Copper Mountain Mining Corporation (CPPMF) CEO Gil Clausen on Q4...

Copper Mountain Mining Corporation (CPPMF) CEO Gil Clausen on Q4 2020 Results - Earnings Call Transcript

Copper Mountain Mining Corporation (OTCPK:CPPMF) Q4 2020 Earnings Conference Call February 16, 2021 10:30 AM ET

Company Participants

Gil Clausen - President and CEO

Rod Shier - CFO

Don Strickland - COO

Conference Call Participants

Orest Wowkodaw - Scotiabank

Craig Hutchison - TD Securities

George Topping - Industrial Alliance

Pierre Vaillancourt - Haywood Securities

Stefan Ioannou - Cormark Securities

Operator

Good morning. My name is Pauli and I'll be your conference operator today. At this time, I would like to welcome everyone to the Copper Mountain Mining Corporation Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]

Please note that comments made today that are not of a historical factual nature may contain forward-looking statements. This information, by its nature, is subject to risks and uncertainties that may cause the stated outcome to differ materially from actual outcomes. Please refer to Slide 2 of today's presentation and Copper Mountain's fourth quarter 2020 Management's Discussion and Analysis for more information.

I would now turn the call over to Gil Clausen, President and CEO of Copper Mountain Mining. Please go ahead, sir.

Gil Clausen

Thank you, operator. Good morning, everyone and thank you for joining us. Starting on Slide 3 as you can see, I have with Rod Shier, our Chief Financial Officer; and Don Strickland, Copper Mountain's Chief Operating Officer. I'll begin by providing a brief update and summary of the quarter. And will speak to our financial results followed by Don will provide a more detailed discussion on our operation. And then we'll wrap up with a project update and our outlook. Then we will open the call to questions.

Turning to slide 4, we finished the year strong as forecast, the fourth quarter was our strongest of the year, posting record production for copper, gold and silver. We saw our total annual production increase from last year, exceeding our guidance range. We also saw quarterly and annual unit cost reductions with 2020 all in costs or AIC within our reduced guidance range. The primary driver of production and cost was the higher grade we began to experience in the fourth quarter. Higher grades are expected to continue through 2021.

Turning to slide 5, the higher copper price, higher production and lower cost is allowing us to generate strong cash flow. Our financial metrics improved year-on-year across the board, with our cash position materially increasing. Notably, our net debt to EBITDA decline significantly year-on-year, we finished 2020 in a solid financial position with $86 million in cash. We were flexible and nimble in implementing a revised mine plan early in 2020. And we focused on minimizing our costs and maximizing margins without sacrificing our long range plan. In May, we materially improve the economics and operating metrics at our Eva Copper Project with a bankable feasibility study, we extended Eva's mine life, increased its NPV and production while reducing costs. Then in late November, we announced an updated life of mine plan for the Copper Mountain mine, which included a mill expansion to 65,000 tonnes per day. Demonstrating basically an over 60% increase in NPV to around a US $1 billion based on $3.50 copper.

In 2020, we focused on operational excellence and project optimization, we begin 2021 in a position of strength, and will continue to execute on our operational and growth plans.

I'll now turn the call over to Rod who will go into more detail on our financial results.

Rod Shier

Thank you, Gil. Starting on slide 7; as noted by Gil the company had a very strong year, and the financial results and year end position definitely show it. Revenue for the fourth quarter of 2020 was $106 million on the sale of nearly 19 million pounds of copper, approximately 7,200 ounces of gold and about 96,000 ounces of silver. Higher revenue was a result of higher copper and gold sales. Although it should be noted that copper production during the quarter was approximately 4 million pounds higher than sales as a result of timing of shipments. The revenue associated with these pounds will be recognized in early Q1 2021. Increased revenue was also a result of higher metal prices, which average 335 US per pound of copper, and 1,867 US per ounce of gold as compared to 267 per pound and 14,180 per ounce for the fourth quarter of 2019. Revenue for the full year of 2020 was $341 million on the sale of 73 million pounds of copper, approximately 26,000 ounces of gold and 323,000 ounces of silver as compared to revenue of $288 million for 2019.

The 2020 revenue included a positive mark-to-market adjustment of $25 million for unsettled shipments at year end, which is due to the increase in metal prices experienced during the year. Cost of sales for Q4, 2020 was $59 million as compared to $72 million for Q4, 2019. The decrease in cost of sales is attributable to the operational initiatives implemented at the mine that resulted in reduced tonnage costs during the quarter. This combined with higher copper production had the effect of decreasing our unit costs, resulting in a gross profit of $52.8 million for the fourth quarter of 2020. This compares to a gross profit of $11.3 million for the fourth quarter of 2019. Cost of sales for the full year of 2020 was $237 million as compared to $263 million in 2019.

The decrease in cost of sales for the year is also a result of the cost saving initiatives implemented throughout the year, which allows the company to realize a higher net margin than would otherwise have been achieved from just metal price increases alone.

Turning to slide 8; as you can see, this resulted in a gross profit of about $47.3 million and a net income of $28.5 million in Q4 2020 or $0.10 per share. Net income for Q4, 2020 included non cash unrealized foreign exchange gain of $13.9 million, which is primarily related to the company's US dollar denominated debt. This compares to a gain of only $5.5 million in Q4 2019. The gross profit for the year ended 2020 increased fourfold to $105 million as compared to a gross profit of $25 million for 2019. This was a direct result of the increase sales in metal prices experienced during the 2020year. Net income for 2020 was $50 million as compared to a net loss of $26 million for the year ended 2019.

For the fourth quarter of 2020, the company recorded EBITDA of $57 million. And after backing out the unrealized foreign exchange gain and the mark-to-market adjustments for the quarter, adjusted EBITDA was approximately $34 million. For the year ended 2020, the company recorded EBITDA of $118 million as compared to $3.6 million for the prior year. Adjusted EBITDA was $88 million for the year ended 2020, as compared to $30 million for the year ended 2019. Again, this strong showing of EBITDA and adjusted EBITDA is directly attributable to increased sales, reduced costs of sales, and higher metal prices experienced during the second half of the year. Cash flow from operations was $51 million for the fourth quarter of 2020 and $122 million for the full year. This strong result has allowed us to end the year with approximately $86 million in cash on hand, an increase of $53 million over the prior year end, definitely a strong year for the company.

I will now turn the call over to Don.

Don Strickland

Thanks, Rod. Starting on slide 10. The mind continued solid execution of the plan delivering quarterly performance above expectations or supply for the quarter was about 75% from phase number three, with the remainder from phase number two. Phase number three is the source of the higher grade or meal during the quarter. Phase number three is planned to be the main or supply throughout 2021. Continuing to provide higher grade mill feed for the year, approximately 65% of the 2021 mill feed will be from phase number three. Phase number two will supply about 25% of the 2021 mill feed. We have now started Stripping phase number four, which is the next push back located on the northeast side of the main tip. As noted on this slide, it is on the opposite side of the tip from phase three, and will further open up high grade or at the bottom of the tip. Phase 4 will provide about 10% of the middle feed in 2021 and will be the main or supply in 2022. During the latter part of Q4, with the increasing copper price, we did increase our Stripping to advance the 2021 mine plan. Also during the quarter, we started construction to modify our main ramp to support the trolley assist installation, which is approximately one kilometer long, and we'll run from the bottom of the main pit to the primary Crusher. The trolley assist ramp section will support horror or haul from the main tip and for new Isabel over the life of mine.

We are targeting to start commissioning our trolley assist trial in late 2021. Our objective is to reduce our GHTs by replacing diesel with electricity. For context, we will reduce haul truck fuel burn from about 400 liters per hour to about 30 liters per hour. While operating on trolley assist. We expect to reduce our GHG emissions in excess of 100,000 tonnes of co2 over the life of mine with the section of trolley assist. They also expect to significantly increase uphill haulage speeds with trolley assist, thereby reducing our overall truck hours. This trial will allow us to define the improvements in productivity and unit operating costs. Turning to slide 11 the mill delivered record copper gold and silver production during the quarter. This was a significant achievement with back to back monthly Copper production records achieved in November and December.

During the quarter we did experience some oxide copper in the form of magnetite which is not recoverable in our sulphide flotation circuit. This resulted in a slip in slightly lowering our overall copper recovery for the quarter. This oxide is from historical underground collapse stub zones that we mined through. This impact won't be material going forward as only about 2% of the 2021 mill feet as planned from these old stub zones. And in these areas, our geologists have been conservative with projected grades. We have experienced positive reserve reconciliations that more than offset any impact of oxidation. The focus in the mill during the quarter was on adjusting to the significant increase in the mill Feed Grade, the associated higher copper production and a change in mineralogy from mainly top of high grade to a higher ratio of 494. We did slow the mill tonnage rate at times during the quarter to maximize recovery on slower kinetic bornite Ore and adjust the operation of the copper concentrate filtering circuit to handle the approximately 30% increase in concentrate production from historical levels.

We are presently investigating opportunities to adjust reagent mix and minor flow sheet changes to maximize throughput and recovery while processing this lower kinetic bornite ore.

Turning to slide 12. Mill expansion to 45,000 tonnes per day, which includes the installation of a third ball mill, is currently underway. The installation ball mill 3 will increase throughput and achieve a finer grind to also improve overall metal recovery. Construction activities are progressing well. The new mill maintenance building is complete, structural and concrete demolition within the mill building is also complete and the area's being excavated in preparation for installation of the mill foundation. We are on schedule for commissioning by the end of the third quarter of 2021.

Turning to slide 13; during the quarter, we continue to move forward with our ESG initiatives. As previously discussed, we are a member of the mining Association Canada and we are committed to fully implementing the Towards Sustainable Mining or TSM standard. We're making excellent progress implementing the eight protocols of TSM and exceeded our 2020 targeted AA rating on Tailings management, safety and health and Aboriginal and Community Outreach. We remain focused on achieving a minimum of an A rating on the remaining protocols in 2021. We completed our annual reclamation work in Q4 achieving our program scales up to 25 hectares per year. Our commitment is complete progressive reclamation at 25 hectare per year, and we continue to advance these designs in our life of mine plan.

We also continue to move forward with a plan to significantly reduce our carbon intensity by over 50% during the next five to seven years. Carbon intensity is measured in tonnes of co2 output per ton of copper produced. We will achieve this goal through electrification and copper production increases. This is progressing well. With our trolley assist plans discussed earlier. Our ball mill number 3 project that is under construction, and our 65,000 ton per day study published in Q4. We are on track. The progress we're making is exciting. And we will continue to build on these plans in 2021.

I now turn the call back to Gil.

Gil Clausen

Hey, thanks, Don. So turning, please to slide 15; we have several very low risks organic growth projects at Copper Mountain mine. As Don mentioned, we have the ball mill 3 expansion projects to increase throughput to 45,000 ton per day that's currently underway. We also have the further expansion potential to 65,000 tonnes per day which we announced new light mine plan on November of last year. The life of mine plan builds on the 45,000 tonnes per day expansion as well as the integration of the new Ingerbelle pit with the 65,000 tonnes per day mill expansion Copper Mountain mine MTB increasing to about US $1 billion as a result of higher production, lower costs and improved efficiencies. Copper equivalent production for the first 10 years of Copper Mountain increases to about 140 million pounds. This includes over 100 million pounds per year of copper and average gold production of about 60,000 ounces per year. When new Ingerbelle comes into production along with this expansion we'll have substantial leverage to gold and silver which better positions Copper Mountain over a lot of our peers.

We expect to make and provide guidance on the 65,000 tonnes per day mill expansion and schedule by the end of this year following the completion of the 45,000 tonnes per year mill expansion. All of these projects at the Copper Mountain mine are planned to be internally funded through the mine's cash flow.

Turning to slide 16. In addition to the Copper Mountain mine, we also of course have another high quality growth Project Eva Copper Project. In May last year, we completed the bankable feasibility study that showed improved metrics across the board. Eva is a rare asset. It's one of the only projects in the world in a tier one jurisdiction that has a long mine life and will produce over 100 million pounds of copper a year and has below median cash cost and CapEx well below $500 million. And it's the only copper project in all of Australia and the Americas, north and south with these positive attributes, so low capital, low operating cost, material copper production, and plenty of upside still remaining an exploration of the known satellite deposits. There's a lot of value and plenty of options for Eva and we are currently assessing the best development strategy for Copper Mountain shareholders.

In our view Eva is a low risk mine development, especially as copper prices continue to strengthen, and we believe it merits development and should be built. We expect to provide clarity on our plans for Eva no later than the next quarter.

Continuing on slide 17, we are set to deliver on exciting year in 2021. Production is planned to increase about 22% to the range of 85 to 95 million pounds of copper, and all in cost is targeted to remain low at between US $1.80 to US $2 per pound. The primary drivers are mining higher grade ore from phase three of the main pit and throughput and recovery increases later in the year. We had rescheduled rather the mining of pit number three in March of last year to better match the higher grades with potential higher copper prices later in the year. And we started to really see the benefits of this decision in the fourth quarter through the significant cash flow margins we experienced. And as we complete the installation of the third ball mill in Q3 of this year, we will start to see those higher throughput and higher recoveries in the fourth quarter, with copper prices continuing at current levels. And with higher copper production and lower costs, we expect another strong financial year to set the foundation of our multi tiered growth plan.

With that, I'd like to open up the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions]

Your first question comes from the line of Orest Wowkodaw with Scotiabank.

OrestWowkodaw

Hi, good morning. I'm just curious on you've got a lot of projects, obviously on the go a lot of exciting growth ahead. Just wondering about sequencing everything and when could we anticipate a board approval for the Copper Mountain expansion to 65,000 tonnes a day? Is that likely going to come this year or not?

GilClausen

Hi, Orest. Yes, we do we have, I think we have a natural sequence of development on these projects. And if you think about the work that has to be done in order to be able to develop this mine and do the expansion at the Copper Mountain mine through 65,000 tonnes per day. We've got, as I said, we've got guidance coming next quarter on the development plans for Eva. And then we expect fully at the end of the year to provide guidance and a decision on the project schedule for the 65,000 tonnes per day expansion. And of course, we're focused right now on the 45. And getting that commissioned and completed in the third quarter. So if you think about a natural timing for these events, it would be I think, more sequential than overlapping and the timing relative to 65. And Eva is going to be one that's going to be discussed at the board level this year and we will provide full guidance on that schedule towards the end of the year.

OrestWowkodaw

Okay, and just sorry, Gil, just so I understand. So are you suggesting then that either that you'll look at building either Eva, or the 65,000 tonne of expansion? You wouldn't try to do both at the same time, is that the right understanding?

GilClausen

So if you think about the workflow that needs to be done, as you may be aware, for the 65,000 tonnes a day, we have an environmental permit that allows us to mill about 50,000 tonnes per day now. So with our 45,000 tonnes per day expansion we have the ability to mill up to 50,000 tonnes per day, then we have to apply for a permit amendment on the environmental permit to go to 65. So there's that aspect of workflow that needs to be done, complete the revision of our existing mining permit or license for Ingerbelle, which is within our operating permit, which we expect to achieve within the next 12 months or so. And if you start looking at that workflow, and then the engineering required for 65,000 tonnes per day, you've got a timeline that allows for a gap between the 45 in the 65 being implemented. And actually within that gap, if you want to advance either as is a permitted project with its engineering completed, we can move into basic engineering. So there's a window of opportunity to actually do these things in a rather sequential fashion that makes sense, which won't overtax --certainly won't overtax the balance sheet and the natural order of these projects.

OrestWowkodaw

I see. Okay, so ideally then you'd sandwich in Eva between the 45,000, the 65,000 tonne a day expansion ideally.

GilClausen

We haven't made that decision yet, but it's logic, it's very logical sequence.

OrestWowkodaw

Okay. And then just last question, for me, just on the great sequencing this year at Copper Mountain, obviously, a big increase in grade, they're in the fourth quarter 0.40. How do we -- how should we think about that grade profile this year from a quarterly basis? Like is it do you expect it to revert back to where it was pre Q4 as early as the first quarter? Or is it more of a gradual decrease?

GilClausen

I would suggest that we're going to see higher grades on average this year than we did last year, there's no question. And I don't perceive a significant change in grade profile over the average at Q3, Q4, something in that range, it's going to vary a little bit as we move through different areas of pit three, but pit three has got stronger pit number three, or sorry, I should call it phase number 3 has higher grades than the other areas of the pit in general. So I would expect that you're going to see relatively good grade performance through the year, and you're going to see a significant increase in production in Q4 as the expansion comes in. So it's a little back weighted, because of the expansion coming into play, but in general there'll be minor grade variances throughout the year. So I think pretty consistent year in terms of upgrade, performance this year is our forecast.

Operator

Your next question comes from the line of Craig Hutchinson with TD Bank.

CraigHutchison

Hi. Just a question on recoveries, I mean, Don talked about it in the opening remarks. [Indiscernible] choose, but just so it's maybe really clear for what are you thinking in terms of recoveries serve in the first half of the year, before you get to the 45,000 tonnes per day expansion? And sort of what are you thinking once the 45,000 tonnes a day expansion is now complete?

DonStrickland

Yes, certainly, we expect to see recoveries in that 80% range for the year. And so plus or minus a couple points, and then towards the end of the year, as the 45,000 tonne per day expansion comes on. Depending on the mineralogy, we expect sort of a 3% to 5% improvement in recovery. And so we expect to see recoveries moving into the low 80s low to mid-80s once it's -- the middle is fully commissioned.

CraigHutchison

Okay, thanks gentlemen.

GilClausen

Sorry. Just to add on to that, Greg, I don't think we changed any anything that we had in our analysis of the 45,000 tonnes a day expansion before, it's really, on average, if you look forward a change from about 80% to 84% recovery with the finer grind. And it's, as Don pointed out, going to be mineral logically dependent. So the only impact that we can see on recovery is if we do get, as we did in the third quarter, a little bit of oxide, but you've got the higher grades, some of that is, it's been oxidized will come in the form of Malachite and that Malachite just goes right through the mill. So you're going to get it in your head grade but it's going to go right through the mill. And because it's oxide so it's -- it may have the effect of slightly decreasing the recovery in that area as that flows through the middle. But generally speaking, we've more than accommodated that with our grade projections in those areas.

Operator

Your next question comes from the line of George Topping with Industrial Alliance.

GeorgeTopping

Good, thanks operator. Hello, everyone. Say -- could you give me more details on the activities and news flow that you plan for Eva through 2021?

GilClausen

Well, hi, George, we've -- as we mentioned, we anticipate that we're going to be able to deliver to our board and analysis of options for the development of Eva. And as we previously discussed on calls and guidance, we said, look, we've been assessing partnering opportunities, we've been assessing go alone project financing opportunities on Eva and we've also been looking at other various forms of strategic initiatives with respect to, expect to that issue with that project, but I would have to say that we will be in a position to be able to deliver a recommendation to our board in the not too distant future. And I would expect that early next quarter we should be able to provide clear guidance on our plans for the Eva project.

GeorgeTopping

Okay, so no drilling or optimization studies between them and no sub filter set?

GilClausen

No, we did a lot of -- we did a lot of work to get the feasibility study completed in 2020, the update done then. We've got about 16 years, there's plenty of work to be done on unknown satellite deposits that need to have some of their some additional drilling on to, but I think that's easily done at any time, certainly between now and construction or even at the beginning of the mine, the additional deposits that we're looking at in the area, and that we're gearing up for exploration work this year are on looking basically they're looking for the next mine in the portfolio, we've got that big land position, as you are well aware in the mine [Indiscernible] and we're gearing up to do some exploration and with the objective of looking at the discovery of another deposit of significance that could be another standalone operation.

GeorgeTopping

Got it. And then just quick follow up. Just for a matter of interest, the 50% reduction in carbon over the next five to seven years has not been costed out to give us an idea of the CapEx that we require to achieve that target.

DonStrickland

Yes, George. We're certainly working through that. I would say with Frawley we've got a well defined plan for this trial. And with the additional pit electrification we're working through those studies right now. And what comes out of this stage of trolley will certainly define the next two stages of trolley that we've actually toasted or that we designed. So for trolley itself we do, the first phase here that the capital will be -- we got some funding coming through from the government and to support that project and so we expect the cost. The project will be pretty much cost neutral I guess over the next couple of years. And so that's what we're focused on. Just defining exactly how much money we will spend on trolley but this initial plan, and all this are a little bit vague, to be honest, this initial plan is planned to be pretty much cost neutral over the next five years.

GilClausen

George, just a couple of points on this. So we've been the, I think pleased recipient of really significant support from the province of British Columbia and also BC Hydro, through power smart initiatives. We're just straightening out our mine-haul road. There's no significant cost associated with that. As a matter of fact, we expect cost savings as we straighten out the main ramp to be able to accommodate a straight haul section on and put the power lines in on the main-haul road ramp up to crusher. The fuel burn is significant; the fuel burn reduction is significant. So on a straight energy basis; we expect to save significantly and in terms of those operating costs with respect to that segment of the haul.

The capital, we've been investing in new trucks as we replace our truck fleet with these are new Komatsu trucks that are equipped with the ability to put the pantographs on and utilize the electricity from the grid through the installation that we're playing this year. So there's really no additional capital costs associated with the retrofitting of trucks as we replace our truck lease, which we're in the process of doing now, as well as some of our older fleet ages out, we were replacing the trolley ready trucks, and there's really no significant increase in cost associated with that. So the real cost is in the construction of the lines itself on the ramp. And as Don pointed out, that's been well offset by support from the provincial government, who's also very interested in the outcome of this trial, and the ability to be able to reduce GHG. So I think in the long run, we're going to see a very strong economic benefit from this initiative, and not just the economic benefit, but of course, the environmental benefits, which we believe will be significant.

Operator

Your next question comes from the line of Pierre Vaillancourt with Haywood.

PierreVaillancourt

Hi, Gil. Yes, actually George asked most of my questions concerning Eva, but I do want to clarify I think in last quarter, you discussed how a sale of the asset was a possibility event, is that still the case?

GilClausen

That was one of the options that we were looking at the time. And I think it's, I guess, I would have to say that sort of the copper prices run away from that strategy, so to speak, Pierre, I mean, just to give a preview look, I mean, there are still interested parties for sure. But it's getting to the point here where the strengthening that we're seeing in the copper market, and that's getting to be one of the less favorable alternatives, I would say at this point in time.

PierreVaillancourt

Okay, and to what extent does your debt preclude you from taking this on? I mean are -- in other words, are you going to be -- do you feel that you'll need to have a partner events or is this something you can do it alone?

GilClausen

Well, as you well know, Pierre, we've got some debt in our balance sheet, it's very friendly debt. A lot of it is related party debt. But I think if we're going to be looking at the development of the Eva, you should be looking at project finance. And that project finance, we would anticipate that on, let's say, roughly, including an overrun facility, US $420 million project with an overrun facility would be something that could be geared to 60% or 65%, or maybe even as high as 70%. In addition, we've got a secondary gold production there that could be the subject to this stream, which would leave I think, a very manageable amount of equity required to be able to do that project. But I think to your point, we would look at the potential for doing, we might look at the potential for doing a little bit of balance sheet restructuring between L&M I think we will be able to ease and improve the cash flow up through the parent to be able to provide the ability to self fund all these activities without having to significantly go into any sale of equity on our part to be able to deliver the project. So those are the objectives that we're looking at and that we're working on. We're working with financial advisors right now to be able to put those kinds of plans together so that we can talk to our board about the options, including partnering options in the second quarter and get that guidance clearly out to the market.

PierreVaillancourt

So but is the favored option to take it on yourself, or as you say, in this copper environment, is something that you would ideally like to do yourself?

GilClausen

Well I mean, look, I'm not going to prejudge for our Board of Directors, it's clearly their decision to make. But I have to say everybody's very bullish about copper and our organic growth opportunities. So I think I'll just leave it at that for the time being.

PierreVaillancourt

Okay. Just a clarification on ores and timing, what I mean, in this environment how soon do you think you can move on developments here? Because sitting on for a while, and I think the great to see this move forward.

GilClausen

So, Pierre, I mean, look, we did do, we have done a lot of work. We did some extra drilling and work on the project. And I think we created a lot of additional value; certainly our execution plan that we have now is very solid. As we move in to continue work here, we're moving into the basic and detailed engineering phase. We're not going to actually break ground on that on anything, whether it's this project or 65,000 tonnes a day expansion project at Copper Mountain and tell our engineering is significantly advanced, probably to the level of about 80% engineered before we break ground. I mean there are certain scopes of work that we want to have fully defined with respect to project execution. So, I mean, these things are generally phased in terms of the stage investments you make on these projects and larger projects, but I think we are now more than ready to be able to kick that off. So really, the fundamental piece that we have to get resolved here is just to put the project financing or project components together that way, and then we'll be ready to make a firm decision on where to start and give you a firm schedule as to when we believe we could be commissioning.

PierreVaillancourt

Okay, so how about how about project financing, and is that something you want to line up next quarter or what?

GilClausen

Well we are working on it, we've been working on it, we've -- as I said, we've retained advisors to work with us on it. And generally speaking, depending on the route you take, whether it is -- whether there's a component that's let's say a bond or there's a component that's traditional project debt financing. There's a different sort of timeline, there's a different amount of work, I would suggest that traditional project financings would take anywhere from six to eight months to complete from start to finish.

Operator

Your next question comes from line of Stefan Ioannou with Cormark Securities.

StefanIoannou

Thanks, guys, most of my questions been answered, but I'm just curious. I mean, obviously, hands full with Eva and 45,000 and 65,000 tonnes a day expansion. And also at Copper Mountain mine, you obviously have a massive resource base beyond the current reserve. But just wondering, can we anticipate any sort of additional sort of deep exploration at Copper Mountain this year, like, with some of the success we saw in the fall at beneath new Ingerbelle or is it more focus on development stuff for this year?

GilClausen

Hi, Stefan. Appreciate the question, because we have a lot of exciting exploration opportunities both obviously in Australia, which we already touched upon, but specifically at Copper Mountain. Yes, you saw that really outstanding drill results we had later last year with respect to Ingerbelle. And we're putting together the program, and we funded a program to do exploration at adding about this year, just to really try and answer the questions about that gap between these high, big high grade zones that we have below the existing reserved pit so that work is going to be done this year. In addition, we also have a significant amount of upside exploration under what we call the North bit, we've got an open deposit there, very good grades, very good gold grades as well, this is the one that's right beside the primary Crusher, basically, we're going to be putting in some deeper holes in that pit.

And it's a really shallow pit anyway. So when I say deep holes, they're not that deep, but they're deeper than what we have. And we're going to test the gap between that pit and one of our other pits that we mined out, which is Virginia, where we believe there may be a strong geological connection; we're going to test that. So there's a lot of upside there. And also in the phase 3 area phase 4 area, just that whole east wall of the old pit three, that wall needs to be tested some more, and the old rod we know extends depth. So there's great opportunity at Copper Mountain first for significant resource enhancement there. From our perspective, right now, there are existing mining rate, we've got about 30 years of reserves. And but what we want to be able to do is really get a strong determination as to where this resource potential is going. And the sequencing, potential sequencing of these deposits in the long run. Right now we see a lot of production coming out of pit three and pit two, it'll swing more heavily into Ingerbelle in a few years. But and then copper north is going to play in as well. So we need to do a little bit more deep work, understand the resource and the potential of these resources in terms of sequencing, and then we're going to start to do some infill drilling too once we've got a good sense of the direction, we're going to put the money into doing the infill drilling to convert to reserves and because look, seriously right now currently, right now, we have about 50 years of known resource that just require some infill drilling. And so the potential of Copper Mountain mine here is just incredible.

StefanIoannou

I mean to see to something beyond 65,000 tonnes a day eventually, who knows, right?

GilClausen

Who knows? Yes. We still don't have a good sense for what's the optimal production rate at Copper Mountain? It could be up.

Operator

At this time, there are no further audio questions. I'll now turn the call back over to Mr. Clausen for any closing remarks.

Gil Clausen

Thank you, operator. Just I want to thank everybody again for joining the conference call and once again, we're getting close to the end. So everybody, please stay healthy and look after yourselves. And we hope to see you all soon.

Operator

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation. You may now disconnect.