Feb 18, 2015
Executives
Cindy Burnett - VP, IR & Communications Darren Pylot - President & CEO Jim Slattery - SVP & CFO Gregg Bush - SVP & COO Rob Blusson - VP, Finance
Analysts
Matt Murphy - UBS Mark Turner - Scotia Bank Stefan Ioannou - Haywood Securities Ralph Profiti - Credit Suisse Sasha Bukacheva - BMO Capital Markets Cliff Hale-Sanders - Cormark Securities
Operator
Good morning, ladies and gentlemen, and welcome to the Capstone Mining Corp Fourth Quarter and Year-End Results Conference Call. At this time, all lines are in listen-only mode.
Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for a question.
[Operator Instructions]. I would like to remind everyone that this call is being recorded on February 18, 2015.
I would now like to turn the conference over to Ms. Cindy Burnett.
Please go ahead.
Cindy Burnett
Thank you. I'd like to welcome everyone on the call today.
The news release announcing Capstone's 2014 financial results is available on our website, along with a PowerPoint presentation that contains summary information on the company and our financial and operating results as well as webcast slide to accompany our commentary today. With me are Darren Pylot, Capstone's President and CEO; Jim Slattery, Senior Vice President and Chief Financial Officer; Gregg Bush, Senior Vice President and Chief Operating Officer; and Rob Blusson, Vice President of Finance.
I would like to advise you that this call is being recorded for replay through our conference call provider, and is being broadcast live through an Internet webcast system. Comments on the call today will contain forward-looking information.
This information by its nature is subject to risks and uncertainties, and actual results may differ materially from the views expressed today. For further information on these risks and uncertainties, please see Capstone's relevant filings on SEDAR.
And finally, I'll just note that all amounts we will discuss today will be in U.S. dollars, unless otherwise specified.
Now I'll turn the call over to Darren Pylot.
Darren Pylot
Thanks, Cindy, and good morning, everybody. Jim will lead off with a review of the financial results for 2014, followed by Gregg, who will provide an update on our operation.
We will also update you on our development projects and our corporate activities, followed by your questions. I'll now turn the call over to Jim.
Jim Slattery
Thanks, Darren. Despite reporting a net loss of $22.4 million for the year, 2014 was actually very good for us both financially and operationally as we'll talk about further.
Operating cash flow before changes in working capital was almost $200 million, set a new record for Capstone, a very strong performance considering our realized copper price is only $3.03 per pound in 2014. Net loss for 2014 was largely a result of $55.8 million or $0.15 a share pre-tax of non-cash write-downs.
$36.2 million was attributable to Minto for an elevated cost structure has been particularly affected by a weaker copper price. We also wrote down our Kutcho property earlier this year and recorded a non-cash impairment of available sales security of approximately $11 million.
Of the 2014 full year non-cash charges, $32.3 million or $0.08 a share pre-tax was recorded in the fourth quarter. Looking forward to 2015, the question is that we're getting most frequently from investors and analysts are around, one, our sensitivity to falling oil prices and changes in exchange rate.
Two, our tax flow and compliance with debt covenant in a weaker copper price environment and, three, how we will align our 2015 capital budget to financial capacity in a volatile market. I'll address the first two and leave the third one to Darren to cover in more detail.
Our 2015 cash guidance, or cash cost guidance was based on a diesel price of $3.25 per gallon. Diesel makes up about 9% of our site cost at Pinto Valley and 8% on a consolidated basis.
Pinto Valley, our largest consumer of fuel, budgeted $3 per gallon which is approximately 7 million gallons per year. The current price is just under $2 per gallon in Pinto Valley; the savings at that mine alone are in the range of $0.06 a pound on a full year basis.
This is the only direct cost at the mine site and does not include the potential savings that we can also expect to realize on other inputs like transportation and ocean freight as the effect of falling prices works their way through the system. Turning to foreign exchange, our guidance is baced on the Canadian dollar of $1.18 per U.S.
dollar and the Mexican Peso was $13.25 per U.S. dollar.
A 1% change in the value of the Canadian and Mexican currency would affect Minto's 2015 after tax earnings by about $1.3 million in close in by about $200,000. We have included a table in the MD&A this year providing detail on our sensitivity to copper prices in operating currencies.
Now turning to the second question, we ended the year with a $115 million of cash and $276.1 million of total debt. Now in January, we've refinanced this with a new four-year revolving credit facility for $500 million with $440 million presently committed.
The rate on the new facility is U.S. LIBOR plus 3%.
We drew approximately $265 million against the new facility, which now represents our only outstanding debt, and have approximately $235 million in additional credit capacity available to us. The covenants on this new facility are a minimum EBITDA to interest expense of 2.5 to 1, a maximum senior secured debt to EBITDA of 3.3 to 1 and a maximum total debt EBITDA of 4 to 1.
These last two covenants are calculated net of our cash balance which leaves us with lots of room currently. We started work on setting up this facility in the fall when it became apparent with the deterioration in the high yield bond market; it was not going to turnaround quickly.
We were completing the facility in early January just as the copper market was moving lower and, as a result, we end our lenders stress tested copper price is down to very low level to ensure that we are all comfortable even if copper prices remained depressed for an extended period. With our current 2015 spending plan and assuming an average copper price for the full year at around the current levels of $2.60 a pound, we remain comfortably in compliance with all of our covenants.
At prices as low as $2.20 per pound we remain comfortably in compliance with our debt service covenants, however, there is some risk of the temporary, and by that I mean no longer than three quarters. A technical covenant issue with the senior and total debt coverage covenants at prices below $2.50 a pound.
Now, once we've moved through 2015 which is a year of significant planned capital investment come back into compliance with all covenants even at prices as low as 20. Fundamentally, we are well placed to ride out a period of lower cost prices without changes to our business model.
Now should copper prices remain below 2.50 for an extended period, however, we do you have the flexibility in addition to the $36 million of discretionary capital that we discussed in our guidance new release to further manage our financial position. At the same time, we continue to believe it makes sense to turn-out the debt used to acquire Pinto Valley, aligning the maturity more closely with the extended 12-year mine life.
So we are monitoring the high-yield market, and if the appropriate window opens up we will consider it. So with the changes in our revolving credit facility, our existing cash balance, no significant immediate use of proceeds in our current operations, we are more than adequately capitalized even at the best copper prices well into the future.
So now, I'll turn the call over to Gregg Bush for our operational update.
Gregg Bush
Okay. Thanks, Jim.
Our operations ended 2014 very close to where we expected to be both on production and cost. All three of our mines posted production within 2% of their guidance mid-point.
Cozamin and Minto both outperformed their cost guidance and Pinto Valley ended the year in $2.03 a pound just 1.5% above the top-end of the guidance. I would like to highlight cost performance at Pinto Valley in the latter part of the year, which came in at $1.82 during the fourth quarter and averaged $1.89 for the second half of the year.
We have identified further cost reduction opportunities in Pinto Valley and will continue to exploit them systematically. These include improved operational stability in the mill as a result of improvements to maintenance systems, organizational realignment and, of course, we expect to see the benefit of fuel savings as well as savings in oil index consumables.
While 2015 cost will be affected by the reduced rate in the mine plan, we're working to improve the cost guidance we provided for this operation. We continue to focus on operational continuity at Pinto Valley and remained focused on stabilizing the operation at a throughput of 50,000 tons per day.
During 2014, the mill frequently operated a throughput rates above that with December recording the highest monthly average so far at 51,200 tons per day. However, operational reliability continues to be an issue at mill performance and, as a result, we still have work to do to sustain that rate and move it up with our focus continuing on systematic preventative and predictive maintenance to reduce the frequency and duration of unplanned downtime.
Following the very positive results in December, January wasn't a great month for us with mill throughput averaging in the low 40s. This volatility is primarily due to reliability of the mill and we're working to improve this through improved execution of our maintenance program and a more systematic application of our predictive maintenance.
This will improve availability and production, while at the same time significantly reducing our maintenance cost. The reliability of the tailings pipeline was also one of the main issues in January impacting mill throughput.
Replacement of this line was previously budgeted for 2015 and the project was currently in the design phase with completion expected in the third quarter. At Cozamin, with the exception of minor grade fluctuations on a quarter-by-quarter basis, we ended the year essentially on plan from a production perspective and did better than our cost guidance on the back of concerted cost reduction efforts at the mine.
Going forward, the mine plan calls for lower production due to lower great ore with cost per pound rising in 2015. In addition, maintaining the underground development targets with existing crews has proven challenging with the new ground support standard implemented in 2014.
This caused a shortfall in development during the latter half of 2014; we were working now to make up that shortfall going forward. At Minto, the mine plan required re-sequencing in 2014 due to the delay in receiving permits and licenses.
However, we closed out the year essentially on production guidance and slightly better on cost due to lower site G&A cost as well as a weak Canadian dollar. We have yet to receive the required permits at Minto and Darren will elaborate on out next steps at that operation.
I'll now turn the call back over to Darren.
Darren Pylot
Thanks, Gregg. I'll briefly cover where we are with their various growth initiatives, our operations at Minto, and also talk about the flexibility we have in our planned 2015 capital spending should low copper prices continue for an extended period.
The budget for 2015 calls for a heavy investment year for us as we open up an additional seven years of mine life at Pinto Valley and a budgeted to strip the high grade Pinto North pit for mining in 2016. When we issued our 2015 capital guidance, we indicated that we have identified $36 million of our capital program that can be deferred or cancelled without impacting current operation.
This is across our operations and growth projects, and while we've not made any changes to our 2015 budget at this time we’ve asked each of our teams to access what projects can be postponed. The $36 million does not include the pre-stripping of Minto North which was guided at $23.6 million.
If Minto North Water license is not received in a timely manner and we decide not strip Minto North in 2015 we would not have to defer much of that $36 million in other capital projects. In the meantime, we’re moving forward with the spending for PV2 mine life extension project at Pinto Valley.
This includes purchasing additional mining equipment necessary to mine the two additional pushbacks and taking the mine life to 12 years from the initial 5 years in reserve when we purchased the operation. Starting in 2016, and for the remainder of the PV2 mine plan, CapEx is expected to have less than $15 million per year.
We are advancing two cases toward a pre-feasibility study for PV3, which is considering that 84% of the mineral resource at Pinto Valley not included in the current mine plan. We're were looking at a modest increase of 10% to 15% in throughput and extension of mine life as the base case, as well as evaluating a 90,000 tons per day case along with an extended mine life there as well.
The studies will be complete in the third quarter and we expect the decision on which path we choose will come down to the risk adjusted return opposite permitting risk and water availability. When we first acquired Pinto Valley we envisioned that permitting for the mine life beyond the first 12 years that could take in the range of three to five years.
We have, however, identified a new area of tailings completely on our [indiscernible] land affording us the opportunity to cut that time that permitting time considerably, conceivably making PV3 a low risk ground field medium term opportunity for us. Switching over to Minto, as we said for some time now, we are coming up on a decision point at Minto.
Our overall objectives are to maximize the value of that operation to our shareholders and to manage cash flow in a period of high market volatility and low metal price. There are two key factors that would influence our decision making over the next several weeks.
The first is the receipt of the water license so that we can mine the Minto North deposit and fully exploit the underground resources. The second is the current metal price environment and the impact this has on our operating cash flows and capital commitment.
As of just last week, it appears less likely that we will receive the necessary water license by the end of March as previously anticipated. In fact, based on our most recent with the Yukon Water Board, if it is not received as planned we are not in a position to estimate when those permits will be received.
This is due to an additional information request received following the period of public consultation. We first submitted the Phase V/VI project proposal for the Yukon Environmental Socio-Economic Assessment Board back on July 5, 2013.
For the next 10 months we responded to four rounds of information request and the evaluation report from the board with a recommendation to proceed was issued in April, 2014. A final decision document was issued in June, 2014, following which we submitted our Water license application on July 2, 2014.
We had three rounds of information requests from the Water Board through the latter part of last year. With the Water Board declaring what they call adequacy last December, on December 10, 2014, our application went to the public common period which ended on January 25 of this year.
There were five interveners that commented on our application and Yukon Water Board presented us with a fourth information request on February 6 of this year, which we responded to on February the 16. As a result, we do not expect to be in a position to pre-strip the Minto North deposit at the beginning of the second quarter plan.
We will continue work with the Water Board to secure the required licenses as expeditiously as possible so we're not be making any capital commitments until an acceptable permit is in hand. While copper prices appear to have stopped falling, they remain at levels where the economics of the Minto mine without the Minto North deposit are questionable.
We are evaluating all options for optimizing the cash flows for Minto in the current plan. It will take us sometime before we can provide further clarity and guidance and our decision will balance the preservation of the value of that operation with the desire to manage our cash flow until such time is final from its ROC.
At Santo Domingo, we have selected POSCO as our EPC contractor for the project. We ran a competitive process with a significant degree of interest from four major international engineering and construction firms.
POSCO was selected based on the quality of its bid, its strong reputation, it's willingness to assume a significant portion of the project construction and completion risk as well as its bid price. Based on a lump sum fixed price bid covering approximately 7% of the project, we are increasingly confident that the total capital cost of the project will come in at or below the previous estimate of $1.7 billion.
With that said, and the recent declined metal prices has had an impact on our capacity to generate cash from our operation to support the development of this project. And as a result, we are focusing our 2015 spending on permitting, the maintenance of our social license and engineering work that will offer the greatest enhancement to the auction value of the project.
In light of this, at this time, we have only awarded POSCO with a limited notice to proceed to the end of Stage-Gate 1, expected to be completed by the end of the second quarter of this year when we expect to have received the approval of the EIA fully validated scope and cost estimates in the definitive feasibility study. At that point, we will reassess the project and make a decision on how to proceed for the balance of the year.
Our 2015 base case spending is $16.9 million in total expenditures of which Capstone share would be 70% or $11.8 million as covered in our guidance news release. In closing, the major milestone for us in the fourth quarter was the continuing progress we made in operating cost at Pinto Valley, and following the end of the quarter, the increase in our debt capacity an elimination of those quarterly amortization payments of our debt.
Looking forward, for the balance of the year, our focus is on continuing to stabilize mill throughput at Pinto Valley, develop the best path forward for Minto, and continue to advance Santo Domingo on a basis that we can afford in the current market under these conditions. Operator, that concludes our prepared remarks and we're now ready to take questions from the floor.
Operator
Thank you. [Operator Instructions].
Your first question comes from Matt Murphy from UBS. Please go ahead.
Matt Murphy
Good morning. Just a question on Minto, I mean can you give a few options, you say all actions are under consideration, can you give a range?
I mean, is a full suspension of activity there on the table or is it more just managing your mining areas?
Gregg Bush
Yes, this is Gregg. Yes, I think everything you mentioned, I mean if we don’t get the water used license within the timeframe that we had indicated then we don’t have enough ore to keep operating until Minto North is stripped.
So the conclusion is obvious at that point, we would have to shut down.
Matt Murphy
Sure, okay. And then just on the Pinto Valley news that you found a new area for tailings, is there a CapEx implication from that option that saves you time or do you think you can do that for comparable CapEx through expanding the current facility?
Gregg Bush
Well for an eventual PV3, there the current facility wouldn’t be adequate, its limited; its limited for a couple of reasons. There is not enough capacity there, but also as you continue to increase the height there you'd have a problem with the rate that you were raising the dam.
So we needed to find another location. The other location that we found, we looked at six different locations.
It actually would have the advantage of reducing our operating cost long-term over the -- over the current tailings endowment (ph) because it would all be gravity flow; it would give us more optionality as well as we would be able to use both the new dam and the existing dam.
Operator
Thank you. Your next question comes from Mark Turner from Scotia Bank.
Please go ahead.
Mark Turner
Great, thanks, guys, and congrats on the operating cash cost there at the Pinto Valley. Just looking for a little bit more color, if I could, in terms of the potential I guess timing of some of this CapEx being deferred, particularly I guess Pinto Valley and Cozamin, and just it is my concern or worry is that it will be sort of continuously pushback in the current copper price environment and I guess maybe now deferred to the fourth quarter.
So just wondering if there is any sort of clarity you could provide on I guess it was about $16.5 million at Pinto and about $6.7 million at Cozamin?
Darren Pylot
Mark, its Darren here. Listen, at current prices, we don’t have to defer any capital.
So that’s one, so we're not deferring any capital and most of the capital is back end loaded to the second half of the year. So we can afford some time to see where copper prices settle in, but as Jim, mentioned when he went through his remarks at current copper prices we wouldn’t be deferring any capital at this point.
Mark Turner
Okay. And sorry, so most of the Pinto Valley CapEx I guess the planned $86 million even thought the shovels I guess you got a new hydraulic truck or the trucks are onsite the shovels coming, most of that’s still back half loaded?
Darren Pylot
Well okay, so yes, the one no, but none of that PV2 capital is part of that $36 million.
Jim Slattery
The only real capital at that PV that we would differ would be the PV3 study so.
Mark Turner
Right okay.
Darren Pylot
PV2 --
Jim Slattery
Would be deferred under any just obviously under any situations we talked about.
Mark Turner
Okay. So the $60.5 million I guess is primarily related to that PV3, PV3 study?
Darren Pylot
PV3 and other things but not anything to do with the current PV2 mine plan.
Mark Turner
Okay. And then, at Minto as well to so you've talked through sort of number of the options and Gregg had mentioned you only have a limited stock pile of ore there.
But I guess in your mines like when do you feel you need to make a decision? Because obviously I guess if you knew that you weren't going to get that permit for another like call it two years, the decision I think would be obvious to stop the operations today and not process that stock pile material because you're doing it close to break even or potentially at a small operating loss.
What, I guess, targets have you set in terms of your minds for when you would need to hear back-- sorry.
Darren Pylot
Well, yes, as I said we've just received a response and responded back with what we feel as an adequate response to the latest submission to the Water Board. And so we need to first understand how they accept that response and what they do upon, if they want further information it's going to take us several months to compile.
You're right, I mean we're down to processing stockpiles and we understand if we didn’t make that, that’s the best use of our capital and what kind of cash flow that generates. So that doesn’t take us -- won't take us that long to do once we get a response back from the Water Board.
But if it's going to be several months we definitely have to have a hard look at the operations.
Mark Turner
Okay. That sort of falls apace.
My last question for, may be last and jump into the queue afterwards, can you provide any sort of color on those information request? Are they -- you must sort of standard one that may be you already done a bunch of the sort of field work or whatever works required to respond to that or is that something that’s more detailed?
Gregg Bush
Yes, look, all of this last information request were items related to a small dam that we put at the mouth of the pit to increase the tailings capacity. And most of the information had already been developed subsequent to the application for the water use license amendment, so we simply provided the information that we had.
There was one item that they asked for that couldn’t be done until you had the final design of the dam and we wouldn't -- it was something that you would normally do as you look through the design and that would be submitted to EMR before you could build the dam, so we've responded accordingly. So we'll have to see what the Water Board's view is at that.
Mark Turner
Okay. Thanks, guys, I'll jump on in the end if I have any more questions.
Thank you.
Operator
Thank you. Your next question comes from Stefan Ioannou from Haywood Securities.
Please go ahead.
Stefan Ioannou
Great, thanks very much, guys. Just a couple of questions, just at Pinto Valley, I know I think in the CapEx that you mentioned is about $8 million for the PV3 study.
So just wondering how much do you have actually spent in 2014 looking at the tailing sites and other things associated with the PV3?
Darren Pylot
Yes, the $8 million is not just for the study; its -- that’s assuming that we get fairly advanced on the permitting path as well. I'm not sure if that’s answers your question.
Gregg Bush
2014, on PV3 was minimal.
Stefan Ioannou
Minimal okay, fair enough. And then how are things going there with the whole labor contract negotiations, the contract I guess expired back in last June and it sound like discussions are ongoing and ongoing, has there been any progress there?
Gregg Bush
Yes, very good progress there. As we commented just on previous calls there the union is negotiating several other contracts at the same time as ours and we're one of the smaller ones.
So we're just following kind of that direction of the union in terms of negotiations but everything has been going very well, we're very satisfied, and obviously due to those sensitivities we can’t comment too much on negotiation.
Stefan Ioannou
Sure enough. And may be just one more and then I'll let some other guys go but just you did some exploration drilling at Providencia in Q4; I mean have you had any results from that back yet or are we still waiting?
Gregg Bush
No we haven’t received any results, yet, we're still waiting for those.
Stefan Ioannou
Okay, great. Thanks very much guys.
Operator
Thank you. Your next question comes from Ralph Profiti from Credit Suisse.
Please go ahead.
Ralph Profiti
Thanks everyone for taking my question, just one for me. Darren or Gregg you talked about coupon availability at Pinto Valley and if I can just go a little bit further into the poor January than expected are we seeing issues with conveyor systems and cyclone pumps that were there in the past or you seeing something new?
Gregg Bush
For the most part I would say issues that have that we’ve seen on one part of the mill in the past and we’re seeing it kind of work is way through the six grinding circuits. The problem we're having with the maintenance there is I still want to reiterate it is not a systemic problem there, it is going to prevent us from reaching the production levels that we've budgeted, we just got a problem in our maintenance systems and maintenance process.
Ralph Profiti
Understood, okay. Thanks very much.
Operator
Thank you. Your next question comes from Sasha Bukacheva from BMO Capital Markets.
Please go ahead.
Sasha Bukacheva
Thank you, good morning, everyone. So I thought that water boarding was considered a torture in certain countries, but I seriously -- so what seems to be the issue there and what [indiscernible] by changing your to change your operating footprint to expedite receipt of this water license?
Gregg Bush
Yes I spoke that the options is here we don’t want to do that but as we think we think it would forfeit a lot of future value there.
Darren Pylot
So Sasha, we could drop I guess we could drop building the tailings dam which we may or may not need and provide more of optimality but that's not the position we want to take Minto doesn’t deliver a lot of our production and lot of our value. So we are - we’re not going to alter our long term plans at Minto just to get a quick best license; we’re going to follow the process make sure that we get what we need and whatever time that takes we'll find them.
Sasha Bukacheva
Okay. And just maybe to get a bit of better sense, what is exactly the issue that we have?
is that stability or the amount of water in the dam like can you provide a little bit more color what are their concerns?
Gregg Bush
I wouldn’t say - I wouldn’t characterize this as an issue they are asking for more,
Sasha Bukacheva
They are asking for more information. They are asking for information that you would normally not provide until you got to the design phase of the tailings dam and so we don’t have that information completed yet; it would take us some time to do that.
So if they are going to demand that they want that information now we would assume the water permit would be delayed by several months. And I suspect some of this obviously because it is tailing dam is coming albeit very small it is coming from obviously the scrutiny around the [indiscernible]?
Sasha Bukacheva
Yes, make senses. Okay, fair enough.
And then separately just to back to Pinto Valley, Gregg, what could you know is there means this issue is not ideal in perfect world what changes would you implement to stabilize things in the plan?
Gregg Bush
I guess better and more consistent predictive maintenance I think it’s a lot of it comes down to the that is what they are the frequency that they are collecting at information who is analyzing it what they are doing what with the information after they get it. So, we’re having a lot of surprises that should not in a well maintain plan be surprises.
Sasha Bukacheva
Okay so [indiscernible] really relates to people and so is it like they wanted to people or the quality of their information management?
Darren Pylot
I think it is probably both; there is some perhaps that we’re have been chronically short on since start-up there so that's part of it. And I think part of it is things that maybe they are trying to do in house what logically much to be much better done by a specialist that from the outside.
Sorry, and typically you do predictive maintenance there is a lot of companies that specializing in predictive maintenance, and that's all they do; they come in they do the route and they take it back and they analysis the information and they send you back -- they basically send you back a heat map, so you don’t have surprises.
Sasha Bukacheva
Is that your plan then to engage one of those consultants? Are you expecting --
Darren Pylot
Yes. Absolutely.
Sasha Bukacheva
Okay. And so what we --
Gregg Bush
We’ve already engaged a company to do that.
Sasha Bukacheva
Okay. And so when do you -- what sort of -- did you set any target for them, like when do you expect to results?
Gregg Bush
Well I mean working through some of the issues is we’ll always -- it takes time, I would expect to start seeing the result pretty quickly, but I think it will start to snowball I think probably in a couple of quarters where we should see some dramatic improvements.
Sasha Bukacheva
Okay. Thank you very much.
That's it for me. Thank you.
Operator
Thank you. [Operator Instructions].
Your next question comes from James (inaudible). Please go ahead.
Unidentified Analyst
Hi guys, just on the accounting cost of Santo Domingo this year, have you got any estimate that you can give us? On a similar vein, if you do put Minto on kind of maintenance, do you have any estimates as to how much that may cost?
Thanks.
Darren Pylot
In our guidance press release, we provided our total cost estimate for Santo Domingo. So that that's what we are anticipating spending and that's what, now there is possibility that if markets improve and depending on the results of the works done over the course of next four, five months that we may increase that spending to about $33 million on a 100% basis, but that is the envelop.
If you are asking whatever cost to strip it down and just to keep it we have a that announces isn't all that refined but it will be a few million dollars but if that's not something about contemplating at this time.
Unidentified Analyst
Okay, guys, and thanks for that. I was asked that but on and if Minto did not care have a maintenance is there any estimate for how much that may cost?
Gregg Bush
We haven't done that analysis yet, but I wouldn’t expect it to be too different than what's already happened there because obviously we are producing at or above the breakeven copper price right now.
Unidentified Analyst
Okay. Thanks a lot guys.
Operator
Thank you. Your next question comes from Cliff Hale-Sanders from Cormark Securities.
Please go ahead.
Cliff Hale-Sander
Hi, good morning, just two questions. One to follow up on that question regarding Minto on the shutdown care of maintenance cost, on the point of view now assuming that you did shut it down sometime in the next quarter, how quickly could you turn it back on in say 2016, the outlook does look much improved there.
Is that going to be a significant cost I know we have had this mine up and down a little bit in the past? And my second question really relates to comments you have in your longer term work strategy of five mines and the project I'm wondering why you wanted to get sold definitive on your outlook and what is driving that strategy commentary?
Darren Pylot
The first question, Cliff, was we would obviously keep, if we did consequently shutdown at Pinto we would obviously keep the care and maintenance as such that it would be able to come back as quickly as possible. We are obviously very optimistic about Minto North and as you said copper prices expect to recover when that happens we are not sure whether this year or next year, but we would be ready to mobilize as quickly as possible and with designer program that would do that.
I'm not sure I follow your second question.
Cliff Hale-Sander
I guess you said five mines, just wondering why you want to be so specific obviously, mining companies generically want to grow volume and production in certain jurisdictions. So just any color for why you want to be so definitive?
Darren Pylot
Well, I don't think it's a question, its directional. But I mean what he is trying to do is -- we are not trying to be the biggest mining company ever.
We are not going to be accumulating a massive significant number of properties. Our goal is to be focused.
To have a finite number of properties that we manage exceptionally well, in jurisdictions that we describe. So it's really to try to give you more of pictures to where we are going to go and what we're trying to be; that we are not going to be looking after 10,000 tons a year producing properties, that we'll be looking for something somewhat larger than that.
We are not trying to become a massive global operation with pointing operations and a huge infrastructure. What we'd like to do is, be able to manage that type of production within office and SG&A bill which is not significant enlargement we have today.
You'll note that, for 2014 our SG&A was pretty much the same as it was in 2013 notwithstanding doubling our production. And that's the kind of economies that we are trying to create with the course of the next 5 to 10 years.
That -- the purpose was really just to give you a little bit more specificity on where we are trying to head, what the vision looks like and what kind of company we want to be.
Cliff Hale-Sander
Okay. Great.
Operator
Thank you. [Operator Instructions].
Your next question comes from Mark Turner from Scotia Bank. Please go ahead.
Mark Turner
Yes. Thanks.
Sorry, just two quick follow-up questions not to the labor Minto here, but Jim or Gregg, can you give us a sense of how many tons are left in the stock pile, I guess that are -- or were economic at year end once you bet up the inventory write-down?
James Slattery
Well, I mean if our stock pile in the currently permitted underground ore would take us through sometime in September, at the current milling rate.
Mark Turner
Okay. Because I guess there has been -- yes, okay.
I was trying to come back then even with the underground I guess you cannot, does that that considers mining through to the end of the currently permitted underground and not I guess increasing rates from underground there once the stockpile is down?
James Slattery
Yes. Well, it wouldn't make a lot of sense to increase the underground because we don't have that much underground ore currently permitted.
So there is a problem, you need the underground together with the stockpiles because the -- we don’t have that many operational phases so you can’t produce enough ore out of underground there with what we currently have to feed the mill. You have to have the stockpiles to go with it.
Mark Turner
Okay. So it's really the stockpile -- the volume of the stockpile that’s the limiting factors through the end of September?
Gregg Bush
Yes.
Mark Turner
Okay. Thanks.
Gregg Bush
That is correct market there would actually be more underground ore there but with no stockpiles left with it, you couldn’t continue to operate at full capacity in the mill.
Mark Turner
Right. And switching gears just to Santo Domingo that’s where you're making a lot of progress towards that first Stage-Gate.
The 70% that’s under the fixed price better or contemplated to be under that bid, the remaining 30% is that just something that’s separate in the scope or just trying to get a sense of I mean what that 30% is, if that’s infrastructure at may be higher risk for typical capital blows that we've seen over the last number of years or if that’s just typically follow inside their scope?
Gregg Bush
Yes, okay. No, I think probably characterize the 30% that stays in our house is most of the lower risk items its purchasing the line fleet is a big part of the pre-stripping is part of it and of course the owners cost.
I'd say the only item in there that’s got some risk attached to it would be the construction of the tailings dam that’s and the scheme of things is less than $25 million.
Mark Turner
Right. And I mean just I guess a mining per ton or material movement cost or the something else?
Gregg Bush
Sorry.
Mark Turner
I'm sorry I guess the risk there would be more material movement and handling costs than anything else?
Gregg Bush
Yes well I guess there is always geo technical risk on where the bedrocks at and but yes I'd say that, to tell you typically on those things the biggest risk is always geo technical. But like I say it's not a big dollar item.
The other items that’s in that 30% is the road bypass but that’s already been fairly, it's already engineered out to a fairly high level of detail. So, I don’t really view that as a big risk.
Mark Turner
All right. Great, thank you for the color and thanks for the good work.
Operator
Thank you. As there are no further questions I will turn the call back over to Mr.
Darren Pylot.
Darren Pylot
Thank you operator and thank you everybody for participating on our call today. And as always if you have further follow up questions we'd be happy to answer those here so just contact us directly.
Thank you very much and have a great day.
Operator
Ladies and gentlemen, this concludes your conference call today. We thank you for participating, and ask that you please disconnect your lines.