Hello everyone, and welcome to Minera Alamos' Live Summit hosted by 6ix. I'm pleased to introduce their speaker for today, Doug Ramshaw, their President. He's gonna be taking us through a company presentation, and after, we're gonna be going through a live Q&A session. Just as a reminder, if you'd like to participate, please feel free to submit any question you have in the chat on the right-hand side of your screen. Later on, we're gonna be posting a survey in the same chat. You can use it to get in touch with Minera Alamos team if you'd so like to. As always, this summit is being recorded, and it's going to be available on 6ix.com in the coming days. Look out for that. Without further ado, Doug, I'm gonna pass things over to you so we can get rolling.
Thanks, Cam. Thanks everyone for attending today. One of these days we'll change this title, but it's still relevant. It's still very relevant to a Minera business model, which, despite some of the fragility that we have experienced of late, some of it, some of which is our own doing, I think is still a very much sound business model. I think that's why the vast majority of our shareholders have had their patience tested but have stuck with the plan, stuck with the team, and we're looking forward to delivering on some overdue promises to support that investment thesis. I will be making a few forward-looking statements today. I realize for a lot of people they know the story and hopefully there are new people tuning in.
I will, you know, spend a bit of time going through the overall company. I think there are some hot topics that we want to address today in this and make this as valuable a town hall as possible for everyone. A little bit of background to Minera Alamos and our business model. We are built around an operating team that has been very successful building numerous mines over the years. Our main focus of that team in the last 14+ years has been northern Mexico. Despite a lot of what we hear out of Mexico, we are still very much confident about Mexico as a jurisdiction. It's not gonna become Venezuela.
Don't expect the kind of noise from the government going into an election year to get any quieter. Although even this week, we saw a very important precedent set in terms of the legal challenge and support in a lower court in Mexico to how the mining reform was pushed through, let's say overly aggressively. As very smart people said when that news first kind of broke end of April, early May, expect legal challenges and there's lots that will not hold up. It's worth noting that the Supreme Court have already rejected one of the 20 amendments which were pushed through, two of which were related to mining at that point because of not following due process.
Expect more pushback from the mining industry and local stakeholders. Mining is a very important component of the Mexican economy. I think we should be always wanting good actors operating in a jurisdiction. I think if you're a good solid company that understands Mexico, brings real value to the exploitation of Mexico's mineral resources for all levels of government and local stakeholders, there really shouldn't be any concern operating there. I think we saw that actually when Agnico committed a lot of money in their deal with Teck at San Nicolás project that was done right at the time where one of these spurious reports of open pit mining bans in Mexico was coming out.
Well, Agnico know Mexico better than most companies and, they don't seem to be, concerned and nor are we. In fact, we're still looking at other opportunities that may present themselves in Mexico. It's a great jurisdiction and it's one that we are extremely skilled in operating within, largely because our team is mostly Mexican. One of the reasons you always see me on these calls is our CEO spends almost all his time down there with the team in Mexico, not back home in Toronto much I'm sure to the chagrin of his family. We like Mexico. We've built mines there before and obviously we built our first operation Santana and we'll address Santana's teething problems, let's say when we get to the project side of it.
We've obviously got two other projects as well. La Fortuna, that has a little bit of a dated PEA from 2018 but is already sitting there permitted. It's again, an example of, you know, our team does permitting well in Mexico. That already has the permits in place. Cerro de Oro, I think really gonna be the flagship company, game changer for this company, has gone into permitting and we hope to get those permits back before we get into silly election season, that's for sure. Where unfortunately if it kind of drags into when the elections are going, nothing really happens for 3-4 months in Mexico.
We're doing everything in our power to make sure that we get those permits, hopefully approved early in the new year, around year end or likely early in Q1 before the elections later in the summer. That's the pipeline of projects. You know, I think you know one of the things that we've addressed recently was a concern of you know how do we build the next mine. Someone had mentioned to me does the speed at which Santana is growing or in recent months not been growing does that impact the ability for us to build Cerro de Oro?
I thought to myself, "Well, no." I realized often we as executives are in our own corporate bubble, and while we know all the answers, as shareholders, as investors, you don't. I felt it was very incumbent on us to put a funding package in place, permit dependent, to demonstrate that, yes, upon receipt of those permits, there is a funding solution, a non-equity funding solution, that's completely independent of whatever happens at Santana because Cerro de Oro stands on its own right, you know, on its own merits. I'm very happy that we announced that, you know, a short time ago, and right at the end of May. We're looking this month to finalize the definitive documentation for it. It's gone through technical due diligence.
A lot of that was done leading up to that negotiation, but final technical due diligence, and we hope to unveil the funding partner and be able to push forward, you know, towards bringing Cerro de Oro online. I still believe that our projects are very immune from this current inflationary environment we still are in. That's a benefit when looking at CapEx numbers that are modest, but I don't think are gonna be too impacted. Regardless, I very much expect Cerro de Oro's funding to come in below the $28 million that included 30% contingency. Because despite some of Santana's challenges, it allowed us to do two things. Santana will grow into a meaningful mine in its own right in time. It did actually have two very important things.
It absolutely informed our costs for Cerro de Oro. There wasn't a single person that questioned those when we last did our town hall in October, upon the announcement of that PEA for Cerro de Oro, no one questioned our ability to build it for $28 million. That's mainly because they saw our build for Santana at $10 million, and we did that despite what was going on in the world at the time. Santana was always designed to be, to get us up and running where we felt more confident taking on debt for project number two. I've been saying that for years. I've been saying that well before we even owned Cerro de Oro. That was always the plan with La Fortuna, when we didn't have a third project.
You know, it's been a very useful project for us in demonstrating our cost structure and demonstrating and allowing us to take on that debt. Little bit of overview, and probably started veering into other slides later in the presentation. This slide, while it feels like timelines have slipped in various aspects of this over the years, that would be quite correct. There's a reason behind some of them and an unfortunate reason behind others, but we'll address those on the project pages. It's still very relevant to our business model. When you own Minera, you're owning because of your belief in building this sequential, organic, growth-driven business model. We're bringing on numerous mines. It's as relevant today as when I first put this slide together.
The reality is, you know, I think my greatest disappointment over the last six months has been this should have been the time where Minera could have been a standout in the gold sector, and instead we're caught in the same weak gold tape, and that's somewhat self-inflicted. We'll be addressing that as we drive things forward in the second half of the year. It's probably the one thing that really disappoints me more than any other is this business model allows us to demonstrate real growth in a sector which really is largely dependent. Stock price moves are largely dependent on gold price moves, and our business model isn't. It is gonna be dependent on execution.
I've said time and time again that our number one asset is our operating team, and I believe that now, as I believed it every time I said it in the past. The problem is when your number one asset is your operating team, and we've had some operational issues, to some extent you get put in the operational doghouse. Our team is able to deliver on this business model. I have absolutely zero doubt, and it's one of the reasons I keep owning more stock in the company because that's my bet. That's my investment in the quality of Darren and Federico and Miguel and Chris Sharpe and the rest of the team that work tirelessly in Mexico to drive this business forward.
I always think this is tough because most people have heard about the board and if there's a new person, maybe they haven't. Look, we are a board of directors that are technically heavy metallurgists, engineers, geologists. I think that's the right team to be leading this company. It's supported obviously by where the real hard work is done, and that's our operating group. I think as the company expands, we will be looking to expand this team. Like everything, it's done in stages. We have a very lean but incredibly hardworking team. They do, I think, most of the heavy lifting for this company. I just get to tell you guys what it is they're doing.
This is the team I'm backing, and this is the team that I think can develop that business model. Four analysts covering the stock. As of the end of March, we had CAD 10 million in cash, zero debt, working capital just under CAD 20 million. Have a few more options. Happy to say, like our last set of options, they were set well above market at the time. I think that's only appropriate. Over the years, stock option plans have lost the word that used to exist in them 25 years ago, which was incentive. I see way too many companies that set the maximum number of options they can at the lowest possible price, and it's like incentive has evaporated from Bay Street's vocabulary.
So you don't win any trophies for setting things above market as we did, but that doesn't mean you shouldn't do it. I'm very proud of how we approach things in that way. It's a lot of those little things that I think does set us apart from a lot of our peers. Ultimately, it's about stock performance. It's not been good enough. I look forward to the next town hall where we've done things that correct that because ultimately, when you are looking at this company, however great our philosophy might be and the business plan makes sense and everything else, you should be looking for absolute returns. We have not delivered on those.
The sector hasn't, with a few outstanding companies, delivered on that. I think we can outperform the sector. The reason I say that is I was having a long conversation with a big shareholder recently, and he was discussing, you know, how he thought the price had reacted to certain different things. It made me think about when we were up at our highs where we crested CAD 0.70. That was where everything was kind of getting ahead of itself.
I said to him, "Well, I think the CAD 0.70 and back down to kind of CAD 0.60 level was that market kind of resetting to more normal levels." Now, what happened thereafter, I think the CAD 0.60- CAD 0.40 fall in our stock, which is painful to say, but it's the truth, is much more about us not delivering on certain aspects of our company's business model in a timely manner. It's an operational issue. That's actually a good thing because I think the fall from below CAD 0.40 has been very much market related, you know, the whole sector. What that means is we don't need the whole sector to turn around.
We just need to show that our operating performance can be corrected, and then I think we can recapture much of that CAD 0.20 drop from CAD 0.60- CAD 0.40 regardless of what happens to the market moving forward. That's on us, but that's where I think there's great opportunity and a recovery in the stock at this point. I don't normally talk about the stock quite so specifically, but let's face it is the elephant in the room when we are investors looking to make money. Santana. I feel like I've been an amateur meteorologist for CNN for the last year, because the biggest question I get is on water. I'm happy to say that for a number of reasons, we consider the water issues behind us. Let's address where those water issues came from.
I've lost count of how many investors I think now have Yécora, which is a local town that happens to be on The Weather Channel app, weather forecasts. They'll email me saying, "It looks like there's some rain in the forecast in a few days, Doug." This mine was never built reliant on what the weather app was gonna say in terms of rainfall. This mine was built at a time where the climatic conditions changed and we went into a very severe drought in Mexico. That did impact our water balance, but we had a workaround to that, which was using external water sources, which remarkably didn't have any real impact in our operating costs. The problem was that drought was so severe that those regional water sources were drying up.
We had to make some tough decisions, knowing that the forecasts were that the La Niña event was coming to a close at the end of last year and into the early part of this year. We could have just pushed forward, delivered what the market wanted, which was ever-increasing production. We could have damaged our balance sheet in an irreparable manner. Well, not irreparable, but one which would have been very dilutive to shareholders. We weren't prepared to do that. We took it on the chin. We made some decisions. We slowed down things, advanced some waste stripping and development work, and slowed down production while we wanted to ensure that on an ongoing basis, not just through rainy season, that water wasn't gonna be an issue. Now, I'm happy to say that water is returning to normal levels.
In fact, forecast is for more of an El Niño event. That is important not from the perspective of, oh, there's more rain forecast to be falling at site. To put it in perspective, between January and May of last year, two millimeters of rain fell at site. There's more rain falling at site. That's not what we needed water from, but it does help the regional water balance, which is restoring, and that's good because it means there are additional sources of water.
On top of that, we've secured additional water rights from another well there while we wait on another well that we're waiting on paperwork that will further address not just not really the water we need now, in fact, but just when we look towards expanded operations, that well will come into play. The local community has been offering for their benefit and ours, because let's face it, when there is a drought like that, everyone, your local community members who have cattle there, whatever, it's impactful on them too. We've been talking about constructing some dams and storage facilities for additional water. I think we feel very comfortable with the water balance that we're gonna be looking at moving forward.
I'm happy because I can take my amateur meteorologist hat off, I think, now. It's a good thing because it's been a long-standing issue, and I understand why. But I think when earlier in the year when we talked about expanding pad capacity threefold, it was in many ways kind of sending some breadcrumbs out there that we didn't see water as a long-term issue here at all. We wouldn't be expanding pads that would need obviously considerably more water, if we felt that there was some ongoing water issue. Now the pad amendment, a lot of things or certain things have slowed in Mexico. Other things seem to be moving at kinda historic rates, at least what we're seeing behind the scenes. This pad amendment, we were hoping to have in Q2.
We're now hoping at some point it will fall in Q3. Now, the good news is we wouldn't be looking to build that pad during the rainy season anyway, and we have existing pad capacity that we will use in the meantime. Even without that, I'm hoping that, you know, we've reached our production lows in the first half of this year. As I've messaged earlier in the year in interviews, you know, production should improve in the second half of the year. I just want to see that inflection point where we can demonstrate to the market that that's taking hold and that production is increasing again. We can continue to use the existing pad. Darren being the consummate professional that he is, definitely wants that pad amendment before we get too aggressive.
We can see an uptick in production regardless of that. Obviously where we want to get this project back to from a short-term perspective, which is, you know, maybe getting up to that 4,000 oz or 5,000 oz in a quarter. I hope that can be our run rate as we leave this year because we know at those production levels from a modest little project like Santana, it spits off $3 million in free cash flow in a quarter like that. Let's just get back to, you know, we've had one quarter like it. It was a great quarter in Q3 of last year before we had to make those tough decisions. We need to demonstrate that that's the sustainable pre-production level.
While Santana can grow beyond that, if that's all it ever does, it's kicking off, you know, its equivalent CapEx and free cash flow every year. That's really not bad for a $10 million mine. Drilling's still underway there at Benjamin and Zada. We'll over the summer have, I think, drilling results coming back out of both of those. I think Miguel is compiling some of that data right now. We'll see. We'll see what that drilling spits out. It's important really more for our longer term planning in terms of understanding and prioritizing which pipes should have more drilling into them and which ones probably shouldn't. We have plenty more targets that we want to approach this year and next.
I think most drilling this year will be Benjamin and Zada-focused. Benjamin is very close to existing operations. Zada's never had a hole in it, which gets me excited about it. At the same time, it's like you never know what you're gonna get. Benjamin's a little different, and there was a lot of historical drilling done by Corex that Minera merged with back in 2018. It's interesting to point out that when Santana is producing, it produces very high-margin ounces. Our direct mining costs are well below industry norms. We just haven't produced as many of those ounces as we would want or our shareholders would want. I think that is gonna be shifting back to, you know, better numbers.
O ur direct mining costs are actually very much in line at this stage of the project's development that we were expecting pre-construction, pre-COVID, pre-inflation. It's why we're very confident in the costs that we used in that PEA for Cerro de Oro because they're being informed not by some database of project data that, you know, consultants come up with. They're being informed by real costs we're seeing on the ground in Mexico. We mentioned the drilling. We are drilling right now in the Benjamin Zone, as you can see, very close to the Nicho starter pits. Zada is over by our camp facilities. I'd been intrigued by Zada since 2019.
We know there was gold at surface, so crossing our fingers that actually means something in terms of the pipe below. Some of the better targets that we'll still want to drill probably in 2024 would be those ones out to the east, Gold Ridge target two and target three. Our team's very high on two. One of those targets, I think we could drill now. The others, we'd need some additional surface rights from a new community that is out there to the east. We'll look to work with them over the course of the next little while to ensure that we can kinda start targeting those other pipes too.
Because the goal will be to really get three or four holes into most of these new virgin targets so that we understand which one's a priority for infill drilling, to plan. You know, because that's what the expansion potential of Santana is definitely bringing on more than the Nicho complex of pipes. The Cerro de Oro, I realize I hadn't given a town hall since the PEA we put out on Cerro de Oro. This is. There's a lot to update on this. Cerro de Oro, I think if you asked 100 random people that knew Mexico where you'd most like to build a mine in Mexico and put X marks the spot, a vast majority would say this part of northern Zacatecas. It is a mining state.
For open pit heap leach, lots of flat ground. The people get mining. They're either directly involved or indirectly benefit. Big water concessions there, Cerro de Oro ticks all the boxes. While it might seem like it doesn't tick the box on grade, 'cause it's 0.37 gram of deposit, which, you know, is kind of great base and grade in the States. It has, I mean, notwithstanding our overall cost structure in Mexico, it has a remarkable strip ratio. I mean, life of mine is 0.3:1. First couple of years are 0.2:1. It really means that most of what you're taking out of that pit is going to the pad, and that's what you want.
It allows us to run a sub-1,000 AISC life of mine, and sub-800 AISC in the first four years. Again, you know, it's always we wanna build projects that work in whatever gold price, and environment we have. If it happens to be a bad one, I think our projects will still shine relative to the sector. If it happens to be a good gold market, well, so much the better in terms of the cash generation that we can use to grow the company. We are planning some additional metallurgical drilling, including looking more at the transitional and sulfide mineralization that is not included in the starter resource. It's approaching 800,000 oz and informs that first eight years of operation.
It's also open in a number of directions as well. Again, Santana very much informs our capital costs there. I'd be surprised if we are over the CapEx number that included 30% contingency. There we go. $28 million in pre-production capital. Sustaining capital. Oops. There's no fudge factor here. It's not like we're trying to keep our pre-production CapEx down, and you see a ton of sustaining capital. I mean, really, that sustaining capital is just a series of pad phase expansions. Life of mine AISC sub CAD 900, and this was done at a CAD 1,600 gold price. We ultimately, there's a bigger resource there. We know, there is a bigger resource there, than this initial 800,000 oz.
That's why we that is why we took longer. It seemed like it was a timeline slip. Anyone that remembers the press release when we announced surface rights, we took a long time. Initially, we could have permitted this without actually requiring a deal with the ejido. Anytime you can do that, it saves you a lot of time. Even a supportive ejido, and it's worth noting that the local community there gave 100% support for this in the negotiations. But it immediately takes longer because there's a series of plenty of meetings and everything else.
That time was well invested because by having a deal with the ejido, we now have submitted permit applications that not only accommodate a heap leach pad that would be sufficient for this PEA case, but in fact, I think we have closer to 120 million tons of pad capacity permitted. We're not doing that if we don't think that this project can get a lot bigger. Darren's always said it reminded him of El Castillo, which he started on a 300,000 oz resource and it grew to close to 2 million. It started at 25,000 oz a year and it peaked at 120,000 oz a year. Our management upside case can see is where we can cross the 100,000 oz barrier just from Cerro de Oro. It is a game-changing project for us.
There was always this question of how do we raise money for it? We've done a $25 million funding package. On closing, hopefully this month, we'll announce who that's with. It's a single-source solution that includes a loan and a royalty package. As I said when I was talking yesterday to some people, I know a lot of people don't like royalties. I'm one of them. I have no problem with a royalty so long as you can buy back a good chunk of it. That 2.75% NSR, we can buy 2% of it back. Ultimately, I looked at our package. I looked at the quick payback of capital that was required for Cerro de Oro. Even at $1,600 gold, the PEA talks about 11 months payback of capital. I thought about this at the end of last year.
I realized that if you're building something that's $200 million-$300 million, you obviously need to find the lowest cost of capital. When you do so, there are a lot more hooks, covenants, and inflexibility, you know, that is put on you as a result of trying to get the lowest interest rate possible, which on large CapEx projects, you absolutely need to ensure. Otherwise, the shareholder is never going to see anything. For us, I thought about it and I realized, well, I can break our backs and try to come up with something which is going to feel very restrictive to try to reduce that cost of capital. Then I thought about it. I mean, our cost of capital here is, you know, overall between the two is in the high teens.
If I'm paying maybe 5% more on that capital than I would if I'd gone for cheaper money, on $25 million for a year, that's actually a little over $1 million of interest, additional interest that we'd have to pay, which is next to nothing and worth every penny when it comes to having less hooks and tighter covenants on a company. It's also structured in such a way where we can refinance this as well. The early buyback of the royalty, you know, absolutely incentivizes us to almost buy it back immediately if we wanted to, if there was a cost of capital out there that made sense relative to that royalty. It was structured in such a way where it can be refinanced.
It was done and about to be completed in a way to demonstrate to our shareholders that there is not going to be that classic rug pull of, hey, everyone, great news. We've got the permits. Only to see a week later some bought deal equity raise rammed down our throats because we hadn't thought ahead on the funding requirements needed. I mean, even when it came to the pad expansion at Santana, a year before, you know, in May 2022, we secured a $3 million working capital facility that remains undrawn to this day.
We were thinking ahead to the pad expansion, you know, and I think while we've obviously had some operational challenges, the lack of foresight other than not being able to anticipate a major drought that lasted close to three years, I think is, you know, we're covering our bases in that regard. Very proud we could put together a zero equity solution for Cerro de Oro. It is going to be a really important milestone for the company, obviously, upon the receipt of those permits. We're extremely confident in our ability to permit in Mexico, having done that twice now, both with the AMLO government and the previous government and in past companies that Darren and the team have built mines with it. La Fortuna, obviously, one of our permitting successes in Mexico.
We rarely talk about La Fortuna, despite what is a phenomenal deposit. It's the 3.5 g-4 g open pit, 6:1 strip. It has fantastic economics. The 2018 PEA, which I know seems tired, which we ran at $1,250 gold at the time because that was the kind of environment we were in back then. It's hard to believe where we are now and the gold tape feels sicker than it did back in 2018, but here we are. But this highlights the importance of building mines that work in any gold price environment. Yeah, I'm sure pre-production capital is not $26 million now. Maybe it's $35 million. It's not going to be that impacted because we already own the 2,000 ton a day mill.
Many people have always wondered why we haven't developed La Fortuna. I've always said, well, it needs more mine life. We know that there are brownfields extensions of that high-grade pit as well as greenfields that surround it. With Cerro de Oro, which is a nice, simple build, the goal is, you know, we can build Cerro de Oro and we've got a perfect use of the cash flow from that to grow La Fortuna. Having La Fortuna here permitted means we shouldn't be like on the edge of our seats worrying about Cerro de Oro permits. Trust me, I would like to build Cerro de Oro next. I think it's the perfect. It's got greater production profile, more immediate growth to it. La Fortuna we could pivot to.
We are actually looking at working with a group that we've known for a long time down in Mexico where, you know, with our bandwidth, we can't stretch ourselves too thinly, that they would be able to support the advancement of development studies as to when we might want to actually start, you know, developing Fortuna potentially in, at the same time that our main team is developing Cerro de Oro. But it means we're not some story that is absolutely permit dependent. Mexico doesn't. Unless you're in a very environmentally sensitive area or an area with major indigenous populations and a lot of local pushback against mining, Mexico doesn't. Those are the examples that keep getting cited in these articles. Those mines weren't being built under the previous administration before AMLO's.
They get trotted out like they're new decisions about anti-resource development, and it's just not true. They're very specific cases. Permitting in Mexico tends to not end in outright denials. You know, things can drag from time to time, especially, you know, if you're in the middle of an election, nothing's gonna get done. But you know, projects get advanced. You know, we have no doubt that Cerro de Oro will get permitted. But it's actually nice that we're looking, independently of that with a group that can do the work so that we don't get distracted about reminding people that Fortuna is an exceptional project in its own right. Maybe that work's actually going to be drilling out some additional mine life to start with.
Maybe it does get constructed on the starter high-grade pit, and we use cash flow from that to expand it. These will all be the determinations we'll be making, you know, as part of this kind of study that we're looking at in terms of what options do we have for Fortuna. It's too good of a project. Those resources are too valuable in the ground to not want to develop. That's the exploration potential there. Fortuna is right in the middle of that map, the little red star. There's extensions all around it. We've got greenfields targets that Darren and the team had looked at, you know, back in 2008 when they owned this project, within Castle Gold.
In terms of the timeline, I'll wrap up shortly so that there is some Q&A. Hopefully, the goal is to have addressed a lot of questions in the Q&A. I'll go to the chat window, and if I don't address yours, it's because I feel like it's been addressed. Obviously, Cerro de Oro is a bit of a permitting exercise. We'll have work programs going on there in the second half of the year, additional test work. Construction anticipated sometime in the first half of next year. It's about a six-month construction window. It should be starting up probably in Q3, Q4 2024.
Santana mining operations, we'll want to demonstrate in Q3 and beyond that that we're back into an upward trajectory on production there. I think we can do that. How aggressively that production expansion occurs will be a function of getting that permit amendment. The good news on it is, it's not something which is just sitting on someone's desk. There is back and forth rounds of questions that have been ongoing for the last four months. It seems like a very engaged process with the government, and we're hoping that the last round of questions we've just addressed are gonna be the last round, and we'll have good news on that in Q3.
Santana exploration probably will draw to a close shortly and we'll move to Cerro de Oro work while we review that Santana drilling. Santana could pick up again towards the end of this year into beginning of next. Last little thing, we talked in January in a press release for the first time about surfacing some hidden value in Minera, a copper asset that existed in the shell that became Minera Alamos. But it's no slouch in terms of its the asset. Los Verdes was subject to a PFS in 2008, a redone PEA in 2012. Darren is looking at redoing that PEA through a further iteration, which looks at it as a low CapEx, a small high-grade mine, low CapEx. It doesn't belong in Minera.
We don't talk about it. We just started talking about it 'cause we realized that we should be looking to surface value for our shareholders in one form or another for this. It's got a high-grade core that's more like 3 million-4 million tons of 1.5% copper equivalent. The key here is we don't wanna do something with copper that distracts from the core business of the company. We're looking at funding plans that will not divert resources or dilute the gold business. Funding that will come independently into copper. That will allow us to expand the operating team so that we ensure that there's appropriate management focus and dedicated support to both.
Because I think it's really important to ensure that the bandwidth is focused on exactly what you invested in before we reminded you that we had this hidden copper asset. I'm definitely not going to damage the gold business by talking about copper, but there is real value to surface here. The most important thing is, unlike in the world of gold producers, there are lots of junior gold producers. There are very few on the copper side. I think this can be a tremendous asset to give exposure to copper for our shareholders. Copper CapEx doesn't have to start with a B. We're talking $25 million type copper builds here. Exactly what we did on the gold side, I think we can take to the copper business.
I think that there is a real opportunity there. Most importantly, we are always looking to surface value for our shareholders. This is no exception. With that, I will stop the sharing part of my browser, and I'll switch back over and look at the chat window. Okay, the first question is on the permitting process in Mexico with the new mining law. Well, I think for an operator, the biggest concerns if those mining reforms actually come through to fruition, and they've already been challenged, and they've already been upheld in the case of one company which set just this last week a very important precedent.
I think regardless, we have to approach it as if aspects of that mining reform will come to pass. That's fine because I think there was lots of stuff in that mining reform that was that probably should have existed in any country's mining law. You know, allowing 50-year concession titles, you know, with the ability to expand, has allowed lots of companies to sit on land. I think you know, for good actors that are going into Mexico that are generating jobs, you know, benefits to the local economy, benefits to the national economy, there should be no fear of what's in that mining law. I think the biggest concern of any is with regard to aspects of water. I think that's gonna be a.
Water management and permits are probably the biggest two challenges facing the industry at large, not just in Mexico. We are already looking to secure local water rights at Cerro de Oro, even independent of the water concessions that we drilled down there as part of our hydrological work. I don't view the challenges that I think will face a lot of companies, especially on the exploration side with some of those mining reforms. Some of the exploration rules that were put in place or planned to be put in place, if the legal challenges don't work, are gonna be very restrictive for companies that don't have land there. No, we are extremely comfortable.
We have layers of community support, municipal support, state support for the advancement of Cerro de Oro because it's an important mine to build, you know, for that region. You know, obviously we don't have control on that, and that's why I addressed the one area that we did have control on, which was the funding for it. On La Fortuna, a presentation says permits in place to allow future construction. Given the journey with various permits at Cerro de Oro and Santana, what does this mean? Are any additional? No. We have the ETJ-MIA that would allow construction. Again, because we've let Fortuna sit there thinking it really, we should grow it.
When we build La Fortuna, I've always preferred us to build the right version of Fortuna, maybe with bigger production profile and longer mine life when we set out. We actually have the main federal permits for that. You could build. You still need some ancillary permits, water and the like. You know, the decisions will be made and consultation will be made. I mean, m y focus is still very much on building Cerro de Oro first. As part of how we look at our development options for La Fortuna, maybe there's a commitment to showing it can be bigger.
You know, maybe a modest drill program at some point there that can show it's bigger so that we, from a planning perspective, can start looking at the bigger operation that it can be. Which is obviously then going to impact, you know, some of those state-level permits and the like. When do we expect drilling results to be published? They'll come through in the summer. I'm not gonna rush Miguel's interpretation of it. With Benjamin, there was a lot of historical drilling, and I want to make sure that we're able to you know, demonstrate what the new drilling brings to the historical drilling. We've never really put anything out on Benjamin's historical drilling but a couple of holes. I would like on an ongoing basis to have.
Take our time with putting the materials together to have proper long sections and cross-sections to better inform what those results mean. If we wanted to, in terms of how much we could use the existing pad at Santana throughout the rest of this year. I think there's no problem in that regard. The longer we push the existing pad, the more you have an expanded pad, which is gonna be at a different level. You're gonna create future inefficiencies for stacking, like running your drip lines and stuff because you really, in a perfect world, you want a pad to always be basically the same height and grow the whole pad up there. We can continue to grow in the first area for sure.
I think there comes a point in time where Darren would rather to operate things more efficiently and not push a problem down the road and just address it now. That's some of what we've done over the course of the last six months. The mining contractor that we when we slowed down mining, he let a bunch of people go early in the year. He was staffing up in May and June. I'm expecting July onwards to start showing steady improvements over the first half of the year. Someone's asking, it's actually an important question about buying.
Just 'cause I hope people realize just because I'm crazy mining guy that loves our business model and I put a lot of money into the stock, that shouldn't be a green light for anyone else. We all have our own financial situation, and we should always be thinking about our own situation and not what someone else is doing. 'Cause my financial situation could be very different to many others. In terms of the rest of the board or management team buying shares, well, Bruce Durham, we don't pay directors fees. But Bruce bought 100,000 shares at CAD 0.44 earlier in the year. Darren, although he hasn't bought in the open market, the last two times he's had expiring stock.
One of the last few times he had expiring stock options, he exercised those stock options and didn't sell a single one to cover the tax consequences of it. That's a significant burden in Canada, at least. I know the last time I exercised expiring stock options, I not only cut a check to the company for CAD 120,000, but I had to cut another check because I didn't sell any stock to cover the tax on it. I cut another check to Mr. Trudeau and his government for the same amount of money. Sometimes open market buys or exercising stock options and having to pay the tax on that without selling any shares to me are not dissimilar.
I should couch what I do as an investor should not be some green light to everyone that things are perfect. 'Cause let's face it, I bought shares at much higher levels than this. My average cost is CAD 0.27. Does that make me a smart investor looking at a CAD 0.30 stock now? I don't think so. I think it will, in time, prove to be a very smart investment for my family and myself and my ego. Right now, you know, our stock performance, which has not been good enough, has been a very humbling experience. In terms of ounces at Santana this year, honestly, I don't know. I just wanna see a trend that starts ticking upwards again.
I think in Q3 and beyond, the trajectory will start to increase. That's what's more important to me. I think right now that's more important after the last six months to show that trend. Honestly, as I said earlier, if Santana is only ever just our first starting operation to get going. If it only ever produces a modest 25,000 oz a year, it should pay back its CapEx every year in free cash flow. But the real bread and butter to this company is, you know, our projects like Cerro de Oro and La Fortuna, no doubt. But Santana, it can be a great mine in its own right, especially given it cost $10 million to build. Yeah.
Again, we can spend a lot of time on Mexican mining reform, but this is where that mining law makes no sense. Because Servicio Geológico Mexicano, the SGM, I mean, they don't even have the staffing to do all that. I actually thought that the rules, the reform was far more impactful on exploration companies or companies trying to get land and the like. Now, in every project case that we have, we have large concessions already. They can't be impacted retroactively by any of these rules. We have around Cerro de Oro a 3,000-hectare regional package. In fact, we've already found an old Echo Bay discovery down to the southwest. We put in a press release, I think, last year.
You know, around Fortuna, we have extensive land positions. Likewise with Santana. No, we think that those reforms, if they were to stay as written, would be incredibly impactful for exploration companies who have to now use the SGM, understaffed SGM, to actually do a lot of analysis of work. Then those very claims that they have could be pushed to the auction process, which it makes no sense. I think there's a lot more that we're going to hear about that mining reform and what challenges there are there and the like. In terms of Peñasquito, could that happen to Minera? I don't think so. Darren explained some to me recently, and I wish I had the answer for this.
It was something to do with the profit share that was negotiated, and it's. I'm sure it will get resolved. I mean, we're not going to be a big unionized workforce for starters. Our mines are much smaller. I wish I could say we have a Peñasquito-sized mine, but probably with a Peñasquito-sized mine, you can get Peñasquito-sized problems as well. That's not to say we're under the radar and there couldn't be problems, but we don't have big mines that have big unionized workforces. We've seen ever since AMLO came into power, a significant rise in the strength of the unions. What is the design capacity for?
I think I've addressed that now as well in terms of like, honestly, quite honestly, I just want to see Santana get back to, at least initially, 20,000 oz a year run rate. You know? 'Cause we know at 4,000 oz-5,000 oz a year, it spits off really meaningful free cash flow for a company of our size. And size isn't everything. We've seen big producers. Especially when you think about gold mining is a depleting resource. It has to be grown through exploration and everything else. When you mine an ounce of gold, you absolutely want to make money off it. I saw a company last year that has a couple of billion-dollar market cap, produced 500,000 oz of gold and barely made a dollar of profit for shareholders.
I look at that and I think that's 500,000 oz of gold that need to be replaced for its business model. It's like I would much rather be a smaller gold producer that's meaning, making meaningful money than one of scale that isn't making money. That's the Minera way. And yes, we've had some problems. But this isn't meant to be step one in a worldwide apology tour. You know, I am, I always lament that our industry focuses too much on the front end of the Lassonde curve. We have way too many companies all chasing the lottery pick that never comes with very few exceptions. I always say I wish we saw more companies that are actually going to the trouble of building mines. But with that comes its own challenges, right?
I think the difference is those challenges can be overcome with good operating teams, whereas you can't overcome bad drill results with mother nature as an exploration company, except with a rollback, a name change, and a pivot into lithium. I think, you know, we're in a tough position, but I also think that we can get out of it. I did mention, I think it was probably the first time I've ever talked about stock price specifically on one of these calls, but I did think about where we can get back to and what we have control over. If we can turn around things at the operating level, then I think regardless of where this overall broad weak gold market we're in right now goes, we can outperform.
That was my greatest regret about the last six months, that our shareholders should have been experiencing that outperformance. I hope that in the next six months and 12 months that they do, because they've been our number 2 asset is the loyalty and patience of our shareholders. It keeps me up at night more than my young twins at home, for sure. What I can say rounding out the call today is we have a dedicated, hardworking team that is looking to turn things around. I think that turnaround is already starting. I look forward to being back on and being able to talk to some of those aspects of that turnaround over the course of the remainder of the year.
Yes, in terms of my goal, I think that our initial three projects can get us in that 150,000-200,000 ounce range. I would like to be able to step back from day-to-day management of the company in five years' time to spend time with my young family that I started late in life. I've got a job to do first. I'm not stepping away from anything until we're at least a 150,000 oz a year producer. Even then, I'll stay on the board, so you'll see that I continue to hold all my shares. By then I've probably got a bunch more. Yes, our AISC is well below industry average.
That's important when you're building something, where it is about cash generation. Something that I think that our industry lost sight of, you know, and is why they wonder why the generalist investors don't invest in us. I can think of countless reasons why they don't. It's not lost on me that we have a very big generalist investor in Aegis Financial that has been an incredibly big supporter of our company because I think the generalists actually get it, get this business model. My goal is to have more generalist investors in us, in our business than mining funds.
I think with that, a couple of minutes over, I hope that this has been an informative update, middle of the year, with summer. I'm about to take my first holiday in four years next week. I hope others here on the call have a great summer. I'm looking forward to giving the next update on Minera Alamos. I appreciate your time today. Thank you so much. If I didn't answer any questions, everyone knows my email, my phone number, direct cell phone number at the bottom of every press release. I welcome anyone harassing me anytime they want, except next week while I'm on holiday. Look forward to. I like those calls when they come in, so don't be a stranger.