substantially, and that's given us a real tailwind in terms of commodity prices in South Africa. I'm not going to go through that in too much more detail. Just a little bit about the fundamentals of the palladium market. We recognized these fundamentals back in 2016 when we started engaging with the Stillwater management.
Palladium is in a fundamental deficit, and the speculation has always been that a few hundred dollars an ounce above platinum will lead to substitution. That's not happening yet. The car manufacturers are not even thinking about it. They've got much bigger priorities. You've seen palladium run based on a fundamental deficit, a lack of near-term supply. You've seen it run up to nearly $1,700 an ounce. The fundamentals looking forward, despite perceptions around electric vehicles, are very good. The biggest difficulty is quantifying the inventories and the above-ground stocks, but we know they are tight. The ETFs have sold down, and therefore, I think we're quite bullish on palladium. We see little downside and probably even a bit more upside. Platinum is in oversupply. It's not a demand problem as everyone thinks. It's not the anti-diesel sentiment that drives or keeps the platinum price depressed.
It's an oversupply out of South Africa. Essentially, that is going to change. There's been a lack of capital investment in the last 10 years, and eventually when that happens, you become ex-growth, and in fact, you start moving into a decline. Platinum will come back into balance in probably about 18 months to two years. As a company, we've got a 50/50 palladium platinum exposure as a group. We are driving a substitution. We're working with BASF in terms of doing some of the pre-work that the car manufacturer should be doing. Substitution will be good for palladium, and it'll be good for platinum. It's not a bad thing. We can talk about electric vehicles, but we see the biggest growth in the electric vehicle space as being hybrids in the near term.
Battery electric vehicles are aggressively entering the market, but it's not that disruptive when you consider, especially for platinum, that 40% of platinum demand is really based on autocats. Platinum has very significant other uses as well. Rhodium is probably the most precious of all of them. You've seen rhodium trading up to $5,500 an ounce. It's in fundamental deficit. The interesting thing about rhodium is there is no substitute. Therefore, again, having a large exposure to rhodium is very beneficial. In South Africa, about 25% of our revenue now is coming from rhodium, and yet it's only about 10% of the product mix. All right. I'm sure Wheaton would like us to talk more about our U.S. business, and I needed to really put in context where this business fits in. It is the crown jewels.
It's in a favorable geographic location in Montana, a very friendly mining state. We've been very well received in the U.S. We have good relationships with the local landowners and the unions. This is really a world-class asset. This is the best PGM asset in the world. Full stop. High grade. I'll show you how it slots in terms of the overall grade profile of other PGM assets. 80 million ounce resource, 22 million ounce reserve. If you look at the diagram on the right-hand side, you can see there's a large part of this ore body which is continuous, has been proven up, but we cannot yet declare a resource. There's 12 kilometers essentially on strike that needs more definition. A very significant reserve and resource life. Look at that grade, 16.3 grams per ton.
Most of the South African PGM businesses run at three to four grams a ton. There is very significant growth that is coming out of the Stillwater assets. By the end of 2021, we should be at about 900,000 2E ounces. Blitz, which is a new project that is being internally funded, will add 300,000 to the existing 550,000 ounce profile. We have what we call Fill The Mill at East Boulder, which really is exactly what it says. It's utilizing existing mill capacity, very low capital cost, about $18 million of capital, with significant investment returns that will take us up to the 900,000 ounces of 2E production. Great business. I think what's also not well known about Stillwater is that it is the biggest recycler of PGMs in the world.
We do about 700,000 3E ounces of PGM recycling from all across the world, mainly out of Europe and the U.S. A great asset. This just puts in context the difference in quality. You can see a group of South African assets on the left-hand side. We've listed ours separately. We don't want to compare directly to our competitors. You can see Rustenburg is long life, Marikana and Mimosa shorter life, and Kroondal the shortest, but the grade is around 3 grams per ton. If you look at Blitz on the Stillwater side, you can see grades of 20 grams a ton. Mine life will be substantially longer, what's shown on that chart as we drill out the ore body, and East Boulder sits at a relatively poor 15 grams a ton or something like that, but long life. These are really high-quality assets in the mix.
Blitz is fully financed. As I said, we're funding it internally. We'll add 300,000 ounces. I'm not going to go through all the technical detail, but Randy, you'd be pleased to know we can tick off some of the completion issues already, such as the tunnel bore heading and so on. Blitz is in a state of ramp-up. Ramp-up in mining is always difficult. There's always new issues, a lack of flexibility, and I have no doubt we'll have our fair share of issues, but so far, so good. Fill The Mill, as I said, is really utilizing the excess mill capacity at East Boulder. It's another 336,000 ounces, a 10-year life with relatively small capital, $19 million over two years, and you can see IRRs of 88% and so on. Obviously, at today's spot prices, those are significantly higher. This is really the profile we're working towards.
You can see the ramp-up over the next few years resulting in about the 900,000 ounces of 2E material being achieved towards the end of 2021. You can see how your all-in sustaining cost drops off as you get more volume. There is very little additional fixed costs incurred through this project. We should have a business with exceptional margins once we have that ramp-up, all-in sustaining costs of about $600 an ounce and less. Current basket price is in the region of high $1,400s- $1,500 an ounce. You can see the sort of margins we are talking about. I think that is the last slide. I would be pleased in the last few minutes if there are any questions. I must have done a good job. That is a lot to take in. Thank you.
Thank you very much.
Thank you very much, Randy.
I haven't actually seen him yet, but I'm sure he's here somewhere. Our next speaker is from Actually, just let me finish off on a couple of comments with respect to the Stillwater operation. Palladium, of course, a bit of a venture for us. We saw on those graphs how well it's done over the last while. It's funny, nobody ever asks us about that. They ask about cobalt, and we'll talk about that a little bit later. Yeah, no, the Stillwater asset is an asset that's going to continue to be a foundation. I look at this asset as being, to actually steal a quote from Keith earlier on, it'll be operating long after any of us care, it'll still be going on. Very excited to be partnered with Neal.
It's been interesting from our perspective, because working with Sibanye and their commitment to safety, it was one of the areas that we put a lot of focus into during the due diligence. We talked about that a little bit earlier on. Happy to report that part of our streaming agreement was a joint investment with Sibanye on some technology that will ultimately reduce injuries and increase safety. A research program out of Wits University down in South Africa. It's, again, an example of at the due diligence stage, how important it is for us to make sure that we have the right partners. Our next company coming up, my glasses are there, so I can't read it. My next company coming up is Hudbay. It's Cashel Meagher is speaking.
I have to say, the Constancia project is what I would describe as probably the most successful project build in South America in recent history, in terms of what it was able to get accomplished over a period of time and with respect to budget and scheduling and stuff like that. Hudbay is, we've got multiple agreements with Hudbay on multiple assets all through the Americas. Very excited when they stepped in. Our Rosemont stream was, of course, with the previous owner, but very excited when Hudbay stepped in, mainly because of that. I know we will see Rosemont in production while we all still care. Without anything else, I'll bring Cashel on board, and thank him for coming up. Thanks.
Of course, thanks to Wheaton Precious Metals, I don't get rolled out often for public speaking. This is my second time in two years, and Randy offered the invite again. I guess a couple of things of note. They always have impressive venues. The ceiling here reminded me of my kids play Minecraft, and it's one way to get kids interested in mining. It's amazing when they ask you about diorite and various rocks and things. This is very apropos. One of the other ways we start most of our presentations is with a safety share, and I think this is one. I was traveling with one of our board members back from Peru maybe a couple of weeks ago, and a gentleman was ahead of us on an escalator.
We were talking and standing, so we didn't notice the hazard ahead of us. When we reached the top, the gentleman's shoelace got caught between the escalator closing, and he really did some damage to his ankle. Fortunately, the shoelace snapped. It's something to look out for your fellow people ahead of you on the escalator. Just it's something to remind that even a shoelace can really do some damage. Let's see if this works here. Okay. We have all this information and Hudbay. I'd like to say that Wheaton Precious Metals has and always has and was and is a very important partner to Hudbay. I remember when Haytham and Neil first arrived on the Constancia site, I'm going to guess it was 2011, 2012-ish. It certainly was llama pasture, and it certainly was an uncomfortable sleep at 4,200 meters.
Since I can say even though in Peru the average size bed is pretty short, they've made them longer in the camp now, so even I can be a little more comfortable. Hudbay is a mid-tier mining company. We're listed on the TSX. I'm sure many of you are familiar with us. We often make the news for the wrong reasons. We do have good assets, and more importantly, we have good people. We've learned a lot over the last number of years. I myself have been here since 2008. I've seen, I think I'm on my seventh CEO now. We continue with the same operating team and the same project development team and the same exploration group. As you can see, we're focused on the Americas. We're focused on investment-grade countries.
We believe in rule of law, human rights, and the right to the asset, that the government will support that. Our major operations in Peru and Manitoba, that's certainly the case, and we do have exploration and development activities in the U.S. and Chile. This is often a slide people glance over, but I think this is important in the context we've been here 11 years, and this slide, or 10 years, hasn't changed. This is our core competency. We often have a strategic review in the sense of oversight on what we're doing every time we change out some leadership, and we always end up with the same drivers. It's about the people.
It's about what we're after, and long life, low cost, mining-friendly jurisdictions, and we certainly have a focus on copper, and that's why Wheaton Precious Metals has been a good partner with us with their focus on the precious metal byproduct. I think what I'm going to focus on, rather than focus on individual sort of agreements, our biggest material properties, of course, are Constancia and some of our Manitoba ones. I think the key points from this is how Constancia will speak to the success we'll have at some of our other big porphyries, and I'll talk a little more about Rosemont, but we do, in the future at Hudbay, also have the Ann Mason asset in Nevada.
Some of the key points about Constancia I'll review are our ramp up, despite a major failure in one of the mills, was still world-class, in less than five months from commissioning. Constancia remains a low-cost operator. It has to be. It's a low-grade operator also. The timeline from feasibility to first production is among the best in class. We pride ourselves in having cost control, both on the operating and the capital end. ESG is important to us, and it's not just a slide to glance over. It provides you with the confidence within the community at the different levels of government and with the workforce that you're there and you're going to participate for the long term. This is key to some of our future negotiations with our local community, as we'll see with exploration or our satellite deposit.
There are some key notes that we're really proud of. We've more than eradicated tuberculosis within the region. The education rate has gone up drastically. I think one of the key telling metrics is now 30% of our operators are from within the local communities, and some of them also are up to driving our $25 million shovels in the pit. Maybe one-quarter of that is from there. I think the other thing is we've transitioned from an expat-heavy operation to a local. I think in the whole operations and the G&A side of all of Peru, we might have two expats right now. We've really transitioned into a local national company. Constancia itself is located in the south of Peru between Las Bambas and Tintaya. This is the Andahuaylas-Yauri copper belt. The way I characterize Las Bambas and Tintaya, they're mega deposits.
These deposits are going to be around for 50 more or 100 years. We're in the middle of that belt. I'll show a slide later why I believe there's opportunity for Constancia to join those among that long life, and we've put together a property position to perpetuate that. I think what's important to understand is some of the logistical challenges we have, and yet we've been able to overcome consistently. We haven't had a material shutdown by the community or our workforce since commissioning, and our neighbors have suffered several shutdowns due to community protests along the route of travel. We get affected by those periodically, but we've built up contingency systems to be able to ensure the delivery of our concentrate to port despite intermittent interruptions.
The port is some 480 km away, and we have some very high-tech monitoring processes and systems to ensure the safety of that. In the beginning, we suffered from various accidents, and we haven't had an accident of significance in several years along that route of travel. We consider that route of travel our highest risk for our people, also for our concentrate, and for our suppliers. There is a lot of technology all the way from fatigue monitoring, GPS tracking.
It's been a real credit to the logistics and warehouse, because I would say that's our biggest challenge going forward, but we're utilizing the technology and the systems available to us in a very unique manner. As I commented earlier, the timeline I think is very important, and so too was the financing provided by Wheaton Precious Metals. A lot of people thought it was a sort of step out for an underground miner in Manitoba to take such a large risk. I was naive enough to go down and think I could do it, but having known what I know now, I was ill-prepared for it, but I was lucky.
We had a very good team that we assembled under us with very keen, intelligent, and experienced individuals from all over South America. We were building during a time when many other mines were building too. There were a lot of people to help mentor and to ask questions of through the way in that time in Peru. This timeline, I think, we would like to repeat this again, of course, at Rosemont. We will as soon as we're sort of starting to break ground. I think we learned a lot from it, and we'll be able to reproduce this type of timeline again, where in three years being near or in production. At the time, capital was difficult for us. In the context of Hudbay itself, a 10% overrun was significant, $150 million or $160 million.
In the world I was living in, we were viewing it as a team as somewhat of a failure. We weren't meeting the criteria that was set out by our board and our senior management. It wasn't till after the project was complete that we didn't understand really what we had achieved in the context of the development of Constancia. It's when our peers started coming to us and asking us how did we achieve this in such a capital escalated market, where you see the peer average here is 57%, and this is using projects in Peru and Chile. BHP decided to model some of the project delivery methodologies we had with theirs and use us as a ramp-up in comparison. It was nice to get that post recognition.
Much of that team is still retained at Hudbay, we intend on delivering our next project in a similar fashion. I think one of the things we are very proud of is this continued culture after the culture of delivering the project with a restrained capital cost. We've had a sort of a culture of continuous improvement, where we are continually evaluating our operational assets for how we can better become more productive and also more safe. There are several initiatives we've implemented in Constancia that ensure that, we've kept the cost down. As you see rated against our peers, some of them, who I would say have much more volume than we do in this unit cost, for example, Cerro Verde, would move 250,000- 300,000 tons of ore a day, while we're at 90,000, yet our metrics are much better.
We have our peers coming to us and visiting us and trying to understand some of the efficiencies we have in our project or in our mine. That optimization hasn't ended there. When we started off with a strategy where we wanted to meet the capital requirements, then we wanted to get our throughput up, which we did. We moved it from the initial feasibility of 55,000 to the permitted feasibility of 76,000, and now we can safely say we're at 90,000 tons a day this year on average. The idea was then, okay, we're satisfied, and we're meeting the limits of where our permit without having another EIS modification, so let's focus on our recovery.
We've done several projects and improvements to improve our recovery, and we believe also that in the future, there is still some optimization opportunities there, so we can see that that trend might happen again. We're very proud of the operating team there and some of the technical programs we've put in place to ensure continuous improvement. One of the questions we get is about the mine plan. The last 43-101, of course, that came out has us mining our satellite deposit, which is key to some of our precious metal production next year. We're right now in the process, we believe, to be able to deliver ore next year in our mine plan from Pampacancha. As I stated earlier, the community relations, albeit complicated and protracted, they're very robust.
We recognize the long-term value of the exploration opportunity I'll talk to and why these relations sometimes are protracted negotiations. We've moved through the grievance process and the understanding of what they wanted changed in the previous life of mine. We've resigned the previous life of mine with no material change to it, but some wording and considerations that they wanted to have. Now we're in detailed discussion with the individual community members who need to vote 2/3 to move it forward. We believe we'll be moving towards development of Pampacancha in next year, and there'll be more with our guidance out early next year with respect to cost and et cetera. I spoke a bit about Pampacancha. This is a bit about the future to Constancia.
I guess one of the things we recognized when we reviewed the area back in 2009 was its exploration upside. There was a previous producer some six kilometers away. It was called Katanga. We've decided for various reasons to call it Caballito now. It was run by Mitsui, and the mine staff was run out in the early '90s by the Shining Path. The area being stable now and of course, us having a major infrastructure in the mine, Constancia, we were able to broker a deal with a junior and a family in Peru to bring all this land mass together. All those claims are now 100% held under option by Hudbay Perú. We believe that this area will produce a major find in the future.
You can see in the bottom right corner there's a potassium thorium aeromagnetic or aero-geophysical survey that we flew back in 2014. We also flew it over Tintaya Antamina complex as a control. We got very similar results. We know these porphyries are mineralized. Our Maria Reyna target's to the north, which is the large porphyry complex. Vale, in 2007, drilled 11 holes in it. One of the drill holes, for example, is 160 meters of 1% copper equivalent, and it's the same type of mineralization we have at Constancia, but higher tenor. We believe this area will yield it. As opposed to Las Bambas or Tintaya, where they had the opportunity to mine the high grade first, we believe we're going to mine the high grade after Constancia, and this becomes a great option for us in the future.
We're negotiating with the communities in the area to get exploration access. One of the communities with the best targets is Uchucarco, whom we've already, under Constancia, negotiated 450 acres life of mine agreement with, and we've just recalibrated that life of mine agreement with them. We're in the throes of negotiating the agreement for exploration in that region. In our Quimsha community target near the Uchucarco target up to the north, we do have an agreement, and we'll start drilling there in December. I call this the jewel in Hudbay. We do have Lalor gold and we have other things. This is sort of the untapped potential, and it'll be realized through the drill bit. The proof of it is that's what we do.
We can show the same for Lalor, but at Constancia, since taking ownership, we've increased the reserve at Constancia time over time. I actually have a drill running at a nearby target near Constancia that some geologists came up with recently. We're hoping for some success there. We believe there's great future in that asset still, nearby Constancia and within the region where we can utilize that infrastructure we put in place for a long time to come. Other than the permitting process of Rosemont, if we just see ourselves by that for a moment, people ask me, what about delivering Rosemont? Well, that'll be a walk in the park compared to Constancia. Despite the dry stack tailings and all those things, with the challenge we've had, we're very prepared for Rosemont.
We're going to incorporate many of the optimization that has proven real and much of the technology that has proven real at Constancia immediately into Rosemont so that we can start off best in class, with an operating cost that should yield a better rate of return in the end. There's some common members of the team, the same engineering firm. There are many people that have worked at Constancia that are working on Rosemont, including myself, and we're very confident that we'll be able to deliver this project in what's a much more hospitable environment, being only a half hour south of the city of Tucson. Maybe in the 1960s, when ASARCO was drilling this off, it might have been a low-grade deposit. Nowadays, it ranks well in the tier two type of deposit area. It's of a scale we've done before.
It'll produce more metal per annum than Constancia will. We've really moved along the engineering now to a stage where we're very confident in the type of contingency and the kind of opportunity that exists within the 43-101. Of course, as sort of Randy said, by haphazard, we'll be partnering with Wheaton Precious Metals in the development of this project, and we believe that certainly all the project metrics are very robust and what I would call very conservative. Some of the important metrics here are some of the hurdle rates we require as a corporation to see a return for our shareholders. I think one of the important things here is, as a development project for the U.S., it's going to be the third largest mine in an area that's had sustained copper mining for over 140 years.
I think one of the most important things, obviously, about Rosemont, when we talk about Rosemont, and we don't view it as an elephant in the room, we view it as a task and an assignment that we evaluate and work on every day, is the permitting regime. We've received all our necessary permits, and early on received all our necessary state permits. Under each challenge of every state permit, we've succeeded when it's moved to the appeals court. There's a lot of emotion around Rosemont and within the area. There are a lot of people with a lot of time on their hands, demographically, that would be opposed to this. What is known is this, the mining law is robust and has been robust since 1872. There have been challenges to almost every mine in the U.S. that has ever been developed or wants to be developed.
There are always these bumps in the road under appeal, and they protract the length of the process. I guess, to characterize the latest ruling on the FEIS by Honorable Judge Soto is it was his first time adjudicating a mining type case, and it is clear that it was an egregious and erroneous interpretation of the mining law. That's our position, and we have confirmation from Washington and the Department of Justice and the U.S. Forest Service that that's their opinion, too. This will be appealed. Our first step was to go forward and give the judge an opportunity for reconsideration. We don't know what his answer will be, but we're prepared that he's unwilling to change his ruling, and we'll move ahead with the 9th Circuit and the Court of Appeals, and we believe that we're sitting in a very strong position.
What we can do is put our best foot forward and point out the law and make others understand it in the process. The unfortunate thing about these judicial processes is the timelines. Under the best case scenario, it's a year. Under a likely scenario, it's two. Under other appeals of the outstanding grievances that haven't been adjudicated, it could be more. All we can do is take the milestones ahead of us. I will say, I sort of referenced Minecraft earlier, but under the spirit of something like a hackathon, we're evaluating every option under the sun, and if any of them really gather legs, then we'll be able to talk about those in the future. Ultimately, we are pursuing as our number one option right now the appeals process. Okay. Thank you.
I tried to concentrate sort of on what's applicable to Wheaton. I'll just end by saying Wheaton has always been patient. They've always been helpful. They've invested in our communities, and we're proud to be their partners. Thanks. Sure. Any questions?
Thank you. Two quick questions. First, on the judge ruling, is there any precedence where a judge has overturned their own ruling? That would be my first question. The second question's on Constancia. I mean, you guys have done a great job. It's very impressive in terms of your cost profile. Can you just speak to what that looked like a few years ago and what have been the key drivers to reduce costs at Constancia?
Sure. The first question, yes, very infrequently. Everyone has pride in their decisions and their process. I guess tactically, the way we feel about the opportunity for reconsideration, even though it may add another three or four months into the timeline of the process, was during the review period, when arguments were being made by either side, the plaintiffs or the defendants to the judge, this topic wasn't discussed that he ruled on. We feel that he needs to hear our argument on it, and this is a methodology for that to happen before it moves ahead to the appeals court, where the appeals court, besides our own argument, new argument, also has on the record the company and the U.S. Forest Service position and the Department of Justice position. What is very unusual about this case is, typically, there is deference to the agency.
Deference to the agency is something that the Democrats are searching for. The current Republican administration is trying to remove administrative process and barriers. What we did in this process was validate administrative process and got validation from the U.S. Forest Service, the Army Corps of Engineers, and the State of Arizona. What we're trying to say is this is counter to that. Given the opportunity to argue the robustness of the mining law in this particular case, then the appeals court will be better informed and/or the judge will learn something he didn't consider. It's maybe a Hail Mary, but we believe it's well worth it. On Constancia, there are a number of things we've done. I think one of the real step changes we had in production was actually, we always had capacity in the mine fleet, much more than we thought.
Early on, we partnered with a local firm that had previously employees from Jigsaw and from Modular Mining and these dispatch systems, and they developed their own system, and it's called MineSense, a different MineSense than the buckets that Highland Valley's using, but MineSense nonetheless. Now other mining companies like Barrick and Newmont are using it in their operations, and it's a more friendly system where there can be modifications to suit the place. Our utilization recognized by Caterpillar is the highest they have in the whole world for manned fleets. That's one thing, and the other was, is we automated our grinding line, using a camera fragmentation program and intelligence where the pre-adjustments are on the microsecond within the milling to add water, balls, charge, speed, jaw settings.
What that has done, it literally overnight increased our ore capacity in our mine by 10%, and that's where we jumped from sort of 82,000 tons to over 90. Those would be the two big things.
Hey. Sorry, just on that judge process, I missed it if you gave it an actual. Is there a legal term for what happens when you ask a judge to?
It's called a motion for reconsideration.
Motion for reconsideration. Okay, thanks. Just those properties around Constancia, does Wheaton have streams on those?
Wheaton has the pink ones.
Pink ones. Okay. Thank you.
Sorry, just to clarify, the process for reconsideration, you're asking the judge to begin the three to four-month process, or are we currently in the three to four-month process of reconsideration already?
My three to four is like a lawyer speak average time it takes. It can be more or less. We believe he's going to address this issue forthwith, quickly, and so does the Forest Service. Really it's in his hands. Yeah.
The key is this question.
Yeah. The key is we decided to take that extra time for strategic reasons. Yeah. Thank you.
Hudbay, we've got several streams with Hudbay on different assets. 777, of course, in Canada, where a lot of the capital that came from that 777 stream helped them finance the Constancia project on a go-forward basis. Hudbay has proven to be a very good, solid partner of ours, in terms of the assets and the drive, and just very happy to, as I said earlier on at the start of it, happy to have them come in because having the right team in place when it comes to building a project is such an important part of. It's the foundation of how a project, the success of a project going forward. Having Cashel and his team, coming from the Constancia outright success, I love the fact that BHP is coming to them to find out how were they so successful.
Having them come into Rosemont, I'm sure they'll work their way through that process, and as I said earlier on, we'll see some construction and some production from Rosemont while we are all here still to care. Our next company coming on is Vale. We've got Cory McPhee here to speak to some incredible projects. Salobo, of course, our foundation asset, and it's going through a third phase of expansion right now. Also Sudbury and Voisey's Bay. Vale has become a very important partner of ours, a very successful partnership. I portray Vale as being our strongest partner, which is probably a good thing considering how much we've worked with them. Their experience, and their track record in terms of everything that we've been involved in with them has been incredibly strong and prosperous for both parties. Cory, thank you.
Thank you.
Now I get to see what everybody's looking at when they said they have five minutes left. There's actually a counter here. Good morning, everyone. Thank you to Wheaton Precious Metals for this opportunity, to talk about the longstanding relationship between our companies. We have a tradition as well of starting with a safety share, I'm just going to piggyback on Cashel's. I can't think of anything more random, yet more common in terms of the Toronto sense than a shoelace and an escalator, I think of the same thing with scarves in the winter and things of this sort. Okay, that's our safe harbor statement. When people think about Vale, a lot of times they think about iron ore, but the focus of this presentation and the focus of our relationship with Wheaton Precious Metals is our base metals business.
When I think of our base metals business, I've been in the business now for 30 years. We look to the future and we see base metals playing an integral role in driving society forward in terms of advancing our medicine, advancing the electric vehicles, alternative energy sources, connecting the world. It's something that I think is very exciting to us and something that we use to engage our employees. If we look at base metals, we want to be the one, the company that supplies that future demand and does so in the most sustainable, safest, most efficient way. This slide basically orients our base metals business. We're headquartered here in Toronto, Canada. We have eight core nickel and copper operations and six refineries around the world, 16,000 employees across five continents, and we're part of Vale, one of the largest diversified mining companies in the world.
You can see that there's a large concentration in Canada, large concentration in Brazil, and then we have operations in Indonesia, PTVI, New Caledonia, VNC, it's kind of off the screen here that I'm looking at, and then refining capacity in China and Japan. You can see here we produce a suite of high purity and commodity products that serve a range of industries from stainless steel to specialty alloy applications. We've been providing nickel to the world for more than 100 years from our beginnings as Inco previously in Sudbury, Ontario. This slide just basically displays the partnership that has developed between ourselves and Wheaton Precious Metals. Started back in 2013 with the original stream for 25% of Salobo gold production and 70% of Sudbury's gold production for 70 years. 20 years, sorry.
With respect to Salobo, two subsequent tranches increased that stream to 50% and then 75%. In June of 2018, the most recent transaction, we entered into a streaming agreement for cobalt production coming from Voisey's Bay, where we are expanding the open pit operation to go underground. Lots of builds in these slides. We'll start in South Atlantic at Salobo, and Salobo started up in 2012. It was followed by Salobo II two years later. It's an open pit mine. It has an ore processing capacity of 24 million tons per year and an output capacity of just under 200,000 tons per year of copper. It's concentrate rich in copper and gold content at about a 38% copper grade, and we have a lot of history and a huge presence in the Carajás region, and we have a lot of know-how, and it's a very productive operation for us.
What I also think is interesting about this slide is if you look at the dark green area and the relatively small mining presence within it, that is a protected area of the Amazon rainforest in Brazil. It is over 786,000 acres that Vale preserves and protects. I've flown over that in a helicopter, and as you leave the Vale preserved area, you can see, and it's very evident here on the slide, where sustenance farming and other encroaches on the land are having a negative impact on the Amazon rainforest. Salobo is a world-class copper mine. Our production in the first half of 2019 was 87 kilotons. That's in line with the first half of 2018. Our unit cash costs are strong after byproducts, and we've had strong operational performance, and we forecast 2019 performance will lead us towards our highest annual copper and gold production.
It's a stable, predictable producer and cost after byproducts are in the first quartile of the cost curve. It has a long lifespan, high copper grade concentrate, and opportunities for expansion. Speaking of expansion, Salobo III is further leveraging this mine. We're building a new beneficiation line with a processing capacity of an additional 12 million tons per year. Of course, there's synergies with our existing presence there and existing infrastructure there. It has a total estimated CapEx of $1.2 billion. We're expecting that by the end of 2019, we'll have spent just under $200 million. We're about 15% physical progress by the end of the second quarter this year. We intend to start up in 2022 with a steep ramp-up, building on the knowledge and the expertise that we've developed in that region.
Moving a little closer to where we are today, in the North Atlantic region, as we define it. In Sudbury, we've been in operation for more than a century. We have five underground mines. It's an integrated operation with mining processing plants and a smelting capacity of over 70,000 tons per year of nickel. We recently completed a flow sheet transformation to reduce our emissions of SO2. It was a $1 billion investment. It involved going from two furnaces to a new, improved single furnace operation, and in addition to reducing our SO2 emissions by 85%, will enable us to reduce our greenhouse gas emissions at the smelter by a further 40% because we will no longer need the iconic super stack. We can take that down, and we'll no longer have to use fossil fuels to heat it.
It's a sulfide ore yielding high-quality class one nickel products, and it's byproduct rich. It's a polymetallic ore, so the copper, platinum, palladium, gold, silver come alongside the primary nickel product. In Voisey's Bay, it's on the east coast of Labrador. It's a very remote region. It's fly in, fly out. It's an open pit mine with further resources being developed underground. Got a capacity of around 50 kilotons per year of nickel and 2.6 kilotons per year of cobalt. It's integrated with our Long Harbor refinery on the island of Newfoundland, which is a hydrometallurgical facility and emission-free. Looking to Sudbury, strong operational performance at the smelter this year in the first half of 2019. We're expecting the 2019 performance to exceed our 2018 figures.
Our North Atlantic cash costs across the whole of North Atlantic, we don't break it out, are very competitive, the Sudbury production with the polymetallic nature of the ore and the byproduct credits really drives that performance. We have a pilot program for digital transformation at our Totten Mine. It's our newest mine in the Sudbury Basin. Digital transformation essentially is bringing us into the 21st century from a technology standpoint and allows us to identify our people underground, our equipment underground, improve surface-to-underground communication and coordination. It's really driving improvements in health and safety and improvements in productivity in terms of turnover on machines. No longer the need to go down underground in a cage when you have surface control, these types of things. Innovation more broadly across the operations is a big area of focus for us. We're looking at mechanical rock cutting.
We're looking at electrification of the fleet underground, alternative energy sources, things that will make our company catch up with the times in terms of the technology that's available to us and the societal expectations of mining companies that are operating today. Voisey's Bay, solid operational performance. The production in the first half of 2019 is in line with what we experienced in 2018. All the nickel from Voisey's Bay is sent to Long Harbor for processing. Long Harbor started in 2014. It's ramping up in accordance with the schedule of the Voisey's Bay mine expansion. In 2017, we shifted our processes from producing an intermediate cobalt to producing refined cobalt metal rounds that are among the purest cobalt products in the world. I should mention as well that some of the earlier speakers have talked about social license. We don't have any communities beside us in Voisey's Bay.
Our nearest communities are indigenous communities, Nunatsiavut Government and the Innu Nation. We've entered into an impact and benefits agreement that dates back to the beginning of the mine operation. Today, more than 50% of our employees are Aboriginal, and more than 80% of our contracts are let to Aboriginal-owned or -operated businesses. It's something that is integral to our business and something that we're very proud of. If we look to the Voisey's Bay mine extension, the project encompasses two underground ore bodies, the Eastern Deeps and Reid Brook, and we're going to be driving two separate ramps to access these ore bodies. The total estimated CapEx is around $1.7 billion, and by the end of 2019, we're expected to have executed $290 million of that. Physical progress is about 29% by the end of the second quarter.
The startup in 2021 is designed to match the depletion of the Ovoid so that we don't have to have a shutdown of the operation. As the Ovoid depletes, we'll be ramping up the underground operation. Again, with respect to the indigenous partnerships, we are partnering with the Government of Canada and the two indigenous communities that are our partners in the region on a new training program. We call it the LATP. It's Labrador Aboriginal Training Program to try and make sure that we maintain our level of indigenous employment in the underground setting because it's a different environment, it's a different set of skills. We're working very hard to make sure that from a social aspect, we don't lose that accomplishment as we transition from an open pit to an underground operation. Geez, I have lots of time left for questions.
I didn't time that very well, did I? I'm here. I can answer whatever you want, and I've also got my colleagues here with me as well.
Could you just walk through the permitting process that's required at the S3 expansion for Salobo?
Cashel, I'm not the technical guy, I'm going to talk to our technical experts and get them to answer your question.
Bring the mic up so he can answer.
The license for Salobo are all granted. This was the biggest challenge at beginning of the project to get this license granted. We managed to get that through our environmental and license team in Vale, and then it's all in time. It's all the schedule, the project schedule in time. We are 100% adherence to S-curve of the project, so we've been doing well.
Hi. Just wondering on the CapEx for Salobo III, it's a pretty high capital intensity if you look at the incremental copper. Just wondering what the key drivers of that are. What are the big capital items in there?
Cashel is our expert on all this.
Well, it's a standalone processing plant. The major capital expenditure is related to all the foundation, civil works, earth moving, primary, secondary flotation columns, HPGR as well. This is the main component of the CapEx.
Any other questions for Cashel? Great.
Can I get my mic on?
Okay.
Thanks. If I could just add to that, it is a totally separate processing facility. There's two lines that have been put in, but this is right from start to finish, a totally separate processing facility at Salobo 3 that is well underway. Cory, thank you very much for coming in and talking about this. I just want to reiterate, and I've said this, our cobalt stream at Voisey's Bay, it's not just normal cobalt, it's Voisey's Bay cobalt. Voisey's Bay is the most socially responsible, most environmentally sound, most recent sort of source of cobalt in the world. When you look at where the bulk of the rest of the cobalt comes from in the world, we really think that this product should be differentiated. It's got a dedicated smelting facility that is, again, one of the most environmentally sound smelters in recent time.
It doesn't use furnaces to process, it's hydromet. When I sit and look at that, our belief is the cobalt stream that will ultimately get out of Voisey's Bay will be able to be differentiated as a good sound product that, in these times of provenance being more and more important, makes a difference. It makes a real difference in terms of what we, as a company, feel like we're contributing towards that. Very excited about how that's moving forward. Of course, Salobo 3, you've all heard me talk about my passion for that project, Salobo, the project as a whole.
It's an incredible ore body, and I think, compared to some of the other projects that we've seen around the world, some of which we have invested into, the steady phased approach that Vale has taken in building Salobo into the world-class asset that it is, one step at a time. I've got some projects in the Andes that I kind of wish maybe had been taken in that approach and gone forward, right? I have to just reiterate the fact that Vale, as a partner, has been exemplary in terms of leading the way in steady management of their assets, and we of course, share the benefit of that, so thank you. Next up is Gary Brown, our CFO. Gary's been with, I think it's 12 years now, is it?
Coming up on 12.
Coming up on 12 years now with our company. Definitely my right-hand man, as you guys all know, I'm a geological engineer, so I require someone that's a good financial strength beside me, and Gary has definitely done very well on that front. It helps that he's Scottish, or got Scottish background. That's always a good qualification for a CFO. Yeah, Gary's going to talk a little bit about the financial side.
Thank you.
Great.
Thanks, Randy. I'm intending to take you through a high-level overview of where our financial results have come out on, and also talk a little bit about how we view our longer-term capital structure strategy. Try to decipher why it is that we're able to achieve better returns than investing in bullion. I think I've got 15 minutes to do all that. This slide takes you through what our financial results have been over the last decade, and I think it provides a really good backdrop to have a quick refresh on much of the company's history. If you look from 2008 to 2012, we were in a commodity price bull market where silver prices rose by 130% and gold rose by 95%.
That, combined with us increasing our sales volumes by about 156% over that period, resulted in our operating cash flow rising by about 544%, from $110 million- $708 million. The increase in volumes was driven by us closing the Silverstone acquisition as well as the Barrick and the 777 streams, and Peñasquito ramping up over that period of time. From 2012 to 2015, we were in a bear market from a commodity price perspective, where silver dropped by 50% and gold dropped by about 32%. You can see that our cash flows from operations only dropped by 40%. You have to remember that we were more than 70% silver during that period of time. The 50% drop in silver had more of an impact on our financial results.
You would expect with a 50% drop in commodity price that our operating cash flows would drop by even more than that. They only dropped by 40%, because during that period of time, we were able to consummate additional accretive transactions, which increased our sales volumes, and those were the Salobo 1 and 2, whereby we acquired 50% of the gold coming from Salobo. We also did the Sudbury stream and we also did the Antamina stream at the end of 2015. That bolstered our operating cash flows. In 2016, we saw both silver and gold prices rise by about 8%, but our operating cash flows jumped by more than 40%. That reflected a full year of Antamina's flows, as well as doing the third leg of the Salobo gold stream, whereafter we were entitled to 75% of the gold flows from Salobo.
In the last two years, we've seen gold remain relatively flat, but silver's dropped by 7%. That was compounded by our sales volumes actually dropping by about 9% over the last two years. Why did the volumes drop? Well, the primary reason was that Cozamin and the silver flows from the three Barrick streams came to the end of their term, and we restructured the San Dimas agreement. Looking at those individually, Cozamin, we generally don't enter into term contracts. The vast majority of our contracts are life of mine contracts. The Cozamin contract was acquired in 2009 when we consummated the Silverstone acquisition, and we acquired that stream for about $42 million. That has returned almost $200 million over its term and generated an IRR for us of over 90%. Fantastic investment. We look at the cessation of the flows from the Barrick streams.
Those flows were originally intended to be only a protection mechanism against potential delays in Pascua Lama, and they've generated over $370 million of cash flow for us to date relative to a $625 million investment, making our net investment in Pascua only $254 million for a stream that is expected to generate about 9 million ounces of silver production for us per year. You look at the restructuring of the San Dimas contract. Through that restructuring, we were able to place San Dimas in the hands of First Majestic, a proven and experienced operator in Mexico. We rebalanced the split of economics between ourselves and First Majestic and thereby greatly strengthened the long-term viability of that mine.
I would also note that in return for the economics that we gave up in that restructuring, we were compensated through the receipt of over $150 million of First Majestic shares, which have appreciated by more than 50% since the consummation of that transaction. The drop in sales volume is not cause for concern here. It's rather reflective of the prudent capital allocation and risk management strategies that the company has employed. I would also highlight that 2018 was just an epic year for the company. We restructured San Dimas, we consummated the Voisey's Bay and Stillwater transaction, we capped the year off by resolving a long, drawn-out dispute with the Canadian government relating to how our foreign profits should be taxed. We resolved it in our favor.
We've gone from the company that had the most perceived tax risk in the space to the company that has the most tax certainty moving forward. I just finish off by giving you a little soundbite as to what we've actually accomplished over the last decade. When we started 2009, we were a company that had six contracts relative to six mines that generated 11 million ounces of silver sales. By the end of 2018, we had 23 contracts relative to 28 mines, generating 22 million ounces of silver sales, almost 350,000 ounces of gold and 9,000 ounces of palladium sales. That is, on a gold equivalent basis, a 350% increase in sales volumes over the last decade, which translates into a compound annual growth rate of over 16%. I think a very strong track record. That's just not growth, it's profitable growth.
You can see from this graph that even in the bottom of the commodity cycle in 2015, we were generating over $400 million of operating cash flow. Don't worry, I won't be spending that much time on every slide. This really just highlights the strength of our model. We know with virtual certainty what we'll be paying for every ounce of silver or gold or palladium that gets delivered to us, out as far as you'd like to go, which allows our investors to participate in any upside in the commodity price itself. You can notice that between 2012 and 2015, the price of gold dropped by 32%, but we were still able to generate cash operating margins of almost 70% in 2015. This slide really just highlights how scalable this business is.
We look at the G&A that we incur every year, we compare that to our enterprise value to come up with what we think is a pretty good proxy for comparing to administrative fees that you would pay an ETF fund manager if you wanted to get exposure to bullion that way. You can see that we're at about 38 basis points, which makes us pretty much the most cost competitive of the group. I would argue very strongly that you're getting a lot more for that 38 basis points than you are through paying a fund manager to deliver a statement to you on a quarterly basis. This chart, I love this chart. This is exactly what we're trying to do when we grow the business, is acquire streams relative to long life assets.
What this chart shows is, the gray line shows the cash flows that we had anticipated receiving at the time that we made our investment decisions. The green line shows you what the cash flows that we've actually generated to date have been. To the end of 2018, we've generated more than $2 billion in excess cash that we hadn't anticipated receiving at the outset of our investment decision making, which obviously enhances returns on these investments very significantly. You can see that that 2010 to 2014 period was the prime driver of that. We do a postmortem analysis every year of every investment that we've ever made. To date, we've invested about $9 billion into streams. We've received $6.3 billion back already. We've still got reserve life of over 30 years and a resource life of another 34 years.
The average return, annualized after-tax return that we've generated on our stream investments to date has been over 17%, and that's over a 15-year period. I would challenge you to find any portfolio manager that could post those types of stats. This slide really just shows you that we don't rely on equity to finance our growth. From 2010 to the end of June of this year, we've consummated about $7 billion of new transactions. Over 80% of that was financed with operating cash flow or debt. Only $1.9 billion was financed through the issuance of equity. We've repaid through dividends, $1 billion of dividends over that period. Net equity raised over that period is only $900 million. You can see also that we drew down $3.3 billion of debt to finance these acquisitions. We've already repaid more than 2/3 of that.
We do pay a dividend. We're pretty unique in that we define our dividend by reference to our operating cash flow. We target paying out 30% of our operating cash flow on a quarterly basis. I like that as a CFO because it's very dynamic, and our investors like it because it gives them participation, any production upside or upside in commodity prices. We feel like we're really well positioned to pursue future growth. We, at the end of June, had about $1 billion of debt on our balance sheet. I have a $2 billion revolving credit facility, so I have $1 billion of firepower right out of the gates here without accessing any additional capital. I'm generating about $700 million of operating cash flow annually at current commodity prices.
You can see that this chart shows you the leverage that you get to increases in the commodity price. For every 1% increase in the commodity price, our operating cash flows increase by 1.5%. This is really just highlighting that we are willing to use this revolver. It's a five-year revolver, and with a syndicate of relationship banks. There's no prepayment penalties when we pay off the revolver, and it doesn't reduce our access to capital. It's a very efficient form of capital for us, which allows us to grow without having to, in conjunction with consummating those deals, figure out how we're going to pay for them. We've got two financial covenants underlying that facility. The first is a maximum net debt to tangible net worth covenant. You can see that we need to keep it below .75.
We're currently at 0.2, so there's no concern there. The other one is a minimum interest coverage, where we have to have at least three times our interest charges in cash flow, and we're at over 9x . We're nowhere near stressing those financial covenants, and we're a little bit different than the other players in this space in that we actually are willing to use debt to finance our growth. We think it's a much more cost-effective way of financing growth, and that ties into our longer-term strategy, where this shows you that from 2009-2011, we were building up cash reserves.
We started to deploy those cash reserves as the commodity price cycle turned down, and we drew down debt to consummate any additional deals such that right now we've got about $1 billion of net debt outstanding, and we're repaying that debt with cash flows by 2021. I love that, right? It's a low-cost form of capital that is only outstanding for a short period of time as opposed to equity capital, which has a much higher cost and is outstanding permanently. That is what we intend to do to finance growth. This chart really is trying to highlight why we outperform bullion. What I've done here is shown what a $10 million investment in just straight bullion would return relative to a $10 million investment in a stream that's reflective of our portfolio.
We have a weighted average cost of capital of somewhere in the 7% range. When we run those numbers, you could either buy about 6,666 ounces of gold with your $10 million, assuming gold was trading at $1,500, or you could buy this stream that is expected to deliver about 21,000 ounces of gold over its life. We look one year out. If gold's still at $1,500, well, your investment in bullion has returned 0% IRR. If gold's at $1,500 with the stream and everything pans out the way we had expected it to, we generate an IRR of 7%. We look at gold one year out hitting $2,000. Well, your bullion's generating a 33% IRR, but our stream's generated a 55% IRR.
Even on a 5-year-- on any investment horizon, the stream is going to be worth more in any upswing environment, and that's what this chart validates. If you look at the return that you would get from investing in Wheaton Precious Metals over any investment horizon and compare that to bullion, we have outperformed on all metrics. What's our track record been? Well, we've put together a high-quality portfolio of streams. We've invested $9 billion into those streams. We've received over $6 billion to date. We still have more than 30 years of reserve life and another 34 years of resource life. We're currently generating over $700 million of operating cash flow, and the investments we have made have generated over 17% after-tax annualized returns to date. We feel like we are well positioned to continue to grow.
We did all this with the ball and chain known as the CRA dispute hindering us. Just imagine what we can do now that we're free of that. I'll turn the mic over to Randy.
Thank you, Gary. I'm going to keep Gary on the stage here. We've just got a few more slides and then we'll open up for questions. Between Gary and I, we should be able to answer most of the questions out there, I think. It's been 15 years. Hello? There we go. Good. It's been 15 years of streaming since we started, October, November. I remember spending about a year and a half actually working with the original Wheaton River team, coming up with the whole concept of streaming and studying it and making sure that it was a sound business model. I have to say, you mentioned the CRA, battling through the test case to prove that it was a sound business model and having that tax confidence in front of us.
I sit back and look back over the accomplishments over the 15 years. Obviously, the first ever precious metal streaming agreement on San Dimas. We've learned lessons. We're not perfect. We constantly look at ways to do things better and what we can do to improve the overall business plan, what we deliver to our partners all the way through. San Dimas, you heard from Keith Neumeyer earlier on from First Majestic in terms of what we've done there to continue to deliver value back to us and our shareholders. Where we've come from that point, I find incredibly proud of, it's the team that you've seen a lot of here today and that exists here. It's our team, but it's also our partners, our operating partners.
The largest streaming agreement, the original Salobo-Sudbury agreement, still stands as the largest ever individual streaming agreement. These next two are very important to me. I come from the mining industry. I understand the importance of social license and anything we can do as a company to empower our partners to be more successful in the maintaining or the maintenance of strong social license, that just makes a lot of sense. So we're the first of the streaming, and I think still the only streaming company, that actually has a formal program that requires us to put money back into the ground, into the communities where the resources are being mined and leaving a sustainable long-term benefit. It is incredibly important. It's the right thing to do. Of course, part of that is a recent commitment to the UN Global Compact.
On top of that, with members of the World Gold Council and the Responsible Gold Mining Principles. Obviously, most of our partners aren't gold mining companies. The UN Global Compact and other initiatives around the world are becoming more and more important, and we intend to continue to be a leader on that front itself. The asset base, it's the foundation that we've built this company on. Having over 30 years of reserves and over 30 years of resources, it is the key foundation of any solid resource company is that resource base going forward. Really proud of what we've accomplished in that first 15 years and what it sets us up for. The future is bright.
This year, we'll do close to seven and I think our formal number is 690,000 gold equivalent ounces in production. The next five years' average is 750,000 gold equivalent ounces. That doesn't include anything from Salobo 3. It'll be coming on probably 2022, 2023. They're on schedule and on track in terms of moving that forward. It doesn't include the upside potential from San Dimas. We just listened to the success that Keith has talked about. They're not to the point of a 5-year plan on San Dimas. We're still dealing with Primero's original 5-year plan and short-term forecast from First Majestic. I feel there's incredible upside there. We've got Keno Hill, which was mentioned earlier on, hopefully turning on production sometime next year from one of the more promising silver projects, definitely in Canada, one of the highest grade silver projects in the world.
Peñasquito obviously has some short-term challenges here, but happy to report the silver's not going anywhere while that happens. As the price has gone up, we've actually gained a bit from some of these delays from a net value perspective. I'm very pleased with the commitment on Newmont's part, Newmont Goldcorp's part, to not kick the can down the road, but to get it solved. To sit there and say, "We can't have this hanging over us on a continual basis like it has been for so many years down there." We've heard of Constancia and Stillwater and Voisey's Bay and just the number of assets. We also heard about some of the earlier stage projects that we've got that do provide that additional optionality.
Mark Bristow came in and took over Barrick, and one of the first projects that he saw in their portfolio that he liked was Pascua Lama. Barrick has holes in its production profile on a go-forward basis. Pascua sure fits into that production profile nicely. Very happy that Barrick sort of initiated stepping up onto that, going after Pascua and trying to improve the situation there and trying to kickstart that project forward. The business model, what it delivers, cost predictability, high quality asset base, sustainable operations, strong partners, leverage to increasing precious metals prices, an attractive valuation relative to peers. That's why we're holding this. A very attractive valuation to peers. Tax confidence, again, reinforcing that. You've seen Nick talk about what's getting delivered from our foreign operations, very active management of our assets. These are partnerships.
We don't just collect a check at the end of the year. These are actively managed partnerships that we've put extra focus on. Good, strong tax confidence by far the other end of the spectrum in terms of that risk profile. Of course, competitive dividend that's a sustainable dividend tied to commodity prices and we'll feed that going forward. I always like finishing off with saying, if you like precious metals, we do check all the boxes. We think that streaming is one of the best ways, the best lower risk ways to invest into precious metals and I think that we in our portfolio have striven to deliver the best portfolio that we can for our shareholders.
I haven't really stood up for any questions, and I wanted Gary to stand up here, too, and open the floor to questions because we're getting close to lunch. You want to take the mic over there for me?
Thanks, guys. That 30% payout ratio on the dividend, can you talk a little bit about that? Doesn't seem like you're ready to move that up on the pecking order, and how do you feel the differentiator is on looking at a dividend that's much different than your competitors? If I can ask a second question. Gary, I think it was slide number 10, you showed that net debt to EBITDA coming down. I'm just wondering, does that include these contingent upfront payments for things like Rosemont and Salobo III? Are those baked into those forecasts?
Well, I can address those probably most efficiently in the reverse order that you asked them. No, that doesn't reflect that, but you can see that we have plenty of room to address the payment that we'd make to Vale down the road when they satisfy the completion test relative to Salobo 3, and still do a whole bunch of consummate additional accretive transactions. With respect to the 30% dividend, we just increased it from 20% to 30% in 2017. I recognize living in an environment where most investors are asking, "What have you done for me lately?" We feel like we've done something already, and we do feel like we've got a home for the 70% that we're retaining. We think there's good growth opportunities. We've got $1 billion of debt outstanding right now, so we've got an immediate use of the 70% that we're retaining.
We will keep our finger to the pulse of that 30% payout ratio, because we really don't want to build up a significant store of idle cash that we don't have a reasonably good chance of being able to deploy back into the ground. That isn't the situation we're in right now, so I wouldn't expect us to be ratcheting up that 30% payout in the immediate future. We will certainly be evaluating that on an ongoing basis.
Yeah. I've always said, the capital ranking in terms of where does our cash flow go, any commitments that we've made on the dividend, which is the 30%, will always stay in place. Obviously, that's number one priority. My next best preference for what remains after that is to put it back into the ground and continue growing the company. I've always had a vision about this company that it's going to get tougher and tougher for us to be a growth vehicle that we are right now, and we will eventually transition into a yield company as we get up over a million and a half gold equivalent ounces of production per year. That 30% will climb to 40%, to 50%.
To be honest, it doesn't take much math to look at this and realize that if you get comfortable to a certain level of production, you can actually get to the point of a 60%-70% cash going back to the shareholders and turning it into more of a yield machine than a growth machine. Currently, the focus is on the growth, but I think it's a nice balanced step. We kicked off the original dividend back in that 2010, 2011, to kick it up to the 20% substantive dividend, when we were cash positive, and had built up a bit of a war chest to fund acquisitions. That's really our focus, still, is growth. We still see lots of opportunities out there.
I do think that if you look at the market on a whole, the mining industry as a whole, we are a source of capital for the mining industry. There hasn't been a lot of investment into the mining industry for a very long time. There's not a lot of new money going in of late. I do feel like we're moving into a phase where development is going to become a little bit more forefront as companies have to fill production holes. We, of course, will make sure that we're there to help companies through that stage. Cosmos.
Yep. Randy, just a very simple question here. I think on one of the slides, you mentioned that right now Wheaton Precious Metals is what? 42% silver, 51% gold. Is that a level, a mix that you're still comfortable with?
Yeah. Most of you have heard me say before that I'm actually most optimistic about silver. I think silver, it's got the best fundamentals. The problem is the silver market is so small, and there's just no growth in the silver market. Most silver comes from lead-zinc operations and from copper. 60% of silver comes from base-metal operations around the world. We're just not seeing People talk about, well, with this increase in prices, we haven't seen that in the base-metal space yet. Copper prices aren't screaming, lead-zinc prices aren't screaming, so we haven't seen that phase of investment coming in yet. I'd like more silver, but I can tell you that when Haytham talks about the portfolio of opportunities that we're looking at, they're 3/4 gold-focused.
There's probably another 10%-15% combined gold and silver, and then maybe one silver opportunity. That's about it. There's just not a lot on the silver space. It's one of the reasons back in 2013 that we recognized that our silver space was relatively limited, and so many of the fundamentals behind why we like silver also apply to gold. The one thing we do like about silver is that more than half of it is consumed in high-efficiency electronics, and that is just becoming more and more important to us as a society. The demand for silver from that side is very attractive. If you ever toss the investors back in, which is what we've seen over the last few months, if you toss the investment space back into the silver space, silver always outperforms gold.
That split, we're happy with palladium, we're happy with platinum. We are a precious metals company. We consider both platinum and palladium precious metals, we always continue to explore that space. After Neil's presentation, I'm starting to explore a little bit more about rhodium and think about it a bit more, then cobalt, we found it's a unique opportunity. It's really not a cobalt stream, it's a Voisey's Bay cobalt stream, and that is a different product than what we see around the world. We don't see too many products like Voisey's Bay cobalt out there, and that's one of the reasons that we're very happy to go into that space, too. My prediction, most of our optionality in terms of the assets that we have in our portfolio right now, would probably keep that split pretty consistent.
When it comes to new acquisitions, I think we're probably going to wind up still being biased more towards the gold side. That was a simple question with a very long answer, so sorry. Any other questions? One up here.
Gary, great presentation. Can you recap again your annualized after-tax rate of return? Did you say it was 15% or a better number than that?
17.5% .
$17 and a half.
It should be on the last page of my slides.
Okay. Is that income or cash flow?
Well, no, that's what the investment has returned. What we do is we look at, for each one of our investments, we'll look at the initial investment that we've made and then the cash flows that they've generated to date, and then we look at how the market's valuing that asset in our portfolio. You can imagine a spreadsheet with a terminal value which is reflective of how the market's valuing that asset. You have to remember that these streams that we're entering into, they have an average mine life of 32 years right now. That's just reserve life. The vast majority of the value. It's more appropriate, I think, to value these things more like a bond portfolio.
What would you do if you had a zero-coupon bond that delivered no value to you until the maturity date? We look at the way the market's valuing that to calculate that return. When we run that across our portfolio, on average, again, after tax, the IRR, annualized after-tax IRR, has been 17.5%.
I smell lunch. Thank you everyone. There is a lunch. We still have some of our partners here to answer questions and to just get to know and answer. Of course, our staff, Gary and myself, and the rest of the team. There is an organizing team. I think Patrick gets the most credit for this, but of course, like the rest of us here, there's a strong team underneath that does most of the work. I just want to thank them for putting this thing together. The lunch is out those doors and a hard right. It's out on the patio. There's a tent out there. Hope to chat to most of you over lunch. Thank you very much for coming out to this event.