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spk03: Good day and welcome to the Core Mining fourth quarter 2021 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Jeff Wilhoyt. Please go ahead, sir.
spk08: Thank you and good morning. Welcome to Core Mining's fourth quarter and full year 2021 earnings conference call. Our results were released after yesterday's market close and a copy of the press release and slides are available on our website. I would like to remind everyone that our press release, slides, and some of our comments today include forward-looking statements from which actual results may differ. Please review the cautionary statements included in our press release and presentation, as well as the risk factors described in our 2021 10-K. I'll now turn it over to the team.
spk05: Thanks, Jeff. And good morning, everyone. 2021 was an important year for CORE, characterized by elevated levels of investment in our highly successful multi-year exploration program and in our robust project pipeline. These investments last year, along with several transactions intended to strengthen and streamline our portfolio, are key elements of our strategy to position Core as America's premier growing precious metals company. We're now quickly approaching a phase of expected high return growth, featuring sustained levels of expected free cash flow from a larger, longer life, lower cost production base generated by our collection of North American assets. Looking back at last year, I'm especially proud that our team accomplished everything they did while delivering another year of consistent operational excellence despite a challenging macroeconomic environment. I'll start off on slide three in today's presentation with a few key highlights. With a strong finishing kick in the fourth quarter, CORE once again achieved consolidated annual production and unit costs within guidance at each of our primary gold operations which contributed to our highest annual revenue in nearly a decade. I'll ask Mick to go into the specific operational drivers of our performance in a moment, but I'll touch on a few key highlights. Palmareo delivered particularly strong results with $25 million of cash flow in the fourth quarter on a 14% increase in mill throughput. Strong throughput and grades drove solid free cash flow at Kensington, Wharf delivered on plan following a near record third quarter and Rochester rebounded nicely from a third quarter marked by crushing and hauling work related to the POA 11 expansion. Four tons placed increased 12% despite a greater than 100 year rain event in October that impacted about 10 days of production. We've asked a lot from Rochester as we work our way through the POA 11 expansion project. The team has certainly dealt with its share of day-to-day operational and industry-wide challenges, all while embracing changes to the operation as the mine transitions into the linchpin of the company's future production and cash flow that we expect it to be. The full-scale test work taking place has been invaluable in de-risking development and informing our operational approach to the expanded project. The finish line at POA 11 is beginning to come into focus. The team conducted a comprehensive re-baselining during the quarter that included reviewing in progress and newly awarded construction contracts. I'm pleased to report that we consolidated the two outstanding SMPI contracts related to the construction of the Merrill Crow Processing Facility and the Crushing Circuit into one single contract. We've awarded it to TIC, a subsidiary of Kiewit Corporation, which you may recall did some great work for us at Silvertip over the past year. Having a proven and reliable construction partner in place reduces our development risk and increases clarity on project completion. In addition, this re-baselining led to the value-accretive decision to incorporate prescreens as part of the new crushing circuit. This work has led to a refinement of the estimated capital for the project. The updated capital estimate is now approximately $520 million, which reflects the 10% to 15% increase we flagged for you last quarter, driven by industry-wide inflationary pressures. In addition, prescreens on the new crusher and associated reassessment of contingency estimates are expected to add $70 to $80 million to the total cost of the project. The stage six leach pad is now essentially complete. Next up is the Merrill Crow facility, followed by the crushing circuit, which will now include the prescreens. The full project is expected to be completed mid next year. Moving to exploration on slide seven, we invested a record $71 million during the year, which led to new discoveries, mine life extensions, and resource growth. After depletion, Palmareo saw its silver reserves increase roughly 5% to 62 million ounces, while Wharf added about two years of high-quality mine life after depletion from about a $5 million investment in exploration. On a gold-equivalent basis, all classes of mineralization increased approximately 2.5%, thanks in part to impressive resource gains at Silvertip. We plan to invest approximately $40 million in exploration in 2022, with about half allocated to infill drilling, with the goal of converting a portion of this expanded inventory of resource ounces. Over the last five years, CORE has invested approximately $240 million in exploration, which is a key element of our strategy and differentiates us relative to the sector. In our estimation, Not many companies can point to that level of commitment to exploration or to the level of success in growing reserves and resources like we've experienced. In addition to replacing production over the past five years, totaling 1.8 million ounces of gold and 56 million ounces of silver, we've added another 500,000 ounces of gold and 85 million ounces of silver to our reserves. And across the resource categories, 3.5 million ounces of gold and 145 million ounces of silver have been added over the past five years, increases of 132% and 63% respectively. Silvertip has experienced its own significant growth since we acquired it in 2017. In just the past year, Silvertip's high-grade resources increased 50% for silver, 35% for zinc, and 43% for lead. These company-wide increases have been generated at low discovery costs and represent a tremendous return on investment as we monetize these ounces in coming years. Relative to our production last year of approximately 350,000 ounces of gold and 10 million ounces of silver, these reserve and resource additions extend the runways out ahead of our operations and provide a lot of flexibility and optionality for future growth. A quick note on Silver Tip. Studies are underway to determine the next steps toward a potential restart and right sizing of one of the highest grade silver zinc lead deposits in the world. With continued exploration success and strong metals prices, coupled with a potentially larger scale operation, we hope to identify a robust business case to support a restart following completion of the Rochester expansion. We expect to have the results of this work later this year. Before passing the call over to Mick, I'm proud to highlight CORE's recent ESG achievements, beginning on slide 17, including further progress on our diversity, equity, and inclusion initiatives, an updated assessment of what ESG issues are most material to CORE, and a recent upgrade to an A rating by MSCI. I'm also happy to report that CORE's lost time injury frequency rate reached an all-time low in 2021, and our total reportable injury frequency rate remains among one of the lowest in the industry. The important accomplishments we achieved as a team last year would mean very little without the knowledge that we accomplished our objectives safely and to the mutual benefit of all CORE stakeholders. CORE's track record of succeeding responsibly isn't a matter of luck. Our culture and mission demand it. I'll now pass the call over to Mick.
spk07: Thanks, Mitch. On slide five, I'll cover the operations, starting off with Palmarejo. The team tends to finish the year strong, and last year was no exception, delivering a 14% increase in mill throughput quarter over quarter and higher grade. Full year gold production was at the high end of the guidance range, and silver production was in line with expectations. At the same time, unit costs for both gold and silver came in closer to the low end of our guidance ranges and benefited from Mexican peso hedges throughout the year. Another solid operating year resulted in nearly $66 million of free cash flow, a great result. Looking ahead, we anticipate a similar year for Palma-Rejo with higher grade, partially offset by lower throughput. As a reminder, our first quarter cash flows will again be impacted by the annual Mexican EBITDA tax payment. Switching over to Rochester, when we spoke on last quarter's call, Northern Nevada was experiencing a historic rain event that impacted about 10 days of our production. With the rains and the third quarter crushing of over-liner for Peary 11 behind them, the team finished the year on a strong note. This great finish helped us to achieve the low end of our production guidance for silver, while gold production was near the midpoint of expectations. All truck availability issues and continued higher prices for consumables led to unit costs coming in higher than expected. Going forward, we are continuing to focus on performance enhancements and driving sustained improvements in our results. We plan to install prescreens on the existing crusher aimed at mitigating the impact of fine ore material and improving recoveries. During installation, around mid-year, we expect our ability to crush material will be affected for up to 30 days. We continue to use Rochester's existing X-PIT crusher and Stage 4 leach pad as a full-scale testbed to de-risk the POE 11 project and apply that knowledge to our post-expansion operating plans. Turning to Kensington and keeping with the theme of strong finishes, production reached its highest level in the fourth quarter as the main hit on all cylinders to turn in a solid year. The team achieved full year production and cost guidance despite continued cost pressures from labour and consumables to deliver healthy free cash flows of over $43 million. We expect another strong performance at Kensington in 2022, with consistent contributions from the Jewell and Bain, even as grades are expected to decline slightly. Lastly, at Wharf, the team continued to deliver consistent operational excellence, achieving guidance on both production and costs. This led to strong free cash flow of $50 million for the year, an ongoing testament to the fantastic investment that Wharf has been for core. Looking ahead, mining within a lower grade portion of the pit will lead to a lower expected year with gold production guidance of between 70 and 80,000 ounces compared to over 91,000 ounces produced in 2021. Before handing the call over to Tom, I want to circle back to Rochester for some additional details that have come out of the updated technical report summary and why we are excited to get the project over the line next year. First, it's important to point out that the new schedule and cost estimate is based on updated proven and probable reserves that reflect optimised curve grades. This assumption accounts for anticipated operating cost inflation as well as our recent experience in processing softer rows on the Stage 4 leach pad. On both fronts, we will bring to bear tried and tested approaches to business improvement and innovative technological advances to maximize Rochester's full potential. We also expect to unlock further value through our successful exploration efforts to target future resource expansion. The larger scale of the operation is expected to more than double throughput, leading to anticipated average annual production 8 million ounces of silver, and roughly 76,000 ounces of gold from 2024 through 2034. This production profile in Nevada, the best mining jurisdiction in the world, is right on strategy for core. We will be able to begin stacking ore on the brand new Stage 6 leach pad later this year, and we'll continue to make big strides on the Merrill Crow Process Plant and Crushing Circuit. We look forward to keeping you updated every step of the way. Lastly, I'm gratified to report that the Rochester PUA 11 team has just surpassed 500,000 hours without a lost time incident. This is a very impressive milestone for this project, and the team deserves special recognition for keeping safety at the core of all we have accomplished. With that, I'll pass the call over to Tom.
spk06: Thanks, Mick. Turning to slide four, I'll quickly run through our consolidated financial results. Stable metal prices and consistent performance at our mine sites led to a historic top-line result of nearly $833 million. Operating cash flow totalled $110 million, a decrease compared to 2020, largely due to Rochester's negative operating cash flow and the inflationary environment that we, like all miners, have been facing for labour, fuel and other consumables. Despite these cost pressures, we were pleased to achieve CAAS guidance at each of our primary gold operations for the year. Looking ahead, as highlighted on slide 15, we issued our 2022 guidance. These guidance ranges show a fairly flat year production-wise compared to 2021. Slide 6 provides an illustrative quarterly production profile, which highlights a slightly back half-weighted year in terms of production. On costs, while we do expect to see a continuation of the inflationary pressures we experienced during the second half of 2021. We expect a significant improvement in Rochester's operating cash flow in 2022. You will notice that we've reduced our planned investments and exploration and that silver tip year over year as we pursue our number one priority to complete the Rochester expansion. I remind everyone that our first quarter also includes some lumpy annual expenditures, which will impact our Q1 operating cash flow. Turning to slide 12 for a look at the balance sheet, We ended the year with approximately $257 million of liquidity, including $57 million of cash and $200 million of availability under our revolving credit facility. We also held $132 million of equity investments, comprised primarily of our investment in Victoria Gold on our balance sheet. We ended the year with a net debt to EBITDA ratio of two times. The increase in POA 11 capital for the SMPEI contracts and the prescreens will put pressure on our desired leverage levels. However, our funding plan remains intact with several layers of financial flexibility from six key sources. Our operating cash flow from our four operating mines, capital leases for POA 11, which were entered into in early 2021, our gold hedging program, the revolving credit facility capacity, which can be expanded by up to $100 million, our equity investment portfolio, including our investment in Victoria Gold and our $100 million ATM program. We remain confident in our ability to fund our growth initiatives. I will now pass the call back to Mitch.
spk05: Thanks, Tom. Before moving to the Q&A, I want to quickly highlight slide 14 that outlines our near-term priorities for the year ahead. In a nutshell, 2022 really boils down to achieving production and cost guidance safely and responsibly and remaining zealous stewards of our capital as we continue to execute on our major growth projects. With that, let's go ahead and open it up for questions.
spk03: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw your question, please press star then 2. And at this time, we'll pause momentarily to assemble our roster. And the first question will come from Dalton Barreto with Canaccord. Please go ahead.
spk04: Thanks. Good morning, guys. I want to start by asking. about what Tom just wrapped up with, and that's on the POA 11 capex as well as the funding options. First of all, I just want to know, you're just under halfway through the spend. How comfortable are you in the updated number at this point? And do you see any risk that that could go up higher?
spk05: Yeah, good question. I guess, Dalton, coming out of that re-baselining work that just wrapped up, Our confidence can't be any higher now than it is. Not to say that the world is an unpredictable place right now and it's not the easiest of times to have a major capital expansion project, but I think we have layered in a lot more of a buffer to reflect some of the uncertainties that are out there, whether it's the labor whether it's the material, I think we're up to a P85 kind of level of confidence on this capital estimate. And so, you know, going into the end of last year, confidence was shaky given all the macro and project-specific questions and crosswinds. I think now, you know, coming into 2022, confidence has been bolstered significantly. Mick, do you have anything? Or Tom, do you want to?
spk07: Yep. So it's a P85 project schedule and cost estimate now. Very solid. And that schedule is agreed with our primary contractor, TIC. So we're pretty happy about where we stand now in the go-forward path.
spk04: Okay. And then, you know, Tom highlighted your different funding avenues. On my numbers at the current commodity price levels, It looks like you're gonna go through your current revolver and need some pretty significant incremental funding. So I guess three parts to this question. Number one, how far are you willing to push your balance sheet? Number two, how do you think about the accordion versus the ATM versus your stake in Victoria, particularly given where your share price is right now? And then part three, why haven't you put in any dollars for 23?
spk05: Okay, all three good questions. The last one there, Dalton, was callers for 2023? Yeah, correct. Okay, thanks. Got it. How far do you want to stretch our balance sheet? Look, we had going into the end of the year, middle part of last year, had sort of set that target of having a two times net debt to EBITDA as we've gone into this more inflationary environment here in the second, well, last year in the second half. and realizing that that's likely the new reality here in 2022 and 2023, we recognize that that leverage ratio is going to be exceeded by how far that sort of spills into your second question, which relates to the accordion and the revolver. As you're alluding to there, the current revolver under which we have $200 million or so of availability There's an opportunity to expand that by $100 million. So we'll definitely be taking a look at that. Of course, with the revolver comes certain covenant ratios, which will govern, essentially, how much leverage and how far we will push the balance sheet. And that'll be a discussion that we'll want to have with the lender group. And as far as the ATM, it's one of those levers that we have that we put in place a couple of years ago. It's a good thing to have, I think, in the quiver. to help kind of round out the suite of options as we navigate our way through here. In particular, the first half of this year, peak spend on POA 11 is really this quarter and next quarter before it starts to step down. So these different options and funding alternatives that Tom outlined are really most targeted towards the first half of this year. As far as the callers, Tom and I were meeting on that even this morning because we've obviously, like everybody, seen the gold price show some strength here, and it's something that we want to try and take advantage of here, whether it's boosting our downside protection here in 2022 and open to the 2023, at least first half, as well. Because, you know, all this funding plan that we've thought a lot about, you know, we are reliant on prices remaining, you know, near these current levels. And so anything we can do to kind of reduce that element of the equation, you know, is something that makes a lot of sense for us to think about adding to what we already have in place. Tom, do you want to cover any of those three?
spk06: Yeah, look, as a As Mitch mentioned, that two times will obviously be stretched. Probably the number that we always think about is at least maintaining $100 million of liquidity. But again, back to your first question, our confidence level in that remaining capital at POA 11 is very high. When you look at the amount of work that's done, all the equipment's been ordered, You know, we really worked hard on that SMPI contract to see what we could do to refine it. We unfortunately weren't able to get that much of a reduction, but what we do have is a really high-quality partner, and so I feel very comfortable with the work that the team has done that that capital is in place. And those alternatives that we've outlined are there, and people see the prize. You know, the lenders, hopefully all of our investors see the prize post the POA 11 expansion. You know, those pretty robust cash flows, and you look at what we've done in terms of extending all of the mine lives, you know, we're feeling pretty comfortable, Dalton.
spk04: Perfect. Thanks, guys. I'll jump back into you.
spk03: Okay. Thanks, Dalton. Again, if you have a question, please press star, then 1. Our next question will come from Carl Blunden with Goldman Sachs. Please go ahead.
spk02: Hi, good morning. Thanks very much for the time. I just wanted to discuss a little bit more some of the funding options that came up. But when you think about an ATM relative to other options, maybe non-core asset sales or stake sales, How does the current share price play into that? You probably don't want to be selling at a time when you feel the stock is undervalued, for example. So just any framework around that would be pretty interesting.
spk05: Yeah, you're right. That's always sort of at the bottom of the list in terms of cost of capital. But it also is, you know, you need to, we feel like, and I feel like you have to pull the lens back a little bit and look at what are the returns that that you're generating off of that cost of capital. And even with the higher capital, higher OPEX, dialing back the silver recovery in that updated SK-1300 for Rochester, it's still a good project, right? A high team's rate of return. Tom alluded to the sustainable $90 million a year of free cash flow. So, you know, the cost of capital to deliver that kind of quality project and others, including the exploration investment that we've been making, you know, kind of puts those relative costs of capital into some context. But, you know, it ends up, I think, Carl, being a bit of a holistic approach, right? Between the revolver and the ATM and the other levers that Tom talked about, trying to think about it in a, in an overall way that can ensure that we achieve the main goal, which is to deliver a successful expansion out there at Rochester. I don't know if that helps give you some context, but Tom, anything you want to add to that? Does that help, Carl?
spk02: Yeah, I think that helps, and to recognize that you've safeguarded the balance sheet in the past on projects that you've been developing. With regard to Silver Tip, I noticed the comment that it would be after Rochester. I'm not sure if that's a very recent change, but it sounds like the sequencing there is quite precise at this point in time. When you think about that, do you want the balance sheet and leverage to be in a certain place before you go after that, or is that not as large of a consideration given some discussion around that you have different funding options and you wouldn't have to necessarily do it with your balance sheet to grow that out. So interested in how that fits now with the updated Rochester CapEx.
spk05: Yeah, I'll start and then Tom can weigh in. It is something we alluded to, I think, in the third quarter about the sequencing and being mindful of, you know, making sure that Rochester is priority number one, that we deliver that. Meanwhile, we'll continue to do this work at Silvertip And we'll have more to say on that later this year. I think some of the suggestions you pointed out, Carl, it's almost like all of the above. We want to get on the backside of the POA 11 and use that cash flow to de-lever for sure. And that's with or without Silver Tip. That's a high priority. That will happen. But I think also, yeah, there are other options for Silver Tip. as far as how we would think about funding an expansion of that facility that could be not necessarily the same approach as we're taking to how we're funding POA 11. Tom, do you want to?
spk06: No, exactly, right? Everything's on the table in terms of alternatives about how to fund that project, and it's It's just a pity capital costs have gone where they've gone at Rochester and for Silvertip, because obviously we're very excited about what we've seen at Silvertip. The exploration results, the growth in the resource are pretty exciting. As we talked about earlier, on earlier calls, the metallurgical recovery, all those testing, the quality of the concentrates,
spk02: are uh continue to have us pretty excited but uh one step at a time we've got to get poa 11 done first that's helpful if i could just um request just to fill in on one piece of uh of the questions i think i've mentioned non-core assets but um maybe just general stakes in uh that you own for example the victoria gold stake how should we think about that uh going forward at this point well it's uh
spk05: It's a hard one to really define in terms of how to think about it. We made that investment because we think that Eagle operation is a high quality asset. There was a unique opportunity to acquire that 18% stake from Orion. It's kind of on strategy for us. How that plays out from here is, I can't really speculate, but it does figure into our future one way or another, right? And which path and when is still TBD, but as we always think about our funding alternatives, that $130 million or so of equity there is something that factors into into the calculus. So that's kind of a non-answer, but it's a part of the overall equation, I guess.
spk02: Thanks for all the time.
spk03: Yeah, okay. Thanks, Carl.
spk02: I really appreciate it. Thanks.
spk03: The next question will come from Mark Reichman with Noble Capital Markets. Please go ahead.
spk00: Good morning, and thanks for taking my question. So On, uh, on Rochester. So the crushing circuit gets completed in the third quarter of 2023. So, you know, there's a lot of talk about mid 2023. I'm just gonna kind of pin you down on, on what, what to assume for commercial production. Would you just kind of expect that it'd be full year 2024 or when do you expect kind of meaningful, uh, production from, from the expansion?
spk05: Yeah, I'll start. And then Mick, uh, thanks for the question, Mark. construction completion of the crusher by the end of the second quarter mechanical mechanical and then we and then we go into commissioning throughout the second half of the of 2023 with first full year you know in 2024 in terms of commercial you know, reaching commercial production levels?
spk07: We would expect to reach commercial production levels before the end of 23 to have a full year of production in 24. That's what we hope. But, you know, we'll have to build that into the commissioning plans and get the detail of that later this year.
spk00: And then the second question. Thanks for that. So next year, kind of lower exploration expenditures. I guess really just two. Do you have a replacement lined up for Hans, who I thought was retiring? And then also, are there any opportunities to extend the mine life at Kensington, or will that just become kind of less important as Rochester gets expanded and then eventually you bring on a larger silver tip?
spk05: Yeah, I'll take... The Hans question first, we just can't get him to leave. He's hanging out here again in the conference room. No, just kidding. There's been a process underway to identify a replacement for Hans. We've made good progress on that front, and Hans is kind enough to be flexible with his plans and his schedule to help with an orderly transition here in the first part of... In terms of Kensington, good question. It's obviously our shortest mine life. It's been that way now for a few, well, it's been that way for quite a few years as an underground mine. And it's been a good asset the last few years. It's generated really good cash flows for us. It should do another good year for us this year. We've been investing in exploration at Kensington mostly on the resource expansion side versus infill to kind of grow the inventory or pipeline, as Mick would say, of resource ounces. And we've been actually quite successful at that. You look over the last three years, resources have grown by nearly 30%. We've replaced about two-thirds of what we've produced over the last three years, so we have seen a little bit of reserve growth. depletion there. This is an important year here in 2022 as we focus, especially in the first half of the year, on more infill drilling to try and convert some of that larger inventory of resources that we've added over the last few years into reserves. And as we continue to do the work on testing some other structures that we've identified from the drilling over the last few years to see what the longer term future might be there at Kensington. The key is really to turn our focus more toward infill this year and see if we can't maintain this three-ish year mine life out ahead of us, which as an underground mine, expensive underground capital development, you don't want to get too far out ahead of ourselves on a P&P basis, but That's just some thoughts, Mark, on how we're thinking about Kensington. I don't know, Hans or Mick, did I leave anything out?
spk00: No, that's great. That's very helpful. Thanks so much.
spk05: Okay, yeah, thanks, Mark.
spk03: The next question is a follow-up from Dalton Barreto with Canaccord. Please go ahead.
spk04: Oh, thanks again, guys. I've actually got a couple more. Number one, these screens, the 80 million bucks on screens, can you help me understand what the incremental benefit is?
spk05: Yeah, I'll start and then, Mick, over to you. That 70 to 80 is a combination of screens and additional contingency that we're adding to the overall project capital estimate. I think of that 70 to 80, I think the screens are about 50 of it. So there's that element of that extra range tied to screens for the limerick crusher. Mick, do you want to talk about the incremental benefit and even a little bit about what we're doing at the existing pressure with screens this year?
spk07: Absolutely. If we look at Limerick and the benefits that were built into the technical report, we've been fairly conservative. We put a couple of percent of improved recoveries in there from screens and And then it allows us to effectively bypass the tertiary crushers and increase the throughput. So if you look at where we were for the original business case for POE 11, it was at about 28 and a half million tons a year. We're now up towards 32 million tons a year. So that's, they're some of the two key benefits from putting screens in, as well as of course allowing us to drive the topside down, topside sizes down on the crusher so that we can maximize those recoveries. So there may be some upside in recoveries, but we're not going to build those in yet until we've tested the XPIT. We should build the XPIT screen later this year, middle of the year, and then we'll get a few months of optimization ahead of building out the Limerick screens. So we'll have really good test work to optimize early and quickly when we start commissioning the Limerick.
spk04: Got it, okay. And then my second question is around timing, which I think a previous caller just alluded to. How confident are you in timing given all these supply chain issues that we keep hearing about?
spk05: Well, as the, not to be too cute about it, but as the finish line gets closer and more money gets spent, We're getting more and more confident. There's less things that are not yet ordered or unknown or uncertain or long lead times that have big question marks next to them. But Nick, do you wanna?
spk07: And we had a delivery schedule and a lot of that was in the early part of 22 and a lot of that equipment on Longlead is already arriving at the site and actually being placed because we're now in a good spot with concrete and foundation. So we can take that equipment in and set it straight away. So that part of the project's going really well.
spk04: That's good to hear. And then just maybe one last one. I noticed Terry Smith took a new job this morning. Any impact of the project there at all?
spk05: Well, let's see. We made a change there middle of last year. And so, no, we have a projects team under Mick that is running with POA 11 and Silver Tip and then all the other capital projects at the existing operations. I hadn't seen that. I hadn't heard Terry landed somewhere, which is great. But that was a change that took place, I think, last September.
spk04: Okay. I didn't realize it was that long ago. Okay. Perfect. Thanks again, guys.
spk05: Yeah. Sure, Dalton. Take care.
spk03: The next question will come from Brian McArthur with Raymond James. Please go ahead.
spk01: Good morning. Sorry, just back to funding. First thing, do you still expect the lab-procursor transaction to close early this year so you'll get that $15 million in?
spk05: Yes. Just waiting for that COFACI approval in Mexico, which should be here hopefully in the first quarter.
spk01: Perfect. And then secondly, just with silver tip timing, I think everybody's kind of talked about this. Obviously, there's different most important things to get Rochester finished and there's different ways to do that. But it probably involves, as you said, balance sheets going to be higher going forward. And then you talked about, you know, obviously, hopefully at some stage, you're going to be having cash flows coming out of Rochester in a big way. How do you think about the timing of a silver tip restart versus, because your balance sheet will be pushed farther up than maybe you want. Capital is going to be needed for silver tip. You talk about alternative financing. Are we talking about potentially, would you go as far as putting a silver stream on silver tip and make it a, you know, mostly a zinc lead mine because there's a lot of that in there and arbitrage that or would you turn around and hedge the zinc and the lead? I'm just trying to figure out you know, even if we get, once we get by, you know, and I get it, the most important thing is Rochester, how you think about the funding out in 24, let's say, or 25, and you want to get silver chipped in by 26?
spk05: Yeah, a few variables there. It's kind of a fun question that you're asking. I think, let's get the plan, let's identify a plan and a path that maximizes the value of that deposit. But as we're hopefully getting toward that goal here in the second half of this year, the thinking, as you pull the lens back, like you are, Brian, get past Rochester expansion. The ideal scenario I think we've alluded to in the past has been this idea of starting at Silvertip on a smaller scale and then scaling it up to a larger throughput in large part, self-funded from its own cash flow. That might help us come up with a path that's not only sooner but less capital intense. And so, you know, I'm just sort of hypothesizing here about what we'd like to see ideally. But if there was a scaled-up operation that could help kind of could self-fund itself in large part, that could be a key part of how we think about funding an expansion and restart. On top of that, then, would come some other things, a couple that you mentioned that are on the table for sure, whether there's a prepay of some sort, JV partners. I mean, if this gets to be a scale that we think it potentially could be, the size of the prize here could be big enough to to make sense to share it with a partner, whether that's another operating company or more of a financial non-operating entity. Those are all sort of on the radar screen of the alternatives that we consider once we have and assuming we have a viable business plan here identified later in the year. Does that?
spk01: you some yeah that does help as you said there's a lot of variables that's why i was just curious what you were sort of envisioning at the moment so so that's very helpful thank you very much mitch yeah no thanks brian this concludes our question and answer session i would like to turn the conference back over to mitchell krebs for any closing remarks please go ahead sir okay well thank you and we appreciate everybody's time this morning
spk05: And we'll look forward to speaking with you all again in the spring to talk about our first quarter results. So thanks for the good questions and your time, and have a great day.
spk03: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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