Automated transcript · Written by software from the replay's audio. It can mishear names and figures; the replay is the record.
26:02 We talked earlier about single asset producers. Part of the problem there is, you know, to me, you never want to take debt on for project number 1, because it will be on 1 heap leach pad slip or whatever will kill you. If you've got $190 million of debt outstanding, you're now not producing any gold for the foreseeable future. You know, the creditors come running. So Our goal was always not, you know, to have debt, but only when it was supported by the first operation generating cashflow. And I think we've stewarded our capital very wisely. Surprisingly, when you're very much aligned with your shareholders, you take dilution seriously.
26:52 And as a result, yeah, protected the balance sheet, made tough decisions in 2023. That, you know, we're all developers, producers here. If you're an exploration company, the example I use, if you're an exploration company and your investors know you've got 7 drill rigs turning and you've got to put out a press release saying, hey, we're going down to 1 drill, Rick. Well, they're not going to like that. Well, I can say as a producer, you're ramping up. And then for various reasons, you have to scale production down. I'd do it again. I would not change the decisions we made internally to protect the balance sheet rather than thinking, oh, the market's going to crave more production.
27:38 Let's blow our brains out and blow our balance sheet up, trying to deliver 1 metric, only to then turn around and tell them, well, we delivered on that. But now there's a gaping hole in our finances because, you know, we shouldn't have done that. So we scaled back production. Oh, 2023 was a tough year for our shareholders. Now, moving forward, we actually, by protecting the balance sheet, we're in a position to expand operations getting and really get this going and yes there was a lost year in there lost couple of years really I feel but time doesn't have the same cost as collapses, as cost overruns. Time will test one's patience, it will test one's resolve.
28:27 And certainly we've done that at Monera, but that is what, you know, there is not the same cost on time. And so to me, making decisions to protect capital, which can be replaced only 1 of 2 ways, and one of them can be devastating, even if it's going to cost some time, is a calculus I would do every single time. I appreciate that. Jose, I'll bring you in for your philosophy or SilverX's philosophy on how to allocate funds in a given year to different parts of your asset. Our company was strapped since the beginning, right? So we always, we were very happy to tell everyone that as founders, we own a big chunk of the company. Actually, we went public 3 years ago. And I must confess at the time, I think I owned about 25% of the company and I own 10% now, which is devastating for me. But the reality is that we have to raise money, right?
29:28 And we raise little. As a shareholder, I was trying to protect minority shareholders from those equity rates strike and we're now getting to a point, perhaps with a little bit of delay, where we can demonstrate that we can make money with small assets. It's almost emotional. The moment you have a company that is like, I don't have to raise money to survive, OK, that's a relief. OK, there might be doubts about the quality of the operations, the resource, the management and that's with every company. What we have to do on these sort of last couple of years, I'd say, we've slashed over here. We've slashed marketing costs. By the way, probably it's the same story with many CEOs of junior companies. We went public and tried replicate, you know, the junior company model, so to speak. We did all the marketing, all the IR, and eventually the market puts you in your place and you have to go back to the basics, which is whatever you are in, right? Exploration or production.
30:31 Believe it or not, and the market will grab it. And that's the battle we are in at the moment. And as that said, now we are happy that we are reaching a level where we can raise debt. We are not having an EBITDA that would support us raising the debt that will grow our project. And that's our focus, right? So the next few months for me is like, oh, I have to demonstrate that, maybe that raise some debt, grow the project, build the value of the company. That's it. If I managed to do that, obviously my investors should be really happy, right? Hasn't been easy. Surviving in these markets have been complicated, but I think we're getting there. But that's my philosophy. We've been really cheap, but managing money. And I always say that in an almost pejorative way. We are a very cheap management team, and you've got to be like that.
31:19 I appreciate that. On the topic of marketing, because I know it just came up, I know marketing promotion sometimes feels like a dirty word in the industry. I don't know why, but it's gotten that way. That's how people think of it. And I want to talk about marketing efforts kind of in response to having a number of different projects at different stages of development. Because obviously there's a question there of when it's advisable to provide less detail on certain projects because they're in what people call the boring stage, if you're in permitting, et cetera. So my question is, and this is really, it's a question of marketing more than anything else, is how do you decide what to talk about and when? And Rick, I'll throw it to you first. Yeah, I mean, it's always a tough one. And I think you have to sort of gauge, I mean, first of all, you have to be transparent in what you're doing. And so that's kind of the premise of, you know, from a market, what I call marketing and how we approach marketing is we want to let shareholders know, investors know what's going on, what the plan is, and we want to be able to tell them that we're delivering into that plan.
32:21 I don't know that there's anything that's not material. If we're drilling on something and it's an early stage project, We wanted to see if it's something that's interesting. If we don't hit anything on it, it's a thought material. We're just, that's where that's kind of happening in the background. Obviously anything happening at Moncho, anything happening at Lucky Shot, anything happening at Johnson Track, we're going to deliver on. We're going to go drill 3,000 meters at Johnson Track. We're going to go do that. We're going to tell everybody what the results are, along with the rest of the plan. But we do have some early stage assets. And really, in the next couple of years, I got to figure out, do they really fit into Contango and what we want to do with Contango, with focusing on the DSO, direct ship, or a model, not building taming facilities and mills and not raising all the capital for that.
33:23 If they don't fit, then what do we do with them? Do we package them up and put them into an explore probe? Those are all things we'll be thinking about in the next few years. None of which is frankly material to what Contango is going to stay focused on, which is getting our 3 assets into production and looking at other assets out there that might fit into our overall 5 to 10 year plan. You know, there's there are plenty of companies in the trough and the trough has gone from 3 to 5 years to 10 to 15 plus years I mean, I think your companies that I started over though great example single asset company now It wasn't that originally when I put it together. But now it now it's all about dominant and You know the markets pretty bored with hearing for the tenth year since I left. Now, hell, it's been 14 years since I left.
34:23 We're still permitting. You know, good luck. Yeah, I mean, there's quite a few stories like that. People do get sort of bored or start to act bored anyway. Doug, I'll throw it to you. When do you just strategically talk about your project that's in production? When do you talk about your exploration from a marketing perspective? From a marketing perspective? The reality is permitting is boring. And there aren't many junctures along the permitting track where there's actually something newsworthy. So, you know, I had one of the analysts that cover our stock the other week when we gave a Santana, yeah, press release entitled Santana Operations Update.
35:15 Clearly it was a news release about Santana. And he was like, nothing about Sara D'Oro in there? It was like, well, in many ways that kind of highlights the issue, right? That, you know, I hate to say it, but Sara D'Oro, you know, when the permitting news comes down, will make it splashy press release. To me, what's more important than the marketing and everything else, and this year having control of our destiny, we're driving Santana production upwards again, and other things that we're doing in the background and in the foreground like copper is about building something like kind of going into your diner and ordering the sundae, but you know, the cherries not on top. Cerro Dorado is the cherry on top. You got to make an appetizing dessert that someone wants to eat, not wait for the waitress to remember that it's a cherry to drop on.
36:10 Even with Cerro de Oro, that was part of the calculus, making sure that there was a funding package there in place. Upon receipt of permits, everyone knows it's ready to go, including the funding, to build it and get it up and running. And I think that press release that day will come, you know, with a meaningful bounce in our stock price. But you have to, when you're marketing, it's not even marketing, when you're thinking about building the business, you have got to give a reason for people to own before that point in time. Part of it is, you know, they can miss that bounce in the stock on that news. And so that's certainly it. But there's that these things can still drag longer than you would want. They are outside of your control.
37:06 And so you have to be doing things to establish value and interest corporately beyond that point. And that's not been easy. And this is my, for either Adam or Michael, or maybe both of you, I'm trying to organically answer a question they did, because I think it is relevant, especially with permitting and when we're talking about jurisdictions. Mexico, one of, where we are focused, has a very good permitting environment, traditionally. Santana took 14 months to start to finish, and that included 4 months where everything shut down because of the elections. The last couple of years of the current administration that changes in a couple of months time, Everything that was great about Mexico permitting seemed to grind to a halt.
38:09 Mining isn't seen by many on the outside as as significant in Mexico as it once was, and maybe as a share of GDP, that's true, but it is very significant to the communities there, communities that we're working with, you know, the local stakeholders. But there has been 2 years of murky backdrop and headwinds of political noise, is what I would call it, that has been very unhelpful. And it's for one of those reasons why we haven't done it. We haven't done it, but I talked about it in 2019. It's a great example of why not just being multi-asset, it being multi-jurisdiction is so important in a company's development.
38:58 Mexico is not becoming Venezuela. If you read some BN America's headlines, you'd think that was the case. But you know, it's not the next Venezuela or Bolivia. It's Mexico. It's mining culture. There are communities that live and die off the mining in those areas. So there's not going to be some blanket open pit mining ban in Mexico, despite prognostications from the outgoing president and the like. Talking to people on the ground in Mexico, any talk on the mining side is gonna get pushed to Claudia Scheinbaum's administration, which yes, is still the Morena party and the Morena coalition, and 1 has to take, acknowledge that there's a big Green Party component to the Morena coalition so you have to tread lightly in terms of environmental review and what's right and I think as an industry and as investors we should really only crave minds that don't impact the environment.
40:06 In holes in the ground are an impact, but there's ways of managing things. So I think I've almost forgotten what the original question was, but because I was so important, like everyone's questions in the chat keep coming in for me. So I kind of just wanted to deal with that elephant in the room to be done with it. We are highly confident in the future of mining in Mexico. So much so that honestly, when I look at other jurisdictions that are north of Mexico, we're still looking at the great opportunities that now present in Mexico as a result of this backdrop, which I think 2 years from now, everyone's gonna look back and go, why were we so concerned about what's going on in Mexico? And yeah, I have to apologize. I kind of forgot the original. I was kind of answering it and then went on a segue to kind of wrap my questions in there and now I'm kind of like. I can see you trying to answer all the questions in the chat. To answer Adam and Michael, yeah, we are, we're very comfortable in Mexico. Everything we're hearing on the ground is actually things are changing. In fact, just the other day we heard that Claudia Scheinbaum is pushing Surma that to start moving forward on clearing the decks of a lot of permits, not necessarily in the mining space, but these outboxes of stuff that's just sitting, waiting to get pushed out, have been filling up for the last couple of years. She's pushing for that. There's a lot of positive things that she said in Mexico that should give people comfort that things are actually gonna turn for
41:39 the better in Mexico. And for those gentlemen that asked me the questions, just reach out to me by email. We can set up a call. I'm more than happy to add more to the color there. But as all the questions seemingly were coming in on me in Mexico, I don't want to look like I'm ducking anything because I'm not. We're proud stakeholders in Mexico. Appreciate that, Doug. Jose, on marketing, just curious, how does SilverX decide what part of the asset to talk about and when? Yeah, that's an interesting one. And by the way, I'll come back to those comments on Mexico, Peru, and other countries, but I love that. As a small company, we decided to simplify our marketing and our message.
42:27 We've been intersecting veins, we've been doing some crazy intersects, some good drilling, we don't support that. We decided not to. We are not an exploration company. So we just talk about production, our financials, and we don't talk exploration. We'll publish our new resource in the next few months. That's it. We don't talk about any activities of the company. We just published a couple of agreements We got with different communities in our area 12 years 50 years, which is pretty impressive We just publish that and we are hoping to get a new permit to go 3 times the current capacity Hopefully before year ends or maybe every next year and we'll publish that so, you know we are going back to the basics. We announce what we have to announce. And it's for good investors to figure out what SilverX is all about. It's a big resource with small mining, cash flowing and growing that's it. I think other than that, it would be just noise.
43:23 And I think we're doing much better now than we did 2 years ago by trying to publish a lot of stuff. Going back to Doug's comments, I mean, we're a Peruvian company and I get asked all sorts of questions about operating in this environment. And obviously, we live in a country that has got some political instability. However, it's in terms of macroeconomics, one of the most stable economies in the Americas in terms of inflation rates, in terms of employment rates, and is certainly one of the best mining jurisdictions on Earth. I mean, not only that we've been mining here for hundreds of years, same as in Mexico, We are not part of NAFTA, so people are not that familiar with us. But certainly, Peru is a completely pro-mining country.
44:12 But they get asked those questions very often. I think that the fact that countries like Mexico went through a period of, you know, question marks, put it that way, and countries like Colombia and some other countries, I think, that brought some confidence on Peru over the last 3 years. But again, it's part of the same game. I think we're really happy with what we have here and we plan to grow in this country as well. Same as that. I always joke, you know, I've been asked a number of times being on panels in Vancouver, what about Peru and the political risk? Well, you know, try to build a mine in Canada. I've already built 2 mines in Foyas and we're about to build the third. OK, so that's my measure of political risk. I appreciate that.
44:58 There's 1 and this often happens. There's a question in the chat that I just like better than any of my questions. I'm gonna ask it instead. And Rick, I'll start with you on this one. This is, Philippe started really, it was really towards the beginning of the hour. So the economic and political landscape is so different now to when the Lassonde curve was originally conceived. So my question is, how has it changed? Like, how does the curve still hold? What about it has changed? And how does that impact how Contango picks projects? Yeah, I say the generality of the curve is still there. I mean, there's exploration, discovery, excitement. But at some point, the drawing stops hitting all the highlight, splashy intersections, and the story has to shift to, okay, well, is any of this economic? What's the metallurgy? What's the geotext? How much water is there?
45:52 All the stuff that usually isn't great news. Because in your press releases, you tend to highlight the best holes and people pay attention to those and they don't look at the other 10 polls that didn't have as good a grade or had no grade or whatever. They also, as you go through inferred to indicated to measured and feasibility, pre-feasibility, all those things. And then if you slap on anything to do with permitting, Doug mentioned that it's not a news rich environment in the first place. And generally whenever there's news on permitting, it's usually not good. Things got delayed, there's this lawsuit, you got your permit and then there's a lawsuit. So the permitting, I always thought it was funny because they refer to permitting and at the end of an EIS as an example, you don't get any permits.
46:46 You start the process to get your permits. It's like the Holy Grail Bible of how do you get your permits. That's the EIS. So and then the EIS can be challenged. And they're not challenging the mining company. They're challenging the department or the regulator that issued the permit in the first place. So it's a very convoluted, complex permitting. It's very convoluted and complex and hard to understand. And then you throw the lawsuit thing on top of it. And it's, I guess it's hardly ever good news on permitting. But so, you know, that's sort of the backdrop of why that Lassonde curve is the valley, the valley of death is now the killing fields. It's just broader.
47:33 And it has to be. We blame the regulators get blamed a lot and they have they certainly you know regulatory oversight and that has taken a lot longer than it used to. And you know You can argue that maybe that's for good reasons. It's de-risking the project. But investors are also wanting things de-risked, and that's another reason why the Lassonde curve goes out. Of course, the longer you're exposed in the market to get all those feasibility, and permitting, and lawsuits all taken care of, the more you're at risk that the market just gets in a bad mood. And so your Lausanne curve, the base of which is up here at some point when the market's in a good mood, The whole curve just goes to hell. And you have, as a junior company, having to raise equity, that's where you get screwed, and the equity holders get screwed. So, yeah, it's longer because of the regulators and investors wanting things further and further de-risked.
48:37 That's not just the mining industry, that's everything. That's why, how many canceled flights? I'll just take something really simple like a canceled flight, this happened to my son the other day, you know, why are can't flights canceled? Well, because there's a storm on the East Coast, well so they decide to cancel a whole bunch of flights because that's be risky. So that's the society we built, I think at some point people might start getting a little frustrated with the lack of progress on certain things or the more flights getting canceled or whatever it happens to be, but that's where we are. No, Appreciate that. And Doug, I'll throw it to you. I know we were talking about it briefly even before people came on. Your perspective on how the Lassonde curve has changed over time and what that actually means for how you market projects, how you think about them, et cetera.
49:30 There we go. Yeah, so this is where I lambast actually how the Lassonde curve is drawn, only to then admit that I've got one of those badly drawn versions of my current deck, so yes. One of the issues, Rick's right, there's ever-changing things. It doesn't matter where you are at a particular point in the broader market, that point on the Lassonde curve is going to feel much better or much worse than what is drawn on that cartoon. The other issue that I think is a, how it is traditionally drawn is you have your first peak, the expiration discovery peak, then you have your trough, and then you have the final peak that every developer, stroke producer wants to get to. It's like, oh you're in production, everything's going great.
50:28 And it always gets kind of drawn in a way that it's higher than that first peak, the discovery, you know, and let's face it, that peak is your arrow keeper, diamond fields, great bear type takeout peak. The reality is when you get to that far part of the curve, it's not that abrupt. And in fact, in many ways, ramp up of operations and everything else, definitely the trend is upwards, But it probably shouldn't be at the pace that is illustrated in the typical Lausanne curve. And in fact, actually, it should come with the caveat that even as it goes up, it can have its own periods where it can stall. There can be mining problems you have to work through.
51:18 Like I think Monero in 2023 found a way to reverse on the Lassonde curve. Like we got to the Farah curve and then we decided we'd throw it in reverse, just edge back again. And now we're driving forward again in 2024. So, you know, just be wary of like often how it is drawn. I think ultimately, if you get up and running, especially building multiple mines and de-risking yourself jurisdictionally and over multiple minds. The long-term real value, you know, is seen in producers that started 20 years ago that now growing into the next variations of themselves and continuing to grow and can deliver really long-term sustainable growth as a company and everything else.
52:11 But it takes time. And that Lausanne curve kind of abruptly ends, like everything's going fine. And you know what, the trajectory's just upwards from here and it's just, that doesn't happen. The thing I would say about the curve is that orphan period, whether it's permitting your first asset of 3 assets you've got or you're a single asset that orphan period the first time out is really tough you got to have really big backers that can take advantage of the impatience and everything else that comes. It's brought with problems and everything else and it can be years or 14 apparently.
53:06 One of the things I like, and Santana was a 14 month permitting bill when we built it, is if you're a multi-mine company, you really only live the worst part of the orphan curve once. That orphan period of the curve once. To make sure you're doing it in a jurisdiction where you actually bridge that part of the Lassonde curve as rapidly as possible. Because even if you're taking your second or your third project into permitting, if you've got the first up and running, the second up and running, you're moving forward. You've removed yourself from that valley of death. You might be going through it on a subset of your portfolio, but it doesn't have the significance as it does your first asset or your only asset going through that same curve.
54:01 So again, I think it's the strength of the multi-mine approach we're talking about here as well, that really when Rick's going through permitting now, it doesn't have the same impact as when he was first making all his decisions at Manchot. And it's the same for us. I know all our shareholders are waiting on Cerro de Oro, but it's not as impactful. That's the only game in town for us. And so I think it's actually a strength of the multi-asset approach that you can get through the worst part of the Lassonde curve once, and it doesn't have the same impact and wearing of one's patience the second and third time.
54:56 So try to pick a jurisdiction where you can actually move through that relatively quickly. No, it makes sense. Appreciate that. Jose, I got a 2 part question for you. And I did throw you on mute. So you'll have to unmute to jump back in. But same question. How do you see the Lassonde curve in modern times? Do you think it still holds or do you think things have changed? I think the Lassonde curve does not talk about the mining cycles. It talks about the expectations in the market. So, it's speculation and production, or let's say dividend, solid investment. And something that Doug just mentioned is like companies in production went through that first cycle. And it's pretty rough. You know, you go through the peak and then that valley which feels never-ending. But once you do it, I believe you've got real value.
55:41 I do believe, I will not attempt to explain the markets because I still haven't comprehend them, But I do believe that the expectation of investors about mining companies have changed, have been changing fundamentally. And I believe that we are moving back to the second part of the Lassonde curve, which is the producers. And I believe that the, let's say not traditional, but the recent decades junior mining companies model is also being, it's been changed dramatically. So I'm very happy to be a producer. That's what I'm trying to say. And once you go through that first valley or first bottom, and you reach that sort of status, I like what that said, you want to become multi asset, because that means that the next left-swing curve is going to be very soft.
56:36 You will not have to be exposed to that. I would like to be that. But again, my point here is that I want to be on the second side of the curve. And those are the companies that we'll see in 10, 15, 20 years time down the line, being the mid-tier and the large mining companies. Don't forget, every good mining company was in the first segment at some point. They all made it through. I appreciate that. And Jose, I have one follow-up question for you. As I understand it, and I have heard from SilverX investors, that SilverX is an execution story. So I'm curious how you get investors excited about potentially serious exploration potential when there's a seeming laser focus on production results. I think the excitement comes from the fact that we are in production and we've got a very large, or let's say a growing resource.
57:25 And that's the value. The investors that say, okay, these companies or these guys are able to build small mines to make some profit, they get the credibility, they then build the next big thing. And I do believe that with their resource, the mine complex we've got, I think within the next few months or years will become one of the largest underdeveloped silver projects in Latin America. And that's what investors should be seeking out for. Okay, that's the real value of silver. I appreciate that very much. Rick, got one question specific to you. You were talking about fitting multiple projects into your strategy and into your portfolio. You recently, very recently, closed the purchase of Johnson Track Project, the high gold. How did this project fit into the Contango strategy?
58:13 It was exactly the kind of orphan project we're talking about in this long valley of death, of killing fields, or whatever you want to refer to this depressing thing as, that is a reality of the market. And so you had a company that had a, this is a high gold, had a nice resource. It's a, you know, It's a million ounce resource. It's good quality. It's 9 grams, over 9 grams. It fits those characteristics. It's also close to the water. So you're easy access to a relatively cheap form of transportation. There's plenty of mills, existing mills on the water. So, you know, those are, there's potential places for that to, that work to go. The other characteristics that I look for in a project that we can basically take advantage of the Lausanne curve, you know, companies that are in this trough, is, you know, the quality. So grade's obviously a big part of that.
59:12 What's the, what's the geometry of the ore body? Is it, is it a difficult ore body? Is it above the water table? Is it below? Is it down in the middle of a valley? Do you have to divert a river or a village or a town or something? And there's some big resources that are in some bad places from a permitting perspective. And that's what we're kind of laser focused on is how do we look at this project from a permitting perspective, assuming we're not building a mill in a tailings facility in a power plant to power all that. That greatly simplifies the permitting process. If you have a line that's above the water table versus 1 that's below, that's why Moncho was relatively easy. Nothing's easy in permitting. Don't, I don't want to, I want to make sure, I just want to say that at the outset, But on a relative basis, if I can get Moncho permitted, or if we can get Moncho permitted in a year versus 5 or 10 to permit a tailing facility, well, I'll take that bet every day.
1:00:15 And I believe, you know, so we've done that with Lucky Shot and now we're in the process of doing that again for Johnson Factory. And I'm saying, you know, to get the infrastructure into a place where you can be mining, There's more work to do. There's lots more work to do, but if we're going to put rocks in a box and transport them to an existing permitted mill somewhere else, that's another issue that we have to deal with for sure, but it's not a 10-year timeline issue. And I will always maintain that if you've got somebody with a mill that's processing 5g per tonne, and you bring in 10, there's a business transaction to be made. So, those are kind of the working theses that we have to execute our model.
1:01:07 I think we're 3 for 3 right now. We've got more work to do to get those other assets into production. But I hesitate to say that the exploration of those assets, that's the easy part. We know how to do that. It's the curveballs that come from left field, stakeholder engagement and all those other things that we have to do, continue to do a good job on that. There's no question about that. That also kind of overlaps with marketing because we market to investors, but hey, guess what? All the anti-mining NGOs hear exactly what we're saying and they know the game. Sure. They're experts as much as anybody else for sure. They raise money for different purposes.
1:01:53 Sure. I appreciate that. Doug, I'll throw the last question to you, and this is really about the Monero model, just for people who might not be familiar. My question is, how far along will Serdeoro be before bringing another project into focus? Just how does the Monero model work, in your words? You are on mute. You'd think an hour into this I would have figured that out. So yeah, this multi-sequence approach of low-cap-x projects where 1 supports funding at the second and the first 2 support the funding at the third, you know, it's a good way to build the exact same production profile that is in a project that is a single asset developer that's hundreds of millions of dollars and more sensitive to cost over us.
1:02:46 Okay. It also lends itself to more flexible project sequencing and in that regard it's funny we've got 3 assets our company has permitted 2 of them from the from the AMLO administration and the predecessor administration. After, you know, we've had 14 years operating down in Mexico, we know it very well. I have absolutely 0 doubt that our third project will get permitted by the incoming Claudia Scheinbaum administration. So 3 for 3 to quote Red on permitting with 3 different administrations. But in many ways, like we had the permits for La Fortuna back in 2019, 2020.
1:03:39 But then we picked up Cerro de Oro, and it showed there's sequencing that we could do. Cerro de Oro was a bigger project out the gate. It was a lower capex. It was just everything about it had scale from the get-go. And so we set about getting the surface rights worked through, including spending an extra year working with a local Aikido, which given Ms. Scheinbaum's comments about being supportive of projects that have local support, I'm very happy that we've got a local community that's 100% supportive of that mine as well. And I actually showed that we went from a 2 project company, Santana and La Fortuna, to 1 where in some shareholders minds feels inexplicable that we are now wanting to build second and take the time to permit a second operation ahead of 1 that's sitting with permits.
1:04:42 Having La Fortuna permitted allows us to pivot for sure. We're not a binary outcome on permitting. We are getting no indications out of Mexico that there should be issues with Cerro Doro and until such time we won't knee-jerk react and decide to do a pivot, which ultimately is not necessary at this point in time. And part of it is we want to build Lafortuna in its right form, right? We based a PEA off a five-year starter pit, high grade, 3 and a half, 4 gram open pit, 6 to 1 strip. It's right up there among some of the best open, high grade open pits in the world. Cause I believe I was giving a presentation after Rick at Denver last year and Fortuna is in one of his slide decks or was, but we own a 2000 ton a day mill already for that project. The PEA not only has a 5 years mine life, no one likes 5 year mine life, But it also was only using about 50% of that milk capacity.
1:05:50 So for us, looking at projects, getting the open pit heap leeches built, like Santana and Cerro Duro, is gonna spit off so much free cash flow that finally we can do what Fortuna really needs, which is spend 10, 20 million bucks over a number of years, really growing out that resource, which we know is there, it's brownfields expansions to that pit. So that we're building it the right way. Maybe we're starting up Lafortuna at 8 plus years with a 75, 80,000 ounce a year profile rather than 5 at 50 with analysts looking going well you can't really put multiples on cash flows that are you know on such a short mine life etc so we can address all that And we will continue with that approach unless we absolutely felt that Cerro de Oro was gonna be bogged down politically, you know, we're shifting, but everything we're hearing out of Mexico on the ground locally at least, is things are gonna be improving and so we're not gonna react and shift our plan.
1:06:52 I think shareholders want a management team that don't make knee-jerk reactions. Investors make knee-jerk reactions and that's their prerogative. But I certainly wouldn't want to invest in a company where a management team is so quick to change a strategy and a plan that makes the most sense. And so, yeah, we'll build out and collectively in their base case Santana Lafortuna and Sarah Dora will get us to about a hundred and 40 to a hundred and 50,000 ounces of Sub-thousand a sec gold production a year is other upside cases on those projects. Absolutely, especially Sarah Dora which we're permitting for right now, the upside case.
1:07:40 You're closer to 200,000 ounces from these 3 assets. So yes, not from a single asset developer, not prone to the risks of those we've gone over in length. And certainly a 200,000 ounce a year producer that you're able to achieve for 60 to 70 million dollars in combined CapEx and not the hundreds of millions of dollars, which comes at a cost. It's either debt that you're paying back from your cashflow that you can't invest in the business, or it's dilution or anything else. To be able to build that kind of production profile for that kind of CapEx is one of our core strengths. And there's a slide in our deck that shows the industry leading capital intensity for the builds that we do. And we're proud of that.
1:08:30 I look forward in time as the operations build out. I have another slide in there that shows the free cash generation per ounce of production profile. That will look very good compared with much bigger companies. If we're in the business of making real money, I don't care if smaller isn't sexy. To me, generating a lot of free cash from something smaller than generating barely anything from something way bigger, I know which one of those alternatives is best for shareholders. And that's the business model where we're developing here at Monero. Perfect, thank you so much. I know we've gone a bit over time, so appreciate all of your time very much. Doug, Rick, Jose, thank you so much for joining me for this discussion. For those in the audience, thank you for asking questions. We worked most of them in, but the ones that we didn't, I'll make sure to get to the relevant management team so they can answer as soon as possible.
