Operator
Good morning, ladies and gentlemen. Welcome to the Timmins Gold’s Third Quarter 2015 Operating Results and Financial Statements Conference Call.
I would now like to turn the meeting over to Mr. Mark Backens, Interim CEO. Please go ahead, sir.
Mark Backens - Interim CEO
Thanks John. Good morning and welcome ladies and gentlemen, and fellow shareholders. Thanks for taking the time to be with us this morning for our third quarter operating and financial results conference call. I am Mark Backens, Interim CEO of the Company. I have been involved with Timmins as a Director since April 2015. And with me here today and will also be participating on the call is our CFO, Darren Prins. In the course of this conference call, we may be making forward-looking statements; we claim Safe Harbor for any such statements.
Our immediate focus is to address the financial condition of the Company and to increase value for our shareholders. To that end, we are making all efforts to increase profitability of the mine operations and implement strict cost controls at the corporate level. With respect to the San Francisco Mine, we have made changes to our operating plans to maximize cash flow. These changes will result in the suspension of mining mid-point ‘16 with continued leaching operations to early 2017, following which the mine will be placed on care and maintenance. We expect to produce 20,000 ounces during the fourth quarter of this year and approximately 70,000 ounces next year. Cash costs for 2016 are anticipated to average between $700 and $750 per ounce; estimated 2016 operating cash flow is $21.6 million assuming $1,100 gold price.
We have completed the first phase of the underground pilot program successfully. The program confirmed expectations with regards to the ground conditions, morphology and tenure of the mineralization, the cost of development exploitation. And continued work on this program is pending further definition of the ore body, underground mine design and associated cost benefit analysis. In the events of improving economic conditions or changes at the operating level, the mine is capable of resuming production with minimal capital as all existing infrastructure will remain in place. As part of our cost control efforts, significant cost reductions have been made and will continue to be made at the corporate G&A level.
For the year ending 2014, corporate G&A was $12.6 million compared to, expected 2015 year-end G&A of $8.8 million with further reductions in 2016 to approximately $4.5 million. These savings have been realized through labor reductions, suspension of executive bonuses, renegotiation of contracts, reduction in discretionary spending, a 50% reduction in directors’ fees as well, as other areas.
The vision for the future of the corporation is to derisk and deliver the Ana Paula project in the most cost effective and timely fashion possible. Ana Paula represents industry leading development project, given its grade, location, capital efficiency and cash costs. The Ana Paula feasibility study can be completed by mid-2016 with permits anticipated to be obtained by early 2017.
Cost for the Ana Paula feasibility study and the permitting activities will be funded through operating cash flow and other sources of cash. Total spending for the project will be in the order of $10 million. The most recent and significant development for Ana Paula is the purchase of the Goldcorp El Sauzal mill, which closed yesterday. This purchase will result in capital savings of approximately $50 million, significant reduction in CapEx risk and really increases the capital efficiency of the project. This 30% savings in CapEx resulted in increase in the pre-tax IRR of the project to over 65%. Additionally, 2,000 meters of drilling to obtain metallurgical samples have been completed and we will release these results to the market obtaining final verification of the assets.
The Company is well-positioned for this transition from producer to developer, given the robust economics of Ana Paula which has straight forward project finding capacity. Ana Paula has upside potential in grade, tons and mine design. As outlined in the PEA, Ana Paula is projected to produce on average 116,000 ounces of gold per year at cash cost of 500. Other platforms include the Caballo Blanco project and the Yahoola [ph] concessions in Veracruz State Mexico. Permitting activities of Caballo Blanco continued since acquiring asset at December last year. Caballo Blanco remains a potential near-term value driver, given our expected permitting success. Work will continue to unlock this value for our shareholders through 2016 and 2017.
The Yahoola [ph] concessions in Veracruz remain an exciting Greenfield exploration opportunity for the Company. Under the current financial circumstances and our focus on cash flow, no significant exploration activities are anticipated in the near future. We appreciate the support of our shareholders as we make this transition. We recognize that Timmins is your company and we are confident we will generate value for all of our shareholders. Thank you for attending our conference call.
This concludes the formal part of the presentation. We are now pleased to take your questions. Back to you, John.