Try and keep the applause to a minimum here, as I know this is being taped. So anyway, real pleasure to be here. Super fun to be back a year, thinking back to this discussion a year ago and all the things that we've accomplished as a company. And look forward to spending the next 20 minutes or so to kind of walk everyone through the unique, compelling investment case that is Coeur Mining. I'm super proud to be part of the executive leadership team that has us approaching this free cash flow inflection point. I'm joined today in the audience by our COO, Mick Routledge, and Jeff Wilhoit, who've been part of the journey. And I can't wait to tell you more about it.
So for those of you who are new to the Coeur story, unique in one of the few U.S.-based mining companies that are around these days, New York Stock Exchange listed, been around 96 years. Three of our four assets are in the United States. We have tremendous trading liquidity and two open-pit mines and two underground mines. Starting in the north, you see Kensington. It's an underground. We produce a gold concentrate, roughly 100,000 ounces a year. Heading to the south, you see Palmarejo, an underground gold and silver mine, produce roughly 100,000 ounces of gold, 6.5 million ounces of silver a year. It's been a great asset, unfortunately encumbered by a Franco-Nevada stream, but we maybe talk about some of that in a minute. Wharf, in the beautiful Black Hills of South Dakota, 90,000-ounce producer, generated $80 million of free cash flow last year, just a fantastic asset.
The star of the show, which is Rochester. I'll be speaking a lot about Rochester. That is the project that we've completed the delivery on here last year. We've started the ramp-up here this year. We're proud to announce achieved commercial production already. After only really turning on the new crusher in early March, we've already been able to declare commercial production. Probably Rochester needs a little bit of history just to sort of set the context. Rochester is in Lovelock, Nevada, about 90 miles east of Reno, right along I-80. If you ever want to see where the jail where O.J. Simpson spent some time, it's right, that's the number two industry in Lovelock. Number one is the Rochester mine. The mine's been in operation since the 1980s, very low-grade silver mine.
This expansion, we've often referred to it or you may have heard us talk about, it's POA 11. So that's the 11th time that we've had an amendment of our plan of operations. Sort of speaks to our know-how around obtaining permits and our social license that we have in this wonderful community that we're going to be mining around for a long time. So this ended up being a $730 million project. So that was a big project for a company of our size. And as part of the business case to approve the mine, Rochester was actually supposed to because it's a brownfields operation, it was supposed to actually generate roughly $100 million of free cash flow over the three-year build. And we actually lost $150 million of free cash flow.
And so those were some challenging times, but we're applying those learnings that we had over those three years are going to generate some significant benefits as we ramp up. And we're already starting to experience that. So a couple of reasons why those learnings were so valuable were, number one, we really started to understand our ore body a little bit better. We, for the first time, started running into some soft ores. And the crusher is three stages of crushing. There's a front-end crusher. There's MP1000s in secondary. And then we have an HPGR on the last part of it. And if you know anything about crushers, HPGRs really grind the rock down, turn it into dust, really. And that's supposed to help with the silver recovery.
There were some just huge, valuable learnings, the biggest learning of which was that we needed a pre-screen between the secondary and the tertiary. And so again, that's all a big part of the jigsaw puzzle. And we'll talk a few more details around that in a moment. So just a quick advertisement about the precious metals. I don't think any most of you would be here unless you were strong believers in both gold and silver price. The stat that I always astounded by is just that silver market. And it's 1 billion ounces a year, roughly, of supply. And demand has been roughly 1.2 billion ounces each of the last few years. That's 200,000 ounces of supply deficit the past two years. As we all know, there aren't that many silver mines. So to turn on the silver supply is going to be very challenging.
You're starting to see it these days with silver now running up to $28. We plan our business using sort of long-term analyst consensus prices. So long-term analyst consensus prices is $22. And so obviously, at $28, it makes for a very interesting adds to the compelling business case that is Coeur. So here's some numbers as it relates to Rochester, largest open-pit heap leach operation in North America, third in the world, largest silver asset. So the messages you want to take away from here are scale. We're going to be pushing 32 million tons a year through this crusher. That compares to 14 million tons a year previously. We want location to resonate. It's in Nevada, arguably the number one mining jurisdiction in the world. And then when you see that reserve life, it's 16 years.
We'll share a little bit about some of the exploration potential there. You might say, "Why are we going to spend some money on exploration when you already have 16-year mine life?" But we'll talk about that in a second. And then silver. So this is if you want some exposure to silver, here's one of the best ways to play that. So again, just to give in case folks aren't that familiar with Rochester, we built a brand new heap leach and a brand new Merrill-Crowe plant. Those were done last year. We actually started loading up that heap leach and turned on the Merrill-Crowe in the third quarter last year. We're actually using the old crusher to upload that as we waited for the new crusher to be built and completed. That new crusher was completed in late December.
Mick had folks working 90 straight days, no Thanksgiving, got them home for Christmas in time to get the construction done. Since the early part of the year, we've been pre-commissioning and commissioning. We're happy to report that we started putting rock through the entire system in early March. As I mentioned earlier, we've averaged over 70,000 tons a day since that startup and declared commercial production. For the pointy-headed accountants in the room, that's an important accounting nomenclature, but just giving you a sense of how this is coming up so well. One of the reasons why it's coming up so well ties back to that investment that we made. So we've really been using this same equipment for the last three years out at Rochester. We really know how to work it well. We've spent over $20 million on operational readiness.
So we've had a team on site just hunkering, waiting to get a chance to play with this new tool. And it's been super exciting to see it come up so quickly. And so the focus here for the second quarter is to get up to that 88,000 tons a day. We've actually already achieved that here in the startup, haven't averaged it yet. But the goal would be to average, try and get to that average of 88,000 tons a day by the end of the second quarter. And then the second half of the year will be about fine-tuning and really seeing what we can do with this. We're obviously super pumped about that. And why this is all important is this is what delivers us to that free cash flow inflection point.
On the back of hitting that ramp-up, the company turns from operating negative free cash flow to positive free cash flow. Our CapEx drops back to sort of that more traditional $90 million-$120 million a year of sustaining capital. We have some debt that needs to be repaid and can't wait to start paying back some of the banks who were kind enough to lend us some money. So here it gives you a sense of the payday that comes when you see your production going up by 2.5 times and your costs going down. I'm not the best accountant in the world, but that should lead to some pretty meaningful free cash flow. On average, about 8,000,000 ounces a year, 60,000-80,000 ounces of gold.
So using kind of long-term consensus prices, that's in the $60 million-$80 million a year of free cash flow. Using today's prices, it's probably a lot more. I'll let people pull out their calculators to figure that out. We're sticking with the $60 million-$80 million. But it's obviously really exciting. And like I mentioned previously, couldn't think of a better way to play silver. And then here's a picture of our land package that we have around Rochester. And you might say, "Well, why are you spending any money on exploration when you've got a 16-year mine life already?" We spent the last couple of years, we brought on a new SVP of exploration, Aoife McGrath. She was with us at this conference last year, who's really dug in and made sure that we have an even better improved understanding of the geology.
Through that understanding of the geology, we've identified a few areas where we think there's some higher grade. In particular, one area that has us most excited is an area under the existing pit called the Wedge. Up until this year, we haven't been able to have access to drill that area. So that's on the to-do list here in the second half of the year. Again, just to give you a sense of the quantum, that Wedge right now, it's in our mine plan. It's in the mine plan as waste. That's 40 million tons. So at a 32 million ton rate, not saying all of it's going to convert to ore, but that could be a pretty exciting opportunity to add some higher grade, et cetera, et cetera. Tons to talk about at Rochester.
Wouldn't be doing a service to not talk a little bit about the rest of the company. A big differentiator for Coeur versus our peers is we've spent over $250 million in exploration over the last five years, right? $250 million for our size of companies is a big investment. And it's paying returns, right? You can't think of a better way to allocate capital than to add resources to existing infrastructure. And we've done a great job. I remember when I joined the company, people said, "Oh, I like Coeur. Yeah, great. Done a nice job with the assets." But boy, all those mine lives are a little short. Well, now Palmarejo, seven years, proven and probable. Rochester, 16. Wharf, eight years of proven and probable. And then the last cab off the rank, as we like to say, is Kensington.
So Kensington's in the middle of a four-year, multi-year exploration and underground development program. The last two years, we've more than replaced our reserves at Kensington for the first time in its history. And at the end of this year, we're expecting that Kensington ends up having at least a five-year proven and probable mine life, which is not a bad place to be for an underground mine. Another big piece of the exploration investment that we have is at Silvertip. There's a separate slide on that in a moment. But I'd be remiss not to talk about Palmarejo. Palmarejo, we're allocating another $15 million of exploration. And what's really what a key area to keep an eye out is we've acquired the land to the east of Palmarejo from Fresnillo. There's been a long negotiation to get that deal done. But that's now been signed. It's been agreed.
It still needs the government approval. And why that's critical is this is going to give us access to all this land to the east, which is not encumbered by this Franco-Nevada stream. So lots of excitement there and another part of our growth plans. So Kensington, just a little bit more detail around this as I mentioned at Rochester, we had POA 11, so the 11th time. At Kensington, we amended our plan of operations for the first time two years ago. And that was critical to have acquired the additional tailings capacity and waste rock storage facility so that you could actually go ahead and embark on this multi-year exploration program. So again, there'll be a mid-year update on how that program's doing.
And again, as mentioned, the expectation is that we get that mine life up to at least five years by the end of 2024. And then another project that it wouldn't be a meeting at Zurich, right, Jeff, where a few folks remind us about that terrible Silvertip acquisition that was done back well before a lot of our time in 2017. It's going to be pretty interesting when this ends up being the best asset in the company. But Silvertip is kind of close to my hometown in northern British Columbia, very high-grade zinc, lead, and silver deposit, sort of right down the middle of the fairway in terms of critical minerals. And Canada is one of the best jurisdictions to support critical minerals. This deposit needs to get a lot bigger. We've shelved all plans to try and do a restart.
Or we need to make sure we have a good understanding of this ore body, how big it's going to be, what kind of minerals are going to come out. We're already finding that this might be more than a zinc, lead, and silver deposit. Our SVP of exploration, Aoife McGrath, feels like she's got a tiger by the tail here. And so stay tuned for more on this. But certainly, for the next few years, this is going to be an exploration stage, sort of a longer-term option, no plans to restart because we've got to take care of the balance sheet. And we'll talk about that here in a second. I'll skip over the Wharf business case. It's been a spectacular return on that $100 million investment, generated over $400 million of free cash flow since 2015 and still at eight-year mine life.
We get asked a lot about inflation. We provide this update with all of our quarterly information. Our Q1's coming out May 1st, by the way. Jeff would be upset with me for me not to remind everyone that the first quarter is going to be our weakest quarter, particularly at Rochester for a few different reasons. But anyway, back to the inflationary pressure. This is data that we show every quarter just on four key areas. You'll see we've certainly been impacted significantly. I guess the headline is for our U.S. operations, it feels like it's tapered off. For our salaries and benefits this year, we're kind of able to keep that around 3%. Late-breaking news in Mexico was Mexico was kind of late to the inflation game. The government was able to keep inflation down on a couple of commodities.
But we've certainly seen that, as well as in Mexico, the peso has strengthened significantly. So I'll close with the balance sheet. Very simple capital structure, $300 million of long-term notes at 5 1/8% coupon, not due until 2029. We'd sort of set up that program with the understanding we've always wanted to have a long-term debt to EBITDA ratio of 1x. So think $300 million of notes, $300 million of EBITDA is kind of how we think about the business on a go-forward basis. Again, that's thinking of long-term commodity prices, but certainly not at $28 silver and $2,300 gold would be far in excess of that. The second component of the capital structure is a $400 million revolving credit facility, of which $175 million's drawn. So plenty of capacity there. We will need to draw upon it here in the first half of the year.
As Rochester ramps up, the last of the capital goes out the door. We had only spent $700 of $730. And then in the second half of the year, we'll be aiming to start repaying that revolver. The line has always been we'll have that revolver paid by the end of 2026 at these prices. Maybe we could get there a little bit sooner, maybe as a stretch by the end of 2025. And so with that, I said I'd leave you at least two minutes for questions. And I'm 10 seconds ahead of schedule here, so.
Terrific. Thank you so much, Tom. Any questions? Yes, please. Wait a moment until the mic comes your way. Thank you.
Could you comment on the Dolly Varden position?
Yeah. We get this question a lot. People think we're with Hecla, but we don't have a position in Dolly Varden.
Yes, please. Wait a moment.
I see the hedging numbers. How much is that in % compared to production?
Great question. So throughout the Rochester build and throughout the ramp-up, we've always stated it's important to protect the downside. The hedge has added $20 million last year and another $20 million the year before. So we've got a remaining 50,000 ounces. That's roughly two-thirds of our gold production in the second quarter at just under $2,100. And then it's 50% of the silver, $1.8 million, at $26. So it's funny how things change. A couple of weeks ago at the BMO conferences, we were getting high fives for achieving those great silver positions. Again, we're going to make money at those prices. And it helped us sleep comfortably at night. The plan is no more hedging once the ramp-up is complete. And as mentioned, that should be complete here in the next couple of months.
Just an additional question. I noticed that the trading is extremely volatile in the stock. I mean, it could be up 5%, 6%. I mean, it's among the silver stocks. It's among the most volatile.
It's pretty fun. I have a fun roller coaster, right?
Are there hedge funds just kind of in and out?
It's a go-to name in the U.S., right? And so that liquidity is a double-edged sword. A lot of institutional shareholders like it because they can get it in and out pretty quickly. But there is a lot of volatility. And it's fun to watch. Some days, silver's up 8%. You're like, "Why isn't this stock up?" And then so yeah, no, it's a fun roller coaster ride. But with that liquidity is really worthwhile. And we've used it to our advantage many times.