Equinox Gold Corp.

Thank you for standing by. This is the conference operator. Welcome to the Equinox Gold Fourth Quarter and Fiscal 2020 Financial Results and Corporate Update conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. If you are participating through the webcast, you can submit a question in writing by using the text box in the lower left corner of the webcast frame. I would now like to turn the conference over to Relynn Bailey, Vice President, Investor Relations for Equinox Gold. Please go ahead.

Thank you, Anastasia, and thank you, everybody, for joining us today for the Q4 call. We will, of course, be making a number of forward-looking statements today, so please do take the time to visit our website and to visit our continuous disclosure documents on CEDAR and on EDGAR. I'm now going to turn the conference call over to our CEO, Christian Mitao, for opening remarks.

Great. Thanks, Roland, and welcome, everyone, today. Just looking at slide number three and running through this past year, we had a heck of a busy year and lots on the go. Strong finish to the year and a good performance on the health and safety front with the very good mine integration and work on the safety front during a very taxing year when COVID was a key impact on the business. And we tested over 15,000 people for COVID during the year, and our workforce is only just under 6,000 people, so multiple tests per person on average. And I think we've done an excellent job, so kudos to the mines for managing through that difficult year. We had the highest production quarter to date and good cost performance, so we're pleased with the end of the year as we go into a big investment year this year. We had very good solid cash generation, and Peter will talk about that in a few slides here. So good end to the year. When we turn over to slide number four, busy on the development and corporate highlights front. Development was extremely busy during the year with Castle Mountain Phase I going into production and then hitting commercial production. in the fourth quarter. The feasibility study for Castle Mountain was ongoing, and we've been optimizing that and ready for release in the next few weeks, so keep an eye open for that coming out. The Los Felos feasibility study update is also underway and is a little bit behind. It'll come out during quarter two, during the mid part of quarter two, so just behind Castle Mountain phase two. We're expecting some good results from that in terms of reserve and resource expansion. And in addition to that, we've finished off the underground drilling at Arizona, and there's a PFS study underway, which we expect to give out to the market in the second half of this year. So lots on that front, lots of new information, some exciting additions coming to both reserves and resources. So a big year on that front. We also saw a nice increase last year in the reserves and resources at Mesquite, and kudos to Scott and the team who did a great job of basically increasing reserves and resources substantially there. And also really pleased with Mesquite's performance overall. We've owned it for just over a couple of years, just over two years now. Paid just over $150 million for it, and we've generated free cash flow of almost $140 million. So almost repaid that purchase price within two years' time. So excellent performance. Also, the Santa Luz feasibility was released with strong results. Really good high-return project, $100 million of capital. Construction started, and we're now about 25% complete. We've also appointed Sally Eyre to the board, so welcome to her this past year as well. We integrated the Leah Gold merger. The teams are now in one office in Vancouver. And we also announced the premier gold acquisition, so very busy on the corporate development front as well. So I'll pass over to Peter to walk you through the financials on the next couple of slides.

Thanks, Christian. So on slide five, you can see we had a good year. We sold 135,000 ounces of gold at an average realized price of about $18.71 per ounce, which generated revenues of $253 million. On the cost front, our cash costs for the quarter were $848 an ounce and just under $1,100 an ounce for all in sustaining. That led to earnings for mine ops for the quarter of $95 million. Income for the quarter is $89 million. For an EPS of 37 cents a share, when you adjust out a number of non-cash charges, our adjusted earnings or income is $34 million at an adjusted EPS of 14 cents a share. Fully diluted, that's 12 cents a share. Most importantly, we generated a lot of cash during the quarter. It was our strongest quarter for that, generating $87 million in operating cash flow before changes in non-cash working capital. That continues to strengthen our balance sheet, which is with cash of $345 million at the end of the year, which is up from $310 million at the end of Q3. In addition, the strong balance sheet, we have $200 million in net debt, which, if you assume the end of the money converts our equity, is $55 million of net cash. Our net liquidity, after you include the $75 million Canadian dollar financing, is about $600 million. In addition, our investment in Solaris has performed really well. We equity account for it, so it only has a book value of $22 million in our balance sheet. However, the fair value of the shares that we own there are about $150 million U.S. So good, strong balance sheet for the pathway ahead and the development that we need to do. Moving to slide six, you can see here our quarterly results by mine. Mesquite, we had a strong quarter, as you can see, with an increase in ounces sold from Q3 of 125,000 ounces to the 36,000 ounces produced and 135,000 ounces sold. Mesquite, Arizona, and Fazenda had particularly strong quarters. Mesquite benefited from an increase in recoverable ounces stacked in Q3, which came out in Q4. Orizona benefited from a higher throughput and stronger grade, which we always love to see, with the 37,000 ounces it produced during the quarter. Moving to slide seven, which highlights our earnings and operations results. Here you can see in the comparison of prior year really the increase in scale from the legal merger. One item I would point out is we finalized our purchase accounting for the legal merger in Q4. Unfortunately, that created a bit of noise because we updated our assumptions on the gold price to use to fair value the heat bleach pads at Los Felos. And when you make changes in your purchase accounting, you have to apply that. RFRS requires you to apply that back to prior quarters, which is why previous quarters are updated as if those changes had been made on day one. I do want to emphasize, though, that none of those changes affect cash. Looking forward to 2021, while we had a very strong Q4, it is a year of investment. We have a lot of sustaining expenditures. You would have heard from our guidance call and our guidance news release from February. To help understand a little bit of the structure of what our expectations are for the year, 61% of our sustaining expenditures in the first half of the year, but only 40% of our gold sales. meaning that we expect to have higher oil and sustaining costs in the first half of the year versus the second half of the year. That's mostly going to affect Castle Mountain, Los Filos, and Mesquite. My final point before handing things back over to Christian is that all of the financial results that we're reviewing today and that are in our press release are unaudited. It's our first year of SOX, and we're in the process of just finishing up the control side of the audit and with respect to our financial statements. We expect that to be done in the next couple of weeks, and you'll see our audited financials and MD&A about them. I'll turn the time back over to Christian.

Great. Thanks, Pete. And looking at slide number eight, just want to run through the operations and a little bit of a look back and a little bit of a look forward in 2021. So, you know, looking at Mexico and California first, Los Feliz and Mesquite are, as Pete said, in an investment phase here, particularly during the first half of this year. Los Filos, we're opening up the Guadalupe open pit. We're also ready to start the Burma All Underground once the social collaboration agreement is signed with the community, which I'll comment on in just a second here. We restarted the Los Filos mine in December and it poured about 13,000 ounces of gold last year and is on track to be ramped up to full production here as we speak. So pleased to see that back in operating. As we said last year on our last conference call, We've been working on an updated social collaboration agreement with the local leadership of the Carozalillo community. And their key areas of sticking or sticking points basically were around employment and contracts for the future growth in the operation, particularly around Verma Hall. So we've agreed those clauses around employment and sharing between the various communities and ultimately contracts and awarding certain contracts or tendering into the local community. So We're pleased that we were able to come to a resolution on those. We're still working on the final dispute resolution mechanism in the contract, and hopefully we'll have that resolved here in the next few weeks. But we're getting very close. We've made progress since last time we spoke to you when Ross and I were on the call a few weeks ago here. So good progress being made, and we plan to see that finished here in the near term and get back to normal business in Los Felos and get the mine expanded. At Mesquite, it's a big, heavy stripping period during the first half of this year, as Pete sort of alluded to. The brownie pit is being stripped. There's very little new ore going to the pads during this period, so we are residual leaching and adding sort of some supplemental ore to the pads. We're also spending about $9 million this year on exploration at Mesquite. You know, it's been an outstanding performer over the last couple of years and has been a key area of focus to continue to extend the mine life, As I said earlier, it was a good job of increasing resources and reserves, and we want to just keep doing that this year as well. So opening up the new area of Brownie, looking to expand the resource and reserve and invest in this mine. And we've also leased a new fleet from Caterpillar because we have such confidence in the future of this mine continuing on for a while. So lots of investment there in those two mines this year. When we look at Castle, we've been ramping that up. We hit commercial production later in the fourth quarter last year. We're still working on some niggly points around solution flow and leach pad management. One of the key investments this year really is in expanding the leach pad, actually spending the capital to build out the phase one leach pad to cover the whole period of phase one. So we're going to put all that investment into this year. It'll give us a lot more flexibility in the operating team, a chance to work on increasing the flows and having more flexibility on the leach pad. So we'll see production a little bit lower the first half of the year, and it'll ramp up in the second half of the year. Turning to slide number nine, looking at the Brazil operating mines. Extremely good year last year. Very satisfying to see all those mines perform well. Obviously, the currency was a key impact and help on the cost, but performance-wise, in terms of production, all the mines performed well last year. And we expect a pretty steady performance this year, quarter over quarter, so you'll see less variability there. Then you'll see in the other mines in Mexico and California. Arizona, I do want to point out, is just at an outstanding end of 2020, as Pete said, about $100 million of free cash flow last year. That's only its second year of operation, so very good results there. And 2021 has a large stripping program and a TSS lift, so the sustaining capital is a little bit elevated this year. Operating costs are basically in line with last year, but they'll be slightly elevated later. all in sustaining costs. We'll continue to allocate exploration dollars as well with that underground pre-feasibility study coming out in H2 and continue to work on satellite extensions as well as looking at some new potential deposits which are within the 10 or 20 kilometer radius of the mine. We're really excited about the future here and we're allocating the capital to extend that mine life. So Zenda kind of continues business as usual. It's been going on and off for about 25 years, so Business as usual, it's had a good start to this year. RDM, again, another good start. The mill's performing very well. The mining contractors continue to perform. We got that large pit extension permit late last year. We're spending almost $35 million on stripping this year, so that's a key portion of our capital for the growth capital this year. Interestingly, there's been quite a rainy period during this rainy season this year. And as you remember, historically, it always was challenged with having enough raw water in the raw water dam to get through a full year of production. But this year, the actual raw water dam is overflowing. We probably had two years' worth of water. So really, really pleasing pictures to see over the last week or so. And P-Large continues on, smaller scale, delivering free cash flow, just at a steady state. Turning to slide number 10, just a refresh on the guidance we put out a few weeks back. You know, 600 to 665,000 ounces, that's a 30% increase on 2020. So continuing our move towards that million-ounce target. Task costs are up slightly, as mentioned earlier. You know, fuel, reagents, labor, and FX have slightly more conservative assumptions this year going into the year, although we're actually seeing almost the opposite on the FX front. I think both the peso and the Brazilian REI have actually been weaker than – much weaker than we expected early this year or so. I'm getting some benefit from that at the moment. All the sustaining costs increased a little more substantially due to the CapEx programs at Los Feliz, Mesquite, Castle, and RDM. We'll be improving those substantially in the second half of the year, as Peter alluded to, and quarter four looks to be a really good quarter as we open up new ore sources at both Mesquite and Los Feliz. Growth CapEx, you know, basically the key components of that are the $100 million investment in Santa Luz restart. I'll comment on that in a second here. $35 million on the pit expansion at RDM, and also opening up the Guadalupe open pit in the Bermahal Underground at Los Filos. So those are the key components that make up that $200 million. So we're spending about $400 million on CAPEX this year in total, including the sustaining. But it really does set us up for a strong 2022 and beyond. So next year in 2022, we should be producing up to 900,000 ounces of gold. Turning to slide number 11. Looking at the development projects, the Los Feliz expansion, the plan there is to move that towards 350,000 ounces of annual production on a fairly steady basis from 2023 onwards. We've selected an 8,000 ton per day plant, and that new feasibility study, as I said, will be out in Q2. And we won't start that investment until that social collaboration agreement is signed for Burma Underground, but we hope to have that up and running fairly soon here, and We should be in a position to launch into construction on the CIL or the carbon and leach plant later this year as well. In terms of chandeliers, we did start construction as we announced in the second half of last year. It's about 25% complete. Just seeing pictures on the concrete cores for the mill foundations, also for the tank foundations. Resin has been ordered. Steel work is well underway and mining is expected to start in May. So making a really good start to progress there. It'll be constructed by year end. The physical construction will be done, so we should be pouring gold in early 2022. At the moment, the mine is on time and on budget, so great to see. And some of the teams that helped build Arizona are down there spearheading this one. Looking at the Castle Mountain phase two feasibility, you know, that'll be ready imminently. We expect that out in the public domain in a few weeks' time here. That should show a nice increase to the mine life, to the annual production, to the reserve base. On the back of all that, we'll also be looking at a slightly larger mill. And then what this feasibility will allow us to do is start the permitting process to amend that permit in the summer this year when we make a submission to the regulators. And we expect that will take us, you know, up to three years to permit, which works in really well with our current development pipeline. We get chandeliers done by around this year end. Hard rock potentially could be started in that second half of this year and completed around the end of 2023, early 2024. Then you could be starting construction on Castle Mountain. So a nice sequencing of our projects. Looking at page number 12, you know, the premier acquisition, you know, we announced that I think it was December 16th. The vote happened last week. We got 99.9% in favor for the premier shareholder vote. We're just waiting on the Mexican antitrust approvals. We expect that in the next few weeks here, similar to what we had last year with Leah Gold. It took us till mid-March, so we expect probably second half of March we should have that. And also the IE spin-out that you and Downey will be running. It's had a nice sort of visibility in the Premier share price. It's probably moved up to about $250 million of implied value. Our 30% stake then will be just under $100 million, so nice to see that value creation happening already and a focus on that pure Nevada-based company. Okay, a little more closely on slide number 13 at the Hard Rock asset. As we announced earlier this week, we'll hold a 60% stake in Hard Rock. We bought the 50% through the Premier acquisition, and we've Negotiated deals will buy another 10%, which will close just after closing of the premier deal. We'll acquire that 10% from Orion for just over $60 million. So really pleased to have that majority stake, to really be able to say that we're behind this project 100%. We actually got a chance to visit it last week and put our feet on the ground and actually see the excitement in the local region for this project. They're really keen to see it up and running, and all the stakeholders are behind it. So nice to start with that support. As well, just a quick reminder, you know, this is a permitted project. It has social agreements in place with the First Nations. It's truly construction ready and has a project team that's been there, that's done the feasibility study, that's built a few mines for EcoEagle in fairly remote locations in northern Canada. So really got all the pieces in place to get going later this year. So we're pretty excited to get this acquisition completed and, you know, do a bit of work before we can launch into construction, but really get this thing moving later this year. This asset will be a cornerstone asset for us for years to come. It's a 5.5 million ounce deposit, so great scale to it. It'll produce over 400,000 ounces in the early phases. Lots of exploration upside potential. I was really pleased to see that last week. There's potential for an underground eventually. The 14-year mine life is only focused on the open pit. As well, there's some potential satellite deposits to the west of the property. Some really exciting pure results come out of there as well. So, We see this as a multi-decade mine eventually. It's got a great starting project, and we plan to get into construction there hopefully later this year. Look at the other assets on slide number 14 of the premier acquisition. Mercedes, it's a 50,000 ounce producer currently. It's producing good cash flow. It's about $1,000 all in sustaining cost. They're generating good cash on a quarterly basis. Hasaga is an exciting Red Lake property. It could be a mine one day. We plan to do some exploration there in due course, but we're really excited about that one. Ray Hill Bonanza, it's a bit of a smaller project. It's sitting between some evolution properties, and it's a logical part of that complex in the long term for sure. And then I-80 Gold, like I mentioned earlier, you and Downey will be running that out of Reno, Nevada. It's three focused assets in Nevada, one producing, one that can be put back into production fairly easily in a high-grade exploration project effectively. And I think Ewan and the team will be able to create some real value there. And as we've done with Solaris, we think we can support them and help them surface that value as a focused U.S.-based gold mining company. And turning to 15, just to kind of bring it together, when you look at this portfolio of assets with the premier acquisition completed, it really does create a nice balanced portfolio overall. We're happy with the diversification. You've got almost a quarter in each of these jurisdictions, being Canada, the U.S., Mexico, and Brazil. Reserves and then asset values, the upside and expansion potential, and all the exploration that sits in this portfolio is just fantastic. We're really pleased that we're able to balance it now almost 25% in each of these regions. And I think this year will be exciting because you'll get a number of studies out, you'll have some exploration results, and what we'll be able to do is expand a couple of the assets and and really show that there's growth and potential in all of these regions. We're not reliant on any one. It's actually nicely balanced going forward. And turning to 16 and just pulling that all together, what does that really translate to? Well, this is the leading growth company in the sector right now. I'm not sure there's anyone with that kind of growth rate, as you can see in the third column there. We plan to be hitting that sort of million-ounce mark in a couple of years' time here. We also have a nice reserve base of almost 16 million ounces, and we see that growing in the near term here. So at the leading end of all the peer comparable categories here on this slide, except for at the valuation end. So our key job here is to move that multiple of price to net asset value up from 0.5 to 0.6 up into that sort of range like our peers of that 0.8 to 1 times range. And really over the next 12 to 24 months, as we execute, as we expand the portfolio, as we become a 900,000 to a million ounce producer, we really think that re-rating has got a really good chance of achieving that and the balance she's in place to deliver on that growth. And just in summary here on slide number 17, you know, it's been a busy year in 2020, a long list of catalysts for 2021. You know, we're going to focus on delivering on the production and the craft space that we have, um, But that production will have a 30% growth factor built into it. And we've also got a $37 million exploration program, which will be mostly focused on extending the mine lives and around the mines that have shorter than 10-year mine lives. So it's nice to see that we're actually reinvesting in our own portfolio this year. It's more inward-looking than it has been probably in the last couple of years. We'll be looking to close and integrate the premier gold acquisition. We'll be looking to support Solaris and IE Gold as they create some value And really on the M&A front, it's a little bit more subdued. I think going forward right now, we're focused on basically expanding our assets, delivering on the value of all the great assets we have internally here, and simplifying the portfolio. So what we think we've done here is we've created a company that has all those pieces to create value. It's well positioned in this gold cycle. You know, diversity scale. We're in mining-friendly jurisdictions in the Americas. The growth is all owned internally at the moment. We don't need to go out and buy it. We've got a strong balance sheet, $600 million in liquidity, another couple hundred million dollars in investments, and a very low net debt to EBITDA ratio of well below one time. So with that and our long-term common vision with our core shareholder base, we're really excited about the future here, and we think that Equinox is really set up for a strong future, and 2021 will be a fun and exciting year. With that, I think I'll end the formal part of the presentation and maybe turn it over for a question and answer.

Thank you, Christian. Operator, can you please remind people how to ask a question?

Certainly. Once again, to join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. If you are participating through the webcast, you can submit a question in writing by using the text box in the lower left corner of the webcast frame. We will pause for a moment as callers join the queue.

Thank you. We do have one question from an investor in the United Kingdom. You've just outlined, Christian, some very impressive growth plans for the coming years. What do you think the market is missing? What does the market need to do to believe in Equinox Gold and have that reflected in the share price?

I think one of the key things that certainly the feedback we get is we do have a lot on our plate. So really focus on your core projects and the opportunity to create value in those core expansion projects and areas where you can expand the reserves and deliver on what you say you're going to do. And I think it's all about the execution here. We've gathered all the pieces to the puzzle. Now we just have to put them together and be on time, on budget and execute and I hope that we've done a good job of building a mind per year over the last few years of doing some M&A and integrating cultures and companies and creating some value already. I just think that it's a matter of executing is the key thing, and I think the balance sheet's in a strong place to allow us to do that. And again, the shareholder base has got a common vision with us of delivering something that has a long-term vision, not just a short-term vision.

Thank you. We'll take a question from the phone now, please.

The next question comes from Carrie Smith with Haywood Securities. Please go ahead.

Thanks, operator. Maybe Doug can answer this question. Just for these big pre-strips you have at Mesquite, Philos, and Arizona, and I guess RDM, would that pre-strip be happening sort of equally over the year, or is it sort of front half-weighted, runs for three quarters, just a bit more clarity on how it's going to be scaled out or scheduled out over the year?

RDM is through the year. Los Felos is more front-end weighted as we strip down Guadalupe and get into the ore. Mesquite is, again, front-end weighted as we open up the brownie pit to access the ore in the southern part of that pit. and Arizona stripping is a bit of a holdover from last year. It just continues into this year, and we'll go through most of the year as well.

I think with the rainy season there, Kerry, we tend to move more tons, obviously, after April, May, so probably pretty evenly distributed.

Yeah. Arizona built up a very big stockpile coming into the rainy season. I think it was over a million tons, so we take advantage of that as we work through the rainy season and get back into the stripping for the rest of the year.

Right, okay. And, Doug, while I've got you just on RDM for the production, that mine's been doing sort of 18,000, 19,000 ounces a quarter, or the last few quarters at least, and your guidance this year is 55,000 to 60,000. Do you want to maybe just talk a bit about why that production's actually a bit lower than what you kind of expect on a quarterly annualized rate?

We were waiting for the permits to be able to do the pit stripping, which came through middle of last year. And that's why we're pushing it through this year. We're actually, I would say, delayed in getting going with that strip. And now that we're into it, we're focused on that. It means that we have a more modest grade through 2021. That said, it's actually been doing pretty good so far this year against our expected grade. So Maybe we'll get a little bit of a pump, but it was kind of expected that when we got into the stripping, we would have a more modest grade going into the plant so that we could get access to better grade in the remaining life of the mine.

Okay. And then does all that stripping finish by the end of the year, then, or does some of it roll over into – It rolls over. Okay. Okay. Okay. Okay. And Christian or Peter, could you maybe just let me know what the book value will be for your I-80 position once the deal closes, the financing closes, and the company starts trading, just what your dollars, millions will be for your allocated book value there?

I think that one's for you, Peter. Do you know that yet? Yeah. We're going to have to fair value. So, A, we'll have to do fair value accounting for it. So, The short answer is it'll be at whatever the shares trade at initially at inception. The fair value of that is going to be in and around, call it $100 million, $80 to $100 million. Okay. I mean, that's a let's wait for Q1 question, really, Kerry.

Right, right, okay. But if I just took the sort of the – this average price to trade that in the first week and just multiply it by the shares, that's kind of going to be your book value.

Correct, yeah.

Gotcha. Okay, that's great. Thanks very much, guys.

Thanks, Gary.

Thanks, Gary. Take another question from the phone, please.

The next question comes from Lauren Stenney, a private investor. Please go ahead.

Good morning, gentlemen, and thank you for all your hard work. As a CPA, I'm a tad bit concerned on the all-in sustaining cost numbers. With the acquisitions and streamlining, are you going to be able to cut costs, and are those numbers going to fall in the coming quarters?

The bigger trend here is obviously as we expand and develop these longer life, larger assets, those will naturally bring down our costs, but also we have the call it the short-term impacts of these stripping programs and less ore going on the pads etc and the skeet and phyllos in the first half of this year so we have an elevated period here in the first few quarters of this year and then you start to see that downward trend and I think as we get into sort of like next year you're running at almost 900,000 ounces and we've got some expansions that have already come to fruition you start to see those costs starting to come down and Gradually over time, as we get Hard Rock into production, as we extend Castle, and as well as we extend Phelos to its full capacity, those will all be lower costs. So it's a process here that we're going through of bringing costs down over time for sure.

Will that lend itself to the potential of dividends? You know, like after those things happen, will that, you know, be more, you know, lend itself to maybe... the potential of dividends, you know, maybe in 2022 or 2023?

Yeah, I'm not sure the exact timing yet, but absolutely we're heading in that direction. And the goal here really is to get this portfolio humming and, you know, spend some of this development and growth capital where we think we can get some great returns on it. And then we'll move to more of a dividend model and, you know, probably be able to allocate some capital back to the shareholders as well as invest in future growth. But I think you're right. It's 2022 maybe, but 2023 is much more likely for that.

Yeah, that should help valuation, too. Thank you very much. Yeah, thank you.

Thank you, Lawrence. Another question from the phones, please.

The next question comes from Mike Parkin with National Bank. Please go ahead.

Hi, guys. Thanks for taking my questions. Hey, Mike. Can you speak to how Santa Lucia's development budget is kind of tracking? Are you seeing kind of any wins on that? you know, certain kind of cost items and, you know, wherever you can kind of give some color.

Yeah, maybe I'll, I'll start there, but Pete and, uh, Doug, please jump in as well. Um, you know, so far we've seen it pretty much tracking. I think it's a percent or two behind where we expected it to be in terms of at this stage, I think around 25% and, you know, it should be at 26 or 27. And I think it's tracking basically on plan for, for the budget as well. And we're obviously getting the, the tailwinds from the FX rate, um, It's a slightly better environment than we had to work in up in northern Brazil there with Arizona. The rainy season and that doesn't have as much of an impact. We're finding that contractors in the area are probably a little more qualified. So far, we've had a really good start to it and really encouraged. It is a fairly short build because a lot of that infrastructure is in place. When we get asked what's the critical path and what are the key issues that could cause any issues or delays, You know, it's not about waiting for a mill to come from China or from Europe or whatever. And, you know, those are there on site. So it's more about executing on, you know, concrete pours, getting that early mining going, getting the steel work erected, et cetera. And so there's less areas for things to go wrong. Of course, it's a construction project and, you know, can't be totally certain. But, you know, so far it's tracking really nicely. You know, Doug or Pete, I don't know if I missed anything.

No, I'm right. Well, I'll go ahead. No, I was going to say the same.

All right, excellent. And on Hard Rock, could you just give us an idea of, like, once the deal closes, it's already permitted for construction. Can you give us an idea of what kind of activity we should expect on that project this year? And do you have a percent of engineering completion on the project that you can share with us?

I'll comment on maybe the first part there, Doug. I don't know if you can comment on the second part. But the idea here is to close. You know, we have been out to site. We've sort of started the process of getting up to speed with the team. You know, we have a few questions just to answer and a few points we want to explore and look into. But overall, we were very happy with the work done to date and the project team in place. And, you know, Premier has given the go-ahead, I guess, on just getting some early works done, like tree clearing and that, that has to be done during the summer months. And, you know, it's a lighter end of early works and, you know, I can't predict the exact timing, but hopefully in the second half of this year, we're in a position to be able to launch into construction. So you're going to see, call it, you know, the lighter end of works where you're hiring a few project team members, maybe doing a bit of tree clearing, you know, ordering a few things with some deposits, but you're not going to see a big capital spend, certainly for the next three to six months. And if you get into construction later this year, you could see us launch into a bit more detail and, At that stage, we can give a full budget and timeline and be able to articulate the capital, but a small proportion of the capital would be spent in the second half of this year, of course.

Okay.

I don't know if you know the exact percentage or where they're at.

Well, part of the work in the latter half of the year is updating all the costs and the majority of the cost for all the equipment was based on firm quotes. So there is an updating phase and completion of additional engineering. It's variable between about 50% complete on some of the detailed engineering on the plant up to closer to 90% complete for TSS and highway rerouting. I will add that part of the push for this second half of the year is establishing the camp and the effluent water treatment plant that are needed to be in place prior to being able to initiate the main construction for the project.

All right. That's a very good color. Thanks, guys, very much.

Thanks, Mike. I'll take a couple of questions online now. So the first one I get asked all the time by email, so I'm going to let you answer it, Christian. Are there any plans to employ synergies at Mesquite with core mining material gold projects?

Not at this stage, that's for sure. We're pretty happy with what we've got going on at Mesquite there. We find the best investment dollars we have at the moment is actually going and exploring and adding ounces reasonably cheaply through the drill bit or the work that Scott and the team and Tom are doing down there. That's what we're focused on. Because of all the upside and the potential there at Tassel and because we think of them not quite as one complex, but we certainly share some of the Some of the people, the skills, the systems, we tax consolidate, we're able to snuff all the gold at Mesquite. They have a somewhat symbiotic relationship, and we think of that as not just one complex, but a linked set of two minds. We've got a long mine life and lots of opportunity there, so at the moment, we're really focused on that. In the last year, I would say we're probably... We've done a lot in terms of the acquiring side of things, and we've got a good portfolio now. We're really focused on our own assets and not really in acquisition mode at the moment. We need to execute and deliver on what we've got on our plate.

Thank you. Another question from a shareholder in Estonia. Do you see any political or union-related risks from any of your mining locations?

I think I would say more generally is that you see political risks and around the world, anywhere you are. And, you know, with today's environment and COVID, I think there are certainly some moving shifts in terms of obviously government and public spending and maybe some tax risks. I think a lot of governments are looking at increasing taxes. I believe the UK government did so yesterday or the day before. So that's something we certainly keep an eye on. But I do think that the jurisdictions we're in are very mining friendly. I mean, Ontario is one of the top, I think, three in the world You know, the U.S. is fantastic where we are in California. I know people say you can't mine in California, but, you know, Mesquite's been going for 30 years. Castle went for 12 years before, and we're having a good go of it right now. So we're very happy there. And, you know, Mexico's got a long tradition of mining. There's a little bit more left-leaning government at the moment, but it's a key engine to the economy there. And Brazil, you know, honestly, when we got back involved in 2016, Brazil has really, really improved. And we've seen the labor relations, the government policies around permitting, also contracting have actually improved. And maybe it's all marginally, but we've seen an incremental improvement across the board. And tax rates have stayed very, very amenable in Brazil as well. So, you know, I think we're prepared now. We've got a diversified portfolio. And if there are changes, we can withstand that and that's one of the key things and part of our story is being diversified and evenly split amongst our four countries rather than being reliant on one or two assets that are much more at risk but you know in terms of unions I think we've got unions at a lot of our sites we have good relationships and that's something just like communities that you have to work on it's a long-term partnership and I do think we have pretty good relationships with all of them and there is always risks in those kind of partnerships that need to be cultivated and and managed well, and certainly at Los Feliz is an area that we learned a few things from after acquiring it, and we'll do our best to improve that partnership, and it's the same with unions, but so far I'm seeing no major issues jumping out at us.

Thank you, Christian. We've got another question online from one of our institutional investors in the UK. At current levels, the equity is extremely discounted. Is management open to considering a small buyback that doesn't materially impact cash levels?

Yeah, it's a question we get. I mean, the dividend share buyback question is always on the radar, and it does get raised in this market. You know, I think with our growth profile and the ability to invest and the need to make sure that our balance sheet remains solid, I'm not sure it would send the right signal necessarily to do a buyback at the moment and take some of that capital away from all the expansion projects we have on the go. There's some really low-hanging fruit in our portfolio, and I think we wanted to focus our capital on that, but I think we're more likely to look towards, you know, a sustainable dividend when we get to that stage. And sometimes share buybacks can be, you know, fleeting and momentary because they are by definition, effectively finite, you know, you just can't keep continuing on with them. So we want to do something that's got a more sustaining long-term view here. And of course we worry about the share price. We're all owners of this company, Ross, myself and all the management team, we have an eight and a half percent stake. So we're very, very attuned to the low share price and, But really, it's the long-term vision that wins out here, and we do believe that we've got the right vision to deliver on value over time here. We don't necessarily just want to do a short-term buyback, so we'll focus on getting to that point where we have a sustainable dividend first.

Thank you. Operator, can we please take a question from the phone line?

Certainly. The next question comes from Andrew Weekly with Smith Weekly Research. Please go ahead.

Thanks, Operator. Well, I want to extend appreciation for the work you guys have done on this pipeline. This is really good, and I don't think the market's paying attention to anything other than figure rates and a little bit of the gold price here at the moment. But, Christian, can you add any color as to some of the highlights of the forthcoming community agreement at Laos Filos? And if you can share maybe just vaguely, what things do you think will keep this relationship aligned longer term? Yeah, thanks, Andrew. And, you know, I want to be careful. I don't want to go into all the granularity of an agreement, but I think I was pretty forthcoming the last few calls and even a little bit earlier where, you know, the goal here is to set a collaboration, social collaboration agreement with the community that makes sure that we look after areas of concern and where we can help that include things like improving, you know, the water distribution system, which we committed to previously and we will continue to commit to and we'll make sure we upgrade that. Things that involve, you know, call it scholarships and medicines and other areas that we can contribute to the wider community and make a difference, a positive difference. And the key areas that obviously were, you know, that the local community leaders were pushing for is making sure that, you know, there's a reasonable and fair distribution of employment and contracts. And, you know, for us, it's absolutely vital that it's reasonably split between the three core communities there, like it is for any of the communities we affect and all the other mines as well, and those are the key areas that we're focusing on because we plan to be there hopefully for a long period of time and there's lots of investment to go in so we want it as solid as possible we want it as understandable as possible and particularly as we said the deceit resolution mechanism or grievance mechanism is as clear as possible so that blockades don't happen in the future and that they feel they can come to us and as an institution we're able to work with them and deal with things and it's not one individual or one person that builds that relationship we're actually a company and You know, with Ross's background and certainly ours, you know, this kind of stuff is critical, vital. It's something that we've all had good experience in over the years, and we're disappointed with how this played out. We didn't get a good chance to go in and build those relationships on a personal level as well amongst senior people in Vancouver and at the mine site level because of COVID and because the transaction happened just before that. So we're looking forward to, and I think I'm pretty optimistic that sometime later this year, in most of the countries we're in, COVID will be under control and we'll be able to start building upon those partnerships and relationships. And part of it's having the agreement in place, having it well understood, managing it well, having a regular dialogue, grievance mechanism. But also it's about building those personal relationships that stem all the way up to Ross and all the way down to the local team that's working with the community. And it's hard work. It's a regular thing that you have to keep up. Just like exercise, you have to keep your your body in shape, you've got to keep your local relationships in shape, and it's an ongoing multiple touchpoint relationship, and I think it's just about that hard work on that front, and I think the agreement is the foundation of it, and the relationships are the key that keeps it going and keeps the machine oiled well. Yeah, I appreciate that, Christian, and I think it is important for the ESG part of it that's happening in this market, which has been largely unexpected, and of course you guys have been

servicing ESG for many, many decades here, but, uh, just wanted to bring that back up and I'm sure you guys are listening to what the community wants as well and trying to find a common ground. So I appreciate that. You guys keep up the good work, keep up the efforts and take care.

Yeah. Thanks, Andrew. And we get, you know, we have a lot of personal joy and pleasure from actually making a positive difference to communities and to the regions we operate in. So we take it really seriously and, um, We'll invest in that. And I think COVID, and I'll just touch on that because you kind of alluded to that. COVID has been a big impact last year as much mentally and morally and just the impact it's had on testing and the way that we operate in protocols. But we do see that the case levels have been reducing across probably the portfolio of minds. The minds have done a wonderful job of managing COVID. And obviously in the U.S. we're seeing a big rollout of vaccines. I think everyone will have a chance to be vaccinated in the second quarter this year. We've even been approached in Brazil about do we want the company to order vaccines, which is something that we would have to consider. I don't know if we want to do that, but we're seeing the vaccines starting to come out, and, you know, I do believe that this year hopefully we'll be turning a corner on that front. Thank you.

Thank you, Andrew. One more question online from a brand-new shareholder as of this week. You've got your first project in Canada now. Are you thinking of expanding in that country?

Well, we were always keen to add Canada. I think Ross was saying when we were on site last week, it's his first time back in Canada in a few years. I mean, I was here obviously with Newgold. We're really excited to be back in Canada. I mean, there's a lot of good reasons to be here for the great mining jurisdiction. A lot of people who know what they're doing in mining. It's really perspective. You know, obviously, rule of law, the social relationships are very strong at this project as well. And, you know, a number of shareholders said to us, you know, one of the key pieces that would round out our portfolio would be adding a good, scalable Canadian asset. So we hope that we pick that box, and we're really excited about that project as a part of our portfolio and think that we can add some value to it. And, yeah, I mean, why not? We'd love to be a little bit bigger in Canada. It wouldn't hurt. But we're not actively out there looking for more projects at the moment, particularly development stage, because our pipeline is full. We've got Santa Lu's. Hard Rock, and then Castle, and then there's a bit of work, obviously, to go on at Philo's that overlaps a bit. So we want to focus on what we've got in hand, and we're not in a rush to look for something. And, you know, if we do ever do anything in the next year or two, it would certainly have to be in a creative deal, and we've got to get our multiple and our valuation up. So our focus is on delivering value and, you know, having people realize that this portfolio is well undervalued right now, and we're getting that re-rating.

That is the end of our questions for the day. So thank you, everybody, for joining us. If you do have questions that you think about after we're done, please don't hesitate to get in touch. And I will hand it back now to Christian for closing remarks.

Great. Thank you. And thanks for the group of questions from Keith's shareholders and supporters who have been around for a long time and patience here. We're building a great pipeline and portfolio in this business. We've got the best growth, I think, maybe globally for a good-sized mining company and As you see us execute over the next couple of years here, it's going to be an exciting ride as we creep up in that re-rating in terms of our valuation. And glad to have you along for the ride now. And thanks again for all the questions. And we'll speak to you again soon.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.