29Metals Limited

Thank you for standing by and welcome to the 29 Medals Limited March Quarter Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number 1 on your telephone keypad. I would now like to hand the conference over to Mr. Mike Sleferski. Please go ahead.

Thank you, Darcy. Good morning, ladies and gentlemen. We will be speaking to 29 Metals March quarter 2024 quarterly report, which was released to the ASX this morning, and the offtake finance and insurance claim update released to the ASX yesterday. This call and parallel webcast has been recorded and will be available for replay by the 29 Metals website and the Open Breeding website. 29 Metals Managing Director and CEO Peter Elbert will present an overview before handing over to COO Ed Cooney to lead you through operating performance and the Cap Copper ramp down and suspension. Ed will then pass to CFO Peter Herbert to discuss financial performance and the additional liquidity disclosed yesterday. Our special guest, Cliff Tuck, will join us to make some comments around the insurance update and then we'll open the call for your questions with the full team available to address them. So I'll now hand over to Peter, Peter Albert, to commence the presentation. Thank you, Peter.

Thanks, Mike, and welcome, Peter. And thank you for joining us this morning for 2024 Q1 results. It has been an eventful start to the year with a lot going on. including the decision to suspend operations at Capricorn Copper and the announcement of the appointment of the company's new CEO with James Palmer taking the reins as of 1st of May, one week from now.

As always, we will start with safety.

Our total recordable injury frequency rate was marginally higher for the quarter at 6.6 per million work hours compared to 6.5 at the end of December. Notably, there were zero significant incidents, zero regulatory reportable incidents or reportable injuries for March. This is the first time in 29 Metals' near three-year history that this has been achieved, an outstanding result for the business. But as always, we can never become complacent about safety. The decision to suspend operations at Capricorn Copper overshadowed the quarter for our Queensland-based operation. It was a difficult decision, especially given the commitment and hard work by the whole team, including the Queensland Government Office of the Coordinator-General, endeavouring over the past year to bring the mine back into full production. And despite achieving a partial restart and significant progress in reducing water retained on site up until January this year, we were then unfortunately overwhelmed by consecutive tropical cyclones. Higher water levels impacted our ability to produce copper with negative impact on cash for the quarter and deferring our pathway to dewatering Esperanza South and restoring to full production levels. These were key factors contributing to the decision to suspend operations. Following the decision, our focus and commitment is now on the key enablers for a successful and sustainable restart of production, being the reduction of site water inventory, the reinstatement of a water treatment facility, and ensuring certainty of long-term tailings capacity. In the short term, there has been an immediate focus on providing support to our colleagues at Capricorn Copper who have been directly impacted by the decision. There will also be an impact on some of our colleagues in corporate offices, which we'll be working through in coming weeks. Whilst difficult, ultimately, the decision will allow us time to establish the key enablers we need in place for a successful and sustainable restart of operations. Holding costs, ongoing costs, and capital recovery costs are included in the release, and Peter Herbert will talk to these later. In terms of timing for a restart, this will depend on the implementation of the key enablers, and we will update the market as and when these become clear. Suffice to say, we're all focused on as early a restart as possible, especially given the enviable resource at Capricorn of 65 million tonnes at 1.8% copper, which we have, and the recent and somewhat anticipated significant rise in the copper price. At Golden Grove, copper production was better than recent quarters, while zinc production was lower. Development rates achieved at Xantho Extended were a highlight of the March quarter. with 853 metres of development to Xantho Extended in the quarter, with continuing good development rates post-quarter end, with record daily and weekly metres numbers achieved by the team, setting up the mine to deliver from Xantho Extended 29 metals' highest value all-source over the rest of the year. Also, paste filling has been continuously improving, enabling multiple stokes to be brought online post-quarter end at Xantho Extended, and we are highly confident of increased metal production in the subsequent 2024 quarters. Costs at Golden Grove are well controlled in the quarter, with a significant movement in stockpile charges impacting unit costs. Over the balance of the year, with higher metal production, unit costs are anticipated to significantly reduce. The team at Golden Grove completed the RotorBox project during the March quarter, with the first of the site's containerized concentrates loaded onto a ship at the port of Geraldton via rotating container tippers with integrated lid lifters. This is an example of a project that will deliver productivity gains, logistical flexibility, and environmental advantages. Turning to corporate matters, yesterday we announced two significant outcomes. First, we have now signed binding terms for a US$50 million subordinated off-take finance facility with Glencore. And secondly, the commitment by insurers for a further interim progress payment of $16 million for the surface component of the insurance claim. Combined, these outcomes provide the company with additional liquidity as Capricorn Copper moves into suspension and works are progressed towards a sustainable restart of operations. Unaudited cash at 31st of March was $106 million. In terms of guidance, 2024 guidance, as released at our last quarterly report, remains unchanged. Although estimated costs for the new tailings facility at Golden Grove have increased, the with capital costs now sitting at the upper end of guidance. In addition, there will be some corporate cost reductions, which will flow through in quarter two. I will now hand over to Ed Cooney to talk in more detail about our operations. We will then, in turn, hand over to Peter Herbert to talk in more detail about financials, and finally to Clifford Tuck to talk in more detail about progress on our insurance claim. Over to you, please, Ed.

Thanks, Peter, and good morning, everyone. I must start at Golden Grove, where copper production at 2,800 tonnes was solid, driven by a majority of feed to the mill being copper ore. Following a strong December quarter seed production last year, the March quarter involved a planned waste-filling campaign at our Zanto extended ore body. As a result, 4 tonnes of mine from Zanto extended, approximately 1.25 tonnes to 65,000 tonnes. and zinc production was lower at 4.7 results. Having set new paste fill delivery records during the March quarter and achieving another record quarter of fire development performance, the mine is well set up to deliver higher zinc production outcomes over the subsequent quarters, with ore tonnes from Xantho extended increasing significantly. Mill tons for the quarter were lower than the December quarter, driven by a higher proportion of hard copper ore associated with a lower throughput rate relative to zinc, and two unplanned downtime events, both of which have been resolved. The June quarter has commenced with an initial zinc mill campaign well underway and multiple higher-grade zinc ore sources online at Xantho Extended. In terms of project-related activities at Golden Grove, the first of the site's containerised concentrates were loaded onto ship at the Port of Geraldton. This approach moves away from historical spoke containers, a more widely used rotor box system, and avoids the need to both re-handle loose concentrate and maintain port warehouse facilities, and has environmental benefits in terms of concentrate loading being done by crane within the confines of the vessel. Applications for regulatory approval for the future development of the Gossam Valley project was submitted close to quarter end and activity progressed related to the Life of Mine TSF4 project including additional long-league commitments, preparation of civil tender documentation and ongoing engagement with the regulator. Approvals and the civil tender process are anticipated to occur during the June quarter. Moving on to Capricorn Copper, we experienced a very challenging quarter following the accumulation of significant additional surface water inventory due to rainfall associated with consecutive tropical cyclones passing through northwest Queensland. Additionally, water treatment through the interim settlement bonds to support operations proved much more difficult than the December quarter, whilst balancing competing demands of treating water for controlled releases whilst Gunpowder Creek was flowing These challenges led to lower mill runtime and lower metal production of approximately 1,300 tonnes of copper, down almost 45% on the prior quarter. As a result of the surface water accumulation, progressive dewatering and rehabilitation underground at Esperanza South has now been paused, with dewatering efforts from underground currently directed at maintaining levels. Importantly, the dewatering and rehabilitation completed today at ESS will be retained along with upgraded dewatering infrastructure, the large diameter raised board dewatering holes into the southern cave and the procured high capacity submersible pumps. These will be installed once surface capacity within Esperanza pit again becomes available and will enable future dewatering from underground at double the rates that have been achieved to date all mining operations at capricorn copper ceased at the end of the quarter with the exception of some raised boring and diamond drilling which are now also complete demobilization of the underground contract equipment and personnel has progressed and it is anticipated this will be complete by the middle of may Processing of remaining surface or stock is currently underway and will be concluded by the end of April, while project-related activities on site are continuing, with commissioning of the Mill Creek Dam neutralisation project expected in the June quarter. Turning to long-dated projects at Capricorn Covenants, we commenced detailed design for a new water treatment plant first quarter end, with current timelines indicating commissioning likely around Q3 to Q4 of 2025. Design work on TSF3 continues and while at this time a firm schedule for the facility is not yet certain, we are very focused on progressing the design activities and continuing engagement with various government agencies. I'll now hand over to Peter Herbert to discuss the financial outcomes of the quarter.

Peter Herbert Thank you Ed and thanks to everyone for joining the call today. I'll start with our revenue outcomes. 29Metal's unaudited revenue of $154 million for the March quarter was an increase of 9% on the prior quarter result. Within that, Golden Grove's revenues increased 27% on the prior quarter, driven by increased volumes of zinc sales as a strong build-up of concentrates in the December quarter unwound. Golden Grove's improvement of revenue was offset by a significant lower sales outcome in copper, with revenues down 54% relative to the prior quarter. Copper as a percentage of total revenue for the quarter was approximately 59%, a decrease on the prior quarter result of 71%, reflecting materially higher zinc sales at Golden Grove and materially lower production and sales at Capricorn Copper. Australian dollar commodity prices were broadly flat during the quarter with a slight improvement in copper prices and lower zinc prices, noting the material increase in spot prices occurred post the end of the quarter. Turning now to costs and capital. At Golden Grove, site costs for the March quarter of $86 million were $5 million lower than the prior quarter result, reflecting lower ore mined and ore milled and increased capitalised development. Selling costs comprising TCRC and concentrate transport costs were $5 million higher, reflecting material increase in zinc concentrate sales during the March quarter. Unit costs were impacted by stockpile movement charges driven by the unwind of zinc concentrate stockpiles and lower production of by-product credits during the quarter. Unit costs are expected to improve over 2024 in line with an increased contribution of ore from Zanto Extended. Total capital for the March quarter of $13 million included $6 million of capitalised development, an increase on the December quarter with improved development advance, sustaining a great capital with both lower than the prior period. Turning to Capricorn Copper, site costs of $32 million for the March quarter were in line with the prior quarter, with the decision to suspend operations coming at the end of the March quarter. The safe ramp down in activity levels is now well underway. Operating costs for the second half of Capricorn Copper are expected to be in the order of $18 million, or roughly $3 million a month, with opportunities to further right-size contracted costs being evaluated. Final sales of concentrate, one-off termination costs and working capital unwind will occur in the June quarter as operations are progressively ramped down. Efforts to identify costs and productivity improvement opportunities continued in the March quarter across the group with a focus on defining plans to target productivity and volume improvements to drive lower unit costs at Golden Grove and reviewing corporate costs in light of the suspension of operations at Capricorn Copper. These works remain ongoing and are an evolution of the program in 2023, which we estimate delivered $20 million in improvements. Turning to cash and debt, 29 metals finished the quarter with unordered cash of $106 million, a decrease on the September quarter position of $162 million. The movement in cash reflects the realisation of concentrated inventories at Golden Grove produced during the December quarter, with operations cash flow positive after capital expenditure. materially lower production of capital and copper, and a further US $10 million principal repayment and interest costs during the quarter. Yesterday, 29 Metals announced that it agreed binding terms for a US $50 million subordinated facility with Glencore. The facility has received credit approval from the company's senior lenders, subject to completion of full form documentation, which is underway and expected to be completed in the June quarter. As part of the package of terms, the company will enter into a long-term fixed tonnage offtake agreement with Glencore for Golden Grove copper and zinc concentrates. Terms are market-based, including benchmark TCRCs, with delivery into the offtake agreement to occur over and beyond the tenor of the line agreement. The company is extremely pleased to have reached agreement with Glencore on attractive and flexible terms following a competitive process. The additional liquidity support will assist the company as it progresses the safe ramp down of operations at Capricorn Copper and its evaluation of a sustainable restart. The group had unordered net withdrawal debt of $103 million at the end of the quarter, an increase on the unordered position at 31 December of $52 million. After principal repayments, very strong debt declined to US$336 million at quarter end. As a reminder, a further amortisation payment to the US $10 million will occur in the June quarter before stepping down to US $2.5 million per quarter for the second half of 2024. For clarity, the liquidity and debt outlined before does not include the post-quarter end announcement of an additional insurance payment of $16 million. CLIP will provide additional colour on insurance shortly. continues to finalise stamp duty submission in connection with the acquisition of Golden Grove. As previously noted, we expect to finalise this submission during the first half of 2024. 29 Metals maintains a $26 million provision in relation to stamp duty. Thank you very much for listening. I'll now hand over to Cliff.

Thanks, Peter, and good morning. We were very pleased to announce yesterday that 29 Metals insured us and agreed to a further interim progress payment in the amount of $16 million. This further interim progress payment again relates to the surface component of the claim and once received will bring aggregate insurance proceeds received to date to $40 million. We've worked very hard with insurers and their appointed loss adjuster to progress the surface component of the claim, including demonstrating the expected future costs to replace surface property damaged by the extreme weather event in March last year. We're grateful to the insurers for advancing this aspect of the claim. In parallel, we've continued to work to evaluate the matters raised by insurers in relation to the underground component of the claim. With this further progress on the surface component and the further progress payment announced yesterday, we're looking forward to accelerating progress on the balance of the claim with our insurance. And as a final comment on the insurance, I would note that we don't anticipate that the announcement of suspension of operations in capital or copper will have a material effect on the progress of the claim. With that, I'll hand back to you, Peter.

Thanks Cliff and Peter and Ed. So Darcy we've completed the presentation that we intended to do this morning and I'm happy to go to Q&A please.

Thank you. If you wish to ask a question please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request please press star 2. If you're on a speakerphone please pick up the handset to ask your question. Your first question comes from Alex Papanau from Citi. Please go ahead.

Hi, Peters and Ed. A few questions from me. So compared to your current term loan facility, is there anything that you can say around the rate of the Glencore facility or the margin and to confirm the tenure of the offtake is matched with the life of the facility?

I'll take those. What we can give some guidance is that it's not priced materially wider than the senior facility, but those terms are commercial incompetence. In terms of the offtake tenor, we expect that it will extend beyond the tenor of that facility and subject to the rate of production over that period, of course. So, again, commercial incompetence, but that's good guide that it will extend to at least that period.

Thanks, Alex. And then on court, On corporate costs, just to confirm, the group level reported 8.5 is inclusive of the 1.8 and 1.1 reported site levels. And could you give any more colour on the expected reductions over CY24?

Look, in terms of the reductions, that process is ongoing, so I think we'll be able to provide more detail in subsequent periods. And those corporate costs for the group do aggregate up, so that's right. Great, thanks. Okay, I'll pass it on.

Thank you. Your next question comes from Daniel Roden from Jefferies. Please go ahead.

Hey, good morning, Peter and Mark. I just wanted to clarify, if you had existing permanent tailings capacity at Capricorn Copper, would you see yourselves turning the asset off into current maintenance at the moment? Or, you know, I guess, you know, tailings capacity seems to be the constraint there.

Yeah, so just to clarify, there is some remaining tailings capacity, albeit not very much, in Esperanza TSF. We have made the decision to suspend operations, though, so as of the end of this month, April, we will no longer be treating mining and milling ore. So that decision has already been taken, if you missed that.

Sorry, Daniel, maybe we didn't grasp the question. Did Ed answer the question there, Daniel?

I guess it's probably semantics, but if there was sufficient tailings capacity post the remaining capacity for the stockpiles, like if it was just uncapped, would you be still turning the asset into care and maintenance this year?

So the question is if the Italian's capacity is driving the suspension, if I understand that. No, I think we've been clear, Daniel, that it's the Italian. Additional water, the rainfall that had occurred between January and March, the three cyclones that came through that impacted the site and led to the decision to, well, one, we were unable to keep dewatering Esperanza South and also the additional water on site became difficult for us to continue operation. So not tailings capacity per se.

Okay, so if the weather events didn't occur, then you would still be producing today, even though there's no tailings capacity?

There's applications in process, Daniel, for additional tailings capacity, which are ongoing, so there's no decision to go into suspension was driven by water, not tailings.

Okay. And can you, I guess, clarify with the facility as well, you know, the offtake is on a group level or is that for Golden Grove? And I think, you know, I guess where I'm trying to go with that is, is there any further ability? So after offtake contracts, after the traffic contract rolls off Cup Copper in 26th?

Yeah, you're right that the offtake relates to Golden Grove. Naturally, it's a little hard to make commitments around Capricorn at the moment, given the uncertainties there at present. We'll consider options around that as we move forward with our plans and thinking, but at this stage, nothing can be committed at this point for obvious reasons.

Yep, yep, no trouble. And maybe just I'll squeeze the last one in. The Capricorn copper capital timing, are you able to provide a bit more guidance on, I guess, just the timing of that into the end of the year and into 25? Just how should we be sculpting that CapEx profile?

The question was for how many 2024 capital guidance was it?

Yeah, so the Capricorn copper restart capital, is it fair just to straight line that? I assume not. So just are you able to provide any guidance around when those capital items are likely to be expended by the company?

I understand the question. The focus at the moment for us is really design activities, which is a more modest spend as we continue and complete the design for water treatment plant and CSF3. The physical activity associated with those will attract the higher significantly higher proportion of capital spend which I would think likely in calendar year 2025. There may be some early capital commitments later this year but we're yet to land on those at this juncture.

Okay, perfect. Thanks guys. I'll hand it over.

Thank you. Your next question comes from David Radcliffe from Global Mining Research. Please go ahead.

Hi, good morning Peter and team. I might start with the Glencore facility as well, if I can, because it's really not that clear. So is this the offtake based on tonnage? Is that what you're saying? And then where should we think the cost of that offtake actually sits? Is it within the interest of the loan or is there other costs such as within the payable?

So it is a fixed And the terms of that offtake are very much market-based, so we will continue to report those in line with our current practice as being the TCRC costs for that material. So there won't be any... There'll be very clear reporting of our finance costs and very clear reporting of the TCRC costs in line with our current practices. That won't change going forward.

Okay, all right. Then maybe a follow-up, because again, it's not clear, but has there been any progress on the outstanding permitting at Capricorn? So has anything changed past your announcement to obviously suspend the operation? I guess I'm still trying to reconcile here what being a special project actually means in Queensland.

Thanks, David. The permitting process at Capricorn is ongoing, as I think I was referring to with Daniel just now. And the engagements with the regulator and especially with the Office of the Coordinator General remains very positive. The state, as they articulate it, is very committed to supporting Capricorn Copper and bringing it back into operations in the right way, sustainable, long-term future, and get it right. So good support from the government. in all of those aspects, those processes remain live and ongoing.

Okay, all right. And then maybe just the last one then. Could you mention, I guess, a working capital impact for an unwind there for Capricorn? Is there any way you can put a number around what that might be and also the one-off expenses?

Yeah, we'll be managing down, you know, very carefully as you'd expect. You know, we'd point to the, you know, the operating costs, you know, for the March quarter as being sort of an indication of what that would be. We're still processing stockpiles at the moment, so naturally there will also be sales primarily during April and maybe into May, depending on the timing of all of that. So that's the guidance that I can give you around the capital underline.

Thanks guys.

Thanks David.

Thank you. Your next question comes from Ben Lyons from Jarden. Please go ahead.

Thanks. Good morning Peter and everyone on the call. Probably a few more for you Peter Herbert on the Glencore facility please. Firstly you talked about a fixed volume. Can you please clarify if that's like a total volume over a number of years or if there's a fixed annual component to that.

Thanks. It's a total volume commitment and we'll work with Blankmore on the yearly allocation of those volumes. Thanks Ben.

Thank you. Next one's on the security. Can you comment over what assets, I realise it's subordinated to the existing facility, but what assets it is actually secured over?

It's all the assets of the group within Australia, which is, as you'd expect, the vast majority of them. So it's on the same terms as the existing senior facility, just subordinated to those.

Excellent. Thanks for the clarification. I'm also interested in some of the other terms that might sit behind it. For example, do you have to maintain... you know, the equivalent of a debt service reserve, like, so maintain a certain cash balance on the balance sheet in order to service the facility?

There's no debt service reserve account, Ben. It is subject to minimum liquidity. It's consistent with the senior facilities.

Awesome. Thank you. Are there any covenants attached or similar styles of conditions attached to the facility?

The minimum liquidity I just mentioned but other than that it's pretty much covenant free. There's standard ones like information covenants and the like but that's the material one that you would be interested in.

Okay and in the conceptual event that you are unable to deliver a certain tonnage of con into the agreement for a certain period of time. What would happen to the facility? Would it possibly become callable under that scenario of events?

Yes, thanks, Ben. Look, clearly the reason that this facility has been provided to in exchange for offtake, so if we were unable to satisfy that, that would be an event of default. However, what I would say in terms of the way that operates is any rights under that facility is subject to inter-credit agreements and the rights of the senior lenders. So it is a subordinated facility in a sense, but let's be clear, the reason why it's being provided is in exchange for offtake.

Yep, understood. I guess the nature of the questions is around our inherent caution regarding the motivations of this particular counterparty and their track record of loan-to-own style facilities. hence why I'm going pretty deep on this, and apologies, Peter, for grilling you on it. But just to be 100% clear, given it's Glencore, given they've done this previously, are there any convertible or equity-style hooks that are built into this facility? No, there's not. Awesome. That's very reassuring. Thank you. And now maybe more broadly, again, I accept it's a conceptual style question at this point in time, but as the business transitions to a single mine operation, albeit hopefully only for a temporary period of time, given the financials are so heavily dependent upon that particular Xantho extended ore body, how do you feel about the optimal capital structure for the business? Thanks.

Sure. So I think it's a really good question and it's something that clearly depended on the work that's ongoing around defining what a sustainable restart of Capricorn looks like in terms of its capital requirements. and also the profile of the ramp-up at Gold Grove. That's a key piece of work for us that we're working through at the moment, and I think they're the key building blocks that define what that looks like, Ben. So, absolutely, that's a really key question for us, and we're working through that, and naturally we'll keep working through that with James as he comes on board very shortly.

OK, OK. Thanks very much for the responses, Peter. Much appreciated.

Thanks for the question, Ben.

Thank you. Your next question comes from Paul Wiggis-De Vries from RBC. Please go ahead.

Good day, Peter and Ed. Just a quick one from me. Just around Xantho extended tonnages, I mean, the end of last year you sort of flagged that production profile would be broadly flat across H1 and H2 this year. Is that still the case or should we think now with the lower tonnage out of Xantho extended over Q1, that it'll be a little bit more sequentially increasing over the remainder of the year.

Yeah, thanks. So just to recap, so last year we achieved about 350, if I'm not mistaken, thousand tonnes out of Xantho extended. And I think last quarter I mentioned the plan for this year is about 600,000 or thereabouts. So, you know, obviously Q1 was less on the, back of a lot of paste filling, we do anticipate a lot stronger result in terms of overall tonnage movements in the second quarter. Probably fair to say maybe the second half is slightly more than the first half given Q1, but not necessarily materially so. We certainly don't envisage a very late run home at year end as we saw in calendar year

I suppose then if we think about it with the zinc grades, particularly higher at Santho, that zinc production should sequentially increase over the remainder of the year?

Yes, correct.

Thank you very much.

Thank you. Your next question comes from Belinda Humphreys from IQ Industry Queensland. Please go ahead.

Hi everyone. I'm interested in the workforce at Capricorn Copper where you say you're retaining about 40 people. How does that compare with the previous workforce levels, contractors and your own employees and also what steps have you been taking to help these Capricorn Copper people through the transition, those who are no longer required there?

Yeah, thanks, Belinda. Thanks for the question. Obviously, a key focus for us in early April, not an outcome we had intended or desired, but in the best interests of the business. The workforce who had really made tremendous commitments to endeavour to bring the operation back to full production was disappointed, as we all are, but also quite understanding of the outcome, many of them indicating a desire to remain in touch and come back at the right time. We provided the support to the workforce in terms of external sort of support to the individuals as well as to their families if they require that. We've provided that support. In terms of numbers, we've got, as quite rightly said, 40, plus minus 40 people there, Belinda, and many of those associated with project activities, which Ed, I think, referred to earlier on. in terms of getting projects in place to bring the project back, bring the asset back as quickly as possible. In terms of 29 metals, people, at full production, when we were operating, normally rough numbers, 180-ish, So the numbers, I'm not too sure we've talked about that before. We'll probably double that in terms of contractors as well. But for now, that's over 40 is probably a quarter of what we had originally on site for the full production, plus minus approximately.

And I might add a couple more to that, Peter. We were in communication with a number of other regional operations. We did pass on a number of vacancies from other operations to the individuals impacted, some of whom I know have already secured employment. And we did offer career transition support as well to impacted employees.

With the... current state of the labour market in mining, do you anticipate having any difficulty bringing people back on when it's time to ramp up again?

Time will tell, Belinda. It's a dynamic marketplace, as you're obviously aware as we are, so difficult for us to make that pre-judge. What I can say, as I think I said just now, is the response from the workforce was a desire to remain in touch and potentially to be available in the future. Time will tell, Belinda, but yes, it is a hot market right now. It may be different in months to come. Who knows?

Thank you for that. That's all my questions.

Thank you, Belinda.

Thank you. Your next question comes from Adam Baker from Macquarie. Please go ahead.

Morning, Peter and team. Maybe just on Capricorn, just wondering if there's going to be any assessment of carrying value of this asset. You know, I think there was over $170 million in net assets there at the end of last year. So will there be an assessment of the carrying value? And if so, when will that occur?

Thanks. Yeah, thanks, Adam. I'll take that one. We naturally will continue to assess carrying values as we come up to the 30 June half-year accounts. When we went through the process at 31 December last year, we considered a number of scenarios in testing our carrying values. and that included potential suspension scenarios. So we have some level of comfort that the work done through that process supports the carrying values where it is at the moment. But naturally, as our work progresses on the restart and we better define what that looks like, we'll be retesting that work and making sure it remains appropriate. So nothing to say at this stage, but hopefully that gives you some colour about the process that we have and will undertake on the site.

That's good, thanks. And maybe on the insurance payments, forecasting these is a bit of a black box if it does occur. So good to see you've got another $16 million there. Just wondering if you could run us through what the remaining claims are and what remains outstanding. Is this all the surface infrastructure covered off now? And is it just the underground component remaining? Or just walk me through that process. Thank you.

Sure, Adam, and this is Cliff. So dealing with the first part, so the components of the claim, roughly, you've really got four parts. You've got property damage on surface, you've got business interruption loss associated with the surface property damage, then you've got property damage underground at ESS, and you've got the business interruption associated with the property damage to ESS. So in terms of the progress payments we've received today, they've only related to category 1 and 2, so the service property and associated BI. And the lion's share of what we've seen in the aggregate 14 when we received the 16, it would be related to the property damage component and the increased cost of working, which is part of the BI. So the boss production and the broader underground claim, as we flagged in the announcement and past disclosures, The underground component of the claim is not resolved. So that's a key part of our ongoing engagement with insurers. But the further progress payment announced yesterday is not the end of the surface claim. There's still more work to do on the surface claim. It's just a significant step forward. Hopefully that answers your question.

Yeah, that's good. So potentially another surface insurance payment to come down the line after further engagement with insurers.

That's the objective. The claim's certainly not finished.

Okay. Thank you. I'll pass on.

Thank you. Your next question comes from Kate McCutcheon from Citi. Please go ahead.

Hi. Good morning, Peter and Peter. If I look at my cash flow expectations, they're not really helped by the amortization schedule and the debt facilities. You've essentially had those facilities from day one. is refinancing something that you're looking at or refinancing altogether?

Yeah, thanks, Kate. I mean, yes, we are. And, you know, clearly for our senior lenders, you know, critical for us is to be able to outline what our restart plans, you know, and capital requirements look like and appreciate, you know, that's not just our senior lenders, that's also the broader market. So that would be for us to be in a position to progress that, you know, more rapidly and experiment talked to a bit earlier, you know, in our prime thinking as Janus Council boarded, you know, finding all that a clear plan forward.

Yeah, okay. And then sort of following on from Adam's question, you mentioned that you're looking at a new water treatment plan in the back end of 25, if I heard that correctly. Is that predicated in terms of going forward on spending that? I think that about $40 million of CAPEX is what it would cost. is that predicated on further insurance payout? I guess I'm sort of looking at the interplay between cash inflows and outflows and wondering how you fund those commitments.

Thanks Kate, obviously got to work through all of that and relate to your earlier question. As we indicated earlier, the current commitment is to get on with the detailed design, and that's already commenced. That doesn't answer your question, of course. And in terms of the overall capital structure, which we've had a couple of questions on that, as Peter said, we've got to work through all of that, look at all those numbers and and understand the best way to execute for those projects that will bring the asset back into operation. So a bit early for us to respond on that at this point in time Kate.

Alright, just to ask the question another way, would you green light a restart at Cap Copper without additional financing measures that we have in place today?

Well, I think it depends on where we get to on the capital requirements and timing of those, Kate, and it's a bit hard to answer that question definitively until we understand that, you know, and including what we want to see in terms of the shape of the balance sheet. So I understand the reason for the question, but we just can't be definitive today until we finalise that work.

I have to say, we're absolutely committed to bringing the asset back. We've got 65 million tonnes at 1.8% in resource. We've got almost 20 million at 1.7% in reserve, well in excess of a 10-year in my life. There's not too many resource bases like that. Whatever the answer is, we're absolutely committed to bringing that back and bringing it back, as I said earlier, in the right way with a long-term future locked in with the three enablers that we talked to, clear pathway on tailings, water reduction, and water treatment facilities. So we're focused on all of that, and how we put all that together is what we have to work through, but absolutely 100% committed.

Okay. Thank you. Thank you. Your next question comes from Ashley Chan, private investor. Please go ahead.

Hi, Peter. Peter, thanks for your presentation. Just got a question just as a recent shareholder viewpoint. With the offtake agreement, when you talk about market-based terms, is that on the spot last 30 trading days or something like the last six months price average or the last year price average? And then given the suspension, the second question just relates, can you run through the trade payables and provisions given the suspension? For example, is it just a wish for that stamp duty and perhaps government royalty is staged payments? Or is it a likelihood what's happened with the trial outcome for the $12.5 million? And operational accruals are any due immediately. I saw their balances increased from $43 million to $59 million in the last set of accounts. And any of the provisions for rehabilitation and restoration, which is Capricorn's got $60 million, any of them go from long-term to current.

Sure, a few things in all of that, so I'll try and cover it off as best I can. I think in terms of the offtake, that is as per market standard offtake contracts, it's priced on a particular month, so it's not a sort of a long-dated trailing payment arrangement there. It's 30 days payment. Environmental liabilities, nothing changes in terms of what we previously disclosed. Working capital, we'll work through that with our counterparties and as you said, manage the line down there very carefully. I'm just trying to think what's left outstanding in your list of questions from all of that.

Are the stamp duty, trial outcome and operational accruals increased?

Yeah, sure, sure. So, look, in terms of the... Nothing unusual in terms of the changes around, you know, accruals. As I said, we'll manage those accruals down as part of our working capital cycle, as we've talked to on a couple of points today. The standard duty submission, we are finalising at the moment. We expect to submit that shortly, certainly within the current half. and we'll be working with the Office of State Revenue at WA over the terms of payment for that. So there's an ongoing discussion there and a submission that's live, so not a lot more I can update on that at this stage.

And I just had one final question, probably for Peter to answer. I guess this is just an in-hindsight question. In hindsight, what would the investment have been to protect the Capricorn from a one-in-a-thousand-year flood? so that none of this would occur, are we talking 5, 10 million, what's it, just like random stuff that you couldn't have protected against?

Yeah, very difficult.

No, it's a tricky one in hindsight, but I guess it's your last conference call.

Well, even in hindsight, very difficult to understand. What we can say, Ashley, is that... That weather event that occurred last March 8th and two or three days around that was the biggest rainfall event ever experienced with a historical record. So very difficult for us to have... contemplated such an outcome. I think it was in excess of a one in 500 year event or there or thereabouts what it would take to protect against that. It's difficult. However, having said that, we have put in place additional protections, additional diversions, additional protection for S-Bands of South, water treatment plant we're planning on, and other environmental protection measures that seek to protect the site against future But if you look back in time and say what might it have cost, it's a difficult one for us to respond to there, Ashley.

Thanks for your comments.

Thank you. Your next question comes from Ben Lyons from Jarden. Please go ahead.

Thanks for allowing a follow-up. I did miss one on the interrogation on the Glencore facility, so apologies, Peter, but one more. Just on the ability to capitalise the interest on the facility, is that quite straightforward? Is there any penalty apart from that? It looks like a 2% interest rate kicker if you capitalise the interest.

That's pretty much exactly right, Ben. There's not much more to say on that point. It's pretty straightforward.

Okay, so you can presumably over the entire tenor of the facility, you can capitalise the interest and just make those repayments between April and October 28th.

It's not at the company's election. If we're not in compliance with senior covenants, including where waivers have been given, that will apply. So that's the arrangement. It's not an option that the company has. It's dependent on whether or not we're in compliance.

Okay. So the default setting is you're required to pay the interest as you go through the facility. But if you don't have enough in that liquidity reserve, then it gets capitalised. Is that how I should think about it?

Yeah, all the operations are generating positive cash flow as per the cash flow test. So again, it's driven by the covenants on the senior facility, Ben. Okay, got it.

Thanks again.

Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.

Just to follow up on the insurance claim, in terms of the underground claim, given that you can't actually access the underground and it's not going to be able to be inspected, is that essentially a stalemate or are they able to progress this thing and essentially show, you know, you can show them what you had under there, therefore it has a monetary loss, et cetera, et cetera, or is it just going to end in a, well, prove that it was lost?

Yeah, hi, thanks for the question. Cliff again here, I'll take that one. So neither the suspension of operations and the consequence that ESS still has water in it is an impediment to progressing that component of the claim. So as we've reported previously, the insurers haven't accepted the underground claim to this point, and they've raised a number of issues with the underground component, and what we're doing is working through those issues, which are more coverage issues as opposed to sort of verifying the damage that's been suffered. Bearing in mind that ESS is sort of broadly 50% to 55% of the total tonnes mined in normal operations at Cap Copper. So a big part of the underground component will always be the BI. And the fact of the water inundation in and of itself is a pretty easy factual matter to demonstrate, if you get my meaning.

Yeah, right. So it can still progress.

Absolutely.

Excellent. Thank you.

Thank you. There are no further questions at this time. I'll now head back to Mr. Albert for closing remarks.

Yeah, thanks, Dorothy, and thanks, everybody, for all the questions today, probably more than we've experienced in the past, so very good. Appreciate all that. I'd like to finish by outlining a number of reasons why we are positive on our output for the balance of 2024. Firstly, at Capricorn, we've well progressed on the safe, safe wrap down of activities. So we made that difficult decision to suspend operations. And as indicated earlier and stated earlier, not what we wanted, but it is in the best interest of the business and will allow the teams, our teams to absolutely focus on those enablers that we talked to for a successful and sustainable restart. And secondly, at Golden Grove, the improvements in development and pace performance that Ed talked to, especially, of course, at Xanthro Extended, setting it up for a successful 2024 outcome. And as we indicated earlier on, the March numbers, well, the quarter numbers in terms of development and the follow-on in March in terms of some of the records that we're achieving there really give us a lot of confidence for Xanthro Extended and Golden Grove for the balance of the year. And thirdly, the progress that Peter, Herbert and Clifford talked to today in terms of additional liquidity from their offtake finance and insurance processes, again, putting the company on a solid footing to support the activities for the rest of the year. And fourthly, and no means least, I did make some reference earlier to the mineral resource and oil reserves specifically at Capricorn, but also at Golden Grove, 60 million tonnes at 1.7% copper and 3.9% zinc. And a reminder at Capricorn, resources at 65 million tonnes at 1.8%. against that backdrop of improving base metal markets. Copper pricing prices significantly up over in recent weeks and long may that remain and get better. So looking forward to the balance of the year. Thank you everybody for attending today. I appreciate your time. Thanks Darcy.

Thank you. That does conclude our conference for today.