Argonaut Gold, Inc. (OTCPK:ARNGF) This autumn 2022 Earnings Convention Name February 27, 2023 9:30 AM ET
Firm Contributors
Richard Younger – President & CEO
Marc Leduc – COO
David Ponczoch – CFO & Company Secretary
Convention Name Contributors
Wayne Lam – RBC
Operator
Good morning, girls and gents. Thanks for standing by. For as we speak’s name, all contributors are in listen-only mode. Following the presentation, we’ll conduct a question-and-answer session and directions will likely be offered at the moment for you. [Operator Instructions] I wish to remind everybody that this convention name is being recorded on February 27, 2023 and 09:30AM Japanese Customary Time and is being broadcast dwell through the Web.
Throughout as we speak’s name, administration will make statements concerning administration’s expectations for the corporate’s future monetary and operational efficiency. These statements are thought-about forward-looking statements. Every forward-looking assertion speaks solely as of the date of this name, and precise outcomes might differ materially from administration expectations for a wide range of causes, together with market and common financial situations, and the dangers and uncertainties detailed sometimes within the firm’s SEDAR filings.
I’ll now flip the decision over to the President and CEO of Argonaut, Richard Younger.
Richard Younger
Effectively, thanks, Joelle. This marks my first Argonaut convention name. And I might like to start our fourth quarter and 12 months finish convention name with an apology to our shareholders and analysts who cowl our firm for the delay in releasing our 12 months finish outcomes. That is my fault. When introduced with the draft budgets upon becoming a member of the corporate, neither Marc or I have been snug with them. We labored with the group truifies all 4 working budgets. A course of that usually takes months was compressed to weeks. These modifications to the 2023 budgets then impacted every properties lifetime of mine plans. Which, as you possibly can see, resulted in a big cleanup of the steadiness sheet.
Sadly, as we have been working to wrap the audit up final Thursday, we have been nonetheless working by way of one closing stock write down at El Castillo, the mine that we’re closing. Consequently, we made the choice to defer the discharge of our outcomes to permit our Board and auditors time to evaluation and approve the ultimate change. With our monetary and working outcomes for 2022 are disappointing for all of us, from our Board to our administration group, to all of our workers. It doesn’t in any method diminish, Marc or my enthusiasm for the way forward for Argonaut.
With that stated, what attracted me to affix Argonaut was the prospect to be a part of a group that believes we’ve got a chance to construct one of many 10 largest and lowest price gold mines in Canada, combining a big open pit operation with the potential of upper grade underground materials to feed an expandable mill. To perform this purpose, we’re laser centered on finishing the Magino undertaking with first pour plan for mid-Could and business manufacturing within the third quarter. The commissioning of Magino would be the first step in reworking the corporate because it enters a pivotal progress stage. Our new COO, Marc Leduc will replace you shortly on the progress we’re making on finishing building, commissioning and ramp as much as full manufacturing, whereas we’re exploring the underground.
Along with Magino, we’ll be centered on exploring the massive sulfide useful resource that Florida Canyon, positioned just under the oxide deposit. We acknowledge that Flora Canyon has by no means been a big money circulation generator. However we’ve got put a plan in place to stabilize and optimize the present oxide operation, in addition to start a proof of idea program for the sulfides. Marc will discuss that shortly. The mix of an expanded Magino mill and doubtlessly including the underground and a potential redevelopment of Florida Canyon would supply the inspiration for constructing a low price mid-tier gold producer in a position to present sustainable returns for shareholders.
Whereas our Mexican operations have been the cornerstone of the corporate since its IPO, 2022 marks the ultimate 12 months that our Mexican operations contribute the vast majority of manufacturing and money flows. As I discussed on the outset of the decision, since becoming a member of in December, we’ve got revised the mine plans to give attention to free money circulation era. Consequently, we suspended mining actions at El Castillo forward of schedule and we anticipate at the least quickly pausing mining actions at our two different working mines in Mexico by the fourth quarter of this 12 months. Whereas we’ve got important reserves and assets in Mexico, we would require land entry and allow approvals to proceed mining. The timing on land and allow approvals is unsure at this level.
In abstract, we imagine that we’ve got important progress alternatives at each Magino and Florida Canyon. And whereas our Mexican asset base additionally has progress potential, the present challenges in nation will make it tough to allocate important capital to the area within the close to time period.
Earlier than I flip the decision over to Marc, I might prefer to make one closing touch upon the administration modifications over the previous few months. I imagine that the modifications we’ve got made strengthen our administration group and supply the collective abilities and experience to execute on our imaginative and prescient and technique. I’ve recognized Marc for practically 30 years, having lived with him [indiscernible], at company places of work whereas I used to be constructing a mine in Peru and extra not too long ago reviewing acquisition alternatives within the U. S. Southwest. Final week, Dave Savarie was appointed as GC and Nancy Lee was appointed as VP, Human Assets. We imagine that these new hires will assist to derisk and develop our firm.
Now I’ll flip the decision over to Marc.
Marc Leduc
Thanks, Richard. I wish to echo Richard’s feedback on being excited now working with the group at Argonaut Gold. The corporate, in 2023 will chase a transformative time as we put the Magino mine into operations and rework our price construction shifting ahead. We additionally look ahead to a few of our different mature mines and the way we might redevelop choices there. We’ll be investigating the potential of those very thrilling choices within the coming years and hope to have the ability to share extra developments sooner or later. I am going to focus on this later in my speak.
Now, I’ll start my feedback on the 12 months finish manufacturing and prices. We reported for fiscal 2022 gold equal ounce manufacturing of 203,155 ounces. That is in step with our steerage for – sorry, our steerage of 200,000 to 230,000 ounces as a consequence of sturdy This autumn efficiency on the Florida Canyon and San Agustin mine. Our money price of $1,443 per ounce was greater than our revised steerage of $1,300 to $1,350 per ounce, because of the impression of writing down inventories to web realized worth in any respect 4 of our working mines. This added roughly $114 per ounce to price. Our all-in sustaining price per ounce was additionally greater at $1,765, which is greater than the steerage of $1,650 to $1,725, primarily because of the stock write down. Our general prices have been all up on the 4 mines as a consequence of inflationary pressures.
Now let’s look intently at every of the 4 mines. At Florida Canyon, the lower in ounce produced throughout This autumn and the total 12 months was primarily as a consequence of decrease ore grades positioned on the pad, partially offset by the rise in run of mine tons positioned on the pad. This had an impact of an general decrease restoration price in comparison with the 100% crushing case, leading to money and fundamental prices together with a $4.8 million write all the way down to the ounce stock worth.
At San Agustin, the lower in gold manufacturing throughout This autumn and full 12 months was primarily as a consequence of decrease ore tonnes mined and processing and decrease grade. The decrease manufacturing for the total 12 months at El Castillo was as a consequence of a discount in ore mining and processing as greater gold grades offset decrease recovered grades on the mine. The upper prices included a list impairment of $15.7 million and the expensing of all remaining capitalized deferred stripping into manufacturing prices because of the accelerated closing of the mine.
At La Colorada, gold manufacturing was anticipated to say no by roughly 25% in 2022 as a consequence of decrease grades mined. Nevertheless, drill gap contamination on the backside of the historic El Castillo exploration drill holes resulted in overestimation of ore tons within the reserve mannequin. Consequently, fewer than deliberate excessive grade El Castillo tons have been positioned on the leach pad in 2022. The second working pit, Veta Madre had decrease grades and restoration charges in comparison with the El Castillo pit.
Shifting now to our manufacturing steerage for the 12 months. We introduced our steerage in 2023 in our press launch, however I’ll now evaluation our steerage. At Florida Canyon, ore tons mined are anticipated to be marginally greater in 2023 in comparison with the prior 12 months. Grade can also be anticipated to be marginally greater than in 2022 for crushed ore, however barely decrease for the run of mine ore. A choice was made to position extra run of mine ore on the pad in comparison with prior years, we anticipate whole tons positioned on the leach pad to be greater than final 12 months.
Having stated that, we anticipate the run of mine materials restoration charges to be decrease than the crushed ore. Total, the mixture of upper tons positioned on the pad and better grade is anticipated to end in a 20% improve in manufacturing this 12 months. We anticipate money prices and all-in sustaining prices to be between 10% and 20% decrease than final 12 months because of the greater manufacturing. On the subject of improvement or revitalization on the Florida Canyon mine. I am significantly excited in regards to the potential at Florida Canyon the place there’s a giant sulfide useful resource beneath the recognized oxide pits. At these oxide pits, we’ve got produced 2.7 million ounces beforehand and we really feel there’s a nice potential within the sulfide space.
Now shifting to San Agustin. We have adjusted the mine plan due to land entry and allowing constraints. The vast majority of the Part IV of the pit is being deferred till land entry and permits are obtained. This determination removes roughly 125,000 ounces from our present mine plan. We anticipate ore and whole tonnes mines to be about 55% decrease than it was in 2022, whereas grades are anticipated to be much like final 12 months. The decrease mining price ends in decrease ore tons positioned on the leach pad by the identical 55% discount and gold equal ounce manufacturing to be decrease by 45% to 50% regardless of benefiting from the ore positioned on the leach pad late in 2022 and recovered in 2023.
We anticipate unit mining and processing price to lift about 30% due partially to decrease mining and processing price, in addition to a better working price in comparison with 2022. Consumable and labor prices are budgeted to extend in comparison with the prior 12 months. Money prices and all-in sustaining prices are anticipated to be about 25% to 30% greater than in 2022, as a consequence of decrease manufacturing and better working prices.
Shifting now to the El Castillo mine, as we reported, mining exercise was suspended in late December 2022. For 2023, web site actions embody, leaching of the ore positioned on the pad in 2022 and re-leaching to rinse the pads as a part of the reclamation course of. With this, we anticipate gold manufacturing to say no by about 75% this 12 months. Whereas working prices are restricted to heap leach processing usually and administrative prices, we anticipate money prices and all-in sustaining prices to be marginally decrease than in 2022.
The vast majority of the location actions in 2023 will likely be centered on reclamation. Practically half of the estimated $6 million in finances reclamation price for this 12 months will likely be directed to rinsing the leach pad with the steadiness spent on actions akin to re recontouring waste rock piles, closing mine pits and [re-vegetation] (ph). As talked about, administration decided to droop mining actions in December 2022, one quarter sooner than deliberate. We determined to wind up mining actions on account of a better working price construction from international inflation and decrease restoration charges within the sulfide materials, which rendered the operation not worthwhile.
Lastly, shifting to our final working mine, the La Colorada mine. The mine consists of two open pit operations. The 2 pits are El Castillo, the upper grade of the 2 pits and the Veta Madre pit. We decided at the start of 2023 to droop stripping actions on the El Castillo pit till the beneath — till an underground mining commerce up examine could possibly be accomplished. We anticipate the trade-off examine to be accomplished in 2023 to find out essentially the most worthwhile and lowest threat path ahead to mine the excessive grade materials discovered on the backside of the El Castillo pit. The principal purpose for taking a pause to judge our mining choices can also be based mostly on the very profitable exploration drilling marketing campaign that we had in 2022. That recognized a number of spectacularly excessive grade areas within the deep components of the ore physique. These areas might open the undertaking as much as future underground improvement.
On the Veta Madre pit, allowing and land entry delays have resulted in roughly 80,000 ounces being faraway from the present mine plan. Our determination to droop stripping on the El Castillo pit mixed with allowing delays on the Veta Madre pit, we anticipate ore mining to lower by one-third and whole mine tonnes to say no by 75% to 80%. Ore processing is anticipated to be one-third decrease because of the decrease ore mining charges. Whereas grade mines are anticipated to be up by about 40% over 2022. Manufacturing is anticipated to lower by roughly 25%. Unit mining prices are anticipated to double base on the decrease efficiencies of the mining contractor. Money prices are anticipated to be roughly 50% greater than final 12 months. Nevertheless, all-in sustaining prices are anticipate to be roughly 10% decrease because of the decrease capital expenditures in 2023.
Now shifting to our new cornerstone undertaking, the Magino undertaking. As talked about by Richard, Magino is our flagship undertaking and we imagine it will likely be transformational to the corporate. By the tip of 2022, the corporate had incurred $583 million in building prices with the undertaking being estimated to be 80% full. Throughout This autumn 2022 and for the total 12 months 2022, the corporate incurred $74 million and $335 million, respectively, in prices associated to the development of the Magino undertaking. Of this quantity incurred, the bulk was for the mineral processing plant, web site improvement and building overhead. The primary section of the tailing administration facility has been accomplished and accepted by the engineer report. As a proactive threat mitigation measure, rental energy has been secured for the method plant commissioning and to supply electrical energy throughout preliminary operations.
As we’ve got reported, preliminary gold manufacturing has been delayed to Could 2023, primarily brought on by a commerce strike that impacted concrete work in Could 2022 and a building fatality with related delays associated to an space shut down and pause whereas extra security measures have been applied in November 2022. Importantly, the Magino undertaking’s estimated completion price was elevated from $730 million or CAD920 million to $755 million or CAD980 million. The rise in prices was largely attributed to the 45 day delay to first pour, which ends up in greater capitalized overheads, greater earthworks prices associated to greater gasoline costs and scope modifications, greater energy prices as a consequence of rental energy being required and modifications to cut back threat within the mining pit startup.
Among the price will increase have been partially offset by the weakening of the U.S. greenback once more — sorry, the Canadian greenback in opposition to U.S. greenback throughout the interval. These actions beneath the corporate’s scope embody earthworks, on-site infrastructure and web site energy. All are continuing as scheduled for the completion and time for first pour and mid Could 2023. Ausenco Engineering, the engineering agency contracted by the corporate to finish the mill and associated infrastructure is on schedule for a similar time as properly. Our web site group is within the means of ramping up the working group for full operations. Our binding commenced forward of schedule in January 2023 to permit for the buildup of an ore stockpile to de-risk preliminary operations. The commissioning group is arriving on web site and the location group is targeted on operations readiness. We anticipate ramp as much as business manufacturing to take roughly three months following first pour in mid Could 2023, putting the undertaking on schedule for business manufacturing estimated to be within the third quarter of 2023.
Of notice, the working statistics are for the total 12 months, whereas the monetary statistics don’t begin till mid-Could as building prices are capitalized inside the mineral properties plant and tools for the primary 4.5 months of the 12 months. We anticipate ore and waste tons mined in 2023 to be in-line with the lifetime of mine plan, which was introduced in our newest technical report. Two modifications have been made to de threat the plan. First, we began ore mining early — sooner than initially deliberate to de threat mining and processing throughout the first a part of the 12 months. And second, we modified the mine plan leading to a ten% lower in grade mined. In comparison with the lifetime of mine plan, tons milled are anticipated to be about 10% decrease than the lifetime of mine plan because of the 45 day delay in startup and commissioning. This lower will likely be partially offset by the processing of historic tailings throughout the fourth quarter of 2023. The common grade processed is anticipated to be about 10% decrease than the lifetime of mine plan as a consequence of modifications within the mine sequence famous above.
We anticipate whole web site price to be marginally greater than the lifetime of my plan. Mining prices have elevated in comparison with the lifetime of mine plan due partly to the 20% improve in diesel and LNG prices, in addition to a 97% improve in explosive [indiscernible]. We anticipate the price of explosives to extend as a consequence of smaller drill gap sample and considerably greater explosive prices than what we had initially deliberate. Because of the 45 day delay and modifications to the mining seasons, we anticipate manufacturing to be decrease than the lifetime of mine plan by roughly 50% because of the startup delays within the decrease grades. We anticipate our general money prices and all-in sustaining prices per ounce to be about 5% greater than the lifetime of mine plan because of the improve in mining prices.
Lastly, trying on the exploration and improvement in Magino, we expect that issues have simply begun right here alongside the [LGDZ] (ph) gold development. And we look ahead to exploring for extra ounces of gold each in open pit and underground prospects.
I’ll now flip the decision over to Dave, who will evaluation the fiscal 2022 monetary outcomes.
David Ponczoch
Thanks, Marc. And good morning everybody. I am going to begin by reviewing our year-end monetary efficiency. Whereas Argonaut made important progress throughout the 12 months, bringing us to the most recent section of building earlier than we fee our flagship belongings. The 12 months was marked by important monetary challenges, primarily on two fronts.
First, we skilled a rise in building prices on the Magino undertaking, which required a big capital elevate, together with debt, fairness and the sale of a royalty. As we’ve got beforehand disclosed in December 2021, we introduced that the associated fee to construct the undertaking had elevated from CAD510 million to CAD800 million after which we introduced an additional replace in Could 2022 to CAD920 million following a second evaluation to make sure we had proper sized the financing. At present, we’re asserting an additional improve in building prices, as Marc talked about. In U.S. greenback phrases, the prices have elevated by $25 million from the Could 2022 estimate to as we speak’s estimate.
Second, as Marc talked about, the inflationary pressures have had a big impression on the working outcomes of our low price heap leach operations in Nevada and Mexico, leading to an impairment of our Mexican belongings within the Florida Canyon mine. We acknowledged that non-cash impairment of mineral properties, crops and tools for 2022 of $136 million in contrast with $65 million in 2021. Impairments consisted of $48 million on the Florida Canyon mine, $43 million on the San Agustin mine, $7 million on the El Castillo mine and $27 million on the La Colorada mine. Impairments have been largely associated to the detrimental impression and the numerous improve in inflation on labor working prices, which have disproportionately a better impression on the low grade heap leach operation.
Moreover, we recorded $10.4 million impairment cost associated to the Ana Paula undertaking. To strengthen our steadiness sheet, in December we offered and optioned two of our noncore Mexican non-operating belongings. The corporate entered right into a definitive settlement to promote the Ana Paula undertaking permitting Argonaut to unlock the worth of this asset and give attention to our important core belongings. As well as, we optioned the San Antonio undertaking to the identical firm.
Income for fiscal 2022 was $388 million, a lower of 11% from $437 million in 2021 as a consequence of decrease ounces offered, partially offset by greater gold value. Manufacturing prices for 2022 have been $278 million, a rise of 10% from $254 million in 2021. Leading to money price per gold ounce offered of $1,443 per ounce in 2022 in contrast with $1,006 in 2021, a rise of 43%. The 2022 gross revenue was 79% decrease than 2021, because of the decrease income and better manufacturing prices.
Full 12 months 2022 web lack of $152 million as in comparison with web revenue of $27 million in 2021 was largely because of the greater impairment in 2022 in contrast with 2021. Whereas 2022 had adjusted web lack of $22 million, that is in contrast with an adjusted web earnings of $57 million the 12 months earlier, leading to a loss per share of $0.28 in contrast with earnings per share of $0.09 the 12 months earlier. Whereas in 2022, we had adjusted web loss per share of $0.04 in contrast with adjusted earnings per share of $0.19 in 2021. Money circulation from operations earlier than modifications in noncash working working capital and others for the 12 months was $71 million in contrast with $125 million, a discount of 43% because of the decrease revenues and better manufacturing prices.
Income for This autumn 2022 was $96 million, a lower of seven% from $103 million in This autumn 2021, as a consequence of decrease ounces offered, partially offset by greater gold value. Manufacturing prices for This autumn 2022 have been $80 million, a rise of 18% from $68 million in This autumn 2021. The upper prices have been primarily associated to greater consumable prices than the prior 12 months. The This autumn 2022 gross revenue was decrease than 2021 because of the decrease income and better manufacturing price, which included the noncash write down of inventories and web realizable worth in any respect 4 working mines up $23 million.
Total for This autumn 2022, we reported a web lack of $175 million as in contrast with a web lack of $37 million in 2021. Largely because of the greater impairment in 2022 in contrast with the prior 12 months. Whereas the adjusted loss was $38 million in contrast with earnings of $10 million a 12 months earlier, leading to a loss per share of $0.22 in contrast with $0.12 {dollars} the 12 months earlier, whereas adjusted loss per share of $0.05 in contrast with earnings per share of $0.03 the prior 12 months.
Money circulation from operations earlier than modifications in noncash working working capital and others for the fourth quarter was $9 million, in contrast with $18 million the prior 12 months, a discount of 53% as a consequence of decrease revenues and better prices. Argonaut ended the 12 months with $73 million in money on the steadiness sheet and $170 million obtainable to attract. Of the $170 million obtainable at 12 months finish, in January, one other $56 million was drawn on the credit score facility. We nonetheless have $114 million obtainable to attract on our credit score facility. Based mostly on the up to date price to finish for building, assuming a mid-Could gold pour– first gold, the remaining steadiness for the credit score facility ought to cowl the remaining prices.
In This autumn 2022, Argonaut closed a $250 million debt bundle and terminated the earlier company revolving debt facility. We offered a 2% NSR of Magino for $52.5 billion and issued $10 million in personal fairness and we did CAD17 million in circulation by way of fairness, all as a part of the financing bundle we introduced within the second quarter to fulfill the upper capital price to finish the Magino undertaking. As of year-end, we had gold forwards for 430,000 ounces of gold delivering into these over the following 4.5 years, offering value safety for a portion of our Magino manufacturing. As well as, in January, we locked in a further 30,000 gold ounces at $1,896 an oz. for Q2 2023, which provides us gold forwards for a complete of 460,000 ounces. Now a portion of those Q1 gold forwards have already been settled.
2022 had important gold value volatility and we felt it was prudent to lock in value safety through gold ahead as we’re within the closing stage of constructing the Magino mine after which shifting into operations. We anticipate that usually building, inside the time traces famous, with the good thing about our mortgage services and we additional anticipate to fulfill all reimbursement obligations as they arrive due. The completion of those financing packages is a testomony to the sturdy undertaking fundamentals of Magino.
I am going to now flip the decision again to the operator for any questions.
Query-and-Reply Session
Operator
Thanks. Girls and gents, we’ll now start the question-and-answer session. [Operator Instructions] Your first query comes from Wayne Lam with RBC. Please go forward.
Wayne Lam
Hey, good morning guys. I used to be simply questioning if you happen to would possibly be capable to present a bit extra element on the modifications within the lifetime of mine plan of Magino when it comes to the mine sequencing within the decrease grades? And I did not catch what the impression on the lifetime of mine working price was. And is there going to be an up to date technical report offered?
Richard Younger
Thanks, Wayne. It is Richard. I’ll begin off after which hand the decision over to Marc. The unit prices are in-line with the tech report and the modifications that we have made have been brief time period simply to de threat the plan. And Marc can discuss that. However your closing query on new tech report. At this time limit, the present tech report is holding sound, so there isn’t a want for an additional replace.
So with that, I am going to flip it over to Marc simply to speak additional in regards to the modifications that we made to the mine plan to de threat it. Marc?
Marc Leduc
Thanks, Wealthy. Hello, Wayne. Sure, Wayne, there have been form of two facets to the mine plan change. First, we did — we began sooner than we had initially deliberate. We did this to construct up a stockpile to form of decouple the mining away from — beginning and commissioning open pit mining operation similtaneously commissioning a mill. So we’re build up a stockpile proper now. We have already blasted and began shifting ore into stockpiles. In order that was — all that may be a sort of mainly a timing change and perhaps beginning somewhat slower. In order that’s the primary half.
The second half is, we moved the place our first base was to step away from the previous Magino underground workings. The explanation we did that’s simply — it is simply one other factor that may go unsuitable. You are mining on the high of a few of these previous stopes. Our indication is, they are not fully stuffed, so there could possibly be some complexity for mining on high of open voids, and we simply felt it was higher to enter an space the place we knew the ore physique was and step away from these open stopes after which we’ll be going again over in there. It is all inside the Part I pit, however we have damaged the pit up. In order that’s mainly the rationale for the decrease grade, however we’ll get again on plan right here within the subsequent few months.
Wayne Lam
Okay, excellent. Thanks. That appears like a prudent technique. I used to be simply questioning additionally what was driving the underspend on CapEx at Magino in 2022 relative to the finances? And the place do you see potential for any additional overruns? After which, only a query on the rental energy at Magino, does that imply there’s any delays with the development of that LNG plant?
David Ponczoch
Thanks, Wayne. So a few issues. To begin with, the underspend in 2022 pertains to the 45 day delay. In order that’s partially the rationale for the associated fee beneath run as we method undertaking completion with the revised capital improve to %755 million, CAD980 million. We’re snug that these numbers, there will not be an additional capital improve over and above that.
Marc Leduc
After which how in regards to the LNG. Wayne requested in regards to the LNG plant and the momentary energy. DO you need me to deal with that?
Richard Younger
Sure. Marc, would you prefer to handle that?
Marc Leduc
Sure, positive. So what it was, Wayne, is it in all probability appears to be like like we’ll have the LNG plant coming in proper about the identical time as commissioning. So we simply felt that for safety sake and never having a possible for a few week or month delay brought on by just a few unlucky circumstance on the commissioning of our predominant LNG plant we introduced in momentary energy to only have as a safety blanket. And these are form of the identical energy items that we present up — state of affairs the place you bought a hurricane. So these items are actually fast to arrange. It’s an additional price, however we simply wished to ensure we hit our mid-Could date on startup. So we do not assume we’ll run very lengthy, however we’re simply hooking these up now they usually’re able to go for the commissioning.
Wayne Lam
Okay, excellent. Thanks. After which, are you able to present a bit extra element on the land entry and allowing points in Mexico? And was any of that associated to the extra concessions required as I assumed that there was some consideration paid to [Fresnillo] (ph) a few years in the past?
Richard Younger
Thanks, Wayne. I’ll flip the query over to Dave to reply.
David Ponczoch
Sure. Wayne, on the Fresnillo this isn’t associated. So that is at San Agustin, that is associated to land entry inside the pit. And we had the expectation over the previous few years to have the ability to get that entry and we’ve not been in a position to obtain that. As soon as we get the land entry, we do have to have allow approvals. Proper now the allow approval course of may be very sluggish in Mexico and so we thought it prudent to take away this from the mine plan, as a result of it is now one thing that is very close to time period. So we took that on the market after which at La Colorada we obtained the concessions related to the Veta Madre pit, however the authorities’s been very sluggish to really grant these. And so we determined to take these ounces out of the manufacturing profile at this level. As Marc talked about, within the El Castillo pit, we wished to check out the trade-off between open pit versus underground given the exploration outcomes that we have had there.
Wayne Lam
Okay, nice. Thanks. After which perhaps simply final one. I used to be simply questioning what the care upkeep prices are on the Mexican operations? And is there any potential for an entire shutdown in Mexico, simply given the upper price within the mine life? After which for the $6 million finances in reclamation, is that El Castillo solely or is that — or what could be the broader reclamation legal responsibility throughout the Mexican operations?
Richard Younger
So thanks Wayne. I am going to reply the primary half. It’s potential that there will likely be a pause later this 12 months. That is what we have at present budgeted for. Now once you step again and also you have a look at the corporate, the main focus had been on harvesting money flows from Mexico to fund Magino. So there wasn’t the reinvestment in among the progress alternatives inside Mexico. So there are some alternatives significantly with La Colorada, as Marc talked about, but additionally with San Augustine. So we will likely be evaluating these. We’re not going to commit a variety of capital to it. However once more, the nation is challenged and permits are difficult to obtain. So there’s a chance that these operations will go on in care and upkeep for some time period.
And with that, I am going to then flip the decision over to Dave to speak about the price of that and in addition to the general reclamation legal responsibility in Mexico. Dave?
David Ponczoch
Sure. Thanks, Wealthy. Wayne, in Observe 14 of financials, we have our whole reclamation and we escape somewhat — the present versus non-current. I haven’t got the — what portion of that’s Mexico. In entrance of me, it is — I imagine it is roughly $25 million of this quantity proven, however I may give that to you in a while.
Wayne Lam
Okay, nice. Thanks very a lot. Thanks lots guys. Respect the replace and better of luck with the upcoming completion of Magino.
Richard Younger
Thanks Wayne. Respect that.
Marc Leduc
Thanks Wayne.
Operator
[Operator Instructions] There aren’t any additional questions at the moment. Please proceed.
Richard Younger
Effectively, Joelle, thanks very a lot. And I might prefer to thank all people once more for becoming a member of as we speak’s name and I apologize once more for the late launch of our outcomes. And 2022 was a really difficult 12 months for the corporate, as you possibly can see by way of the monetary statements that have been launched earlier as we speak. However the future is vibrant. We imagine Magino goes to be one of many high 10 gold mines in Canada and we’re enthusiastic about Florida Canyon. So it is a greater path ahead. It has been a difficult 2022, however issues are bettering. So with that, we’re open to any additional questions that anyone might have, please be at liberty to achieve out to us and have day all people. Bye now.
Operator
Girls and gents, this concludes your convention name for as we speak. We thanks for collaborating and ask that you just please disconnect your traces.
