So here today to talk to you about a combination that we announced on Friday, where New Found's acquiring shares of Maritime, and so since January, when I started, we've, in March, we released our first resource. The market didn't react so well, but it really formed a base for us from which to work. We then financed in June and issued our PEA in July, did another private placement in August, and since announced this acquisition, and then on Monday, we announced some further property acquisition from Exploits, so we've been busy, but we've got a strong treasury, new team that started in December at the board level, and with the expert experience on developing and operating. We're in Newfoundland, which is a fantastic jurisdiction. I'll touch on, you know, the timetable for that a little bit later.
We issued our PEA, as I mentioned, one that really showed using the high-grade core that we have in our resource at Queensway. With the combination, we'll be producing by the end of the year, next quarter. And we don't want to forget the property package that we have both combined that really has significant upside. So back in December, the board changed out. Paul Huet was brought in as chair and really shifted the focus. All but one director remained from the previous directors. And then more recently, we brought in Tamara as our director just after the annual general meeting in August. Myself, I was brought in in January, and I'm a 40-year mining guy that's seen this movie a number of times now. So new theater, but lots of fun working in Newfoundland.
And changed out some of the key team members to put more on the development side and brought in Fiona to help us really get this new story out. So we've really hit the ground this year, just getting this new direction and story out, and we've been executing quite methodically on it. So it's quite a strategic combination for us. What we're getting is the Hammerdown Mine is a high-grade open pit. It's not a big one, but it does, you know, it will produce ounces, and it's got about, you know, a five-to-six-year mine life. It'll generate cash flow. So, you know, on the back of that cash flow, we're looking to have that as what we call the equity portion of our project financing for Queensway phase one, which I'll get into in a sec. We're going to be a gold producer.
Our premiums from explorer to producer will change. And so we should see a re-rate as we go into the productions. And as far as synergy goes, this is, you know, one word that's often used, and yet in our case, really complementary assets. We've got a producing mine, we've got a developing mine, and we've put two processing facilities as part of that combination. So now we really do have control of our destiny in terms of processing, which at Queensway, we said phase one was going to be a 700-ton-a-day custom milling operation. So now we have our hands on and we can control that destiny. So the transaction terms, I won't read everything. I think the summary really is that total cost fully diluted is CAD 292 million for the deal and that pro forma shareholding will be 69.31%. Oh, yeah.
Then our pro forma capitalization is afterwards. We'll have a good balance sheet, CAD 109 million cash and no debt. You know, let Garett take over.
You want to?
Yeah, sure.
You know all the details.
Thanks, Keith. Thanks, everybody, for listening to our story. I'll tell you a little bit about Hammerdown. This is the project we've been working on for the past probably about six years. This was a former operating mine back in the early 2000s. It was built and operated by Richmont, right, so back in those days, gold prices were a lot lower than they are now. This was a 15-gram ore body at the time it was operating with an 8.2-gram cutoff grade, so since that time, it's been dormant. Our company's been advancing this project over the last few years to bring it into production, so here we are. The mine is now fully permitted. It's fully financed, and we're shipping our first load of ore up to the mill here in the next few weeks. We own our own processing plant.
As part of this deal, this is all going to become New Found Gold. And it's a very high-grade project. For open pits, you don't see grades like this too often. The reserve grade is about 4.4 grams per ton. This is probably going to do, you know, 40,000, 50,000 ounces a year with a very healthy margin. So it's going to generate a lot of cash flow. And it's in a very good location in Newfoundland and Labrador. We're close to infrastructure. We have good community support. The province has been great to work with. And also, there's a lot of upside around this project as well. Over to you.
Yeah, I might add one of the things that attracted us to it as well was the property package has a lot of good exploration targets. And we've got, you know, a great exploration team. And so, unfortunately, Maritime haven't put a lot of investment on the exploration side. So we saw that as a real upside. Queensway project, our PEA laid out a phased approach. So starting with a 700-ton-a-day high-grade open pit operation, it would get trucked to the Nugget Pond Mill and be processed for four years. And then during that four years, we would permit and then build the phase two with the cash flow from phase one. Phase one generating 69,000 ounces a year at just under CAD 1,300 an ounce. Capital cost for phase one was CAD 155 million. Phase two, the growth is CAD 442 million, and that's a 7,000-ton-a-day plant on site.
That will then, you know, the production for the five years, first five years of that plant is $172,000 a year at less than $1,100 an ounce. So, you know, we're expecting that we turn on the plant and basically the plant's been paid off. And so that's a lot of free cash flow getting spit out at that time. We'll be developing the underground. So lots of leverage to the gold price. We go from $2,500 assumption. We were at 56% IRR. We did sacrifice NPV to get a higher IRR by phasing it this way. But once you put in $3,300, it shoots up to almost 200%. So it pays off very quickly. And by the way, don't forget, lots of exploration upside. So this is my favorite two charts. So this is the phased approach. We see phase one in the dark.
So that's the 69,000 ounces a year. Then we build the plant on site. We still mill during that first year of the plant ramp-up. So that's why there's that higher production. And then phase two, we go there. So the 172,000 ounces a year is in that range there. And then with our exploration upside, and we will continue to explore at levels that we have been, you know, we see ourselves filling in that triangle in the back end. Because this end here is really the low-grade stockpiles that we've been stockpiling. So we're going to fill that back in with what we discover on the site. Then the next slide here is that cumulative cash flow slide. And you can see the line, the darker line is the CAD 3,300 an ounce line.
You can see that basically when the plant is built, it's been paid for with the cash flow from phase one. So high grade, high margin, lots of cash flow. This, this is only, let's do this, get rid of that. This is only Queensway. It doesn't have a Hammerdown component. When you see sort of in year five, you know, in that starting year five, six, and seven, we layer on another 40-50, as Garett mentioned. We're now looking at 200,000-220,000 ounce producer after we finished phase two. Summary really is, get rid of that. You know, it's CAD 155 million that initial phase one, and it unlocks a producer of $172,000 a year, CAD 1,100. We're Newfoundland-focused. As Garett mentioned, you know, the government has been great to work with. I'll give you a data point.
I don't see anybody from Firefly here, but you know, they applied for their environmental assessment and got it in 45 days. So I'll say that again, 45 days. That's unheard of, but we can see how that is because the government wants to work with you before you apply. It's been really refreshing to see how you work with the government. They give you the feedback right away. So it's all contained within that application. That's why they got it out in 45 days. We're using the same engineers to put our application together, and we expect to do that in the first quarter of next year. As far as the workforce around up at Hammerdown, it's fully. You've got all your people, all local.
You know, that thing about Newfoundlanders having a homing beacon on their heads and wanting to come home, there's a lot of that and so Hammerdown has been able to populate their workforce that way. We expect the same at Queensway. An hour around the site, we're only 15 kilometers out of Gander, but an hour drive around the site, there's a population base of about 40,000 and every flight in and out of Gander, half that plane are FIFO workers that are going somewhere else in Canada. So once we put, you know, that long life operation in front of them with a warm bed, their bed every night, I'm sure, you know, we'll be able to fill that and then as far as infrastructure goes, I said, you know, we're 15 kilometers outside of Gander. Your Tim Hortons coffee doesn't even get cold.
We've got a power line that goes right through the property. We've got to move it to be able to mine. And we've got the airport and deep shipping ports not far away. So, you know, really highly complementary assets. We've got one that'll be producing end of the year. The next one will be producing in 2027. Pine Cove Mill is operating, and that's where Hammerdown will be sending its material. We're working to secure the ability to fully operate Nugget Pond. And that will be, that would be where Queensway would send its material. And so that's the plan, and that's really why this combination really makes sense. We also see a significant re-rate potential because, you know, we got a line of sight now under our control to get to $220,000 a year at, call it $1,200-$1,300 an ounce.
By doing that, when you start looking at the comparables in the marketplace, I'll point to maybe Wesd ome or even Discovery, you know, you're starting to talk $3 billion-$3.5 billion. For us, that's the target now in the next five to six years. That's executing what we have in front of us. We're still going to explore. We have really strong supportive shareholders. Eric Sprott owns 23% of New Found and 6% of Maritime. Dundee owned 40% of Maritime. So combined pro forma, Eric alone 19%, Dundee 10%. We have really good institutional. Don't have a final number there yet, but I bet you it'll approach pretty close to 20% pro forma. Then as well, we've got a couple of other large shareholders. So we're, you know, we're pretty blessed with some pretty high-powered investors. So benefits to shareholders.
On the New Found side, we've got, you know, the addition of the high-grade short-term production potential right here in Newfoundland. We're anticipating to ramp up production in the new year and, you know, processing it at Pine Cove. The cash flow generation is going to be what is our equity portion of that financing for phase one. So we'll be a producer. So that should give us those better premiums. And, you know, we've got a significant re-rate potential once we're in production. So once we build phase one, we'll be over 100,000 ounces. And then once we build phase two, over 200,000 ounces. Garett, you want to speak to you for Maritime? I'd hate to speak for you.
Okay. Thanks. I was just reading an email that we just sold some gold at CAD 3,650 an ounce. So that was a, those are nice emails to get. The benefits to Maritime shareholders, why we were interested in this deal, an immediate premium to our share price. We've had a nice run over the last few months, like many companies. So there's a premium to that. But really the big advantage that we saw was being part of, you know, a larger story. With Hammerdown over the years, we've of course, been a smaller company. We were, you know, struggling to raise money over the last few years. We haven't done a lot of exploration. We focused on getting this mine built and running, which is just about to happen. We bought mills along the way. We took a lot of risks to put all this infrastructure together.
Here was an opportunity to give our shareholders, you know, something else, something that they could be happy with and have almost a 31% interest in a billion-dollar company that's going to generate over 200,000 ounces a year in the future. So we were really excited about that. Now, Keith and the team are going to do a great job. I have all the confidence in the world in him and his team. Also, the trading, I guess, activity, the availability with the New York listing, all of that is something that we didn't have as Maritime. So I think when you put it all together in a nice logical way, using cash flow from one mine to the first phase of Queensway, then both of them down to the second phase will result, I think, in a great company. And it's all in Newfoundland and Labrador.
I can tell you right now that the province, the communities are really thrilled about this idea. For us, it was a good decision. Our shareholders are very happy with it. Our major shareholders, of course, and we have signed up voting support agreements, all of our directors, management team, Eric Sprott, Dundee Corporation, SCP is also in that list too. That's up to just over 49% of our stock. We feel very confident it'll be voted in. We look forward to working with Keith and his team as they build this great company.
Very good. I think that's it. That's a good way to end.
Questions.
We've got a lot of time for questions. Raise your hand and take the mic.
Perhaps I missed it in the presentation. The capital requirement for the bigger mill, if gold prices hold up where they are, do you largely fund that from cash flow or operational cash flow, do you?
So the short answer is the break-even gold price is about $2,650. So anything above $2,650 U.S., we pay for it with phase one.
Yep.
No capital?
No, it's all cash. Yeah. If we go back to my opener chart, this one,
So at $2,500, at $2,500, you can see there's a bit of a down line here. That means we need about just over $200 million instead of $155 million, but as soon as you raise the gold price a little bit, and we got a high torque on gold price, at $2,650, basically that first raise will be enough. At $3,300, we basically pay for that $440 million build while we're building.
Another one.
Keith, I know a lot of the focus has been on the deal and a lot of focus on the deal and the, you know, the construction, but there's a lot of low-hanging fruit on the exploration side that will support that. Did you bring a slide that would help us? Visual is always helpful.
Okay. Let me do that. So I'll go to a different one, different but same exploration. So that's the core area. And so when you, you know, when you zoom out, our property package is 110 km. Okay. So basically 20 km swath from Val-d'Or, Rouyn-Noranda. That's what I picture. And we've got, you know, we've been doing some infill drilling and, you know, really confirmed the results at Keats West, some really good grades. Again, similar grades that have been reported before. So we're really confirming the block model that's been generated. And then when we, you know, they've done a lot of good work at exposing at Iceberg and then the next one's Lotto. We're also doing diamond drilling right within the veins. But, and we've done channel sampling. So very methodical because it is that narrow vein mining. You've got to be methodical.
For those that saw the previous presentation, this isn't, you know, one continuous. There's a bunch of veins that are chopped up and you've got to know that. We're also exposing. We've exposed Keats, Iceberg and now we've exposed Lotto. That exposure, again, to try and put it into perspective, is four football fields big. It's not a small trench. It really is a, we'll call it a starter pit. A lot of work. On the exploration front, this is a long section. The results at the bottom in green and blue is we're drilled to 1,000 meters to see if the system was there. They hit the veins, there's gold in the veins. Not quite as spectacular as what they found up top, but now it's really to find the high-grade shoots down there.
Up in where the yellow and the orange are, well, that's in amongst sort of where the resources are. That was drilling that was done after the resource database was closed back in November. So, you know, you can see again some pretty nice results up at surface. Then you look a bit further, a little bit further down at Golden Joint. So that'll be more in the underground area. But 90% of the drilling has been above 250 meters. So very little drilling below. And so in the mine design, you know, we got the pits, but very little underground material. So of the 1.5 million ounces we have in our PEA, only about 260 is in the underground. And it's wide open. So I can see us just establishing drill drifts and drilling below and having these undergrounds go for quite some time.
And then as far as the more regional, I'm going to start sounding like that infomercial dude at 2:30 A.M. But wait, there's more. 11 km to the north. So we acquired this property last July, not this past July, last year. And one of the targets, Dropkick, there were some drill results, but our team, knowing, you know, the structural model using down below, said, you know what, we should drill it differently. And so they did. And this was again after the resource database was closed off. But I always like to zoom in on this one. Whoop. Boy, I tell you, you get drunk doing this. It's not my iPad. That's my excuse. Come on. There we go. These are pretty spectacular results. And so, you know, it's a really exciting target for us that's emerging.
These are results that we announced back in February, March. But we've been drilling there since June. And, you know, these veins are showing up and starting to emerge. So, you know, that bigger exploration picture, we've got, you know, our big target here at Dropkick. But wait, there's more. We've got that 110-kilometer long package. We've just acquired the Exploits ground along our two main fault zones. So at Queensway North, I may have stretched it a bit high. Well, maybe not. But, you know, we know that that's where the, that's the plumbing system. So on the northern end, this is, there we go, a reflection of the more regional target generating. And this is grab sample grades. So the purple is 10 grams per ton. 3 to 10 is the red.
This thing lights up like a Christmas tree along those two main fault zones. We've got lots to follow up on. But wait, there's more. 60 kilometers to the south. Again, in between those two main structures, we've got, you know, a lot of grab samples that show up high grade. And then they did some follow-up drilling. I'll be gentle. You know, not as spectacular as Dropkick, but still, I mean, you know, that's open-pittable stuff. So still lots to follow up on for us on our property package. And like I said, that's a, you know, 110-kilometer-long swath. So it's a very big land package. And I don't have a slide on it yet, but the targets over at Hammerdown too are pretty good. They're very interesting too. And so we're excited about those ones as well.
We've still got time for one more.
Yeah, hi. Just to follow that up, with respect to Maritime, first of all, I'm a happy shareholder or ex-shareholder. So thank you for the transaction. But Maritime also has, in a sense, not for a bad reason, been starved of exploration to an extent. How do you think about, you know, the potential there versus how do you allocate effort? And what might your targets be up on the Maritime ground?
Go ahead. Well, talk about the targets.
Yeah. Yeah, you're right. For the last few years, we have been starved of exploration funding, right? It's been tough. We've focused on developing the mine, getting it ready. We have had a lot of targets that we've identified over the years. There's some big fault zones that are coming through. I mean, Hammerdown itself at the very bottom of the mine was cut off by a deep fault. Okay. We don't know where the deposit went after that. So there's some deep exploration directly below the mine. There's a number of targets very close to the open pit. So there's near mine targets. There's even targets beside our mill, okay, that we inherited through the transaction itself. So there's a lot of work to do.
And with the cash flow being generated now pretty soon from Hammerdown and soon from the first phase of Queensway, there's a very good chance we'll have a lot of success with exploration around the mine and around the mill too. Yep. And there's some greenfield stuff too that we've always liked. Some very high-grade soils, some outcrops that are showing up, things that look like Hammerdown. There's even VMS targets we've identified. But our geologists have been focused for the last little while on the mine development primarily. But I think with Keith's team coming together here and their expertise, it'll open it right up. Yep.
Anyone else? All right. Well, thank you. I really appreciate it. Interesting and.