And as soon as we can push material through the whole thing, we’ll start that hot commissioning. So, getting close. And in terms of what we’ll publicly announce between now and first gold pour, I’m not sure because it really is coming down to just getting the programming done and starting to push material through the circuit. Is that about it, Doug, or anything else to add?
Doug Reddy: That’s really what it boils down to now. Most of the other things are minor. And once you’re in the hot commission, you can work through any residual issues and tidy everything up.
Kerry Smith: Okay. We’ve got a few questions online from Kerry Smith, our analyst from Haywood Securities. First one is for Doug. What’s the stockpile grade at Greenstone? And is it in line with your block model?
Doug Reddy: Well, first of all, deal with the second part, is it in line with the block model? We did a grade control drilling program was done and everything is pretty much matching against the grade of the block model. And then on the current stockpile average grade, I think we’re about one gram overall, but that’s not reflective of the bins. I mean we’ve been getting I’ll say a positive reconciliation on tonnes and low-grade material that’s outside of the block model. But it is the first few benches. So we are carefully monitoring it as we go along. There is some variation on topography as you have the interface between soil and initial rock. But so far it looks like it’s bang on.
Kerry Smith: Perfect. Thanks. Kerry is also wondering what our preferred strategy and options are for retiring the April 2020 convertible notes?
Greg Smith: Well, the preferred strategy is that it settles in the money and they convert and move from being note holders to shareholders. If that does not happen, either they don’t convert or does not settle in the money, we have a fund set aside from the convert that we raised in September, which is currently parked against the revolving credit facility, and it’s there to repay, move bottle should we need to.
Kerry Smith: Thank you. One more from Kerry. How are the discussions going with the three communities at Los Filos for the long-term life of mine agreement?
Doug Reddy: I’ll be general, because this is really a discussion between us and the communities at the moment. We’ve had — I met with them in November. We’ve had several meetings through December, January. We have a team that’s engaged and addressing concerns both on the current CSR side, but a separate team that also is able to meet with them on an ongoing basis. Full on dialogue, we’ve kind of laid it all on the table as to the opportunities at the mine and we see it as an opportunity to establish the next stage of life for Los Filos and it’s clear that change is necessary, so but it’s a dialogue and so it’s going to take a while.
Rhylin Bailie: Okay. Thank you. Ashia, can we please take some questions from the phone?
Operator: The next question comes from Wayne Lam with RBC. Please go ahead.
Wayne Lam: Thanks. Good morning, guys. Just curious on the non-sustaining spend at Mesquite this year, it’s quite high on that stripping for the Ginger pit. Just wondering what kind of additional mine life or ounces we should expect from that stripping program?
Greg Smith: I’ll just start, Wayne, and Doug, feel free to jump in. So, Ginger is a new discovery, brand new pit at Mesquite. And so what you’re seeing in our non-sustaining CapEx this year is basically the stripping program we’re undertaking to advance that pit toward commercial production. And Ginger will provide a substantial amount of the ounces in 2025. And what this does, this capital investment this year, it really sets up for a fairly meaningful increase in production in 2025 at Mesquite. And then beyond that, we’re continuing to develop additional sources of ore and kind of what we say on every call here is we want to keep Mesquite going as long as we can. And happily, we’ve been able to continue to do that through the discovery of new resources at site. So, certainly, 2025 is looking good at Mesquite. That’s the whole point of the investment we’re making this year.
Wayne Lam: Okay. Is that in reserve though or are there any parameters that on how we might be able to think about it?
Doug Reddy: I mean it came in quickly. So essentially it was identified by exploration and put into a resource model and as we came through 2023, but it is at a reserve level and was able to be put into the mine plan at the tail end of the year. And then we — yes it’s definitely we’ll continue to look at additional opportunities to try to expand beyond but it provides good production in 2025.
Wayne Lam: Okay, great. Thanks. And then maybe just at Greenstone, it seems like the total CapEx budget was effectively spent by year end. Just wondering on the $95 million in non-sustaining, is the majority — just on timing of that, is the majority of that spend going to be complete in the first half before the first gold pour? And then just looking at the mine plan, there was about $77 million in sustaining CapEx budget in year one and just wondering what the delta is versus the $25 million guidance?
Doug Reddy: I’ll handle the first part of your question, Wayne. The $95 million is spread fairly evenly throughout the year. We split that really, call it, $55 million construction related, $40 million other, call it, ancillary infrastructure that we need to do, but timing of which we’re still reviewing, and not at all fundamental to the actual construction budget. Of the $55 million about half of that is contingency, so that would — related to construction, that would be the first half of the year with the remainder effectively spread throughout the year.
Greg Smith: And I guess the second part of your question there Wayne, I mean, I don’t have the feasibility study in front of me. Obviously, it’s several years out of date in terms of where we’re at in the project now. But within our sustaining CapEx, it’s primarily for work around additional drainage on the site. We also are going to be maintaining our camp. Originally, it was a construction camp. Now we’re going to make it, we’ll call it, semi-permanent camp. And so we’re going to do some upgrades on that camp. We don’t really need to do those yet. We could push that out to later in the year. And then there’s some capital stripping in there as well.
Doug Reddy: Yes. There may be a calendar year versus year one difference, a model difference versus a calendar year difference. But Wayne, we can get back to you on run that to ground and get back to you on it.
Wayne Lam: Okay, no problem. Thanks for the detail. And then maybe just curious on the ATM, you guys have done the convert in September, which was kind of advanced to try to derisk the upcoming repayment. And just curious, it seems like the execution over the past few months has been pretty aggressive on that facility. And so just wondering if that if you guys expect to continue that program over the coming months or how we should think about the execution on that ATM?
Greg Smith: Yes. I guess, just looking at the big picture here, we’ve been in two years — more than two years in a Canadian dollar terms, a $1 billion build for the company, pretty meaningful build. And we financed that largely through debts, some prepays, cash flow from operations, and to a very minor extent, some equity through our ATM at the sub-10% at this stage. And so, the ATM has been a good tool for us and our shareholders, I think, just to manage our cash balances and our financial strength across what has been a pretty significant build. As we go into the later part of this year, Greenstone hits commercial production, we start to generate substantially more cash flow from operations and it becomes less probably less of a focus for the company.
In the near term, we’ve got access to it as we go through the commissioning at Greenstone. I think it’s a good tool to have available to the company. But whether or not we’ll use it will depend on how we are seeing things shake out with our overall liquidity position as bring Greenstone into production.
Operator: The next question comes from Don DeMarco with National Bank Financial. Please go ahead. Thank you, operator and good morning team.
Don DeMarco: First question, can you speak to the trajectory of the ramp up over the year? Mean, you got 240,000 ounces obviously back end loaded, but maybe any additional color on how we should model this quarter over quarter would be appreciated.
Greg Smith: Yes. So, it’s staged ramp up, probably the best way to put it. We think that we will start pouring gold in Q2. The first phase of the ramp up will be to get to sort of 60% of capacity. Commercial production, and let’s call that sometime in Q3, starts to look like 80% of capacity. And then by the end of the year, we should be at that 90%, 95% capacity as we move into sort of November December.
Don DeMarco: Okay. And in response to an earlier caller’s question, you mentioned the stock upgrades maybe one gram per tonne. Should we expect that the grades in the first half during the ramp up to be lower than in the back half?
Greg Smith: Yes. So the original plan was to have around 800,000 tonnes, 900,000 tonnes at around a 0. 9 gram per tonne. That was in our original model. We’re sitting here now at a million north of a gram. We’ve got as Doug mentioned, we’ve got several bins and we’ve got certain bins that are very, very high grade and then we’ve got some positive variance in terms of tonnes where we’ve got some lower grade material as well. So of course, as we start the ramp up, we’re going to be running much lower grade material initially through the crusher and mills. And as we dial in the processing circuit, increase our recoveries, we’ll start to introduce that higher grade. And in the first five years of this mine, the grade is higher than the life of mine average. So, we’ll be able to ramp up the grade profile pretty quickly this year.
Don DeMarco: Okay, great. Well, I’ll certainly look forward to that. Costs are attractive for the guidance. But sticking with Greenstone, on the Greenstone CapEx, you mentioned you expect to finish the year on budget versus the $1.23 billion total CapEx. Now CapEx guidance included the $68 million in post construction costs. Can you provide some more color on these items, like for example, it had the new hydro substation and so on. And are these items considered separate from that initial development CapEx budget?
Greg Smith: Sure, so as we get to the very end here, we’ve got some things that fall into sort of sustaining capital or post construction capital. There’s a few items that we did not need to do during the build that we pushed out. The hydro station is one of those items. It’s more of a timing of the open pit as to when we need to move it. So it was not something that had to be done during the construction period. As we said, by the end of 2023, construction of the mine, of the tailing facility, of the crushing circuit, milling, all the stuff needed to run the operation and all the material infrastructure was complete and we moved into commissioning. And over the course of 2024 and into 2025, we do have to do the hydro substation.
There are some historic soils on the property that were contaminated from early mining and earlier industrial activity. We need to move those into the tailings facility. We’re buying an additional generator, which is really for redundancy for the power plant. We’ve got fleet payments, which are related to leasing for the fleet, which are kind of even through the year. And I think I said earlier, some drainage and then the camp and then some capital stripping that comes in later this year as well. So nothing sort of significant in and of itself, just things that will clean up the overall site and things that we need to do, although the timing of when we need to do some of these things is such that we can push them off or wait until commercial production or even 2025.
Don DeMarco: Okay, understood. Thanks for that. Well, that’s all for me. Good luck with the rest of the ramp up.
Operator: The next question comes from Anita Soni with CIBC.
Anita Soni: Apologies if this has been asked, I just topped off the nuance call. But I was just wondering, when it comes to the guidance for the Hard Rock — sorry the Greenstone asset, could you give us a little bit of color on the grades and sort of cadence of throughput increases that you expect over the course of the year?
Greg Smith: Yes, we just answered that question, Anita, and I’ll give you the two scoops again. So, basically, from first go forward, the first ramp up is to 60%, and we see that happening relatively quickly. The push to commercial production would take us to 80%, and we see that happening sometime in Q3. And then as we move into the end of the year, we would hit that sort of 90%, 95% plus capacity and largely be at capacity by the end of 2024. The initial grades that we’ll put through sort of for the material that will lead to first gold and into that 60% ramp up will be lower just as we go through the commissioning, make sure we’re getting the recoveries and everything is working the way it should. And then we can start to introduce the higher grade material into the plant and through the back end of this year as we’re in commercial production.
The average grade for the first five years, this is a general comment in the model, is 1.47, but there’s higher grade material available sort of within that broader average. Right now, we’re sitting on a 1.5 million tonnes of stockpile. That’s just over one gram. But within that 1.5 million tonnes, there’s a fairly wide range of grades where we’ve got some low grade and we’ve also got a fair bit of much, much higher grade than that. So like any mine start up, start with the low grade, ramp up the production, increase the grades as we ensure we’ve got the recoveries and then get to commercial production.
Anita Soni: Yes, I guess when I was last on the tour in September, you guys were talking about potentially smoothing that first five year profile. I think originally the technical part had very high grades at 1.7 gram per ton material and then dropped to 1.3. So I was looking for sort of a little bit of color on that, but then also the other aspect of it is the stockpiled material like your, as you mentioned the grade that you have in the stockpile is one gram per ton material and you’re going to be feeding something materially higher than that. So it’s relying on you pulling higher grade material out of that stockpile. So I was just wondering like what the actual feed material is going to be in the next couple of years?
Greg Smith: Yes, I think, I mean, we’re looking forward to looking at the mine plan and working on some of that smoothing in the future. Right now, Anita, we’re totally focused on getting this plant up and running. Doug, earlier on the call, which also you were not at that point, Doug did talk about the reconciliation. Everything is reconciling incredibly well to the block model. We are finding that we have some more tonnes, tonnes that would have been waste, but actually do meet the criteria of ore. So, we will end up with some lower grade stockpiles rather than going to the waste dumps. But in terms of the mine plan and the reconciliation to what we had intended on mining, it’s actually looking really good. So we’re early on, we’re early benches, but in terms of grade reconciliation, looking good, probably more tonnes than had been anticipated. And then going forward and optimizing the mine will come after we get it into production.
