First Majestic Silver Corp. (NYSE:AG) Q4 2019 Earnings Conference Call - Final Transcript
Jan 21, 2020 • 11:00 am ET
could affect production in 2020. At least we're not guiding any production in 2020 for any of the improvements there. Those improvements will start to kick in in 2021.
Ermitano is another big focus for us at Santa Elena. This is a large discovery that we made a couple of years ago. There'll be another 43-101 resource estimate coming out in early 2020, we hope around March or April in order to show drilling that's taken place throughout the year, and there is substantial drilling that obviously has occurred.
We're now running an added [Phonetic] into the ore body. We started that about two, three months ago. I was down on site in late November, and I was very impressed with the progress that we're making there. We're going to be spending a substantial amount of money, doing five levels of underground development before we take out the first ounce of silver. And this is just a prudent way of doing things. It does show up on our costs, obviously, which is in today's news release.
But that's well spent money and that's going to bring a lot of extra ounces at Santa Elena because it just upgrades itself from [Indecipherable] much greater than the current grades that are being fed from the heaps which is the blending operation that goes on with that operation. So Ermitano will replace the heap feed, increasing the grades substantially at that operation. So that won't take place, unfortunately until end of the first quarter in 2021 so we stand today and profit later. But it's going to be pretty exciting when we get Ermitano up and running.
Another thing that we did in 2019 which will start to impact us in 2020 is the Tayoltita development. Tayoltita was the original mine dating back something like 300 years, and it's always been known as a high grade area, particularly silver, but it was shut down due to the silver -- by the previous operator because of the stream that was on the mine at that time. But with the new stream, it pays a lot to mine silver, and we've been spending the last year redeveloping the old Tayoltita mine. There's still some work still underway, but we expect to have Tayoltita up and running by the end of Q1 and it will be ramped up over the full year, so by the end of 2020 it will even be producing more than it will be in Q2, for example.
The improvements that we're going to get from the HIG -- it's in the news release, but reduction of energy, eliminating steel valves, which is a big cost. And when you eliminate steel valves, you not only eliminate cost, but you also reduce the amount of reagents and cyanide used in the process because the iron obviously absorbs these chemicals and you have to use more. So it's going to be great for us to get the system up and running.
Santa Elena --