Challenger Gold Limited (CEL) Earnings Call Transcript & Summary

Okay. Good morning, and welcome to the Challenger Gold Investor Webinar. I'm Jane Morgan, Investor and Media Relations Manager. And today, I am joined by our Non-Executive Chair, Peter Marrone, our Chief Operating Officer and Interim CEO, Yohann Bouchard and our Vice President, Projects and Strategy, Luke Buchanan. Today's webinar will be running through the investor presentation, which was lodged with the ASX followed by a Q&A session. [Operator Instructions] Peter, I'm going to hand to you.

Jane, thank you very much, and thank you to everyone, both this evening and in the case of Australia this morning for participating in this webinar. Let's begin the presentation. by discussing management and what has changed, one of the questions that I'm asked is what has changed in the company. And amongst the many things that relate to the asset itself and the improvements and optimizations that are being undertaken Clearly, none of that can happen without a quality fit-for-purpose management and one of the questions that I'm asked is what is the appeal of this particular investment that I've made. And yes, it is an investment. I am an investor as you are an investor. I prefer to refer to it as an investment plus. The plus part is I was asked by many of the institutional shareholders and the Board of Directors of the company. What can I do to improve and optimize the governance of the company, what can we do to improve the management. But one of the opportunities here is also that there is a fit-for-purpose local management that we have supplemented but that already existed in San Juan Province in Argentina. But of course, corporate managers are important. And so with the introduction of Yohann Bouchard as the Chief Operations Officer and Interim Chief Executive Officer, Felipe has our Chief Financial Officer; and Luke Buchanan, as Vice President, Projects and Strategy; and Luke and Yohann, as Jane mentioned, are on the call. We have a fit-for-purpose management that can develop this asset, take it from the prefeasibility stage when it was handed over to us over to development and then production. It is a management and Board of Directors that has a proven track record of value creation, clearly, with leadership coming from Yamana Gold, Allied Gold, New Gold and Andean Precious Metals. There's extensive mine development and operations experience, mostly with large-scale open pit mines across the Americas. And that aligns with the company's transition from a exploration company, as I mentioned, to a development stage company where project execution will be critical. And then, of course, as a producing company, producing asset where the operations will be critical. There's great depth of technical expertise to optimize and to derisk the Hualilan project, through completion and detailed engineering. Again, I'm often asked what was it there was appealing about this project and here we are with a project that is while the pre-feasibility study stage, many of the components in that prefeasibility study are at a depth and breadth that exceeds the nameplate of re feasibility. It can be taken to detailed engineering and then ultimately to development. And we see that there are some significant optimizations and improvements that can be made. We're in progress on those optimizations and improvements, testing those as we also complete the detailed engineering. And as many of you are aware from our public disclosure, we've also advanced the project such that rather than being in production in early 2029 -- early 2030, my apologies, we expect to be in production in early 2029. This is a company that is underpinned by 2 large-scale gold projects with a near-term production pathway with long-term growth optionality. We have, in Ecuador, the El Guayabo project, it's a copper gold exploration project, but with significant inventory of ounces already at more than 9 million ounces of gold and gold equivalent. And of that, almost 7 million ounces that's attributable to Challenger Gold. We combined aguaavo and the Colorado 5 deposits. It's open at depth and a long strike with district scale potential. It is a very large footprint with many untested targets. And it is also, yes, on the same system as the egos project, which was sold in 2025 for $650 million. Again, of the questions that we're often asked, we were asked the question, in this case, what do you intend to do with it? And what we intend to do is to maximize value. And the starting point of maximizing value is better understanding it, likely engage in an exploration program and then ultimately determining what we do with it at that point in time. [indiscernible] likely an option that's available to us, but we will look at other options that can maximize value. But clearly, the prize here and the asset that we are here to discuss is the Hualilan project in San Juan, in Argentina, already an inventory of 1.8 million ounces that would be produced a gold equivalent with just over 14 years of mine life, but with the opportunity for that to be increased significantly. We are fully permitted. And as I mentioned a few moments ago, the intention is not to start operations in early 2030 as contemplated in the pre-feasibility study, but to bring production forward by a full 12 months to early 2029 with a CapEx that is comparatively manageable, certainly for a size and scale of company that we are, we think the $267 million is a manageable amount for us to spend to develop this project with a payback even at a discounted gold price of just over 2 years. And I want to come to this point of the net present value at a 5% discount rate, we use 5% as a discount rate because that is convention what is used normally in marketplace. So we're comparing apple-to-apple, our project, our company to other projects and companies that are comparable, but $1.1 billion at a discounted gold price, that number climbs quite dramatically to $1.8 billion. If we look at a $4,500 gold price. So roughly, where gold price is trading. But in our view, we're not going to look at this only from the lens of how do we maximize an already robust net present value of $1.1 billion to something significantly higher based on gold price. We're going to look at it from the lens of what can we do, what are we doing to maximize and to optimize this project, and we'll go into some of that detail. in a moment. So with that, perhaps if I can pass the presentation, Yohann, to you, just to go through some of the information that we just discussed, but are detail.

Yes. Perfect. Thank you, Peter. So next slide, please. So on Slide 6 here, we have our different, 5 priorities that we're working on at this moment to increase value for shareholders. So the first one is really the commercial production early 2029. So we engaged BBA consultant to work on 2 different things. The first thing is to update the PFS study to under 43-101 standard to be able to promote the company to, I would say, Canadian and American-based investors. So the second thing is also to do the detailed engineering to advance the project to early 2029, and which is about a year ahead of time. So basically, we are in a process through a different test work. I mean to go beyond what has been said in the -- I would say, as opportunities in the first -- in the physical study by testing some other I would say, recovery on gold and leaching and also some other trade-off analysis on the, I would say, on the leaching plant. So this is something ongoing. It's advancing really fast. I mean, we already put the package in place for bidding for long lead equipment and we hope bill to send a tender within the next couple of weeks. So the other one is increasing Hualilan NPV ahead of construction. So we see a lot of potential with exploration and reserve growth. As you know, we plan 35,000 meters of drilling to transfer some inferred into reserves, but also to -- there's many bases that Luke demonstrate later on that has been not even drilled. So the pit is on as you made it was, but in fact that could be or -- so we're going to pay attention to those places and see if we can transfer some of that material create, I would say, or out of waste. So it would be really beneficial for the project. There's some of the point here about security project financing. So basically, what we did is, for sure, we went through site many times. We look at the budget. We came up with a different budget, different approach, which is a bit more maybe center on cost control and cost savings compared to before. And we want to make sure that we spend the money at the right place, at the right time and control our cash as much as we can and deliver on the objectives Refining the debentures, Peter, something had talked about already. I mean we're going to come back to that. And for sure, completing the financing by mid next year, one way or the other is going to be important to ensure continuity of the project. So for sure, coming back now to the internal exposure. The developing NI 43-101 report is quite important for us, many investors here in the -- in Canada and U.S., they require such a document to get certainty on the project, and that would be really beneficial to showcase the project to new investors. I'm looking at upgrading as well on the OTCQX in the U.S. that's going to be done very shortly, hopefully. And for sure, we're going to look at another relisting as well. So the last one, which is quite interesting is the Ecuador project, which is it's a large project that we start to look at it barely. I mean we're quite focusing now on Hualilan, but now we're going to start to look at it. And we believe there's a strong potential to increase value and take a proper decision in time. Peter, would you like to add something to that slide?

Yes. Just a few cents, Yohann. The first is One of the questions, and there are some themes to the questions that we've already received. So I'll try to address them even before the formal Q&A. But one of the questions that we're asked is about the convertible debentures. And of course, there's also a question on the financing of the project. The convertible debenture that is outstanding is repaid as of tonight. We are refinancing that convertible debenture and increasing the amount that we're raising as we publicly disclosed, we expect that will raise at least $30 million. There's strong support for this replacement convertible debenture that will allow us to be able to bring money into the treasury of the company. And if we look at the amount that we have as cash on hand, plus that $30 million that would come into the treasury. We're estimating between $25 million and $35 million. Presently, we stand at about $30 million. We think that, that number will increase. With that, those funds, we have sufficient funds to carry us at least into the middle of next year to deal with the long lead time items and to give us that runway that we need for the purposes of completing the full project financing. We have to look at this from the lens of history and also practicalities and logic. On the history, Yamana Gold, which is a company that I founded in 2003, spent almost $250 million for the development of its first project in South America between 2003 and 2006, 2007, and the market capitalization of the company when we began the financing of that project was roughly a couple of hundred million dollars. So we actually start from a very similar position to where we were at that point in time. And so there's a bit of history that makes it certainly compelling to me to say that we certainly have a track record of being able to finance these projects independently of the market capitalization of the company. Most recently in Allied Gold, we began with a market canalization of roughly $900 million, $950 million, and we were able to secure financing for a very -- a much larger project, a project that will be producing close to 300,000 ounces in Ethiopia with a capital cost that is approximately about $575 million. So I'm very confident saying to you that we'll be able to secure the financing that we require for the completion of this project with a capital that is estimated to be somewhere between $210 million and $267 million. And why I give that range is because one of the items that Yohann will be looking at and will speak to is reducing the capital because in that $267 million is an amount for our connection to the power line, well, rather than us spending the money for that, we can have a utility do that and then we pay for power. That's certainly a very viable for us. I don't want to leave you with the impression that the Ecuadorian project is for sale. I've made that very clear from the very beginning. But when you have optionality that comes from another project that is not core to the company, at least not core to the present development stage of Hualilan, we certainly would look at that as an option for the purposes of bringing further funding into the company. Bottom line is we have repaid the convertible debenture as of today. We have a replacement convertible debenture that tops up the treasury of the company after that repayment, that gets us to a cash balance that carries us including expenditure on long lead time items into the middle of next year, and it gives us plenty of runway for the required financing for that $210 million to $267 million for the development of Hualilan. Yohann, let me pass it back to you.

Thank you, Peter. Next slide, please. So here, I got a single slide on Ecuador. So what I'd like to see here is El Guayabo is, again, has 9.1 million ounces from which 6.9 million attributable to Challenger Gold. So I mean, this is a Tier 1 district obviously here. I mean, we're neighborhood of, I would say, of the 26 million ounces concrete deposit, which is massive. As you can see, that deposit is only 6 kilometers away. And personally, in previous life, I operate like multi-pit operation that was at that distance. So you can see perhaps the potential of that really well-located deposit. So again, we're talking about here about bulk tonnage. There is a high-grade core, I mean included in those deposits. I think the exploration team previously did a wonderful job by increasing maiden resources in 2023 to 9.1 million ounces within 3 years, which is quite significant. And for sure, it's open in all directions. -- adept in strike and we believe a modest budget. We believe that we can spend much other than that the current resource. Again, just to -- the title is quite important here. So that project is located on the 6-kilometer from Cangrejos that was sold at AUD 650 million a year ago. So we don't know really what we have yet. I mean we're going to pay attention to it. And for sure, we're going to take action on that in but it seems to be a really good project. So next slide, please. So now just going back to Hualilan. So I just want to talk a little bit about the location of the project. So the project for Argentina, as the landscape acting significantly over the next couple over the last few years. So looking -- it's a very interesting place to the business. like we're going to talk a bit about the RIGI that's been put in place is a program for a large business that gives some benefits and improve in PV basically. So in the feasibility study, that's been done and published in May. That accounts for about $10 million that is already reflected in -- so just to show how it could be resting for -- to start a project of that scale. So the -- we already started to work on the application, and I'm going to come back to the time line on a different slide. So San Juan is a mining place. It's one of the top mining place in Argentina and gain South America. So it's not that complicated to find people there. I mean, we have most of the people that we hire. Now we basically were shifting. I would say the mine management team to an exploration project to more operating project and construction and the people that we hire, they had at experience and the old base out of San Juan. So I'm very glad I mean, and Peter thought was about that, I guess, on the first page, talking about the management team that we're putting in place there. And it's really top people with high integrity and with a proven record our building mine and operating mine and improving. So I'm very happy with that. The site itself, I mean, it's located about 100 kilometers north of San Juan. It's easy access. It's pave road and VLT is only 1,700 meters. So still high, but not high as the automine -- so there is no logistic associated to heavy snow and that kind of stuff, it got cold, but all manageable. So it's location is quite handy for the deposit. And for sure, it's fully permitted, which is great. I mean, the only thing we have to do is just making sure that we update our EIA every second year which is basically a formality. And we have to -- I mean, the next update is due for October 20 of this year, and we're pretty much aligned to have everything ready and submitted to the government intenses. And we have a strong support from the government as well, then we create -- the new management team succeed to create really good relations so forth. So I'm really happy with that. And for sure, what is important is the project going to create about 900 jobs in San Juan and really happy about that. And I think that, that is going to be a major economic engine for Argentina and San Juan.. Next slide, please. So here, just to give you some color, I'm going to go fast on the RIGI application. So again, Red is created to attract large-scale projects by offering benefits to improve NPV. So as I said, for the product here for Wallan, we're talking about already the $5 million of benefits. That's already reflected in the PEA of May. So basically, to be eligible to RIGI, the project has to be above $200 million and about 40% of that amount has to be spent in the 2 first year. So I will not go through all the benefits, but just to give you a list of all the benefits that we have here. And -- about, I would say, a month ago, we started to do the to, I would say, to set up RIGI to fill the paperwork with the active to submit the application last week of September, first week of October. So -- and we believe it's going to take between 4 to, let's say, 6 months to get the application. The good thing about it is RIGI is retroactive, so we can really put RIGI against expenses that occur so far. -- since the project start. So basically, I mean, there is no doubt that we're going to meet the eligibility that is on that flight. So we'll go now to Slide 10. Peter, do you have anything on rigor it's pretty straightforward.

It's an impressive system that's been adopted in Argentina certainly the train the quality of jurisdiction that they're supportive of mining and to create that type of value to reduce taxes in the way that it does. Clearly, they're trying to encourage large-scale projects, we qualify as a large-scale project.

Thank you. So going now on Slide 10, the upside here, it's kind of a snapshot of the PFS side, the major line. I mean we talked about that many times. But on top of that, I mean, I wanted just to bring my attention that what Hualilan has to offer is one of this is a rare kind of project case I mean it's fully permitted, as we said. We don't find that every day Tier 1 mining reduction, so it's access to really good and skilled people. I mean mining is important there. So I mean it's 1 of -- it's a place to be, and I'm sure that -- as Peter mentioned a few times. I mean I did business there in San Juan and in other provinces of Argentina. And I mean, it's great for us. We have an experienced team in place. As I said here, we're really succeeding at recruiting like top people to do that. I mean we just recruit like a project manager that just finished building a heap leach in Santa Cruz we're having people return that know what to do it and did it in the past. So under we content on that aspect. Capital efficiency development, this is something that is quite interesting from that PFS, having -- being able to sequence heap leach and flotation with few years of interval it's something that is quite interesting in a way that you can finance basically a second phase from cash flow for the first phase. So it's quite good and it derisks a lot the project. And for sure, the investment within heap leach is not that big. So it's -- and a lot of benefits can be created in cash flow to -- again, to finance these to 2. Low operating risk. Again, this is bulk mining it's a large-scale operation, bulk mining. So it's not like mining narrow vein so you cannot miss but a bulk open pit, low-grade it's nice to mine, actually. I mean it forgive. And basically, I mean, to develop, I would say, beach operation, need to develop a mine need to develop a leach fab the processing circuit. And it's a pretty -- it's easy forward, I mean, too. It's not that complicated, and that can be done within 15 months about -- and for sure, significant upside with the deposit with exploration. As Luke is going to show that later on, but we're going to see some good target in pit that has not been touched has been like treated at was, but could be or -- and basically, there is also potential to extend in strike. And it's a large land package that deserve to be drilled a little bit more as well. It's -- we have a lot of other big tagground there, obviously. So again, I need to go through that number, like 1.8 -- 1.8 million ounces equivalent of production over 14 years. compiling like NPV of $1.1 billion and the $1.8 billion at 4,500, which is pretty close on what we have now. So the return is 35% on the investment, modest initial CapEx of $267 million, that is including $25 million of contingency and the $47 million about for the power line that we will not -- that is going to be done by a third party basically. So that decreased significantly the CapEx cost, and we see some other maybe cost savings and be able to offset some costs for future year. But -- so we believe that we can build the Phase I with mucoadhat, obviously. And the payback is only 2.25 to 2.2 years for the old project. And I'm sure if I would use a $4,500 gold price, it's only 1.25 years at -- but as well as we look at just -- if we just decide to go with the e-fleet and postpone by more than 2 years, the flotation, the payback of the lead chain, I would say, operation is about a year. which is quite interesting. So I mean that's -- we're talking about 200,000 ounces that will produce over the first year, and this is enough to pay back pretty much all of the CapEx considering the lower operating cost of that operation. Peter, you would like to add to that, perhaps?

Well, let me just touch on a few points. This is a value play. And so it's a deep value play, with the market capitalization of the company and a net present value that is likely going to get well above that $1.1 billion that is shown in the pre-feasibility study. And my view is we can see something that is in the range of 40%, 50% higher than that with or without an increase in gold price, I see here because of some of these optimizations, capital efficiency, the upsides that Yohann has mentioned, and we'll touch on in greater detail in a couple of minutes. So there's a very compelling deep value play here that I think cannot be overlooked. And if we go to the next slide, let's just speak very briefly on the production platform. This production platform shows an average over the 14.25 years mine life of 135,000 gold equivalent ounces. Most of that is gold. About 85% of that is gold and the balance is silver. This is showing what happens in the first couple of years with heap leaching and then what happens once the flotation circuit -- flotation production is in place by 2031. Again, as I mentioned before, Yohann mentioned, this is a full 12 months ahead of schedule to the prefeasibility study. We took carriage of this company from a Board point of view, management point of view and made our investments that AUD 86 million that was raised, including my money that came into that in your hands. We came into this as the prefeasibility study was being completed. But we looked at it and said, while there are quality elements to the pre-feasibility study, there are further optimizations and improvements. So one of those is shown here because what we intend to do is to improve this production schedule. That's one of the corporate actions that we intend to take to smooth up the production and we'll do that as a result of many things, exploration successes, bringing some of the pre-stripping that would -- or stripping that would be done in later years and bringing some of that forward. that might increase capital more modestly, but it will also increase production significantly in those years when we see from 2032 to 2036, our production platform that is lower than that 163,000 ounces in 2031 and over 170,000 ounces from 2037 to '39, blend out the production make it closer as a -- not just as an average, but year-over-year of that 135,000 ounces plus exploration successes and plus recoveries that we'll speak to. The pre-feasibility study assumes a 69% recovery but many of the column tests show well in excess of 80% recoveries. And so we're highly confident in high conviction, pound the table, that will be able to be at least in the range of 75% recoveries. So there's significant optimization and improvement. And even with the termination of the toll milling project, we did learn a lot. Yohann, you touched on this. We learned that we've derisked the project. We've learned that this is a lower grade large volume operation, more than selective mining. We have a better understanding of the metallurgy, a better understanding of the geology of this deposit. And so while we stepped in on the basis of the quality of work that was done up to the point of the pre-feasibility study, we also saw some significant optimizations and improvements. And part of that optimization improvement will lead to a better production schedule than what you see here, which is already a very high-quality production schedule for an asset of this descale. Perhaps if we can go to the next slide and Yohann if I can pass it back to you.

Yes, for sure. Maybe to add to this one. I mean when we look at the feasibility study, I mean, the ramp-up of production was quite low in the first year. So and talking with a contractor that we're going to do mining, we all believe that we should be a little bit more aggressive to start, and that's another way to bring ounces forward and to smooth out that production profile. So there's many opportunities that we're looking at, at this moment, not only with operation, but also with, I would say, with the main concept to smooth down that production. So going now to Slide 12. So here, I mean, that really show -- I mean, we show that road map in release and this is giving like, I would say, a right level information to what has been done and what we're going. So as you know, the PFS has been delivered in May, which I believe is quite strong. And on top of that, the PFS came with really good opportunities that we are taking seriously and that are under review -- and so far, so good, I would say, we took action on all of them about drilling, about TDA study about -- let's say, about increasing recovery. We touch all of them. And I mean, pretty good job has been done to highlight those. So bring me to the next phase and generating procurement and construction. So this is all ongoing I mean, we engaged BBA as I said. We did -- we are doing like detailed engineering. We engage with most of the consultant and contractor, I would say, to help with the construction of the main components. So it's advancing very well. So what we're doing is we're getting all the bidding package ready. Again, that should be out soon. And after a we're going to get that and be in position to understand the time for long lead equipment and purchase the equipment right in time. I would say not right in time, but with a buffer to have everything ready and functional for the beginning of 2029, basically. So on that aspect is of anything well, we are cross-eng like the mine plan, looking at other opportunities on that aspect. So everything is well integrated. And I would say, Luke is on top of that and really committed to make sure that everything is evening well. So exploration here, I mean, again, it's -- we have a good plan in front of us. I mean, 35,000 meters of drilling, targeting those void at Luke is going to show on the next pages. And I mean, we see a lot of potential there to improve what we have, which is already really strong 1 point of view. So refinancing, Peter talked about that. This is something that is ongoing now. And for sure, the execution is -- I mean we're going to get there soon. So power line, I mean, we engage with the third party for the power line construction. Everything is advancing very well. And again, all the permits are in place. So that's a everything and that make everything really, I would say, make 2029 as a really realistic objective. Luke, I mean, maybe I forgot something, you want to -- something to say on that one.

Just to reinforce, Yohann, that the reason that we were able to bring production forward at 1 year from 2030 in the PFS to 2029 now. as we've gone back and looked at the execution plan that was developed for the PFS, and we've gone through it with BBA, and we've identified where the -- what is the critical path to put this line into production and we've bought a lot of a lot of those activities forward to this year. So a lot of the stuff that we're doing now in terms of the engineering, the test work and the earthworks, that wasn't supposed to start to next year, but we've bought the expenditure and we brought the activities forward to make sure we're on track for 2029.

Thank you. So going now to Slide 13. So again, talk a bit more about -- I mean, we touched base about that, but all the opportunities that we see here, I mean in more detail -- we have like acceleration. I mean, from day 1, we said that we're going to do exploration to convert some inferred into reserve and also to find and to fill those gaps of, I would say, ways that could be or so we're executing on that. We have 4 rigs at this moment at site. And we are aiming to fulfilling that objective by, I would say, end of this year, beginning of next year. But we intend to give market I would say, a follow-up on exploration at the end. Improving heap leach recovery is quite interesting here because the PFS is showing 69.7% recovery for the pad, but the average was about 74.7% recovery. And this is for, let's say, 120 days of leaching. -- basically knowing that we're going to reach more than 120 days is each lift, and we're going to go in the dofmaybe 500 days about, let's say, for each lift. So we believe that putting back that 5% into the PFS is reasonable. So we're going to -- that the new PFS is going to show 74.7% compared to 69%. So that will, for sure, improve all, I would say, gold production profile. And what we're doing as well is when they were doing the test work for the -- it seems like the larger column was returning better recovery, and this is normal. I mean if you use a bigger column and the ratio between the biggest particle and the common size is becoming less relevant with a bigger can. So with a bigger Colin, they came -- at the time, they came up with a recovery of -- so now what we did is we partner with the San Juan University, and we're doing some common testing at 8 and 10 inches. And basically, we just started those tests at the beginning of September. And after the 20 days, we should have resolved, and this is our intention to share those results with the market sometime in Q1 next year. So I mean, everything is pointing to a really good heap leach recovery for sure. Mainland optimization here, that's an improvement that is pretty much under Luke, I would say. So I mean, what we try to do here is really optimize the mine through process, I mean, plan, improved equipment ization stockpiling management and all that kind of, I would say, more production-oriented activities . We can be much more detail on the plan, and that's going to be done under, give an example, I mean, the PFS is not really specific about the stacking sequence and we're going to make sure that in our next iteration, the -- I would say, the stacking sequence is going to be considered for sure. So those kind of things are really helping to really decrease and really pinpoint where are all the savings -- and for sure, reducing upfront CapEx, as Peter mentioned here. I mean we're already engaged with a consultant and all the, I would say, big energy company in Argentina, in order to give them the mandate to build, the power line, and that would be repaid over like the life of mine per tonne process basically. So which is a really good deal for us. And for sure. And we believe that it's going to take about 2 years to build it. So we believe it's going to be ready pretty much at the same time, then we're going to be going to start our, I would say, heal leach operation. But worst case worse, if it's delayed by a few months, the plan also, I would say, we also have 2 generators in the budget to make sure that we're going to have the power that is required to run the leaching plant. So those are mainly the things that we saw from the first PFS. And again, we're executing on each of them. So Peter, anything to say on this one?

No, I think you've covered it, Yohann, let's go forward.

Thank you. So again, here the detail engineering here, and this is something that I'm going to just maybe bring gas on that one and turn it to Luke. But Basically, the Phase I is really underway with BBA, with meeting like every week discussing the details and putting together the plan for the long lead item, which is quite important. And now we did the verification on the block model. Now we are at a stage where we're doing reserve mine planning, phasing and selection of mining equipment. So that is pretty much what we're going to do over the next couple of weeks. We drilled 5,500 meters of geotechnical hole to make sure that we have the stability of a wall, right, and also to make sure that we have all the combination program in place for the infrastructure, but also we're also going to use that information to or sorry, for groundwater management. Metallurgical testing. I talked about that already. It's quite interesting. The other thing I didn't talk about is all the crushing size testing that we're going to do, making sure that we have crushing right to optimize recovery. There is a ratio between if we need to add cement and crushing. So we need to run some tests, making sure that we have this, we have the core, but that's going to be done within the time line that we specify here. And for sure, I would say the hardwork that needed to be done, bringing the equipment in time, the construction of the ramp-ups that have started already I mean we already -- I mean, from the to milling and the work that we did before, I mean, a lot of money that's been spent is going to be used for the larger-scale operation, so which is good. And again, one other thing that we did with so far, I mean, we built a stockpile as of the end of June of about 80,000 tonnes, growing about 72 grams per tonne. So the idea is also to be proactive and build a stockpile to make sure that we're going to have a smooth start when we're going to start the operation in 2029. Luke, you would like to add to that?

Maybe just add one thing with Metallurgical Testwork, apart from the increased recoveries that Yohann, you've already talked about, there is also the opportunity to optimize the crush sizes and also the reagent usage as well. So there is an opportunity to reduce the operating cost for the heap leach as well as a result of this test work. And we're also going to use this additional metallurgical information to build a geometallurgical model so we can really target the best recovery zones early in the mine life to help, to bring some of that production forward like Peter mentioned.

Next slide. So just on the Exploration. As we reported in July, we've started our first real exploration program at Hualilan for 3 years. Really in the last 3 years, the company has been focused on converting the resources to reserves and doing the studies to complete the PFS, and that's been successful. We've got almost 2 million ounces of gold equivalent in the mine plan at the moment. But now that's done, we're going back and restarting the exploration. So we currently have 4 rigs on site. And what we're really looking to do is try to focus on the areas that have the biggest impact on the on the mine plan and can add value quickly. So we're really looking within the pit and also adjacent to the pit without necessarily going deeper and without exploring some of these other targets just yet on the land package. So deposit is drilled really well. It's drilled to a space of about 40 meters in the area of the resource and reserve but you'll notice that outside of that area, there's very little drilling, even run next to the pit. So what we're doing is going back identifying some of the gaps and they're shown in red circles on these projections on the right-hand side of the slide. And so we think there's some good opportunities here to either expand the pit with some additional mineralization or even to convert some of the waste within the pit to ore. So it's fully most clear to see that on the bottom cross-section where some of these drill holes we stock short. And we think there's a good opportunity for the mineralization within the pit to continue up there. So that's going to reduce the strip ratio and improve the economics of the project. We're really focusing on the other side, but pink material in these cross sections. That has a really good continuity and scale and it's also really good for the heap leach process too. So we're going to be focused on some of those areas. In terms of the time line, as I said, we've started drilling. We've got 4 rigs on site we're being to give an exploration update by -- before the end of this year and then to incorporate these building results into the new reserve and resource estimate. We say half to second half of next year, but it's probably going to be around the middle of next year. Next slide. So this is just showing the same thing, but in plan view. So I think this really clearly demonstrates the point that I was making that we have a lot of drilling within the pit, but very little outside of that. So you can see both to the north on the left and to the south on the right again side of the this slide, the opportunities to extend the pits along strike. And even the next -- like parallel to the existing pit, we have some opportunities there to do additional pushbacks as well. So plenty of opportunities. And really, that this first 35,000 years is going to be focused in on, and we expect to see a bit of an increase in reserves next year.

Thank you, Luke. We'll take over on that one. I just want to say on this year, I mean before us wanting the management team, I spend like 6 to 8 weeks looking at our project, and I was quite impressed -- and basically, based on that, and I've been for sure I became an investor but which is quite good. And I mean also like I mean, part of the management team. And basically, what I saw are pretty much I mean retaining that side, I mean, we saw like an opportunities to bring forward like the production in 2029 by having like I would say, the simplicity of the project, which is quite impressive here. The fully permitted -- it's fully but capital-efficient goal development project. I mean the way that the sequence by having Phase I and Phase II, one after a charter, quite impressive as well, I would say, and this is not many deposits that can offer that kind of sequencing and I would say, capital discipline to manage risk, I would say. So the strong PFS economic of $1.1 billion, a 35% IRR It's, again, for that kind of project here, it's really good. I mean we believe -- and on top of that, it came with opportunities to even do better than that. And gold price at this moment is quite good. So -- and by bringing this forward by 1 year, we believe that we're going to be able to serve on that gold price. That is quite good. I mean that -- the management team that we put in place is quite good as well. And the demand that we developed is quite doable again. There are 2 items that need to be built for leaching. And we believe that we can do it really like -- we can do it really well, actually. So the opportunity exploration upside the equator is something that we're going to pay attention, and we believe that can bring tremendous value to the -- I would say, to the company and we're going to fit out well in our future plan. So I will not go through all of those catalysts here, but this is pretty much what we have in our press release, it's quite aligned. But as you can see, there's a lot of stuff that's going on. Our objective is delivered on each of those milestones and communicate to the market the progress as it goes. So Peter, I'm going to turn it to you.

So we have a track record for delivering projects into development on time and on budget. This will be exemplary and that we will have done again. What do we have in addition to that deep value play that I described before, an improving mine plan, reducing waste to ore improving pit design, improving recoveries, reducing capital, optimizing Ecuador and, of course, an exploration program that will -- we expect to discover more ounces. All of these things will further increase value. The milestones here, the time frame and the sequencing will be coincident with the timing for the financing of the development of the project. We expect to be in production in early 2029 as Luke and Yohann mentioned. Jane, with that, let me pass it back to you.