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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you all for joining us this morning. Before I turn the call over, I need to advise that certain statements made during this call today may contain forward-looking information, and actual results could differ from the conclusions or projections in that forward-looking information, which include but are not limited to statements with respect to the estimation of mineral reserves and resources, the timing and amount of estimated future production, cost of production, capital expenditures, future metal prices and the cost and timing of the development of new projects. For a complete discussion of the risks, uncertainties and factors which may lead to actual financial results and performance being different from the estimates contained in the forward-looking statements, please refer to Yamana's press release issued January 25, 2021. I would like to remind everyone that this conference call is being recorded and will be available for replay later today on the company's website. Replay information and the presentation slides accompanying this conference call and webcast are available on Yamana's website at yamana.com. I will now turn the call over to Mr. Daniel Racine, President and CEO.
Thank you, operator. Good morning, everyone, and thank you for joining us today. We would much rather do this face to face, but clearly, that isn't possible in the current circumstances. But we hope the situation will improve and that we will be able to meet in person with many of you in the near future. As you have seen with the 2 releases yesterday night, we have a lot to cover this morning and a lot to share with you about what we believe is an exceptionally bright future for Yamana, a future underpinned by our 5 producing mines, which will anchor our 1 million ounces GEO production platform over the next 9 year -- 10 years and beyond. We saw in many reports overnight and this morning that our guidance for this year is light compared to what we have said last year at this time. There was no pandemic in February 2020. Our guidance this year is taking into account that we are still in a pandemic and we took a more conservative approach, especially for Cerro Moro, where we were the most impacted in 2020. We have to respect our community and we will. A future with significant upside potential driven by our newly acquired Wasamac project and a strong pipeline that includes the MARA project, the Suyai project and a number of advanced exploration projects in our generative program. With me today is the senior management team of Yamana. The presentation will be made by many of them. Also with our -- also with us is our Executive Chairman, Peter Marrone. Peter is available should anyone have any question after our presentation on the strategic direction of the company, on our plan for some of our strategic asset and our approach to evaluating the direction of metal prices. And before we begin, a quick rundown of our speakers. Jason LeBlanc, our Chief Financial Officer, will kick off things with a quick company overview of the 2020 highlights. [ Craig Ford ], our new Senior Vice President of Health, Safety, Environment and Sustainable Development, will follow with an overview of Yamana ESG approach and performance. [ Craig ], as you'll note, is succeeding the retiring Ross Gallinger, who will be remaining with the company through March to ensure a smooth transition. Ross, as many of you know, has played an integral role in building our community relations and developing our One Team, One Goal: Zero vision, which underpin our approach to health, safety, environment and community relations. So allow me to acknowledge Ross and thank him for his contribution to Yamana and to welcome [ Craig ]. After Craig's presentation, we'll turn it back to Jason to discuss our 2020 results, 3-year guidance and capital allocation. Yohann Bouchard, Senior Vice President of Operation, will then take you through our 10-year production overview. Gerardo Fernandez, Senior VP of Corporate Development, will provide an overview of the MARA and Suyai project. And finally, Henry Marsden, Senior VP of Exploration, will update you on our exploration program, and a question period will follow. All our speakers will be available for question, as Peter and myself. And as I say, a full schedule, so let's get started. Over to you, Jason.
Thank you, Daniel. And good morning, everyone, and thank you for attending our event here today. Daniel already highlighted the agenda and the speakers for the day, but I also wanted to mention that we expect the formal presentation to go for approximately 1 hour and 15 minutes, and then we'll move over to the Q&A. As you see, we've also taken a little bit of a different approach here today by incorporating video despite the team not all being together. We've taken all the steps and expect everything to go swimmingly, but please bear with us if the technology gets the better of us here today. I'll set the stage with a couple of introductory slides for those new to Yamana before passing it along. We have 5 producing mines located in mining-friendly jurisdictions in the Americas, specifically Brazil, Argentina, Chile and Canada, all countries with well-established mining pedigrees and clear, predictable rules and regulations. We have a 1 million GEO production platform with low all-in sustaining costs. Revenue is derived from gold at 87% of the total and the remaining 13% coming from silver. In addition to our producing mines and other gold projects, we also have a significant copper project in the portfolio known as the MARA project, which we're very excited about and we'll speak more on a little later. In the interest of time, I'm not going to talk to this slide in detail, which shows our 2020 highlights. Safe to say that we had a busy and productive year across the various topics you see here. While COVID did impact our operations, we had a strong operational and financial performance, further strengthening our balance sheet and increasing our dividend. Although we had 5 -- 4 of 5 operations performed well above expectations, we also had the disappointment of the outcome at Cerro Moro, given the extent of COVID challenges there especially at the end of year. Even despite those challenges though, Cerro Moro actually had quite a strong finish to the year. But without that impact, we had an exceptional performance from our operations. We made significant exploration progress, continue to optimize our portfolio, including the sale of our Royalty portfolio; the acquisition of Monarch Gold, which closed last week and added the Wasamac project to our portfolio. We also took a significant step forward with the integration of Agua Rica and Alumbrera to form the MARA project. We listed on the London Stock Exchange, putting Yamana on the radar of a whole new group of investors, some of whom are participating here today. And we continue to deliver high ESG performance across a number of indicators while taking steps throughout the pandemic to ensure the health and safety of our employees and communities. I'll turn it over to [ Craig ] in a moment to talk about our approach to ESG before I come back to talk about our preliminary 2020 results and guidance/outlook, but I'll also take this opportunity to welcome [ Craig ] to the Yamana family. I guess I also have the honor of passing over to [ Craig ] for the first time. So with that, over to you, [ Craig ].
Thanks a lot, Jason, and good morning, everybody. I'm really excited to be joining the Yamana team. And certainly, while there is no replacing someone of the pedigree of Ross Gallinger, I will do my utmost to follow his example and continue to enhance Yamana's exceptionally strong ESG program and culture. As Daniel mentioned in his opening remarks, 2020 tested the world in ways that it's never been tested before, and certainly, Yamana was no exception to this. We did however take early and prompt action in response to COVID-19 to prevent its spread in the local communities and at our operations. That included securing testing capabilities. Our efforts spanned the entire corporation, from the Board through to senior management, and through the hard work of everyone at our operations. And for that, they deserve our sincere thanks. Our efforts have paid off, although we continue our close oversight of the situation at all of our locations. Despite the challenges at Cerro Moro involving the imposition of unexpected restrictions in December, the impact to our business from COVID was relatively limited. And thankfully, we have not had any major outbreaks or severe cases. We feel it's really important to focus on the health and safety, quality of life of our employees and local communities and to comply with the government-sponsored health rules even if this is at the expense of operations and production expectations. And while those operations and productions will be impacted, the impact is modest as compared to the benefits that accrue to people's health and safety. From the start of the pandemic, we have worked with our community partners to provide them with critical supplies and equipment they need, and we are now evaluating how we can assist governments and local communities to ensure that vaccination programs are effectively implemented. We are addressing a wide range of ESG matters in our ongoing operationally focused programs. This slide presents some of the highlights, and I'll talk about 3 elements. First, we maintain our focus on building safety culture through leading indicators and managing critical workplace hazards. We achieved an almost 10% reduction in our total recordable injury rate in 2020, which is a remarkable achievement from our already low 2019 rate. Second, our social license to operate index or SLO index continues to be a valuable tool to assess trust and acceptance amongst our local communities. This tool allows us to demonstrate our privilege to operate and is something that distinguishes us from our peers. Third, our ESG performance is increasingly being recognized by external ESG rating agencies and analysts. We place high importance on maintaining excellence in corporate governance. Our Board has responsibility for overseeing all aspects of ESG. We have a direct linkage between ESG performance and compensation at both the operations and executive management levels. Our tailings governance and systems are best in class, and we are progressing with a review of the recently released global tailings standard. Our efforts to engage with our stakeholders, identify and reduce adverse impacts and deliver positive impacts are achieved through the incorporation of best practice from international codes into our management systems and processes. This slide highlights some of our ESG performance. We invite you to read about more on our performance in our materials issues report, which is available on our website. Thanks very much. I look forward to having the opportunity to meeting with many of you either virtually or face to face when we get to the other side of this pandemic. Thanks to you, Daniel and Jason, for your warm welcome, and all the best to Ross in his retirement. I'll hand this back to Jason to discuss production results and guidance.
Great. Thanks, [ Craig ]. Turning now to our preliminary results. Production of 901,155 GEO for the year reflects outperformance of 4 of 5 operations, including Canadian Malartic, Jacobina, El Penon and Minera Florida. While full year production was within our guidance range, including a 3% variance, we had hoped to reach our revised target of 915,000 GEO. However, COVID-related restrictions imposed in Argentina late in the year meant production at Cerro Moro was a little below our expectations. We remain confident in Cerro Moro, which would have met our Q4 production goals but for the unexpected but necessary pandemic-related restrictions that were imposed in December. Overall, our strong financial performance continued into Q4. Operating cash flow before net change in working capital is expected to be at the highest level of the quarters for the year, exceeding the $199 million generated in Q3 as well as the average of the prior quarters leading up to that. Net debt declined by a further $53 million from Q3 for a total decrease of $323 million for the year. And cash balances for the year were approximately $428 million after repayment of the $100 million drawn but unused credit facility. Turning now to our mine-by-mine results. Jacobina produced 44,165 ounces of gold in Q4 and an all-time high of 177,830 ounces for the year. It was the second consecutive year of increasing production for the operation, a trend that's expected to continue in the coming years as we advance the Phase 2 expansion. El Penon produced 55,529 GEO during Q4 and 216,749 GEO for the year. Mine sequencing in Q4 resulted in lower gold feed grades but higher silver grades. Production is expected to shift back to those higher-grade zones starting this year. At Canadian Malartic, we produced 86,371 ounces of gold on a 50% basis in Q4 and 284,317 ounces for the year. The operation processed a record 62,000 tonnes per day during Q4. Mining is transitioning from the Canadian Malartic pit to the Barnat pit, which is now in commercial production, with an expected ratio of about 75% of the total times mined in 2021. In addition to the higher tonnes from Barnat, we're in the early years there so the strip ratio is a little higher, and this shows up in the sustaining capital this year. We'll see that decrease in future years. Minera Florida continued to perform exceptionally well, producing 26,352 ounces of gold during Q4 and 89,843 ounces for the year. Annual production at Minera Florida was the highest since 2010 and the second highest total since the mine entered production in 1986. That excludes production from the historical reclamation of tailings there. Cerro Moro produced 42,943 GEO in Q4 and for the year, 132,415 GEO. These levels were below plan but driven by the rolling COVID restrictions in Argentina that were unexpected. Q4 production was impacted by a high number of COVID cases in Argentina, including an increase in cases in the communities near our operation. While the mine operated continuously during the quarter, travel protocols were tightened and work rosters significantly reduced to protect the health and safety of employees and communities, especially near the end of the year. While production at Cerro Moro was below plan, production in Q4 was the highest for the year, and December production of about 15,000 GEO was a significant improvement over prior months and quarters. Operational challenges related to COVID-19 are expected to continue in the first half of 2021 but we expect the situation to normalize as the vaccination program ramps up in Argentina. But without the unexpected challenges in Argentina, we performed well above plans for the year. On this next slide, you can see our 3-year production guidance and our cost guidance for 2021. We expect sequential growth in gold production over the next 3 years with 862,000 ounces in 2021, 870,000 ounces in 2020 and 889,000 ounces in 2023. Silver production is expected to be 10 million ounces this year, 9.4 million ounces in '21 and 8 million ounces -- sorry, in '22 and 8 million ounces in '23. Overall, we expect GEO production of 1 million ounces in each of the next 3 years within our plus/minus 3% variability for each of those years. If not for the impacts from COVID, primarily at Cerro Moro, we would have aimed to have our guidance a little higher this year, but we have needed to take this into account. Cash costs this year are forecast at $655 to $695 per GEO. And all-in sustaining costs are expected to be in the range of $980 to $1,020 per GEO. Our expansionary capital spend is projected at $86 million for the year with sustaining capital and exploration spend forecast at $183 million and $110 million, respectively. Before I move to a couple of slides on capital allocation, with our preliminary results last night, we also updated on some potential changes to the carrying book values of Cerro Moro and El Penon that I will share some thoughts on here. As required under IFRS, we continually assess our assets for indicators of changes in value that are not consistent with their carrying values. Although we've impaired assets in the past due to this mark-to-market approach, we've also had instances of reversing that impairment later on as we're able to better deliver improvements to those operations, Jacobina being a case of this. For a point in time during 2014, we impaired its value, but then in 2018, we fully reversed that impairment. And I can say since then, although not reflected in its carrying book value as it had already been fully reversed, we have added substantial further value to Jacobina since 2018 given its exploration success, operational improvements and expansion opportunities. In this case, today, we expect to record an impairment at Cerro Moro and an impairment reversal at El Penon. Although we have not finalized the audit of our calculations that will be published in a few weeks, we expect they will net to a pretax impairment reversal between the 2. At Cerro Moro, there were a handful of indicators that we took into consideration. These include the indefinite extension of an export tax on the mine effective December 30, 2020. Previously, a temporary export tax was set to expire in 2021. We also expect decreased production levels than we previously anticipated due to the mining of lower grades that are better suited to the operation. Costs will be impacted commensurately. We still believe strongly in the exploration potential of Cerro Moro and its large and prospective land package, but we are not where we expected to be in relation to our prior multiyear plan to add 1 million GEO to the resources there. Also, COVID has impacted our Cerro Moro mine while others have been able to better manage during the pandemic. Especially during 2021, we expect COVID to continue having an impact on Cerro Moro. So although the asset will be partially impaired, we see an excellent opportunity, and it's our objective to deliver this value over time from exploration and operation opportunities such as a low-grade heap leach operation at Cerro Moro. Yohann will expand later, but we are refocusing the asset to these opportunities. But it will take some time. Conversely, at El Penon, the strong exploration and operational performance has resulted in an increase in its value above its carrying book value that is expected to necessitate a partial reversal of a prior impairment on the asset. At the time of its past impairment, El Penon needed to be transitioned to a lower tonnage and more selective operation. That had an impact on its value. But over time, we've been able to position El Penon as a consistently improving mine that we previously impaired, and we see that value coming back now. That is the approach we'll take at Cerro Moro too. Moving over to capital allocation. We have 3 priorities: balance sheet management, increasing sustainable dividends and low-capital organic growth and reinvestment. First, our balance sheet and financial resilience are very important to us. Our net debt-to-EBITDA ratio continues to trend lower as our cash balances grow. At the end of Q4, after fully repaying the drawn but unused revolver, we had approximately $428 million in cash, which has increased, having met our budget goals and cash flow for the year. We have no debt repayments until 2022, and then it's a modest $190 million, which we intend to repay with internal funds. Next, we have consistently paid a dividend since late 2006. More recently, we have been increasing our dividend, which is up 425% since Q2 of 2019. We see more room for increases as we will continue to balance our cash flow generation among our 3 allocation priorities. Finally, the third component we consider in capital allocation is our low CapEx organic growth. The next slide covers what our capital requirements are expected to look like. But beginning with our mines, Jacobina is engaged in a phased expansion to increase production there. At Canadian Malartic, we expect to release the details of a PEA on the underground project in February, along with our Q4 results. We also have potential growth at El Penon and Minera Florida, with both having excess plant capacity. And as our resources of inventory grow, we'll be able to bring some of that forward. At Cerro Moro, there are further opportunities to upside possible through exploration success and a potential heap leach operation. Beyond our operating mines, we have several strategic opportunities in development projects, including a majority-owned MARA project and Suyai project as well as the newly acquired Wasamac project, in which we hold 100% interest. Gerardo will cover MARA and Suyai in more detail, and Yohann will cover Wasamac. Longer term, we have a generative exploration program. The main objectives of the program are to advance a stand-alone project with inferred mineral resources to at least 1.5 million ounces of gold equivalents within 3 years that on a longer-term basis, can support the development of a new cash flow-generating mine with annual production of at least 150,000 ounces for 8 years. In summary, we not only have short-term, mid-term and longer-term growth. With low capital cost, we also have internal financial resources to support that growth from cash on hand and future cash flows, which gives us the financial flexibility with an already fully funded business plan. Now before I hand it over to Yohann to discuss our 10-year overview, I wanted to highlight that we have a manageable capital profile and we are fully funded for all our new projects that you will see in our 10-year production overview. Our current forecast estimate a modest $100 million to $125 million annual expansionary capital for growth projects over the next 4 years, which adheres to our balanced approach to capital allocation. So in addition to these modest growth investments, we have the flexibility to return further capital to shareholders with our current and growing free cash flows. To punctuate further, this balance provides the sustainability of our dividend at the current rate and at lower gold prices. In addition to our cash balances and cash flows, we also have interest in securities and other assets that can over time and will likely be monetized, which will add to our cash balances for redeployment to our capital allocation priorities. One further highlight I wanted to mention is the quick cash flow generation from projects at Jacobina Phase 2 and Odyssey, which would see both investments starting to contribute to our cash flows as early as 2023. This allows further returns of capital to shareholders in keeping with our balanced approach to capital allocation. And now I'll hand it over to Yohann to further discuss the details of our 10-year profile.
Well, thank you, Jason. I will share with you now our vision on the GEO production over the next 10 years. There's 2 main takeaway from this graph. The first is that we have a line of sight to 10 years of approximately 1 million ounces from current our operation. In the following slide, I will go through the assumptions and road maps for each operation to show how we plan to achieve this. Well, the buildup of this production profile can be classified into 3 main categories: operation, exploration and optimization and expansion, shown in different color of the bars. We will give more detail about what is included in each categories in the next slides.The second takeaway that I have is that we have options outside of the 5 operation. The most advanced of these right now is the Wasamac project in Quebec, which we recently acquired. We see Wasamac as an ideal addition to the portfolio for 2 main reasons. At a minimum, the additional production will mitigate, again, risk associated with current operations in the back end of the decade. The operation at which we have the least visibility right now is Cerro Moro. Well, compared to our other more mature operations, Cerro Moro is still in the relatively early stage of exploration. And while we continue to believe in the geological potential of this operation and invest in exploration and studies, the long-term potential is not as well defined. And secondly, Wasamac provide opportunities for production growth beyond the 1 million ounces GEO target. Other projects such as Agua Rica, Suyai and our generative exploration projects provide additional upside. So -- well, I said the 10-year production profile is built up from these 3 main categories at the existing operation plus the fourth category, which is Wasamac. The first category which is the foundation of the 10-year outlook is operation. Well, the majority of this category is based on mineral reserves, and the next 2 years are based exclusively on the reserves. However, we have included high-quality mineral resources and potential in the later years of some operation where we have high confidence in conversion. For example, at Canadian Malartic, we include underground mineral resources from Odyssey project that we expect to convert to reserve with additional infill drilling and engineering studies. The operation category also includes some advanced optimization and expansion project. The main ones are the Odyssey project and the Jacobina Phase 2 to 8,500 tonnes per day. I will provide an update on these 2 projects in the following slides. And finally, it includes the incremental increase of production at Minera Florida to approximately 105,000 ounces per year through the utilization of the existing capacity. The next category is optimization and expansion, accounting for the relatively small portion with the 10-year production outlook. Like I said, the most advanced projects are included in the operations category. This category includes the expansion of Jacobina to 10,000 tonnes per day, which we refer as Phase 3; and a small expansion at Minera Florida to 3,300 tonnes per day to bring production up to about 120,000 ounces per year. The exploration category include production that require exploration drilling to top up and extend mine life to 10 years. Well, El Penon and Minera Florida both had a long track record of successfully replacing depletion. So although the exact source of production in year 9 and 10 of the outlook profile is not currently defined, we have high confidence that these ounces will be converted to reserves well before then.At Cerro Moro, all production from 2020 time onwards is included in the exploration category. And this comes back to the point that Cerro Moro is a less mature operation and has not yet developed the reserve replacement cycle that provide the rolling mine life such as at El Penon and Minera Florida. The potential heap leach operation at Cerro Moro could also contribute to this category. I will provide some information about this later in the presentation.Well then, finally, as I mentioned, we include the construction of Wasamac in the 10-year outlook. But we also have other excellent project in the portfolio that provide additional upside, including MARA, which is the Agua Rica-Alumbrera integration project; Suyai; and also other generative exploration projects.So there are 2 more aspects of the 10-year outlook that I would like to point out before we move to the mine-by-mine summary. The first graph on the left shows the contribution of ounces from each of the 4 categories in the 10-year outlook production profile. Well, as you can see, about 3/4 of production is from the operation categories based on continued production from our 5 operating mines, which -- with higher confidence mineral inventory and advanced project. The other 3 categories together made up for about 25% of production, and notice that this production is from the year 9 and 10, providing plenty of time for exploration and implementation of new projects. The graph on the right shows the distribution of production by regions. In total, we have production eventually split between the 3 regions of Canada, Chile and Brazil/Argentina.Well, now I will present some more detail on a mine-by-mine basis, starting with Canada Malartic. So as you know, Canada Malartic is a large open-pit operation in north of Quebec, which is owned and operated as a 50-50 partnership with Agnico Eagle. The open-pit operation continued to deliver ratable production with gold production of 568,000 ounces on 100% basis in 2020. Canadian Malartic remain Canada's biggest gold mine and -- gold mine. So in 2021, production is expected to increase to approximately 700,000 ounces on 100% basis. Highlights from the current operation include ongoing optimization on the processing plant, which has seen mill throughput increase progressively from 50,000 tonnes per day in 2014 to a run rate of approximately 7 -- 57,000 tonnes per day now. For those who have driven through Malartic in the past 2 years, you would have noticed the completed highway relocation that has allowed us to develop the Barnat pit. Waste stripping of Barnat is on schedule, and Barnat is planned to contribute 50% of the gold production in 2021. But the real exciting news at Canadian Malartic is the Odyssey underground project, which is -- which I will discuss more in the following slides.The underground mining at Canadian Malartic is not a new concept at all. I mean -- in fact, more than 7 million ounces have been produced from the underground mine at the operation since 1925. But the modern story on underground project started in early 2014 when drilling from the previous owner, Osisko, intersect Odyssey deposit. The holes confirmed the potential for resources growth at depth and were a key consideration in Yamana's acquisition of Osisko. Since then, underground mineralization resources has grown at an impressive rate. The discovery of East Gouldie in 2018 was a game changer for the project and has gold grade that are significantly higher than Odyssey and East Malartic at about 3 grams per tonne. So as of year-end 2019, the underground zone contained more than 10 million ounces of gold at a 100% basis, and further increase is expected for year-end 2020. The known geometry and location of the deposits are shown in the diagrams at the bottom of the slide. The potential vanadium deposit will be drill test in 2021.The next slide illustrates the infill drilling completed in East Gouldie in 2020. A total of 97,000 meters were drilled throughout the year to cover the initial zone of interest after grid spacing of approximately 150 meters. The main objective of the infill drilling program was to grow inferred mineral resources to support the preliminary economic assessment. The expected resource growth is illustrated in yellow there. Well, in general, the infill drilling confirmed expected grade and width of East Gouldie mineral inventory while the zone was also expanded in several directions, which provide target for future growth. Based on these updated mineral resources, the Odyssey PEA will assess the economics of the project. The study is in its final stage, and the result will be reported next month. Well, here is the conceptual mine design covering East Gouldie, Odyssey and East Malartic. Well, although the project is at PEA level, several aspects of it are much more defined and advanced. You see the location of the production shaft down to the center of the zone. This will be a 6.3-meter diameter, 1.8-kilometer deep shaft with hoisting capacity of about 20,000 tonnes per day. In 2020, a 2.3 kilometer-long geotechnical hole will drill at the planned shaft location. From surface, just above the green Odyssey South zone, you can see the exploration ramp that was started in Q4 2020. 2,800 meters of development is planned for 2021, which will establish the first underground drill platform.I will now play a short 40-second video showing the development of the exploration ramp hole in 2020. For me, this is very exciting to see all the excellent work undertaken by the Canadian Malartic team over the last -- past few years becoming reality. It's quite fantastic. [Presentation]
Well, Yamana see the Odyssey project as a future underground mine with annual gold production of 500,000 to 600,000 ounces on a 100% basis and a mine life extending past 2040. So looking forward, this is the road map on how we realize that potential. Well, as I mentioned, we will release results of the PEA next month, and we have already started with the detailed engineering, especially related to the shaft and headframe. The plan is to start production from Odyssey South in 2023 from the ramp while we sink the shaft to East Gouldie. From 2023 to 2020 -- sorry, 2023 to 2028, the plant feed will progressively transition from open pit ore to underground ore. Production from East Gouldie is planned to start in 2027. There's also a potential to feed marginal stockpile material which is not included in our mineral reserves to provide additional mill feed during the transition period. This will depend on the gold price at the time, but at current spot price, this material is economic.So just to summarize, Canadian Malartic has a great future ahead. It is really an incredible gold deposit. If you add up all the gold ounces that have been mined since 1935 plus the current open pit reserves and the underground resources, this is a 27 million ounces deposit. And what is even more impressive is that more than half of these ounces are still to be mined.We'll move on to Jacobina, a long-life, low-cost underground gold operation in Brazil. Jacobina has been a real success story over the past few years. It is exceeding expectation with consistent year-over-year production growth together with cost reduction. In 2021, we expect Jacobina to produce 175,000 ounces of gold at an all-in cost of $735 to $765 per ounce. Mineral reserve has grown in line with production to maintain the reserve life index of 15 years plus a pipeline of mineral resources and exploration targets for future conversion. Looking forward, we have a plan for ongoing production increase through low CapEx optimization and expansion.Well, this graph illustrates the production growth at Jacobina over the past 5 years, so from 120,000 ounces in 2016 to an all-in -- all-time high of 178,000 ounces last year, and each year has exceeded guidance. But more importantly, it showed the potential production growth that we see going forward. As you know, we completed the feasibility study for the Phase 2 expansion to 8,500 tonnes per day in Q1 2020. The project is robust at conservative gold price and exchange rate assumptions and show very attractive returns. Engineering and permitting of Phase 2 are ongoing with the intent to proceed with construction. We will provide further update about the CapEx and construction schedule later this year. Something that we have not talked about before is the opportunities to expand Jacobina to a throughput of 10,000 tonnes per day. Internally, we have been referring to this as Phase 3. Although the project is still at a conceptual phase, we do not anticipate significant CapEx as this will be -- there will be sufficient grinding capacity with utilization of the 3 ball mill after completion of Phase 2. So at the feed rate of 2.4 grams per tonne, Phase 3 has the potential to increase gold production at Jacobina at approximately 270,000 ounces per year.Well, here is the road map for Jacobina to achieve the 270,000 ounces production target. On the next -- in that 10-year production profile, we are assuming that Phase 2 will be commissioned in early 2024, but we're currently evaluating opportunities to fast track the commissioning into 2023. And in the meantime, we continue to implement optimization to continue the incremental production growth trend from the past few years. Higher production from Phase 3 is currently penciled in for completion in 2027.El Penon gold and silver mine in Northern Chile continue to be a significant cash generator for Yamana. Since the mine went into production in late 1999, El Penon has produced about 5.4 million ounces of gold and 133 million ounces of silver. As you know, Yamana made the decision to rightsize the operation in early 2017 to throttle back production to a sustainable rate of approximately 220,000 GEO per year. The rightsizing has been a success with the mine showing a significant reduction in operating costs and CapEx over the past 3 years, resulting in an improved margin and higher cash flow. The other advantage of rightsizing has been to allow the exploration team some room to rebuild a pipeline of exploration opportunities and replace the depletion of mineral ore reserves. In fact, the reserve has not only been replaced but have grown from 764,000 ounces of gold at the end of 2017 to 916,000 ounces at the end of 2019. We are expecting to once again replace depletion in 2020.I want to spend a couple of minutes here to talk about reserve resources and mine life. So as I mentioned in the production slides, I mean, Yamana is forecasting a mine life of at least 10 years at each of our existing operation. At El Penon that means that we have -- we are assuming conversion of additional reserves. So the 10-year outlook is based on stable production of 230,000 GEO per year. That means a total production of 2.3 million GEO over the next 10 years. And we have about 1.3 million GEO of reserves, so that will leave an additional 1 million ounces that we plan to convert to reserves.Now looking at the required reserve replacement factor. As I mentioned on the previous slide, the mine has a strong track record of replacing depletion with a replacement factor of 157% from year-end 2017 to year-end 2019. Going forward, El Penon will look for a conversion factor of only 62% over the next 8 years to add the additional 1 million GEO required to support the 10-year mine life.Well, of course, we plan to do much better than that, and our exploration budget of $18 million in 2021 is designed to achieve a target of 100% depletion and sustain strategic mine life of at least 10 years of rolling -- on a rolling basis. The way that El Penon achieved this rolling 10-year mine life is by maintaining a pipeline of mineral resources and exploration potential, and this strategy has been working for the past 20-plus years. It usually doesn't involve huge million-ounces discovery but incremental additions of extension on a regular basis.So when it comes to the El Penon road maps, it is simply a matter of continuing to do what the mine has done so well for so long while continuing to focus on productivities and cost. And although we have forecast a stable production profile at 230,000 GEO per year, ongoing exploration could unlock opportunities to ramp this back up while still managing costs and ensuring long-term sustainability. Well -- sorry, so if Yamana decide to ramp up -- well, if they ever decide to ramp up this production, El Penon has the existing processing capacity to do it. Well, if I had to choose one operation that was -- that I'm most proud in 2020, I would be -- that would be Minera Florida, no doubt. The operation produced almost 90,000 ounces of gold, which is 22% increase compared to the previous year, and the second highest ore production in the history of Minera Florida if you exclude tailings reclaim. Minera Florida is an underground mine located about 2-hour drive south of Santiago. In addition to gold, it's also producing silver and zinc as a credit. The operation is currently at 74,500 tonnes per month, but the processing plant has capacity of about 90,000 tonne per month with some slight modification.Similar to El Penon, the Minera Florida 10 years outlook also contain a component of production in excess of mineral reserves. And like El Penon, Minera Florida has a track record of reserve replacement and the pipeline of resources and exploration potential to give Yamana the confidence that a 10-year mine life is reasonable.Well, I won't go through the same process of detailing the number beyond inventory. But instead, I will show a snapshot of what the mine looked like now in comparison of when Yamana acquired it in 2007. So in that 14 years, Minera Florida has discovered dozens of new lines and expand the area of the exploration concession by 80%. And mineral reserve have increased despite the fact that we have produced more than 1 million ounces over the last 14 year period.For those who have been following Yamana, you would remember 2 key messages. One, we said this last year that Minera Florida has turned a corner. The 2020 success is evidence of that. Secondly, we have shared our view on Minera Florida as 120,000 to 130,000 ounces operation. In our view, this is the optimal production rate for the operation to maximize cash flow while also ensuring long-term sustainability. So now you want to -- so now I want to talk about the action behind the success in 2020 and the path forward to increase gold production up to 120,000 ounces per year. So in summary, we are following the same process that we've been so successful at Jacobina over the past 2 years, which can be summarized as the 3 Ps, which are planning, preparation and performance. Well, it starts in the mine and with geology, and that has been a big focus for us over the past couple of years. A big part of Minera Florida's success in 2020 is because we have excellent predictability and reconciliation from the block model. And a better understanding of geology lead to increased exploration success, as we would have seen in some of the result that Yamana reported in 2020.Well, on the flip side of that, the improved reliability of the block model has resulted in some lower confidence zone being removed from reserves and resources. So we are expected to be slightly below the target of 100% depletion this year. But this has not excluded that some of these zones can come back into our reserve and resources statement from an additional diamond drilling in the next following years.So what are -- improvements made throughout the year include improved synergy with El Penon because both operations are now reporting to 1 local VP of operation. We've improved mechanical ability of the mobile equipment. Internalization of all mining activities, this was completed in Q4 last year, and we expect to see positive impact on costs from 2021. Reestablishment of all ore passes in the mine. For anyone who has visited Minera Florida, you will remember the long and winding road up the mountain to the high mine entrances. The ore passes down to the lower level of the mine will significantly reduce haulage distances. And finally, development of waste dump point within the mine to allow development waste to be dumped into old underground voids.Looking forward, the recent improvement combined with development of new mining zone will incrementally increase production. The 10-year outlook assume an incremental production increase of about 4% per year. This will be achieved through a combination of high tonnes and higher feed grades.Also, when it comes to the road map for Minera Florida, like I said, the focus of an improvement right now is on the mine. But in parallel, work is advancing on the plant optimization and permitting application to increase the throughput rate. We will need to increase the permit beyond the 74,500 tonnes per month to achieve the 120,000 ounces per year. Well, this first -- the first step is the EIA, so -- which is currently underway. This should allow us to start processing at about 90,000 tonnes per month from 2024. And then we have some work to increase the crushing capacity, and this will take us to 100,000 tonne per month for a production rate of about 120,000 ounces per year.Well, Cerro Moro is a gold mine in South Argentina, and this is our newest operation. Yamana acquired Cerro Moro in 2012. We've seen similarity to El Penon with core area of shallow high-grade veins within a large land package in the prospective region. That description remain unchanged. So in 2017 and '18, the operation was constructed in time and on budget, and the plant is now exceeding design throughput weight and maintaining high gold and silver recoveries. I'm not going to sugarcoat. I mean 2020 was a year of challenges. The most recent of these challenges is COVID-19. Cerro Moro was the hardest hit in all operation. The travel restriction in our -- for our employees and the limited capacity on camp restricted the number of employees on site. Well, we managed to keep the operation running, although often at a reduced level for most of the year. Q4 was especially challenging, and this impacted on the full year production. But we managed to keep the mill running when many of the surrounding mines were suspended.The impact of COVID is not only on production but also on the mine development and exploration. So underground development delays mean that we are behind schedule in accessing new level of the mine, which will impact production in the first half of the year while we are ramping up. An exploration delay has a less immediate impact in that we did not complete the drilling that was planned over the year to generate the new mineral resources expected. While, again, the unexpected COVID-19 restriction imposed in Argentina impacted the operation, without those restrictions, Cerro Moro would have had an excellent year-end, much higher than what we showed and pretty much aligned with our budget. So as a result of those restrictions, the lack of predictability in country and the action that they will take to manage the pandemic, well, we have taken more caution approach in our guidance this year with slightly lower guidance this year than we planned last year. And this is entirely due to that caution due to COVID-19.With that, we currently know that we are forecasting a production rate of approximately 150,000 to 165,000 GEO per year from 2026 to 2030 after depletion of existing reserves and resources. The base case long-term forecast for Cerro Moro, which is the base case of the 10-year production forecast, is based on continuation of the existing processing plant with feed grade of 12 to 13.5 grams per tonne equivalent. To extend the profile to 2030, we are assuming exploration success over the next 3 years. So as Jason mentioned earlier, we still believe strongly in the exploration potential of Cerro Moro as evidenced by the $17.4 million exploration budget for 2021.Gold anomalies had been identified throughout the large land package, and the exploration team had some recent success identifying potential [ hydrid ] extension to -- in both Escondida and Zoe. But new high-grade discoveries are never certain, and exploration drilling has identified an extended mineralization that is now below cut-off grade and therefore, not included in the resource and reserve statement. So therefore, we are evaluating several alternative scenarios considering processing of lower-grade mineralization to unlock additional value.One promising option is really heap leach. So a conceptual study was complete in 2020 for a 3,000 tonne per day heap leach operation. CapEx is estimated at about $45 million. Samples were sent Canada for metallurgy testing, and toward the end of the year, we received some very positive results from bottle roll tests. Column leach tests are currently underway, and Yamana will proceed with a feasibility study in 2021 to improve the accuracy of the cost estimates. The heap leach project will serve basically 2 purposes. First, it will sustain the 165,000 GEO production level if the equation campaign returned lower grade. Secondly, if -- it provides an upside of 50,000 to 60,000 ounces of incremental production beyond the base case if exploration returned hybrid results. So other opportunities include processing plant expansion, presorting technology and installation of a power line to connect Cerro Moro to the grid. The mine is currently powered by diesel generators. So a new power line would reduce the power costs and therefore, reduce cut-off grade to allow processing of lower ore. Approximately 70 kilometer of new line would be required at an estimated CapEx of $30 million. So like I said, we are pursuing several different options at the moment, which is why the long-term plan for Cerro Moro is not as clearly defined as the other operation. The priority for the operation right now is to navigate as best as possible the changing situation resulting from COVID-19 and to focus on increasing productivities and continuing to reduce costs.All study of potential options for processing lower grade are being advanced in parallel. We are showing heap leach in the -- we're showing heap leach in our road map to give an idea of the expected timing. But again, heap leach is not included the upside scenario shown on the 10-year outlook.And then finally, the acquisition team continued to -- at building the pipeline of target, the conversion to reserves and -- resources and reserves, sorry.Well, lastly, before I hand over to Gerardo, I just -- I will just provide a brief summary of the Wasamac project, which is recently -- which recently came into Yamana's portfolio as a result of the company acquisition of Monarch. So Wasamac is a feasibility study stage project located in Rouyn-Noranda in Québec, about 100 kilometers west of Canadian Malartic. The project is really well; advanced. The former owner, Monarch, completed the feasibility study in 2018, showing a very good economics. The permitting process has also begun.So the transition with Monarch team since we announced the transaction in early November has been excellent. And Yamana is already heavily involved in communicating with local stakeholders about the future plan for this project. We have also commenced an update of the feasibility study. During an initial review of the project, we identified some area that we would like to define to a great level of accuracy, and we have identified some opportunities as well.So some example of opportunity is that we have -- that will begin this year over the next 6 months to further enhance project value include throughput and flowsheet optimization, and we will review material handling from the underground mine. We will also incorporate some innovation and technology to minimize the impact on the local community, and [ polishing ] Wasamac as a low-cost operation.And on that, I will hand over to Gerardo to provide an update on our Yamana -- on another project in Yamana's portfolio.
Thank you, Yohann, and good morning, good afternoon, everyone. In this section, we will look at the long-term opportunities within our portfolio that could provide both as with production and cash flows in the longer term, but also, they represent significant opportunities to bring cash and value earlier to the company. In general, our strategy is to continuously optimize the portfolio of assets, assessing which loans are aligned with the corporate strategy. And we define how to best deploy resources to advance those projects through the development process. We also determined where we have gaps in the pipeline, and we can take advantage of those opportunities that may be available externally. Of course, we also define what assets don't fit with the rest of the portfolio. In fact, the creation of Nomad Royalty and the progressive monetization of our investment in Equinox Gold, which originated from the spin-off of noncore assets and the creation of Brio Gold.On the other side of the portfolio optimization strategy, the acquisition of Monarch Gold, which recently closed, brought us the Wasamac project, which is a good example of a bolt-on acquisition where we can leverage our strengths and expertise and which is aimed to improve our development pipeline.If we take the 10-year outlook presented earlier, and as we can see on the slide, and laying over the production potential we have from our advanced assets, plus we have, obviously, the Wasamac project which Yohann just covered. And then we can see in the later part of the decade, there is further upside potential of production growth from the strategic projects which we've been steadily advancing this year either through the formalization of partnerships or advancing engineering, or both.There are also projects in our generative exploration program that Henry will cover, but our target is to provide a resource inventory of 1.5 million ounces in 3 years, and they can become and turn a platform for new projects that will be in production after going through the engineering and development process in the later part of the 10-year period.If we take the 63% -- 56% interest in MARA, and you take a 60% interest in Suyai, assuming our partner takes the option, we can see those 2 assets together will represent about 200,000 to 300,000 ounces of gold equivalent production in the later part of the decade. In the case of MARA, it will also contribute with the average of 260 million tonnes of copper per year over those 4 years. I will provide more detail on these assets in the next few slides.MARA, to the left, is one of our most significant and strategic assets. This is the result of the integration of the Agua Rica orebody and the Alumbrera processing facility and related infrastructure. Most of you probably know this project as the Agua Rica, or we referred as the integrated project. As we completed the formal integration between the 2 assets in December, and also, we have been working with our partners for the last 2 years, we decided to rename the project MARA for Minera Agua Rica-Alumbrera. After formally combining the 2 assets, Yamana ownerships in the JV ended up being 56.25%, and we are the manager of the joint venture, whereas Glencore holds a 25% interest, and Newmont holds a 18.75%.During 2020, we completed a series of studies and are evaluating and optimizing opportunities as well as to minimizing risk that were identified in the 2019 pre-feasibility study. This study became the foundation for further optimization in the ongoing feasibility study for MARA. [ In 2021 ], our focus will be on advancing the feasibility study. We now plan to have it completed in 2022. And we'll also continue advancing the EIA and the social license for the project.The scope of work of the feasibility study includes field work and drilling campaigns for which MARA has obtained the respective local permits, and we look forward to continuing the cooperation with the local stakeholders in order to generate value for the local communities and our shareholders.Suyai, to the right of the slide, is a high-grade gold-silver deposit in Chubut, Argentina. In the past, we have completed feasibility and pre-feasibility studies in the project. Most recently, a study was completed on 2017 evaluating a high-grade underground project producing a concentrate to be chipped outside, thereby minimizing the environmental footprint. That study showed about 7 years of production with up to 250,000 ounces of gold equivalent production per year.In 2020 in April, we signed an option agreement with a local Argentine portfolio management company for them to acquire up to a 40% interest in the Suyai project. This team is advancing the social licensing and has assumed responsibility for the local permitting process. As the project continues to advance under the milestones set out in the JV agreement over the next 4 years, we could see Suyai move into a more advanced stage of development.In the next slides, I will show you some highlights on MARA with some interest in benchmarking information for the project. In this slide, we can see a few highlights from the 2019 pre-feasibility study. MARA is in a unique development asset, as in really, it's a de-risk brownfield projects given integration of Agua Rica with the Alumbrera processing facilities; the general infrastructure, which includes power, water; the TSF and other ancillary buildings; as well as the concentrate transportation and storage infrastructure all the way from the site to the port of Rosario. Last but not least, we have access to highly qualified local workforce and services.In 2019, we aligned the production of 20 years with average copper equivalent production of 450 million pounds of copper equivalent in 100% basis. The production profile is higher in the earlier part of the mine plan with copper equivalent production of about 530 million pounds of copper equivalent for the first 10 years. The all-in sustaining costs are expected to be below the 50% percentile of the global cost curve at about $1.5 per pound.If we look at the pre-feasibility, CapEx was $2.4 billion or 100%. For a project with this scale and our production profile, we can consider that to be very competitive. And this, obviously, is due to the existing infrastructure and processing facilities in Alumbrera. To say the construction spending mostly relates to the open pit pre-stripping, the building of the primary crusher and the conveyor belt that will tie the mine to the plant. There are some minor modifications to be done to the Alumbrera circuit, but that doesn't represent more than 5% of the total capital. If you consider this CapEx and the size and the scale of MARA, it will rank among the lowest capital intensity projects in the world. With the aggregate value that being lower risk as most of the complex part of the project, which is normally the processing plant, is already in place.As we show in 2019, using a copper price of $3 per pound at $1,300 per ounce of gold, the NPV of the project was about $1.9 billion at an 8% discount rate and after-tax IRR of nearly 20%.In the next slide we show MARA against the production in 2020 from the biggest copper mines in the world. You can see if MARA was in production in 2020, it would have ranked among the top 20 to 25 producers in the world. Also, we had added, in black, some select projects that are near MARA, whether that's in Argentina, Chile or Peru, but they're comparable in scale. You can see how MARA will rank underpinning the scale and its strategic value.The next slide is also benchmarked compared to other development projects, and it shows in the scale, the size of tonnage of the reserve -- sorry, the resources, and it's great. You can see the will rank up on the top side for copper equivalent rate.If we move up to the next slide, we also can see how MARA compares on capital intensity. As mentioned before, at 0.25, it will rank among the lowest capital intensity projects in the world. We also put MARA in the context of the capital market. In the slide, we can see an example of how MARA equivalent rate is valuation as we progress through the feasibility and permitting process and eventually will reach production. By pursuing a strategy of advancing the project, we can significantly increase the value of the market -- in the market and get closer to the NPV value. Also we can get the benefit of increasing improving copper price especially and also gold prices, and this provides Yamana with different value creation options for us and for our shareholders. At this point, we have not made a decision on what we'll do with our investment in the project. It is too soon for that. We are keeping our options open from participating in the development of the current level of ownership, perhaps divesting part of, it or even creating a stand-alone copper company. We just have all options open.But in the mean time, as I said, it's best way -- the best way to maximize value is to keep advancing the project forward through the feasibility, the permitting, de-risking it and general through the development cycle. It's an excellent project.This is an example of the portfolio optimization strategy I mentioned at the beginning of this section. And we have other assets in the company that can provide production and cash flow in the long term. And while we're speaking about those opportunities, I will pass it on now to Henry to discuss the overall strategy for exploration.
Thank you, Gerardo. Exploration at Yamana is dedicated to replacing depletion and providing further opportunities for growth. The cornerstone of that exploration is always replacing mine site depletion. This is a strategy that has provided the company with sustainable cash-flow-producing assets.El Peñón, as Yohann noted, has shown consistent year-over-year replacement of depletion, while Jacobina has generally shown strong growth in both reserves and resources. Minera Florida is recently entering into this group. Discovery in new areas has helped the mine become a cash flow generating operation, and we're now looking to solid year-on-year depletion replacement, adding new areas to the mine for added flexibility and further growth.Cerro Moro is the least mature of our operations, and it has struggled initially with depletion replacement. But as our expertise and data acquisition mature, we have developed more accurate resource models, and we are also now making new discoveries, both in the core mine area and on the large and favorable land package, and we expect to see that operation join the club of our other assets as we aim for year-over-year depletion replacement through discovery.Canadian Malartic mine, also long viewed as a depleting open pit asset, has also created a long future through exploration with the game-changing discovery of East Gouldie and the development of the associated underground project.Thus, this key metric of depletion replacement is achieved by having clearly defined goals for the mine team, replacing not only the mine depletion but also replacing and building a high-quality inventory of inferred resources that provide a stable platform for future conversion to reserves. These teams are unified under a single manager who reports directly to the general manager. Together, they guarantee that drilling achieves both short- and long-term goals. Efficiency, both in terms of total drill costs, and success ratios are the key metrics that are constantly monitored and improved by these high-efficiency teams.The longer-term goal of extending mine life are also accomplished by smaller, steady budgets per mine site greenfields exploration. These greenfield teams use innovation, out-of-the-box thinking, multidisciplinary tools to drive the relatively rare but key to new discoveries that can create game-changing opportunities for either production expansion or longer mine life.Proficient teams covering the mine site depletion, the company can create further value through greenfield or generative exploration efforts outside of the mine sites. These long-term efforts require focus, technical ability and long-term investment. Focus requires that the company selects limited areas within the global exploration potential. These areas are selected where discovery potential is high, social and political settings are favorable and the potential for company changing world-class deposits is known to exist. For Yamana, this means a major focus in high-potential belts within political jurisdictions where the company is already active. The generative strategy is designed to provide a flow of scoping-level projects that we'll eventually replace or add to our existing mine portfolio. While we're constantly monitoring activity and discoveries in other areas, our generative exploration teams are based in areas where we have existing support and overhead, very strong local expertise and extensive land positions that have been created through Yamana's uniquely acquisitive history. These teams drive local discovery and also work hand-in-hand with business development and operations to define high-quality low-cost acquisitions with a short and clear path to development. Yamana has announced long-term financing for this effort with $53 million over 3 years, demonstrating the strong corporate support that we have behind the exploration. These generative teams develop strong regional databases and local expertise. We are always seeking district scale opportunities that allow us to be the dominant player within high-potential districts. This strategy allows the company to maximize the benefit from our existing or any future plant infrastructure. Excess capacity can be utilized by trucking ore from smaller discoveries or opportunities that would not be stand-alone operations, thereby extending mine life and ensuring access to a large district for discovery and long-term production potential.Looking at Canada, discovery on the large land package at Canadian Malartic has provided a whole new outlook for the operation, and further exploration will continue to drive success at this outstanding operation. Elsewhere in North America, we're developing our internal portfolio, projects in Ontario, Manitoba and Nevada, including our Monument Bay project. And the recent acquisition of Wasamac is an excellent example of a high-quality, low-cost acquisition in a high-potential district that places Yamana in a position to now be a dominant player within the Abitibi.Moving to South America. At Jacobina, we have been demonstrating the extraordinary potential of the core mine area with ongoing discovery and delineation. Last year, we started to advance exploration on the remainder of the belt, which is controlled entirely by Yamana. And this year, we've expanded budgets to drive towards major new discoveries, both within the high-potential core mine as well as our new mineralized reefs that are being discovered well to the north of our active operations.At Cerro Moro, we have now consolidated over 300,000 hectares of high-potential property, and we're pushing multidisciplinary, aggressive exploration on diverse targets to guarantee a long-term future for this recently constructed mine. Within Chile, we have large land positions in favorable rocks around both our El Peñón at Minera Florida plants. Exploration in these areas is focused on providing further mine feed that can take advantage of that existing infrastructure.In Brazil, we continue to stake and work new areas. We're focused on the less explored but very high-potential proterozoic magmatic arcs, and that allows us to build on the expertise that led to the discovery and eventual development of the Chapada copper-gold deposit. These early generative works have produced several discoveries, including the main zone in Lavra Velha, a promising mineralized zone with shallow, largely oxide mineralization within a large district endowed with numerous gold anomalies that are being defined by stream sediment samples, soil and rock geochemistry. Very excited and optimistic about this project, but also of our other generative efforts that is defining good mineralization on promising projects like Borborema and Jacobina Norte.With that, I hand it back to Daniel.
Well, thank you, Henry. And then before we go to the Q&A, let me thank our full senior management team and especially the one who presented this morning. But also the people below them and then our IR team that has been doing an amazing job to put that great production -- that great presentation together. And with that, operator, we'll open it for questions.
[Operator Instructions] First question is from Anita Soni from CIBC World Markets.
So a few questions. Firstly, could you give us an idea about the Wasamac CapEx build-out? There's a couple of slides that you guys have. But the first one, the introductory one, I guess, those start-ups, I guess, the one on capital that Jason was presenting, shows that the capital spend kind of indicates that it will be like in 2025, and then later on, there's start-up in 2025. I know you guys have talked about overall capital of $100 million to $125 million for the next 4 years. So I'm just trying to get a handle and a context on the spending from 2022 to 2025 for Wasamac and for any other projects that are not -- that we could sort of infer that are on top of sort of sustaining capital that you have for this year. Any kind of like puts and takes we have for this year's capital. Just to get an understanding of like, are we looking at $400 million for the next 3 years, $450 million? Just sort of broad strokes, that's the question.
Well, thanks, Anita. So go ahead, Jason. I was just...
Yes, I'll jump in. Thank you, Anita. So the -- we tried to keep it simple by referencing that average of $100 million to $125 million over the next 4 years. That's really -- let's call it, the first 3 years is really potential underground spend at Malartic plus the Jacobina Phase 2. As you get out to that fourth year, there's no Jacobina. We're kind of in the middle innings of the Malartic spend underground where it's not that intensive, and so we need to tie stuff in a few years out. So that's that 2024 year. It's really about Wasamac in that average total of $100 million to $125 million.As you would go into the further year '26, it would -- or 2025, it would be a little bit higher because that would be the peak year on Wasamac plus a little bit of spend on the underground as well. So it'd be a little bit above of that average of $100 million to $125 million, but that's 5 years out.
Okay. And then on that subject, sorry, on Wasamac, I was just looking through the technical report this morning. I know it's dated and it's done by somebody else, but is that a good starting point for capital spending if we shift it out? I think the preproduction capital in Canadian dollars, I thought there was a peak year of about $300 million. So is it going to be phased a little bit differently? Or is that -- like what are you thinking there?
Yohann?
I would perhaps I would defer that to Jason about CapEx. But I would say about OpEx, what we see is when we look at Wasamac, we saw many similarity with East Gouldie and what the guys did at Gouldie and also what we do at Jacobina. So we see some very good opportunities by -- with innovation, with different kind of hauling system from what you see…
[indiscernible] there?
Yes, exactly. We're going to make a bit of analysis. And we're going to come with something that's going to be, I guess, slightly different. But I would say, when we look at that feasibility study, we quite like the fact that, I would say, Monarch took care of the community, they took care of that aspect, the position, all the infrastructure on the other side of the ONRAD 17 highway away from the community. So -- and based on that, I mean, we see so much similarity with the operation in South America that, that project has been [ catered ] from us from our point of view. So on an operating perspective, I think that's going to be a really good cost. Jason, do you want to expand a bit on CapEx?
Yes. Just quickly, Anita, the peak year, there would be 25, but it's not going to be order of magnitude that's mentioned in the -- that's why your study, we see it as a more balanced spend profile there.
Okay. And then just on the subject of care with the community, I noticed -- it doesn't say explicitly, but it looks like it's a downstream tailings facility. Is that correct?
Yes. Yes. All of them are -- go ahead, Yohann.
Are you talking -- are you asking about Wasamac?
Yes, Wasamac. Yes.
We're looking at dry stack.
The next question is from Tim Huff of Peel Hunt.
Yes. Just one question regarding Cerro Moro. Obviously, a lot in the fourth quarter was about Cerro Moro, and the changes in production there as well as costs. Just looking forward, the guidance that you've given for 2021, and even the base level that you've given, the base production level over the medium term, both of them imply lower run rates than you even reported in Q4. So just from the short-term perspective, in 2021, I was wondering if you could give us maybe a little bit more color as to what you're expecting in terms of grades relative to 2020. And whether there's any seasonality in that from quarter-to-quarter. Any sort of color would be appreciated.
Go ahead, Yohann.
Well, it's a very good question, and I'm glad you asked. I think that Cerro Moro was the most challenging operation for us. And the fact that we worked hand-in-hand with the government to apply the COVID restriction that they requested us to apply to protect the -- our people against the virus. And we complied. But on the other hand, I mean, that's what's really tough on the operation, because we're limited with the number of people that we can have to site. So for sure, we have -- we kept the full milling crew. We cut by 50% of mining team over the year. But we saw -- we reached pretty good -- I mean, we did increase our efficiency with the amount of people that we have. So I'm really pleased the way that our new BT operation, local BT operation have managed that operation in 2020.On the unit, I would say, on a unit cost basis, we improved our development costs, we improved our processing costs, we improved our mining costs. Everything has improved. But unfortunately, when we -- when you have less mining, you have less flexibilities. And that you're forced to mine the lower-grade zone that you would not have put in your mine plan, otherwise you would have stockpile at all with low-grade pile. So that's a bit the payback about that.And going forward, I would say, Q4 was extremely hard from us. The fact that the Argentinian government decide to put, I would say, kind of a year-end break to give a chance to -- I mean, put some more restriction at the end of December. So the 2 last weeks of December were really -- even the 3 last weeks, most of December definitely, was at really limited workforce. That was planned as the highest month of the year because of that ramp up that we're doing in 2020. So by losing at the last minute most of our people to work in the operation, that really gave us a hit. That was terrible for us. But on the other hand, I mean, you have to imagine that we run the mine for 3 weeks with only 1 jumbo operator, 1 drill operator and we succeeded to achieve to have about 15,000 GEO in December.So if you put it on a yearly basis, you talk about 180,000 ounces per year, which is good. And for sure now, I mean -- and when you don't achieve your mining, you need to rebuild that inventory going forward in 2021. So for that reason, we decide to approach with caution, approach in 2021 by ramping up all gold production. I think that we show a modest decrease compared to last year. But that really take in consideration the unexpected, I would say, requirement that the government can ask us over 2021. So that explain why, I mean, we have as much production. And I would say the profile is going to be a progressive and increasing the gold production profile over 2021. I hope that answers your question.
That's perfect. And you've actually already hit on my second question, which was on cost where you're below where we expected for next year. So much appreciated.
[Operator Instructions] The following question is from Don MacLean of Paradigm Capital.
Mine, like Anita's, was on Wasamac. Maybe Henry, can you go into a bit more color on the exploration potential you see at Wasamac? And then I guess the second question, I'm not sure whether it'd be Evan, maybe Gerardo. Just your view, when you look at the feasibility study, I think, Evan, you touched on the cost, but that $635 per ounce all-in sustaining costs, is that something that you feel is a credible number for us to look at going forward? The 6,000 tonne a day, is that something that is a significant constraint? Or is it easy compared to your perception of the layout of the deposit?
Go ahead, Henry?
Yes. Thanks for the question, Don. At the moment, really, at Wasamac, we see very good potential economics from the existing resource base. We're not counting per se on any exploration success, but we have designed the program. We see good potential between some of the zones. We see good potential to expand, perhaps zone 4 and 5. There are zones like Wildcat that have seen very shallow drilling. And then there -- obviously, there's kind of the east and west expansions on the main share zone. So we're -- we have a number of targets, but our initial focus will be the confirmation and delineation drilling.
So how much -- how many dollars are going to be spent and how you'd split it between sort of confirmation and expansion?
Yes, we're looking at about $6 million to $7 million this year, probably the same next year. And we'll have that at about a 60-40 split, with 60 to confirmation and 40 to exploration.
Yohann, on production and...
Yes. Yes, it's a good question, Don. Thank you for that. The -- I would say on the production side, I mean, I think that the way that the feasibility study has been done by Monarch is quite good. I mean it's quite accurate. But as I said in the beginning, I mean, we see many improvement can be done. And we used perhaps a different, I would say, consultant to do the update to do the study with us. And we already highlight some opportunities with processing with perhaps increased grades. And we're looking at optimal value for throughput at this moment. And we also believe that we can optimize the hauling system from underground.So the idea, I mean this is sort of a shallow operation. A shaft is not needed. In Yamana, we use to mine without shaft. We don't have any shafts. I mean, this is a [ bottom grab ]. We're doing really good with that, and we know how to do it. And on the other hand, there is amazing technology that's been developed in the last 2 years, and it seems like with COVID, it's going faster. So we're going to have a team in place to look at all the options, go fully, go with automation, innovation and position that mine as one of the top underground mines in Canada. So I strongly believe that we're going to achieve these costs. And we have the business partner to make it happen.
Yes. Maybe, Don, to complete -- go ahead.
Go ahead. Go ahead.
No, no. I was just to say to compete on what Yohann's comment that Monarch did an amazing feasibility study that was released in '18. And then we believe the cost that you see there, that's what we can achieve and then do better with optimization on throughput per day. And also, like Yohann said, using new technology to be more efficient.
Interesting. I mean, we're so used to when small companies sell projects at the economic estimates, particularly the sustaining capital for undergrounds are particularly underestimated. So it's encouraging to hear you feel comfortable with that low and all-in sustaining costs.And so then just to interpret what you're saying Yohann, the 6,000-tonne-a-day you don't see really as being a constraint given the shallow nature of the deposit?
No. I mean, you have to keep in mind that the deposit is quite -- I mean, this is a very simple geology there. And I mean that's coming from a geology team, it's pretty -- I mean, it's pretty straightforward deposit. The width is minimal to 50 -- 8 meter to 50 meter of width behind the well. I mean, there's 4 different zones. We can have -- we can split the mine in many mining area zones to make sure that we're going to ensure throughput. We're planning to use paste fill as well. And that should be a very nice mine to mine, I believe. And that caused a -- as Daniel said, I mean, we're going to be, without any doubt, able to sustain the opening cost that's been put and that in that initial service system.
The next question is from Tanya Jakusconek of Scotiabank.
Just a couple of questions. Maybe, Jason, for you, just to start on taxes. Just wanted to confirm what's your understanding of the export tax in Argentina now? Have you had any conversations with the people in the area in terms of indefinitely having this tax on for -- maybe just your views on this tax and what you know.
Sure, Tanya. Yes, we -- I think we noted that in the results press release, just relating to some of the things we're looking at, at Cerro Moro. So yes, there has been an extension of the export tax there. The rate that applies to us is 4.3% to our exports. And I would never say anything is permanent. But for right now, it's been an indefinite extension there, which we've included in our models.
Okay. And are there any other tax changes that you're hearing about in Brazil and/or Chile where you operate that we should be aware of?
No, nothing to note.
Okay. And then just maybe on the capital spend, Jason. So my understanding is that then the year '24, '25, '26, when we have Odyssey and Wasamac, we could be above the $125 million of discretionary spend in those years. Did I understand that correctly?
Yes. I know we quoted the first few years. Obviously, there's a greater certainty around that. I think that's the line of sight on the spend and then aligning that to the overall capital allocation. As you get out to '25, '26, then you'd have, as I said, the peak years of Wasamac included in there. And you're still spending at least a little slug of cash on the Malartic underground as well. So it would be a little bit above that $100 million to $125 million, but not anything approaching multiples or anything like that. So very -- still very manageable in those years.Keep in mind, too, that come those years, you've got Jacobina up at about 8,500 tonnes per day, perhaps approaching that Phase 3. And then all the ramp development at the largest underground is quite progressed and we'll be displacing some of those reclaim times at Malartic for underground tonnes in those years. So -- but that's all in addition to any absolute capital profile. There'll be a benefit there as well.
Okay. And then maybe just on Jacobina and just looking at that 10,000 tonnes a day, on the mine tour, maybe I remember not correctly, but I thought that this [ third ]material and we needed the paste backfill to make sure that we wouldn't need a new tailings facility. If we go to 10,000 tonnes a day, where would we stand on the tailings facility?
Yohann?
Yes. I'm going to take that one, Tanya. So that's a good question, Tanya. I think the -- what you perhaps I didn't talk too much about in my presentation, but what's in the presentation is the paste fill plan project. We advanced that much faster than we thought, and we're in the process of the final study of that, and we're expecting the final result of this by -- in a few weeks from now, basically.And the plan was to, I would say, not only to you, the -- not paste fill, the backfill plan. So the backfill plan was in our mind, it was to the 10,000, perhaps in the near future. But we believe that we're going to gain by bringing in the pipeline sooner that backfill plan. So yes, we believe that the objective would be to bring back, let's say, tailings on the ground. And on top of that, I mean, the economic of it is we're going to open -- perhaps we're going to increase recovery of tailings, and increase of mining reserves, which is good. But at this moment, we have many years in front of us. I mean it's -- and hopefully, yes, in 15 years, I wish that we're going to we're going to need more space to put the tailings. It's going to mean that that's going to be a good sign that we succeed to extend the life of that operation. Hopefully, we can get there. But in the interim, we believe that bringing backfilings underground is the solution to solve that, I would say, midterm problem or midterm opportunities, I would call it.
Okay. So going to 10,000 tonnes per day for now, you seem to have the capacity and the tailings and -- for at least 15 years, and then we'll assess at that point.
Yes, absolutely. For sure, that's going to -- and our view is not to have a shorter life of mine because we know that we're going to find more, and we know there's much more in the pipeline there. But I would say it's a phasing approach, as we always do at Jacobina. And again, I mean, the -- I just want to reinforce that the 10,000 tonne per day, basically, is a no investment project because the additional ball mill that we're going to install is going to give us a flexibility with 3 ball mill working in parallel. So at the end, for sure, we're going to have and -- we're going to have to find and spend some money on the new tailings, but that will come in time, and this is not a short-term project.And as you saw in our presentation, we believe that we may be in position with all the permitting process and everything to be at 10,000 tonne per day in 2027. So we have plenty of time in front of us.
Okay. And then maybe, since I have you on, just on El Peñón, which you mentioned a 10-year mine life and looking at potential mill expansion there and keeping that operation going for the long term, the resource grade, as you know, is quite -- much -- it's a lot lower than your mining -- your reserve grade. And so just trying to understand your forecasts are based on additional new finds in addition to the conversion of these resources, I would assume, to keep those grades up.
Yes. Yes. To be -- I mean, to be fully transparent on that, I mean, in Q3 and Q4, we were finishing like zones -- 2 mining zones and the grade was maybe slightly lower than we thought, but we say, hey, we're there. We're going to mine it, we're going to process it, and we're going to go to the next one. So -- and I would say, Q3 to Q4, we put those 2 -- we finished those 2 plays. We put it in the pipeline, we mine it, we assume lower grade. But you have to consider that we also processed lower grade stockpile that decreasing the average feed grade. So -- and that explained why we have variability between, I would say, the greater reserve grade and the processing grade. At this moment, I mean with out of these places, those places have been mined. And now we're in the process of opening new mining zones. And opening more mining zones, basically. And our objective always is going to be to fill up that new at full capacity of 4,200 tonnes per day. And at this moment, I would say, the run-of-mine is about 3,000 to 3,200. So when you see difference between feed grade and reserve grade, most of the time is due to reclaiming of low-grade stockpile.
Yes, sorry, I'm focusing on your 10-year plan. Sorry.
Say it again, sorry?
I was focused on your 10-year outlook in terms of keeping that mill feed. I think your resource...
I would say -- I would say on that, I mean, we see -- I mean I see weekly success with exploration with all there and there and there. And I'm not sure how we can keep track of all that. But in both of our Chilean operation, we have -- they get a lot of good ore. I mean, it's really nice to see all that. It would be nice something with a wider -- a little bit wider [ vein on ], but we have what we had in front of us. But I believe since we rightsized the operation, we got excessively good to mine narrow vein at the lower cost.And for us, as you saw, we have 1.3 million ounces in our reserves and 8 years to find 1 million ounces at the average reserve grade. Don't take it as a [indiscernible] based on what we see in the pipeline. So I'm very -- feel very comfortable with that. And as you see -- I mean, from 2017 to 2019, our replacement factor was 157%, much above the target of 60% that we have for the next -- not even a target, but the requirement that we have in the next 8 years. So I'm feeling very good about that. And a mine is a mine. And I think we will set up to mine to process any kind of grade at the different [ decisions ] in front of us.
The following question is from Fahad Tariq of Crédit Suisse.
Just one from me. On the generative exploration program, can you tell us what the run rate spend for that would be over the next, call it, 3 years?
Henry?
Yes. So we've been looking at expenditures this year of about $14 million, $15 million. And we expect to see that increase as we get closer to a more definition phase. Total budget for it, as I mentioned, is $53 million over the 3 years. Our spend in 2020 was considerably lower. We saw a lot of impact from COVID where regional programs are generally a non-essential service. So we tend to be affected, and we will be affected ongoing into next year. COVID is far from over at our operations and in the countries where we're working. So we'll -- that run rate will probably be affected again in 2021. But the aim is to get about $14 million to $15 million of exploration and drilling down.
Okay. Got it. And then just as a follow-up, maybe more strategically. But as you think about that program and the goal of adding a 1.5 million ounce mine plan over the next 3 years. Is that still the goal, given there's quite a bit of visibility now in the 10-year production guidance, maybe not as much pressure to add that many resources or develop a mine plan, a new mine plan. Just any thoughts around that would be helpful.
Yes, the pressure is certainly there. It's a key goal for management. I think, Daniel can...
Yes, it is.
Back up on that. So we really would like to see growth. We are in a unique position now with that acquisition in was America and the discoveries at East Gouldie. But we want further projects for growth. So yes, it's a key metric and the goal for this year.
The next question is from Carey MacRury of Canaccord Genuity.
Just a question on Canadian Malartic, the schematic issue on Slide 28 with the 2 declines at the -- in the shaft. Is that sufficient to get you up to that 15,000 to 20,000 tonnes a day? Or is that sort of like the start and there's going to be more infrastructure to come behind that?
Yohann?
That's a good question. Thanks, man. The plan at Malartic is to -- well, we have -- the decline. We have a couple of declines, I mean to get access the shallow portion of the operation. And one of these declines is for automated trucks. So the goal is to get a constant, I would say, round of mine of about 8,000 tonnes per day going forward from the upper part. And the remaining, that'll come from East Gouldie, for a global production of about 20,000 tonnes of ore per day. So -- and that -- if we exhaust the ore from, I would say, the shallow zones, the East Gouldie is going to provide a 20,000 tonne per day target and processing rate. So that's the way that it's split. So in that view, I mean, you have to consider that we're using the ramp access, and we are using as well the shaft and the ore that's going to be one of a kind in Canada.
And just given that the project is largely development, is the CapEx just pretty much moved out over, it looks like 7, 8, 9 years of development work there? Or there is some big chunk or years in there?
Jason, do you want to take that one?
Yes. No, Carey, I think you kind of hit the nail on the head there. It is really spread out. I mean, in terms of overall profile, it's probably a little bit more in the front end, a little bit more on the back end. And as I say, in the kind of the middle innings, it's quite a bit lower as we just think in the shaft. So it's fairly balanced over those years. I mean, I'll go back to like we do see preproduction come in, in 2023 from the benefit of that ramp access. So that just takes the edge off any further capital. When we talk about that capital. Those are absolute numbers, pre any credit.
Maybe just one last one, just given you show East Gouldie in 2027. Does that mean the shaft doesn't really need to kick off for a couple of years there? How would you think about that?
I think that we should look at the route profile. I mean, we don't have -- I would say the detailed information yet, I mean, but we're going to have it in February when the PEA, we're going to have the PEA results on hand. But you need to think about a few per year starting in 2023 when we're going to see the first gold from Odyssey, kind of a combined -- the combined production from underground and open pit, and we're going to see a progression, and that's going to ramp up. And we're going to see some synergy between both pits from, I would say, 2020 -- I mean pit and underground from 2023 to 2028 about. And after that, 2028, 2029, we're going to have the underground in full production to take over the processing rate.So basically, we're going to start to see some production per us before, but I would say this is built, I would say, in logical sequence, and it also have some caution as well in that plant. But again, we don't have the detailed information yet to share, but we're going to have it early in February.
Great. Great. Just maybe one more for me, if I can. Just on the heap leach at Cerro Moro. Just what you're looking at there in terms of grade and recovery.
I -- the heap leach is quite interesting at Cerro Moro. And as I said in my presentation, it's not finding a lot of good stuff in Cerro Moro. And perhaps with the mill that we have, it's so high grade and lower tonnage. But if you look at it a different way by considering perhaps all these ounces that can be added to our reserve resource statement, that can be significant.So I would say that heap leach is a pretty good solution, and it seems like we can heap leach grade as low as 1 gram per tonne. And -- but that's going to be the cut-off grade, but for sure, we would target something higher than that. But again, the tests are going really well. I mean, it's above expectations, and we're very happy to continue those tests. And we're looking at different options to see how we can unlock full potential of Cerro Moro.And again, looking at all those options in parallel, I mean it's hard for us to define. We do the path going forward. But we're developing a different, I would say, approach. And we're going to take the best one to ensure a minimum, I would say, threshold of 165 GEO of production at the, let's say, the back end of the decade, for sure. And again, based on that, and I explained the heap leach has 2 purpose. Going to be, first, to ensure sustainability of 165 GEO per year, or incremental above that of 50 to 60 GEO per year. So we keep all the options open at this moment at this time.
The next question is from Grant Sporre of Bloomberg Intelligence.
Just a question on the MARA project. You talked about it being a significant value opportunity and having a number of options, be it spinning it out or selling a stake, et cetera. But ultimately, can you just give some idea of what your time line is to advance the project. And what you're thinking of before you would have a, let's say, a full bankable feasibility study, et cetera.
Gerardo? Gerardo.
Yes. The time for the feasibility is to be completed in 2022 as well as with the EIA. And those are the main activities we have in front of us to bring the project to a construction decision.
And roughly how -- and how much would you have to spend on that? I'm guessing the spend would be relatively low to get it to that stage.
Yes. It's relatively low. A lot of the work we've done in the past. I think we have $15 million for 56 this year. And it is a similar level next year and then drops off. And then, obviously, we're kind of compressing the schedule we have between 2020 to '21 and '22. So you're looking at total about $3 million to advance the project with the EIA and the feasibility included.
Thank you. There are no further questions registered at this time. I'll turn the meeting back over to Mr. Racine.
Well, thank you very much, everyone, to joining our call this morning. Please stay safe. It's still the pandemic everywhere. And then hope to see you -- all of you soon. Thank you again for attending our presentation. Bye-bye.
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