Agnico Eagle Mines Limited (AEM) Earnings Call Transcript & Summary

Good morning. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Detour Lake technical presentation. [Operator Instructions] Mr. Ammar Al-Joundi, you may now begin your conference.

Thank you, operator, and welcome, everyone, and thank you genuinely for taking time out of your day, either in person or virtually to join us. Before we jump in, please note we're going to be talking about some forward-looking statements and comments. We have a very high level of confidence in this project, but there's always variability in the future. So today, what I would ask is that we hold off questions until the end. We have 2 hours, but the presentation should only take about 45 minutes. It's not a complicated presentation, we'll be going through it, but really, the story is simple. The story is simply and it's probably the worst kept secret, we're going to be talking about getting Detour to 1 million ounces a year. This is something we talked about originally 2 years ago when Agnico and Kirkland merged. We made some promises then. We said we were going to reduce overhead costs, we did that. In fact, we doubled the admin savings. We said we're going to bring amalgamated Kirkland into production. We did that, and we're doing that. We're expanding East Gouldie. We're going to be talking about Upper Beaver later this year. But one of the things we talked about was we think there's the potential, real potential to take Detour from about 700,000 ounces a year to over 1 million ounces a year for decades. And so I'm going to introduce this. I only have one slide now and then one at the end, but I want to hit 4 things. All 4 things you're going to hear about, but I'll sort of summarize. One is what are we talking about today. Today, we are talking about a very specific plan that we are going to execute to get Detour to over 1 million ounces a year. Now the first step of that plan, and I said this in the last quarterly call and the previous quarterly call, is if you're serious about disciplined capital, you minimize risk and you maximize return. And so the first step is we are going to spend about $100 million spread over 3 years, so about $30 million a year, to put in an exploration ramp and take a bulk sample. That exploration ramp, to be clear, is going to be designed that it can become a production ramp and that $100 million is part of the $730-odd million total number. $730 million to bring in 300,000 ounces a year at very low cost in a very good jurisdiction, about a 9% increase in production for that. That's a good number, and that's what we're going to talk about. Two, we're going to talk about economics. As an ex CFO, I always focus on economics, and I'm not ashamed to do it. Our job -- the 300,000 ounces a year is great. It's fantastic in a jurisdiction where we're going, but our job is not to produce ounces. Our job is to make money for our shareholders and to make money for our shareholders on a per share basis, and I'll come back to that; to do it safely; to do it environmentally responsibly; to do its socially responsibly, but to make money. So let's jump into some of the numbers. This project at current prices generates a 25% return on capital. That's what I care about. Our capital is your capital, which really is the shares. So when I say return on capital, I am, by definition, focusing on per share metrics. A 25% return on capital, to put that in perspective, is about a 2-year payback in a safe jurisdiction. The other thing that's a little more subtle but important in the study that you look at, it's not just about the project. It's that we've updated the life of mine from 3 years ago. So let's address some of the big issues that people want to look at what's happened to costs. We've had 3 years of inflation. Inflation has been about 15% to 18% cumulative, at least that's what I'm told, over that period of time. If you look at the numbers, our cash costs are projected to be down $20. Now, to be fair, there's an accounting adjustment that basically takes $26 out of cash cost and puts it into CapEx. So if we adjust for that, our cash costs are up about $6. So about 2%. Now I'm comparing different projects as we're going underground. But I am telling you, and we said this in the last call, even though gold prices are up, we have never been more focused on cost control. So I'm very proud of the team that at the end of the day, even taking out the accounting change, the cash cost per ounce is only up about 2%. On the CapEx side, if you take out that accounting adjustment, comparing apples-to-apples, we're up about 10%, still a lot better than the 15% to 18% deflation. So assuming, and this is a big assumption, roughly OpEx and CapEx are 50-50, the team has been able to control, over those 3 years, inflation to about 6%, somewhere between 1/2 and 1/3 of what the inflation rate has been. And the third item on economics. So one is the return. Two is the update. And three is this is just a snapshot in time. The numbers we're going to talk about are based on 55% of the resources drilling that ended in October. As Guy talks about later, we found -- we hit some of our best holes in that western extension since. This does not include that. There is potential. This is just a point in time, and this project is going to get even better. So one, what are we talking about, which is getting Detour a specific plan to get Detour to over 1 million ounces. Two, the economics. Three is the risk. In our business, nobody talks about risk. We assume the same risk in Tanzania as we do in Nevada, as we do in Canada, the same as Papua New Guinea. And we assume one project is the same as the other. This project is not a brand-new mine being built at the top of a mountain range in a country we've never been to. This is a very simple expansion of an existing asset that's been running for a long time. There's a conveyor. There's a pace plant. There's a minor building for maintenance equipment. You'll see it later on. But operationally and construction, which a big part of the risk is construct -- this is simple. Putting in a ramp, we do this every single day in a region we know. It's not a new team. The team building this is the same team that's been running and operating Detour for over a decade. The team designing this is a team that's designed a number of lines in Ontario and Quebec and Nunavut. We've done this before. So when I talk about economics, but I also want to talk about risk, because I think that's important. We talked about return on capital, but nobody talks about risk-adjusted return on capital. And that's really the core of Agnico's strategy. So one, what are we doing? 300,000 ounces a year, expanding to over 1 million ounces. Two, the economics are good. Three, it's relatively low risk, which gets to, four, does it fit with our strategy? Again, our strategy has always been focus on regions that have geologic potential for multiple decades in a region where you can operate for multiple decades, try to build a competitive advantage in that area and leverage that. And there's not a better example than Detour, a multi-decade mine, was discovered 50 years ago, in a great place to operate where we've been operating since 1957 that has huge potential for expansion and leveraging off not just the infrastructure we have, but the people that we have. And then as I turn it over, what you're going to see is, I think, the best team and one of the best teams in the world, both operationally, exploration and studies, everybody is going to be confident. You'll see that. You'll see that today, and you'll see that tomorrow at site. So with that, Natasha -- Oh, I'm sorry, Dyane, I will pass it over to you.

Thank you, Ammar, and thanks for the introduction. So the foundation for bringing Detour to 1 million-ounce producer is really the mineral resource, and that's what I'll be talking to you today. I'll provide some background information on the new update that was just released from March 31, 2024. This includes, as Ammar said, the same database as the year-end 2023. So you have here the longitude overview. So let's start first by pointing the fact that I'll be focusing more on what we did to improve the models from an open pit focus model to an underground high-grade deposit. That was necessary to be able to capture the true value of the underground resource to be able to include it in the PEA. So the reserve, as you see here, it remains solid, and it's relatively unchanged from December 2023. So it's -- our model still reconciles very well with the open pit production, and we've depleted it to end of Q1 2024. And this is the basis for the current plan. On the resource side, I'll provide just a bit of background. As I said in the past, Detour was very much open-pit focused, so did the modeling strategy with focus on low-grade 0.2 gram per tonne shell. So we put together a team that included the exploration geologists at site, Detour team, the production geologists, the resource geologists across the company. So basically our best combined effort and fresh view on the project with new people as well as corporate. So it has been our top number one priority this year. To revisit the model, the model is a modeling strategy to capture the high-grade -- continue to either -- that we're seeing in the campaign in the last years. So with this, we were able to successfully model some high-grade corridors and high grade, again, it's not high-grade Macassa style. It's more above the 0.2 that we're doing, so above a cut-off grade of 1.2. And this lower corridor goes from the bottom of the reserve pit all the way down to below the resource pit. So this is what we refer to as a high-grade corridor mineralization that was made available for the PEA. So what's inside the resource is open-pit resource, but below is underground. Importantly, too, that I wanted to add, this was made available to us. I guess, it was -- we were able to create that model with a lot of new understanding on the geology. So with all the new drilling that we've been doing, and we've put our best efforts to add mineralization control. So we now for each zone, have a clear idea of what controls that either lithological or structurally. So it could be a contact between 2 zones or a structure. So this will all be detailed in the technical report. So with the approval, as Ammar said, of $100 million, there's 3 things that will happen. So we'll have first a ramp, an exploration ramp that will go down to 270 meters and with this ramp, we can access and drill closer to the deposit to further refine where we're going to take the bulk sample, which is our second step. So the bulk sample, we'll aim at a very interesting zone to the West, and there'll be more detail with Andre later. And the last step is we'll have a high-density drilling from surface, so and then to be able to drill another area more to the East, one that we really want to learn more about. And this could be done from surface, and it will be done in 2025. So there will be a lot of new information coming up with this. So the key takeaway is that we can access the underground, the high-grade ore earlier by underground mining than we could by open pit. So this is basically the true takeaway of what you're going to hear today. So these are the larger parts of our MRMR, consolidated for Agnico, so we're very happy of what we've done, the progress so far, and we're also very excited about everything that's coming up. There's a lot of new drill holes. We will present it and lots of new ideas with all the team we have in place to improve that model and make it more robust. So snapshot in time, as Ammar said. So on this, I will leave the mic to Natasha. She'll talk about the Ontario platform.

Natasha, would you mind if I just said something quickly?

Please. For sure. Yes.

I apologize, I'm jumping in here, but I love this slide because what we're doing actually is really simple. If you have a giant ore body, and you're accessing it here for decades and the reserves don't come in for 15 or 20 years, and you want to increase the value, what do you do? What are the 3 obvious things? And I want to say this because this is exactly what you're doing. One is, can you get more ore through the mill? Yes. And we're going from 28 million to 29 million. Remember though, it's permitted for 32 million. So we talked about a picture in time. So one, you would increase the throughput, of course. But the other two are interesting. Second thing you would do if you could do is you would replace low-grade ore with high-grade ore. And the third thing you would do is, can you get that high-grade ore in sooner, not 15 or 20 years in the road, but in 5 or 6 years? So how do you do that? Again, is the answer. You go and you access it sooner through an underground ramp. And that's really all we're doing. The whole presentation, we're going to talk about increasing the mill from 28 million to 29 million. We're going to talk about going underground and accessing this more through the mill, higher grade through the mill, sooner through the mill. And then finally, again, to the point that we're just starting, this infrastructure not only opens up this but opens up this. So I just wanted to -- and I apologize for people on the line who didn't see what I was doing, but I just wanted to sort of, at a high level, talk about that. Sorry. I might interrupt 7 or 8 more times, but.

Sounds good. Thank you, Ammar, and thank you, Dyane. Good morning, everyone. Just based on what Dyane just mentioned and Ammar just mentioned, hopefully, you can start to see a little bit of the potential that the Detour underground project has. But what's also advantageous is the strong platform that we have in Ontario and hence, the competitive advantage that we have in Ontario, in order to -- and the ability for us to leverage this competitive advantage to ensure the success of this project. There we go. So with respect to the production platform in Ontario, you all know this. But under the leadership of our VP of Operations for Ontario, Andre Leite, we have 2 high-quality gold mines in the region that we're operating. The first one is Macassa. It's an underground mine in Kirkland Lake Gold -- sorry, in Kirkland Lake. It's not just an underground mine. It's one of the highest-grade gold mines in the world. It's been operating for 90 years, and it still has strong exploration potential. And then as Ammar touched on, we have Detour, just north of Cochrane. This is a world-class asset. This is the largest open-pit gold mine in Canada. It's 1 of the top 10 largest gold mines in the world. It has a multi-decade pretty healthy production profile. And that's just the open--pit portion. What you'll hear Andre talk about shortly is the potential for expansion at Detour. We believe with the introduction of an underground mine with optimization of the mill, we can get this mine to produce 1 million ounces a year to extend -- we have the potential to extend the life at Detour, and we have the potential to improve the valuation of this asset. Now coming back to the competitive advantage that we have in Ontario and the Abitibi region, we've been operating in Ontario and Quebec for a number of years now, and we've slowly been building up this competitive advantage. And this is the competitive advantage that we can leverage for projects like Detour underground like Upper Beaver. And what I mean by that is that we can leverage things like our people, the technical and operational expertise that we have. For example, over in the Abitibi, Goldex and Odyssey, they employ a bulk mining strategy underground that is pretty similar to what we envision in the Detour underground. So when it comes time, we can actually leverage the skill set to ensure the success of the project. We can also leverage the relationships that we have built over time in Ontario with our key stakeholders, with our First Nation partners, with our government, with our suppliers. So overall, we have a strong competitive advantage in Ontario and in the Abitibi region that we can leverage. And this slide pretty much highlights why we have that competitive advantage in Ontario. In general, across all the regions that we operate, Agnico Eagle strive to be the partner of choice, but also the employer of choice. And Ontario is a perfect example of this. We are the largest employer in the regions in which we operate. We contribute significantly to the economy -- to the local economies, as you can see on the slide here with the highlights. And as I mentioned before, we also are committed to fostering positive and collaborative relationships with our First Nation groups, our indigenous communities, our government and even our employees. And speaking of our employees, the Detour workforce, I just wanted to touch on that. Detour is a fly in fly operation. So majority of our workforce, 93% of our workforce actually reside in Ontario. Now 76% of that workforce resides in Northern Ontario, and that's a huge benefit for us because what we've seen is that when people work closer to their home, we have a benefit from a retention perspective. The other very important metric that we are very proud of from an employment perspective, is that last bullet point that you see there. 18% of our workforce at Detour identified as indigenous. That's a big number, especially when you compare to the Canadian -- sorry, the mining industry average in Ontario, which sits at 9%. That's double what the industry averages in this province. So we're very proud of the team for achieving that. And we are very proud of them for continuing to put efforts towards increasing that number. Okay. This is a quick overview of Detour. I'm not going to go into the details of the mine and the mill. You're going to get a better feel for it when we have boots on the ground tomorrow. But I will want to -- I do want to talk about some of the history behind Detour. Detour started off as an underground mine back in the 1980s. Between 1985 and 1999, this underground mine operated and produced 1.7 million ounces of gold. Now with the falling gold prices at that time, the mine closed and then it reopened up as an open pit operation in 2013. Now it started -- we started mining there, and we also started mining in and around the old workings. And for those that are joining us on the site visit tomorrow, you'll be able to see the openings and the old adits, in and around the walls of the open pit, so it's pretty cool. So fast forward to this year, where our production profile for Detour now is sitting between 675,000 ounces per year to 705,000 ounces with an average cash cost of $734 an ounce. So pretty strong numbers. What Andre and Guy are going to talk about in a few minutes, is the potential to mine a new underground mine just below the reserve pit and to the west of it. Now I want you to keep in mind one thing, that this technical evaluation and these results that you're going to see here today are based on the resource model that Dyane explained, but it's based on drilling information that was cut off as of October last year. And this is important to remember, because Guy and his team have continued to drill and continued to see good results beyond that. For the last 8 months, we have continued to drill, continued to see good results and we haven't been able to collect that information and put into the technical evaluation just yet. And so what I'm trying to tell you is that this is a snapshot in time. Even though we have good results to show you, we believe that we have the potential to do better. And we believe that the asset can add even more value than what it currently has. Just in closing, I think Detour has -- with the land package that we have here at Detour and with the caliber of the team that we have on site, we see the potential of Detour being a district scale asset. And so with that, we have a lot of technical information that we want to share with you today and so I'm going to ask Andre to come up here and kick us off.

Thanks, Natasha. I got the microphone here, thank you. So good morning, all. Look, I think that 2 years ago, I see some familiar faces. We're going to talk today. I think this is the main core of the presentation. I'm going to be going over the details of the PEA. Now our PEA here has 2 components on it. You have 28 million tonnes to 29 million tonnes a year, the expansion of the mill and the Detour underground project. We're going to discuss what is the current view, as Natasha mentioned and Ammar as well, this is just the current view, a snapshot in time. And going back to our journey. So 2 years ago, we are here. And the message has been consistent, right? So we've been optimizing this asset and the team that we're talking here today, so Natasha just introduced me, she's our COO; myself, the VP of Operations for Ontario; Larry is here today, until recently, he was the General Manager and VP for Detour, a lot of the experience at Detour, over 10 years; myself as well; and Barry Kellar, which he used to be the GM at Detour, the Deputy GM of Detour, how he is the GM; and Larry is our Director of integrated operations in both projects. So this team, we've been optimizing this asset. We were in a journey that took Detour from a 600,000 ounce producer to a 700,000 ounce producer, right, we delivered. Now what we did is set the merger, the deal on the underground Detour, we have established like a start to work. In 2022, with the merger happened, what we did right away is we want to accelerate value creation, okay? So what we did is we really tried to mobilize the best team that we had available. And Agnico brought that to the table. So here you have a group of people, Alain, Daniel, Julie that they built the Nunavut platform. So we have here an experienced team that has been working at Detour underground since 2022 and has experience building this type of mine, delivering, okay, successfully this type of mine, high-volume mine and work in collaboration with the Detour group that's there, that's been part of this journey as well. So as we go ahead and we discuss a little bit about what Detour on the ground is, I want you to -- one of the messages that I want to share with you today is about what -- the key of our success has been our people, and we are leveraging more and more the expertise that we have with Agnico. Now we're going into the meat here, so I want to give you right away what is in the PEA, the main metrics. But before that, I just want to elaborate some of the messages that Ammar gave to us before. This is a brownfield exploration. So we're talking here about expanding production in the mine that the mill is there. The tailings are there. The relationships with our First Nations are there. We've been working day in, day out in keeping those relations really good, okay? We have their support. We're talking about -- this project here is about good returns as well. So you look at the table here on the right, right? And I'm going to -- for the audience on the call, I'm going to point here, but you cannot see I don't think. So we talk about 4 million ounces of gold. A mill throughput of 29 million [indiscernible], NPV really high, like from an investment perspective, right, the $900 million with internal rate of return of 18% at $1,900 gold. Currently, you are talking about the current gold price environment, this is 25% return. So it's a good project, and it's a very low risk. The other aspect is exposure because we're talking about increasing the volume of production in Detour. So now we're talking about breaking through this work for -- to 1 million ounce producer over a long period of time. Now this makes Detour, thus with Detour, to put this asset in a very exclusive club out there, which is the club that can produce 1 million ounce later. Now not all of these other assets are in safe jurisdictions. So it's another differentiating factor for Detour. And we will continue leveraging, right, the expertise. I want to reinforce this message with you guys here that we are really working together, we've done this before. As part of this project, the project group, we have people that mine Goldex, that understand what it is to mine this type of high-volume ore body because Detour underground is going to have the same DNA of Detour open pit, which is a high-volume, low-cost operation. Correct? And that's what we're working to be. And we are -- already at Detour, we continue our DNA, it's continuous improvement. We've been -- since 2018, this team has been looked and turned every stone, right, to make sure that we continue optimizing Detour. So similar to 2 years ago, okay, 2 years ago, we had kind of the same kind of graph. The only difference is at that time, we're talking about open pit and then the stockpile reclaiming. Now we're talking about 3 phases, okay? We have the open pit, I would say, time, which is from 2024 until 2030. And then a piece here that's the open pit plus underground and then the processing of the stockpiles. As you see, what the underground is to us, it improves it more a very competitive asset. So our cash cost drops from $750, let's say, range to about $50, $60 [ hand ] right? On a very also very strong free cash flow generation. Now the stockpile period allows us to operate in a very competitive cost structure, right, because the mill is producing 29 million tonnes a year. So our cost is being diluted, our fixed costs. And what it does to us is allow us to, I would say, have the option to realize the potential to the West that both Detour, Dyane and Natasha expressed to us today. So we can expand this resource base. the resource endowment in this area is not fully understood yet. We're drilling. Guy is drilling, and he's going to cover this with us today. To the West, right now, the view is not tracking tied to the potential. As Natasha mentioned, October '23, I want to reinforce this message, because this is a snap shot in time here of the potential that Detour underground is. And we have the optionality to realize that potential because we have enough time here to expand this. Right now, the 4 million ounces that I'm discussing was only 2 years of this. We added 2 years to the mine. So we can see that potential to be expanded. Now here's just a summary slide, so $4 million (sic), that will be -- $4 million, 4 million ounces, that would be the increment, okay? This is repayable gold. And I call your attention that some of the numbers that you're going to see today that we're going to see to gold, payable gold. So those are the source of the variance, okay, if you're looking at it. And then again, very, very competitive cash cost for us which makes this asset even more competitive within the [ activate ] size asset class. The other thing is we're -- this continues to leverage the DNA of high-volume low-cost producer that Detour is. Right? The other page here that I want to share with you guys is the journey, I would say, to permit this. This is a simple expansion, considering the impact related to the open pit. The open pit, right now, we have the permit to operate our open pit, right, with the West Detour expansion. What this does for us in relation to the overall affected area, it's very small. So from a permit perspective, very simple permitting process. We're talking about amending some of our closure plan and amending our industrial sewage permit. And we have 2 new permits, which is the permit to take water for the initial phase that I'll discuss here and the full extent of the underground mine. Now we started very proactively engaging with the First Nations. So since 2002 (sic) [ 2022 ], this product has been socialized First Nations. So they are aware of it. And in fact, it's something that they see with positive perspective because it's a very small impact from a relative terms and a significant benefit to them in relation to additional benefit to the communities and for opportunities for business. So from a permitting perspective, what we have here is the first phase that I will discuss later, which is the '24 to '26, which what we're doing is we're going to have -- from a capital discipline, we're very, very concerned about this as well, about capital discipline, how we invest your money, correct? What we are -- and our money, I'm also a shareholder. So the point is we want to make sure that this project has a well understood from a geological perspective. So we're going to have a first phase. We're going to do a ramp. And then that ramp will allow us access to derisk the project, better understanding. That ramp is part of the project. So it's our surface ramp that we are using as an exploration ramp. I'll just give more details about this later on. At this point here is that first phase, the permit that we need, we already expect to get it by the end of the year. We start that process in 2023. For the second phase, which is the full extension of the mine that's [indiscernible] 29, the permitting as well is amendment to our closure plan, an amendment to our industrial sewage permit and a new permit to take water. All of them very low complexity. From a footprint perspective, I'm going to reinforce this message as well. It's not a very complex project. Ammar mentioned before, we're talking about here a very small footprint. Here is the mill, number one. It's our -- like close to the mill here, trying to show where the mill is. And this is the conveyor. So we're going to do a conveyor ramp to access the center of mass of the ore body. And then we have in here, number two, for the people on the call, we started a service ramp that is our exploration ramp that will double as an exploration there and where also we will have the infrastructure for paste plants and maintenance shops and dry. So it's not a very complex mine. It's something that we do, I would say, on a day-to-day basis, and we are leveraging the expertise from Goldex as well. From an underground perspective infrastructure, again, not very complex. We're not talking about the deep mine, we're talking about a mine that's about 900 meters deep maximum, okay, approximately. Infrastructure-wise, we're talking about the configure that comes from the previous slide, you have the conveyor coming down, the conveyor ramp to a crusher where we're going to have a [ purchase patient ]. And that's pretty much the most complex of this. So it's nothing really complex. For a risk from a capital perspective, not a lot of risk on this. This section here, what we want to share with you is, again, the message that 2 things. We don't -- we're not talking about a very deep mine. We're talking about a very elongated mine infrastructure-wise. It's being maximized. It's being designed to maximize tonnage production, so to optimize this asset to become closer to our DNA, which is high volume, low cost. And again, to the West, the red is what the stopes are included in the PEA, and we have a lot of drilling that happened from October '23 to the West, that's not fully captured here. But the results indicate that, yes, we have a lot more potential that we are going to realize as we advance the project. Again, from a mining perspective, we're talking about a high-volume mine true to the DNA of Detour, which is a high volume, low cost. Talk about 11,000 -- approximately 11,000 tonnes a day. This is something that Agnico does, and we did it successfully at Goldex, we did it successfully with Odyssey. And that translates about 4 million tonnes a year. 130 stopes, and this is long haul, perhaps traverse mining. So it's not complex. That 1.8% cutoff. So just going back and I'm sure most of you are familiar with the history of the Detour, the placer operation operated in a much higher cut-off than this, okay? So we're targeting here 2.5 -- approximately 2.5 gram material where they are targeting to feed in the different gold price environment for 4 or over 4 grams per tonne. So ramp up as well, as we design our mine, when I mentioned about that conveyor ramp to the center, the strategy there is to maximize volume. So most of the expense that we have in that period of construction is related to mine development, okay? 40% of our capital on that initial capital is mine development. So what it does is sets us very well to a fast ramp up. So that would allow us, again, to ramp up fast and get those [indiscernible]. From a development strategy, so we started on the core of the ore body moving up West. And then at this point, again, a snapshot on time in relation to the potential of this mine. You move up to the West, not capturing the full potential. And here, the colors, they match the different phases that we have of development. So following that slide, just to give another reinforcing of the message that we still have a lot of potential, this PEA captures only 55% of the material that was at the October view, the October 2023 view, so only 55%. We know there's more than that. And Guy is going to discuss a little bit more in a lot more color what that looks like. So at this point, so we discuss a lot about what the PEA from an underground perspective is. Now I'm going to ask Larry to join me to discuss about the 29 million tonnes journey. We have been -- as I mentioned, we've been working really hard to optimize this asset for the last 6 years. A lot of work has been done, Larry, which as I mentioned was the previous GM at Detour until very, very recently, okay, transitioning to more regional role now, has been instrumental on journey with the team, and he's going to give you a lot more color about what that journey looked like, where we are right now and what looks like to get to 29,000. I will come back to just discuss the next phase after he speaks.

Thanks, Andre. So I would like to spend a bit of time kind of reiterating some of the messages you've already heard from the other speakers. Detour Lake Mine's been operating for over a decade. Over time, I think we've proven that we have the ability to approve and adopt really a culture of continuous improvements. And really, that's if you look at the site, it's -- we've got a workforce that's fantastic. As Natasha mentioned, almost all of them are Ontario-based mostly in Northern Ontario. And that team is very engaged and want to see Detour succeed just as much as the team here does. So when you combine that with the resource that we're going to be talking about over the course of the year or course of the years, we've done a lot of work even just in the open pit of understanding that ore body more and more all the time. And we continue to see upside potential on the ore body. And we have every confidence that, that ore body will continue as we go to the West. So and then finally, when you look at the infrastructure, the process plants, already well established, running very well and PEA development is very consistently achieved every year and then the infrastructure, power to the site. We have [ now ] power coming to the site. Obviously, there will be some requirements to feed the underground mine. But all those things are already in place, and there's no reason based on our performance that we won't continue. This will be a successful extension to the operations. So Andre talked about the DNA of the mine again, low grade, high volumes, being as efficient as we can. And we understand that to be successful on a financial -- fiscal and financially successful, that we have to innovate, and we've got the team at site to do that. We have the management team has been in place for several years now. I've been on the GM role for 4 years, a very low turnover. We've got a very committed team that's managing the site, again, based on innovation. And you look at our philosophy is to have kind of laser focus on the value stream at site. So that's really our -- the way we've been successful, just 2 examples here. I'll talk about payloads. So an 8% increase in payloads, and this is versus kind of over the history, this kind of stuff has already been built into the 2024 life of mine. So if you're seeing the impact of inflation that we've seen in the world, these are the things that are reducing that inflation impact in that long. And the other one, the reagent improvement. So we've -- that the success we've had with reagent improvements results in an over life of mine, and this is comparing 2022 life of mine to 2024, we're saving $100 million in reagents. So those are the types of things that we really are focused on and trying to reduce costs as Ammar was mentioning. So getting into the mill optimization itself, you can see and when -- the blue chart is the monthly throughput rates on a tonne per hour basis. So obviously, an increasing curve, varies from month to month. But the first 3 years identified there. We're really focused just on the way we match things. There's very little capital went into that improvement over those first 3 years. There's developing a consistent approach, mine the mill philosophy where we plan the mine and we make sure that we're doing the right things, focusing on choke feeding in the crushers. We improved fragmentation in the mine considerably. That not only helped throughput in the mill, but also helped the mine itself. And that was really just a focus on that and being as efficient as we can. The next 2021, 2022, that's where we invested some capital. So we looked at a debottlenecking exercise in the mill. And as you're probably aware, we spent, again, just shy of about $100 million, doing some things, both on the crushing circuit, primarily on the crushing circuit, but also with CIP and some other areas to make sure that the mill grade through the process, grade through the entire mill could have a lot of additional tonnage. And that was our goal to get to 28 million tonnes. Now what we found and you can see in 2020 -- late 2022, 2023, still seeing those increased rates. But certainly some remediation efforts that were required after those capital projects were installed. And that's kind of where we spent the year 2023 and even a little bit into 2024 is developing the plan, how do we remediate some of the issues that we've seen with this increased throughput and putting those plans and those small capital items into place so that we can continue to reach that 28 million tonne mark. Of course, in 2023, you're aware, the transformer failure that we had in August impacted us pretty significantly, over 1 million tonnes lost for that year. So we were -- we fell a bit short in that year for tonnage. And then but nevertheless, still on track with our improvement plans to reach our goals. At that same time, that's when we're planning and thinking that we're seeing, at times, throughputs that are very strong and certainly seemed achievable that we could reach that 29 million-tonne run rate. And that's a path that we took. And we've been working on that for probably the last 1.5 years. So we do have a plan in place. Relatively low capital investment to get there. And you can see that the initial, I'd call it, low-hanging fruit, but if you look at those first 4 years, the slope of that curve is pretty high. The last few years here to get to that last 1 million, a little over 1 million tonnes is going to take us a little bit longer. But it's just a lot of work. It's a lot of effort around things like -- and I should mention, we have been working on, well, can we fill that gap between 29 and 30 to that 28 million tonnes. That's another story to tell someday maybe. But in that work, we did grinding survey, a very comprehensive grinding survey and both with the expertise within the organization, but also some third parties how to look at that and they confirmed that the 29 million tonnes, the path that we're taking is certainly achievable. It's -- the biggest thing is can we get finer feed going into SAG mills. We see capacity and so in that case, we need to do some work on our secondary crushings circuit again, primarily around the secondary crushers themselves, the motors and the drives. So we're purchasing some variable frequency drives, and that will allow us to really fine-tune that secondary question circuit. And SAG mill itself can be doing a bit more work. Right now, it's running. We just need to hold a bit more material back. So we're looking at all the parameters within the grades and the screens. Hope and do a bit more work in the SAG mills. Subsequently, that provides a finer feed into the ball mills. And with a little bit of rework around the ball mills as well, try to increase the load and do more work in the ball mills. And those are really the kind of the main focus mechanically. But on operationally, the other thing we're doing, we just installed a mill slicer on the SAG mills, so getting more data, understanding how those mills are operating, feeding that into the [ mine ] and developing that process technology that's going to allow us to make adjustments and eventually fully automate all the processes in site. So we think there is another 2% just in the process itself, so managing process. So I think that's it, Andre.

Thank you. Thank you, Larry. And I think one of the questions that we've been asked is some of the issues we had in '23 and '24, they're not related to the fact that we're optimizing this plant. They were one-off situations that they are not related to us optimizing the plant. It's not that we're pushing it too hard, okay? It's not that. We're transforming. It's a very isolated thing and the capacity of the transformer's way higher than what we're using right now. So as we move on. First, I want to come back to the beginning, right, where we started like this conversation, reinforcing the message that as everything you saw now with more detail, right? Those numbers that I showed to you, the risk at just an NPV, I think that's the term that Ammar mentioned at the beginning, this project is really competitive. We're talking about the brownfield, not a lot of complexity developing, support First Nation. So we gave you the details. I gave you the first statement, and I hope that you trust me at the beginning, but now I gave you the information, so this is it. So that's why I can say that that's the journey that we are. Again, the DNA, as Barry -- Larry mentioned here today, our DNA is there. We've been optimizing the mine, and we will continue the same DNA with the Detour underground leveraging and accelerating value creation by leveraging the expertise that we have in the building mines and in the Nunavut platform, building mines in Quebec platform with the same team that did that. The next step. So now you have what is in the PEA, right, with what is included in the PEA. Now what are we going to do next step wise is we need to better understand with that sense of capital discipline understanding the ore body better before we make a final decision and formal final decision on the project. So what that translates to, it is a bulk sample on the -- that's being expressed here on the star, okay? The star represents our bulk sample. And the square, yellow square in the center of the image is where we're going to do a high intensity drilling to better understand one of the domains that we're planning to mine. That will be done in the next 2 years, right. By the end of 2026, we will have that deal and the infrastructure we're going to be building, which is the ramp that you see on the right. It's a 2-kilometer ramp, simple development and most of the expense that the initial investment there will be on the development of this ramp that to access that, but it's also our service ramp. Now what the translates in scheduling investment is we have the exploration ramp that this -- so to you, that will translate to -- and surface infrastructure, that's $90 million investment over the period of '25, '26. And then we have the grade continuity validation. So we want to validate this ore body both from a geology and mining perspective. That's going to be another $10 million. And Guy is going to give you a lot more color on the conversion strategy and exploration strategy that we are going to develop in parallel. So to convert because now about in this study, 85% of the material is inferred, okay? 15% is indicated. So this conversion strategy is to align with the production time line that we had in 2030, everything going well as planned. So with that, I just want to close saying thank you, everyone, because 2 years ago we were here. We were discussing this journey. Now another pitstop for us. I don't think it's the final one. There is still work to be done, as Larry mentioned, about continuing to optimize these assets from geological endowment that his conversation with you today, but also a new optimization perspective that we still have a journey there. We see it that we're going to be there. For the ones who are going to visit to us today, 2 years ago, we couldn't fly, right, due to weather. So we have a site team that's really excited. There is there, preparing us. They were waiting for you 2 years ago. I hope that we're going to -- they're going to work -- they're working really hard to make it worth the 2 years wait for the ones that are planning to go. Okay? So with that, thank you, and Guy maybe if you want to join me?

Thank you, Andre, and good morning, everybody. So Andre just mentioned about the geological endowment and maybe this is why we foresee one ramping up with exploration at the end. We did about a similar update last year with the sister operation in Canadian Malartic to demonstrate how much -- well, how much bigger was the geological endowment and the potential at Malartic and we're going to do it a bit today, where it's another milestone in the history. So in order to, I would say, better understand what we're doing forward or what we plan to do forward, it's a good opportunity to look backward. Detour has been around since 1974 when [Amoco] first went there. It's been first developed as an open pit back in the days, in the early '80s. From '79 to '87, they went underground and since the redevelopment by Detour Gold in 2003 of the pit. So there has been both successful attempt at mining it open pit and underground, not without challenge. At the time of Placer, the gold price was not where it was, the size of the operation, the benefit of having the open pit was not there in the same time. And what we plan to do moving forward is just to doing concurrently with a ton of additional information. Over that history, at the time, I would say, prior to Detour Gold that came in, there was about 0.5 million meters of core that was drilled and 1.7 million ounces that was mined underground. When Detour came in, Detour Gold in 2003, they drilled about 1 million meters of core from 2003 to 2013 before bringing the mine into production. And since Kirkland Lake and Agnico carry on what's been undertaken a couple of years ago, we've drilled an additional 1 million meter of core, basically into the West. So altogether, there's been -- there's a ton of history in terms of historical database that allowed us now to produce a better model. Dyane mentioned the fact that we've spend a ton of time when, up to very recently, we were looking at it from an open-pit perspective. You look at it with a 0.2, 0.3 cutoff grade and you try to define wide, large low-grade envelope. Now we've been refining what's higher grade within that. And it's very similar to what was done back in the day with Placer, and this is basically what we've been communicating over the long list of press release we've been putting together over the end. That's just pretty similar to what was done back in the day, meaning that you see those kind of intercept, we've been getting between 2 gram, sometime up to 6 grams. Some of them in the double-digit over decent width for underground mining, locally up to 50, 60 meters where we've been getting those kind of grades that are amenable for underground mining. And as Andre alluded to as well, what we've been talking today is basically what you see, obviously, in the reserve, in the orange pit, in the blue pit, in the high-grade corridor. And with the blue shape, which is basically the end of what we've been considering into the PEA. All of that what you see in green to the West is basically not tightly drilled enough yet. Although we already have our number of what could be sitting into that green, and I think we're bidding 3 million and 4 million ounces that could be added in the near term within that what we call mineral inventory or additional mineral inventory to the West and still open. So 8 million ounces mined so far, almost 20 million ounces in reserve, 20 million in resources. It's part of the very selected club with the 50 million ounces, gold and [ domain ] into a deposit like that. And so in terms of value creation, we like that slide. When Kirkland came in and we carry on that big phase of drilling, we've been adding about 1 million meters of core from the year-end 2019 to now. We've been basically adding 20 million ounces, spending about $100 million, so discovery costs of less than $10 per ounces in that period of time and been paying a lot of attention at better defining the high grade within that wide envelope. And all of that reserve and resources grow at the same time that we were depleting from mining. There's been already 6 million ounces mined in the pit from the time that Detour started production in 2003. So seeing that still growing reserve and resource while we continue to mine or extract 0.75 million or so gold a year is quite impressive from a deposit like that. And this is just a small footprint within the larger property. And Ammar and Andre and Natasha mentioned, there's a simple way to create value. We're going to be looking at continue to optimize the mill throughput and we need to send a better head grade at the mill and better head grade at the mill come from either from a better plan, extracting the higher grade from underground sooner, or what we are looking also at regionally speaking, to find some additional satellite ore body, high grade. I know we can -- you know that 58 North has been there forever. It is about 2/3 of million ounces at 5 gram over there in the Lower Detour. So we keep -- obviously, we're extremely focused next to the pit in that red dotted box and that blue dotted box to the west of the pit, but also looking at ways long term how to continue to enhance the head grade at the mill while we continue to optimize the mill throughput. And we're sitting on basically 50 kilometer of favorable geology. It's all about length and its consolidation, having the land package either on the Ontario side or on the Quebec side in the auction with Wallbridge on the Detour East property. So we control it all. We have best-in-class team that know exactly what are the control of the mineralization, what needs to be done. It's a terrain with a fair bit of overburden, especially to the East. So it's good that you know exactly what you're looking for and we have the best and large team, and you're going to be able tomorrow to meet those that are making it happen. I'm not doing anything and Natasha and Guy is drilling. I'm not drilling. The team over there is top notch. You're going to meet with [ Carol Burns ], you're going to meet with Steve Gray that is basically mastering the drilling over there. He was mining with Placer back in the day underground. He knows Detour. He's still taking care of that. So very relying -- I'm just a storyteller relying on bunches of bright people that are doing all of that heavy lifting, that are doing all of that and drilling over the last several years. And I'm going to pass it back over to Ammar for some closing remarks, and we'll be open for questions at the end.

Thanks, Guy. I actually thought Guy was out there drilling. I didn't know he was just the story. Well, thank you very much for your time. We'll finish up now. I just want to conclude very quickly. We have the opportunity to take the biggest tied with Malartic. The biggest open-pit mine and the biggest gold mine in Canada, 1 of the 10 biggest in the world and make it 1 of the 5 biggest in the world. 1 of the 5 biggest in the world in a good jurisdiction, with a very long life, with the ability to continue to extend it. The plan that we have, and it's a plan, it's beyond a vision, it's a plan, the numbers look good. As a financial guy, I tell you 18% to 25% return on capital, 2-year payback in a good jurisdiction at low risk, you don't see many of these in my job. You don't see many. And it's big. 300,000 ounce a year increase. Good exploration results, demonstrate upside. What we're actually doing over the next 3 years is $100 million. I know there are people say we've got a lot on the plate. That's a good thing. Our actual pipeline looks very good. But this is pretty small, $100 million spread over 3 years. We know what we're doing. That won't be an issue. And we are leveraging not just the people, not just the experience, not just the infrastructure, but this is a large high-volume, relatively lower-grade underground, we do this. We do it at Goldex, we do it at Malartic. We know how to do this sort of thing. So I'll finish at this point. This is exactly down the fairway of our strategy. Take good regions, focus on geologic potential, try to build a competitive advantage and try to leverage that advantage in people and capital and experience in relationships and suppliers, and it's all about per share metrics. That's what we're focused on. The story here isn't just the 300,000. In fact, it's not the 300,000 ounces a year. It's the value creation that we see now and going forward. So with that, the presentation is done. We will open it up for questions. I apologize that we ran a few minutes over, but I think that was because people are excited about what they're talking about. Maybe, operator, we'll take questions internally here for the people in the room, and then we'll turn it over to virtual questions. So why don't we jump in if there are any questions.

Anita?

Yes. Sorry. Do I need a mic or no, just shout?

Probably have a mic, if you have a mic, so people on the line can hear.

You're right. You should be able to hear me. So I need a sign from your guys. Let's see. First question, why was the drilling from October 16, 2023 not included in the [ deck ] I think?

Sorry. Why was the drilling after October, not included.

We're going to move here. Just that we wanted a kind of date for the people that were doing the block model and everything. We can integrate roll up to the last minute. So we decided that arbitrarily to use the same database closure and drilling information because results just keeps on flowing in constantly. So we have to put a drop date on that. So we've then instructed the team to work on the PEA, the mine concept based on the October 1. We've added since another, let's say, 125,000 meters of drilling with similar kind of results, more focused to the West. So there was no other reason than we have to get going and close something so that the team can work on the mine concept.

Just to confirm, that was the real database for our year-end?

Yes, that was the same drilled kind of database in the year-end. So we wanted to keep at least that same database for the concept. And we carry on in the future to continue to process more iteration, that type of.

That gives me another question then. If that was the database that you used at year end, why are your reserves inferred category only like 1.5 million at year-end?

And that's an interesting question because as we mentioned, we've been paying more attention at modeling the [indiscernible] within because at year-end, we were still using the interpretation for open-pit mining down to the open-pit depth using that 0.2 cut-off grade. So we've been fine-tuning the reinterpretation of the high-grade willingness. And when we talk about open pit, we need about the gross pacing of 60 by 80 to make it indicated. When we talk about underground, based on the history of this work, we need to bring that drill spacing to about 30 by 40. So this is why we've been reclassifying some of what was used to be indicated in -- with the open-pit perspective to infer. Because for underground, when we look at it from an underground perspective, it's going to need to be drill tested tighter to meet the indicated criteria for underground mining.

And you'll see that the grade is a lot higher because it's exactly what he's saying. You're going from lower grade -- remember that picture we showed you had the resources that was a lower grade open pit. Now you're focusing on a smaller, higher grade and it's just -- it takes time to convert it and you need more drilling. That's the reason.

Okay. And then one question for cutoff. The cutoff grades, somebody mentioned 1.8 in the underground, but the text said it's 1.5 is what you included.

Yes, there is 3 things. Resources were doing it at a lower cutoff grade as usual for inferred where for resources, we're using 1.2. Then for the mine plan, we've been using from 1.8 to 1.5 over time, starting with 1.8 and then it's going to go to 1.5 eventually. So we're having kind of a dual depending on the mine sequence. So in the early part of the mine, we're using 1.8, and then we're going down to 1.5 and the resources is done with the lower cutoff grade of 1.2.

And then my stock question on the resources, then I'll pass it on. The 45% of the resource that you have and did use, does it meet your cutoff grade thresholds or not?

For the resources, yes. So it's currently meeting the threshold for the resources, that is 1.2. So we've been within the larger underground resources that totals about 8.3. If you take the indicator in the infer that is potentially meeting that 1.2 gram per tonne cutoff criteria. We've been winning it, selecting what reached 1.5 or 1.8 for the mining scenario. And we're just, let's say, taking the higher grade part of it, which is at 2.46. But the rest of it all meet the resources cutoff grade criteria.

When you pull out that high grade, it still meets the criteria?

Yes.

I'm trying to calculate a risk measurement you didn't present. So there's 53 million tonnes of resource. Had it been an open pit, it's something like 10:1 strip, there would have been 530 million tonnes of waste stripping and you were -- at $2.5 or $3 a ton, you estimate the mess $1.3 billion to $1.6 billion. So you're saving something like $1.3 billion to $1.6 billion of waste stripping and you can tell that Moose Creek, that you're not putting at least 0.5 billion tons of mess on the surface.

Go ahead. Go ahead. That's correct.

But I'd say the same thing, we're doing.

And the [indiscernible] is approximately the stripping?

Yes, like it will be a bit lesser than that when we look at it. But your point is valid, right? Until right now with the [indiscernible], we have the optionality. This option right now that we have here on the underground has some intrinsic value in relation to overall lesser footprint, overall accelerated cash flow generation, as Ammar mentioned. So there's a lot of benefit in relation to the other option to access this, which is the open-pit option.

Question. You have a 12 million or 15 million tonne sample. The Placer down mined to get 1.7 million ounces on the other side of the pit. Is the tenure of your Western extension mineralization different than with Placer mine requiring the 3-year bulk sample process? You're not being conservative for the sake of being conservative. I'm not asking you what the coefficient variation is because you haven't collected the data yet and done all the studies. But are the tenure of the assays so variable that you want to do the bulk sample because you wouldn't delay 3 years just to delay?

No, well, one second, we are not delaying for the sake of delaying. It's just we're 6 kilometer away from what Placer was used to be mining. When you look at that area with, it's still a different mining area. It's along the same corridor, it's along the same structure, but the mineralization sort of happen in pockets along that break. And we're almost, I think, from the far west of what Placer was mining, the area where we want to gather additional information. And this is the reason why we're not talking about taking a bulk sample nearby where Placer were mining underground because we have all of that drilling over there. There's been some opening. With the area we have less confident because it's never been mined. It's that area further west of the resource pit, which is quite far away from what was ever mined. But the grade at first sight looks pretty similar. It's just about the same conduct in the stratigraphy with the CG horizon and what were the key horizon at Detour. Still, it's 4 kilometer away so.

How many assays do you have there over 30 grams per 1 ounce?

I cannot tell. Time will tell it [indiscernible].

Is it very many or is it a lot?

There's a few, I would say, which is -- but it's not very typical we've been seeing recently. It's one of the drill hole you're going to see when visiting the mine tomorrow. We've been getting, I think, our best single assay ever at Detour in one of the recent drillhole, we hit the 2,600 gram, which on the sample of a meter. So there seems to be the same kind of pattern. We had locally some high grade within the lower-grade envelope but that's the nature of the beast. You're familiar with the old days what Placer was dealing with, but they were trying to do it using a cutoff grade at 3 and reaching at a grade of 5 which was much more challenging than what we're aiming to do because we see between that 1.5 for the mining will be our cutoff grade, and an average grade of 2.5 and 3 with that kind of throughput in combination with the pit. So less risky than Placer was used to be doing underground only back in the day. But a very similar standardization, very similar kind of pattern in terms of grade distribution.

Can I just add? There's a lot of references to this as a moment in time. And it sounds like the opportunity is more on life extension. But what does the 32 million tonne scenario throughput look like? Is that underground running at 7 million tonnes? And what would you look to see to sort of trigger those decisions going forward?

I mean that's a good question. Right now, based on what we see on the open pit, if you went to 32 million, you have to offset the CapEx to get there because getting to 29 million isn't much CapEx, getting to 32 million is more CapEx. So you would then look at it and you'd say, I'm basically exploiting the open pit faster and you'd look at the economics of that. So that would be the analysis. I suspect that was sort of the reason you asked the question. And you're right, that's the analysis you would have to take a look at.

It's on the open pit, so the underground is pretty much whatever you find in the West, it's probably still a 4 million-tonne throughput?

I mean you could -- because they're so separate, you're not getting in your way, you could actually increase that but that's but a different -- that's a complete from scratch of analysis. But it's a good question, but you're not constrained by space. So you actually could have a different operating phase.

I'm on a phone today, what would be the IRR of the life of mine plan 2024, open pit only versus the open pit plus underground?

So the question was, for those who didn't hear. If we looked at the economics differently, what's the IRR of the open pit today versus the underground? It's a good question. I don't know what we're looking at and maybe somebody does know. You know more.

I'll take that. Okay. It's about -- it will be about 16%.

16%?

16% with the 29 million included.

Is that with the underground?

No, that's with the underground. So 2% of that. Yes, it's, so 16. Okay. I understood the question. The inverted. We will have to check because I understand what you're saying, think firm, I don't...

Because what you're trading off here is free cash flow for the next 5 years when that...

No, but that captures it. So what you're saying is you're trying to -- you have to capture the difference in free cash flow because you're making an investment. The 18% to 25% number I give incorporates all the cash flow, including the cash flow that you give up by definition because what we do is we take the new cash flows, we subtract -- we take -- like what it will be now with the underground, we subtract the cash flows versus what it would have been if we didn't do it, and that's where we get the 18% to 25%. So it does incorporate that.

From today?

From today. Yes.

Okay. And then one more question. If you have less free cash flow available from Detour for the next 5 years, does it change your CapEx budgeting for the company? Should we think about Agnico as a $1.7 billion, $1.8 billion a year CapEx budget?

So the question was -- and I'm going to paraphrase, I apologize. If we are going to be spending money on this project, does it change our capital spending profile and roughly what number should we be thinking Agnico of should it be sort of like a $1.7 billion, $1.8 billion CapEx. That was the question. This is -- and we tried to make this point because it's an important question. This is $100 million spread over 3 years. When it's done, there's about another $630 million spread over another 3 years. In the scheme of things, $100 million over 7 years isn't a big deal for us. What I would say is we do have a good pipeline, but we are going to be very disciplined about CapEx. And it's not just financial CapEx. The truth is we only ever want to put our best people on a project. So it's also a restriction on do you have enough people to build all this. So we are going to be spreading out. But I think the ballpark number of $1.8 billion is not unreasonable. Would we peak at around $2 billion? Possibly, but only if it makes sense. And again, this pays back in 2 years. It's a lot different to build something that pays back in 2 years versus something that pays back in 8 or 9 years.

So this will get higher priority. It's one of the better projects you're running?

That's exactly. He said does it get higher priority. Sorry, I'm repeating. It's not his accent just because he's quiet there. Yes, this is -- honestly, this is a great project. It's a great project return. It's a great project strategically. I'll tell you something I think the market doesn't value correctly that's important to us, two things. One is risk, and we've talked about that. This is relatively low risk, low-risk construction, low-risk operation, low-risk community, everything low risk. And two is longevity. In our industry, we sort of tend to say, well, look, past 15 who cares? Past 15. we care. This is -- we want this to be a 40, 50-year mine life. And those are few and far between, I'm telling you. And sometimes when people make mistakes on capital allocation, it's because they have a big cliff falling off. And having long-life mines at Malartic, at Detour, at other places, hopefully at Hope Bay, I think the market undervalues that, and so this is important to us.

I have the mic. Mike Parkin, National Bank. We've got a good view of like what this life-of-mine update does for the underground. But has there been any material changes with the plans of the open pit? I know in the past, there was contentious issues around a lake kind of in with that surface, wasn't very big, more like a large pond. But has that changed? Or is the footprint of the open pits materially changed? And has anything changed with respect to what the impact is [ certain ]?

No. Pretty much the same, no change.

There was a pond at surface or a small lake, that was an issue years ago, it's since been resolved.

The free cash flows that you're showing in the presentation, is that at spot gold?

Go ahead.

Yes, I can comment on that, [ Suzy ]. So in the presentation, we're using $1,900 gold, that we show between 2030 and 2043, we average of USD 650 million a year. If you adjust to $2,300 gold, we're producing on average 1 billion ounces a year, $1 billion of free cash flow, our cash costs are $543 an ounce over that period. So that's the sensitivity, 1 billion ounces, $1 billion a year for 14 years from 2030 and 2043.

I don't think I need the mic. But I have a couple of questions, I guess. First one following up on Mike's question about the open pit. Did you look at a trade-off study of maybe connecting the open pits and going a little bit further at depth there before you do the underground? And then my second question will be following up on that. If you did look at a mill expansion scenario, I know it's like super, super preliminary, but would you be able to give us any kind of estimate like how much incremental was an expansion to 31 million or 32 million tonnes of your cost?

So the first question, we did look at sensibility between underground and open pit so to optimize that boundary. So this is, I would say, at the current view, the option. And then the second piece is at this point, it's very early in the stage. We're still doing the studies that Larry mentioned, we did a mill survey, we're trying to understand grindability, what that will do CapEx-wise. So we are not in a position to share more detailed information.

If I could just add a really dumb question. And I'm sure it's in the release somewhere, but it didn't come out too early. So I didn't have a chance to read it all yet. But when you show the life-of-mine plan, can you just talk about like how much of the measured indicated inferred is in your life-of-mine plan today and in your IRR calculations today?

Sure. So in the life of mine, I don't remember by heart the breakdown between indicated and measured in -- you're talking about reserves, correct? Your question's reserved?

Just like how much of the reserve and the resource is in the life-of-mine plan, in the IRR calculation?

So just to clarify, there's the life-of-mine plan, which is without the underground, right? So there is no PEA. In the PEA, we have -- because they're now in the PEA and putting inferred, so I'm mixing reserves and resources. So in the PEA, we had 18 million ounces that's coming from the reserve and 4 million ounces that's coming from resource and that 4 million ounces has 85% of it is inferred, 15% is indicated.

So in the 18% or the 25% IRR, that's including all of the inferred?

Yes, yes.

David Haughton. So having a look at Page 30 of your geological plan, you have the underground resource, just hitting the bottom of the open pit and then plunging pocket to the West. So I'm just wondering, okay, it's open to the West. But is it also open at depth and this underground potential? Can open up your mine to looking a little bit further East at depth compared to where you're drilling now? Or is it geologically confined for some sort of mineralized cutoff?

I'm sure like the other question, could you rephrase that [indiscernible]?

Maybe if you can repeat the question, I apologize because it's hard to hear it, I don't know.

I think his question was we're going underground to the high-grade ore to the high-grade core. We know that it extends and dips to the West. Is a close to [indiscernible] step though? Do we know?

No, it's not closed up at depth. So as we discussed, the PEA currently contemplates just what's there, what's in blue. And to the West here, what we were discussing as an additional exploration of site, all of those green, which we have a certain drop pacing not like tightly drilling off and still to the West, there was still drillhole showing, for example, here, almost at 1 kilometer 32-gram over 4.8, 2.6 over 35, 2.8 over 14. So we are still into the deposit that around a kilometer here. And the PEA just consider the overlap here, bit on the ground up to that limit here. So we're still a couple of kilometers, and it's still open.

I think, Guy, he was also asking is there anything under here.

Well, the nature of the deposit is plunging like that. That's a fact. When you look at the old working from Placer, the shapes tends to be like that, and there's a collection of them. But that's also a point here that we wonder if there could be some other repetition. So as part of a, let's say, broader, more wild cat, we're aiming to target beneath here to see if there's additional repetition because here, you saw there was some old zone here, there and there are still some remnant here. So we wonder if there couldn't be something else. But now...

Is there no information?

It's no information. So there is very limited drillhole that was done back in the day, below while Placer and there's still the chance for repetition and that's part of our -- more of a wild cat kind of approach.

Yes. That's more my point because it looks like a lot of the geological thinking has been confined by we have an open pit and the open pit can only go down so far and you haven't looked below the open pit. So what you're saying it's actually quite [indiscernible].

Well, that feature, it's a plunging almost folded kind of shaped feature that has the general trend to go like that, that we have investigated down to a kilometer here, but that's the nature of the ore body. Could there be another plunge or shoot at depth? Yes, there could be. But based on the circled drillhole here by Placer, there was a couple of dead hole here and we're kind of wonder based on our overall [ geographical ] understanding here, there could be something else sitting here. But fundamentally, this is more that tubular kind of shape plunging over 9 kilometers. That is the primary thing. And since we've been getting some decent results here, we cannot go all over the place and investigate everything. But that's in the back of my mind to test a couple of wild cat here.

But you're right. I mean the history of it's open pit, and you tend to go to a certain depth only. Anita?

Yes. So a question on the open pit and the cost. How much of the -- so I think it was 24.9, right? Now on the unit cost for -- was it? Yes. Is that net of deferred stripping? And how much stripping is included in your capital number there?

It's net.

It's net.

And it's Canadian. It's Canadian.

Yes, Canadian. And then how much of your capital number for the open pit is deferred stripping? So because otherwise, I guess, we're going to count to 12 [indiscernible]. No?

I'm going to have to get back to you on that one.

In terms of like the bottom of the pit and the ramp, do you not need to maintain some kind of a crown pillar?

Yes. So that was part of the study. We're looking through all these different aspects, okay, like stability. There was additional geotechnical drilling that was done to understand the rock mass, and there's a science behind that was put it to make sure that there's difference. So there is a buffer already included in the study.

Yes. So does that mean that you lost any of the bottom of the open pit ore?

No, we didn't lose because the pit was like as I mentioned to the previous question, we do that trade-off. And that meant that the pit one in relation to the reserve. So we didn't change the pit.

Okay. And then 4 million tonnes coming up a ramp. Does that -- is the initial capital estimate for the underground, does that include everything like the haulage fleets they're going to need?

Yes. And then the most of the material handling will be done back on the year.

And the conveyor is obviously not in the pit.

Sorry, the conveyor's not?

Not in the pit.

In the pit. All right. That's it for my questions.

We'll go up the line -- call back on your line.

Actually, one last question. Are you going to file with the PEA?

We will file within 45 days.

Yes. The [ 942, we're going to ], yes.

So if there are any questions online -- ooh, sorry.

Just with respect to the tailings facilities, I remember there's 3 cells originally planned over the life of mine. Does this PEA push the requirement for a forth cell or does everything fit in the 3 cells that you planned?

Yes. So we will be a fourth cell. So we have -- but it's not related to the underground. That was part of the -- let's say, the updated of the pit like that we need a fourth one, fourth cell. So in the 2022 update, that fourth cell would be part of that. So you're already -- the underground here, in fact, helps in a sense because part of the tailings are going to be used for backfilling the stores, right? So from a -- there is an impact at the end, but at that point in time, it's already [ infill ] disposal that we are assuming.

[Operator Instructions] And at this time, it appears we have no questions on the line.

Can I ask on Slide 19, the stope picture to the West is kind of spotty. Is that just a function of the spacing right now? Or is it continuity of grade?

It is classification. So at that point there, if you go to the next one -- sorry, the one that we have the -- that one. So resource classification, you can provide more color on it, right, Guy?

There's 2 things that's here and classification, but also sometimes you have grade [ fit # ]. And that's something that even here in the old days, you see that there's a migrate shoot, sometimes the grades fades a bit and then it comes back. So there's also -- it's a mixture of sometimes drillhole [ entity ] information and sometimes the grade is getting narrower as -- lower. And the envelope is still there, and we've been modeling it. But sometimes just the grade doesn't hold together. So it's -- this is one of the reasons why when we don't want to go after the high-grade underground, we need a tighter drill spacing. But it's not going to be mined as a plywood panel all the way down. There will be an area where we'll be leaving stuff that is not meeting the economic criteria.

We do have a question on the phone from Carey MacRury at Canaccord Genuity.

Yes, can you hear me okay? I just had a question on Slide 14, just about the stockpile processing period. You've got cash cost there, $1,400; gold price is $1,900, that's $500 an ounce times roughly 300, you've got 150 million. The free cash flow there shows almost double that. I'm just wondering, am I missing something on that calculation?

Yes. It's mainly the accounting principle because the stockpile has been capitalized over the years, and now it's a noncash item that is depleted at those -- during that period.

Good answer for a non-accountant.

Thank you. I've been coached by a bunch of good accountants.

And how much of that is in the cash cost? How much of the cash cost is noncash cost, I guess?

I don't know by heart. We will have to get back to you.

[Operator Instructions]

Well, I think everyone -- oh sorry. Go ahead.

I'm sorry, sir. No questions.

Okay. Well, thank you, operator. Well, thank you, everyone, for coming. It's -- we ran a little bit over on the presentation, but we really did try to be -- put everything out there. Again, this isn't an exceptionally complex idea. We are accessing higher grade sooner than we otherwise would. That's pretty much it. I look forward to everybody going on the trip tomorrow. It is a fantastic sight to see for those who haven't seen it. I apologize, I can't go; my niece is getting married, so I have to go to that. I don't say that in a bad way. But so I hope all of you enjoy yourselves. And you can tell we're very -- we're really like this is important to us. We promised you guys this 2 years ago. And so it's a big deal for us to be able to deliver. So thank you very much.

Thanks, everyone. Thank you.

Ladies and gentlemen, you may now disconnect your lines.