So if we have higher gold production of course that means a bigger gold credit. I think Heiko what we look at as a management team is our direct operating costs per tonne. So the things that we can manage mining costs, processing costs and the indirect costs, so our G&A on-site. Our goal is to meet plan on that and we end up in a higher gold price environment of course that byproduct credit lowers our all-in sustaining costs and our cash costs, but we’re — like I say, we try to control what we can control, and that’s the inputs that are going into our operating costs.
Heiko Ihle: Fair enough, and then just a longer-term question, your direct operating costs in the quarter increased by about 10%. In your release, you said this was based on ongoing ventilation and water management challenges that affected productivity. Obviously, none of this translates to Terronera at all. And I just looked at some of the pictures here on your website and it looks like this thing is really coming together, but then you also state in the release that you’re encountering ongoing inflationary pressures and costs that I assume may ultimately be seen at Terronera a bit. I mean, commissioning at this point, Q4 is not that far out. Should the analyst community start thinking a bit of inflationary costs for the side or should the current numbers that we have stay as a good baseline for where we should be at?
Dan Dickson: Yeah, that’s a very good question Heiko and we haven’t provided guidance from an operational standpoint for Terronera since April of 2023 when we announced construction decision and at that time, we put out an optimized plan that highlighted an $81 cost per tonne and that cost per tonne had come down from the feasibility study of $87 to $81 because of the economies of scale going from 1700 tonnes per day to 2,000 tonnes per day. That estimate was done effectively December of 2022, January of 2023. Since the start of 2023 across the industry and specifically in Mexico, you’ve had the appreciation in the Mexican peso by 15%. You’ve had inflationary pressures specifically on steel, reagents, power costs, all in Mexico.
So it would be very fair to assume that you’ve had escalations from an operating standpoint at Terronera going from $81 maybe get into the $95 or $100 range. We haven’t gone through and rebuilt those estimates from an operational standpoint. As we go into production, hopefully later this year, like I say commissioning for Q4, management will update those costs and we’ll provide guidance in the marketplace going into 2025, but again, if you just look what’s happened across the industry, what’s happened in Mexico, fair to say that those operational costs are higher than what we put out when we initially did that optimized plan.
Heiko Ihle: Fair enough. Great answer. Great quarter. Obviously, the stock is reacting quite favorably and I’ll get back in queue.
Operator: The next question comes from Craig Hutchison of TD Securities. Please go ahead.
Craig Hutchison: Hi, guys. Can you talk about the cadence of the remaining spend at Terronera? I think you said 53% in the March, commissioning maybe six to nine months away. I would imagine that the spend that you guys reported last time about 2% to 3% a month will accelerate. But if you could just sort of talk to how that spend will accelerate between now and then the commissioning?
Dan Dickson: Yeah, that’s a good question, Craig, and the fact that we are reaching our peak construction within well really this month, next month through August. The key components being the upper platform, As I said, 80% of steel is complete there. So now we’re going into piping and electrical. That’s been going very well with our contractor. Mine development remains a critical path into production. We are hitting ore in Q2. So this quarter, we expect start having ore come out of the mine. We have crossed the vein. Everything looks really good from that standpoint. So there is additional spend from standpoint and then the key other critical path is our tailings facility. Our tailings facility we call it the lower platform that’s where our dry stack tailings facility will be, our concentrator will be, and ultimately our LNG plant.
Our LNG plant remains delayed. It’s expected to start commencing putting in the concrete this quarter and then obviously vertical construction after that. Our expectation is that LNG plant won’t be complete, which is 10% of the production of 100%. That won’t be completed until 2025. So we will be on diesel gensets when we go into commissioning in Q4, but ultimately from the 2% to 3% that’s going to pick up significantly and we’re going to get like I said, I think we said we have $225 million committed. A lot of that’s going to be pushed through in this quarter and then early Q3. So lots going on, but we have really no more procurement. It’s now just about executing and as we execute the embankment for the tailings facility, which has been going relatively well, we’ll be on track for commissioning in Q4.
Craig Hutchison: Okay, great. And just maybe as a follow-up on that, I understand the LNG getting commissioned again in 2025. How what’s the throughput you can run the plant at on diesel alone?
Dan Dickson: Yes, our diesel gensets will have the same output as our LNG plant which is just shy of 13 megawatts. So the plan is everything should be up and going on these diesel gensets. What the diesel gensets will do is increase our operating costs compared to the LNG plant.
Craig Hutchison: Okay, great. And then once you guys are sort of reach commissioning, what’s sort of a timeframe to reach commercial production? Like what type of what is the definition for you guys for commercial production? How long do you guys think it’ll take to get there?
Dan Dickson: Yeah, I don’t have the specific definition, it’s a multitude of factors of getting into commercial production or qualifying for commercial production. We initially estimated three to four months. I think we think we can do that a lot quicker than three to four months, but as we approach and understand where our bottlenecks are and if we can pre commission some of the upper platform before Q4 that would be ideal, but we’ll give guidance to the marketplace as we approach Q4 on that.
Craig Hutchison: Okay, great. And one last question for you, just on the second drawdown, can you remind me what the milestone is to access that additional money?
Dan Dickson: Yes. In that right now we like to say in April we pulled off $60 million and in that we had a cash requirement of sitting in your account which we ultimately call overrun facility of $24 million We’re required to build that up to $28 million and then independent engineers are doing a visit for the lenders late May, just to kind of update to make sure what’s happening in our reports is what’s happening on-site and that’s one of the terms and then other bunch of minor terms that need to be executed on going into that.
