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Thank you for standing by, and welcome to the 29Metals Limited March Quarter Conference Call [Operator Instructions] I would now like to hand the conference over to Mr. Mike Slifirski. Please go ahead.
Thank you, Darcy. Good morning, ladies and gentlemen. We will be speaking to 29Metal's 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 is being recorded and will be available for replay by the 29Metals website and the Open Briefing website. 29Metals Managing Director and CEO, Peter Albert, 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.
Thank you, Mike, and welcome and thank you for joining us this morning for our 2024 Q1 results. It has been an eventful start of the year, a lot going on, including the difficult decision to suspend operations to 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, at 1 week from now. As always, we will start with a -- our total recordable injury frequency rate marginally higher for the quarter at 6.6 per million work hours compared to 6.5 at the end of December. Notably, there were 0 significant incidents, 0 regulatory reporting instance or recorded injuries for March. This is the first time in 29Metals, near 3-year history that this has been achieved an outstanding result for the business. But as always, we can never become complacent for our 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 coordinated general endeavoring 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 the dewatering as brands of 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. Most 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 this 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 an earlier 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 anticipated 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 meters of development at Xantho Extended in the quarter, with continuing good development rates post quarter end with record daily and weekly meters numbers achieved by the team, setting up a mine to deliver from Xantho Extended 29Metals highest value ore source over the rest of the year. Also, paste filling has been continuously improving, enabling multiple stopes 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 were 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 Rotobox 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 2 significant outcomes. First, we have now signed binding terms for a $50 million subordinated offtake finance facility with Glencore. And secondly, the commitment by insurers for a further interim progress payment of $16 million for the surface [indiscernible]. Combined, these outcomes provide the company with additional liquidity as Capricorn Copper moves into suspension and works have progressed towards a sustainable restart of operations and unaudited cash at 31st of March was $106 million. In terms of guidance, 2024 guidance as released at our last quarterly call remains unchanged, although estimated costs for the new tailings facility at Golden Grove increased with capital cost now is sitting at the upper end of guidance. In addition, there will be some corporate cost reductions, which will flow through in quarter 2. I will now hand over to Ed Cooney to talk in more detail about our operations, who 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 the Golden Grove where copper production at [ 1.3k ] tonnes was solid, driven by a majority of feed to the mill being copper ore. Following a strong December quarter same production last year, the March quarter [indiscernible] planned as filling campaign at our Xantho and at orebody. As a result, all tonnes from Xantho Extended, approximately a quarter of 1 to 65,000 tonnes and zinc production was lower at [indiscernible] results. Having set new paste fill delivery records during the March quarter and achieving another record quarter of high development performance, the mine is well set up to deliver high zinc production outcomes over the subsequent quarters with ore tonnes from Xanto Extended increasing significantly. Milled tonnes for the quarter were lower than the December quarter, driven by a higher proportion of harder 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 grades zinc core sources online at Xantho Extended. In terms of project-related activities at Golden Grove, the first of the site's containerized concentrates were loaded on to ship at the Port of Geraldton. This approach moves away from historical [ spoke ] containers, a more widely used rotobox system and avoids the need to both rehandle 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 Gossan Valley project was submitted post quarter end and activity progressed for life-of- mine TSF4 project, including additional long-lead 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 service or inventory due to rainfall associated with consecutive tropical cyclones passing through Northwest Queensland. Additionally, order treatment through the interim settlement bonds to support operations proved much more difficult than the December quarter, whilst balancing competing demands and treating water for controlled releases whilst Gunpowder Creek was flowing. These challenges led to lower mill run time 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 is brand 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 [ raise bore ] dewatering holes into the Southern Cave and the recured 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 raise 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 ore stockpiles is currently underway and will be concluded by the end of April project-related activities on site are continuing with commissioning of the Mill Creek dam neutralization project expected in the June quarter. Turning to long-dated projects at Capricorn Copper. We commenced detailed design for a new water treatment plan first quarter end with current time lines 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.
Thank you, Ed, and thanks to everyone for joining the call today. I'll start with our revenue outcomes. 29Metals unaudited revenue of $154 million for the March quarter was an increase of 9% on the prior quarter results. Within that, Golden Grove's revenues increased 27% on the prior quarter, driven by increased volumes of zinc sales as a strong buildup of concentrates in the December quarter aren't weighed. Golden Grove improvement in revenue was offset by [indiscernible] sales in Capricorn 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 of 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 results, reflecting lower ore mined and ore milled and increased capitalized development. Selling costs comprising TCRC and concentrate transport costs were $5 million higher, reflecting a 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 byproduct credits during the quarter. Unit costs are expected to improve over 2024, in line with an increased contribution of ore from Xantho Extended. Total capital for the March quarter of $13 million included $6 million of capitalized development, an increase on the December quarter with improved development advance sustaining and increased capital [ were both lower ] since 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 $80 million or roughly $3 million a month with opportunities to further rightsize 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 cost and productivity improvement [ launch ] continued in the March quarter across the group with a focus on defining plans to target productivity and volume improvements to drive lower unit cost of 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. 29Metals finished the quarter with unaudited cash of $106 million, a decrease on the September quarter position of $162 million. The movement in cash reflects realization of concentrate inventories at Golden Grove reduced during the December quarter, with operations cash flow positive after capital expenditure, materially lower production at Capricorn Copper and a further USD 10 million principal repayment and interest costs during the quarter. Yesterday, 29Metals announced a degree binding terms for a USD 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 for copper and zinc concentrates. In terms of market base, including benchmark TCRCs, with delivery into the offtake agreement to occur over and beyond the tenure of the loan agreement. The company is extremely pleased with reached agreement with Glencore on an attractive and flexible terms following a competitive process. The additional liquidity support will assist the company as it progresses the safe rampdown of operations at Capricorn Copper and its valuation of a sustainable restart. The group had unaudited net drawn debt of $103 million at the end of the quarter, an increase on the [indiscernible] at 31 December of $52 million. After principal repayments for strong debt declined to [ USD 336 million ] at quarter end. As a reminder, a further amortization payment to the USD 10 million will occur in the June quarter before stepping down to USD 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. Cliff will provide additional color on insurance shortly. Finally, 29Metals continues to finalize [indiscernible] submission in connection with the acquisition of Golden Grove. As previously noted, we expect to finalize the submission during the first half of 2024, 29Metals maintains a $26 provision [indiscernible].
Thank you very much for listening. I'll now hand over to Cliff.
Thanks Peter, and good morning all. We were very pleased to announce yesterday the 29Metals insurers and reinsurers a further interim progress payment in the amount of $16 million. This further interim progress payment again relates to the surplus component and the further progress payment announced yesterday. And once received, will bring aggregate insurance proceeds received to date to $40 million. We've worked very hard with insurers and the required loss adjuster to progress the service 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 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 surplus component and the further progress payment announced yesterday, we're looking forward to accelerating the 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 operation on Capricorn 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 happy to go to Q&A, please.
[Operator Instructions] Your first question comes from Alex Papaioanou from Citi.
Peter 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. Well, we probably can give some guidance is that it's not priced materially wider than the [ senior ] facility, but those terms are commercial and confidence. In terms of the offtake tenure, we expect that it will extend beyond the tenure of that facility and subject to the rates of production over that period, of course. Again, commercial confidence, but that's a good guide that it will extend to at least that period.
And then on corporate costs, just to confirm, the group level reported $8.5 million is inclusive of the [1.8] and [1.1] reported at site levels. And could you give any more color on the expected reductions over FY '24.
Look, in terms of the reduction, that process is ongoing. So I think I'll be able to provide more detail in subsequent periods. And those corporate costs for the group do aggregate up, so that's right.
Your next question comes from Daniel Roden from Jefferies.
Mark, I just wanted to clarify, you had existing permanent tailings capacity at Capricorn Copper, would you see yourselves turning the asset off into care and maintenance at the moment? Or I guess, tailings capacity seems to be the constraint there?
Yes. 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 -- of this month, April, we will no longer be treating mining and milling ore. So that's already, that decision has already been taken [ previously ].
Sorry, Daniel, maybe we didn't get the -- grasp the question. Maybe -- did we answer that -- did I answer the question there? Daniel.
I guess it's probably [ somatics ], but like if there was sufficient tailings capacity post the remaining capacity for the stockpiles, like if it was just uncut would you be still turning the asset into current maintenance this year .
So the question is, if with the tailing capacity is driving the suspension, if I understand that. No, I think we've been clear, Daniel, that it's 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 tailing capacity?
Those applications in process, Daniel, for additional tailings capacity, which are ongoing. So there's no -- the decision to achieve -- go into suspension was driven by water not tailings.
Okay. Okay. And can you, I guess, clarify with the facility as well, maybe offtake is on a group level? Or is that for Golden Grove? And I think I guess where I'm trying to go with that is, is there any further ability so after offtake contracts after the [ Trafi ] contract rolls off, Capricorn Copper in '26.
Yes, that you're right that the offtake relates to Golden Grove, naturally, it's a little hard to make commitments around Capricorn Copper 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.
No trouble. And maybe just a last one in. The Capricorn Copper timing, are you able to provide a bit more guidance on, I guess, just timing of that at the end of the year and into '25? Just how should we be sculpting that CapEx profile.
The question was for how in the year 2024 capital guidance, was it?
Yes. Yes. So the Capricorn Copper restart capital, is it fair just to straight line now? I assume not. So just are you able to provide any guidance around when those capital items are likely to be expanded by the company.
So I understand the question. I mean, 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 TSF3. The physical activity associated with those will attract the higher significantly higher proportion of capital spend, which I would think likely in calendar year 2021, there may be some early capital commitments later this year, but we're yet to land on those at this juncture.
Your next question comes from David Radclyffe from Global Mining Research.
Peter. I might start with Glencore facility as well, if I can , it's really not that clear. So is this -- is this the offtake based on tonnage 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 success within the payabilities and [indiscernible].
So yes, so it is a fixed tonnage. And the terms that I'll take are very much market-based. So we will continue to report those in line with our current practice as being the cost per TCRC costs for that material. So there won't be any -- there will be a very clear reporting of our finance costs. Very clear reporting on 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 post our announcement to obviously suspending the operation. I guess I'm still trying to reconcile here what being a special project actually means in Queensland?
Thanks, David. -- 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 coordinated general remains very positive. The state, as they articulated, 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 a 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 -- you mentioned, I guess, a working capital impact for an unwind there for Capricorn Copper? Is there any way you can put a number around what that might be and also the one-off expenses?
Yes. Look, we'll be managing down very carefully as you expect. We point to the operating costs 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 unwind.
Your next question comes from Ben Lyons from Jarden.
Probably a few more to 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?
It's a total volume commitment, and we'll work with Glencore on the yearly allocation of those volumes.
Next one is on the security. Can you comment over what -- I realize it's subordinated to the existing facility, but what assets 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. I'm also interested in some of the other terms that might sit behind it. For example, do you have to maintain the equivalent of a debt service reserve like to maintain a certain cash balance on the balance sheet in order to service the facility?
There's no debt service reserve account. Ben, it's subject to minimum liquidity is 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've 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 in exchange for offtake. So if we were unable to satisfy that, that would be an event of default. However, what I would say is in terms of the way that operates is any right under that facility is subject to integrated agreements in the right and senior lenders. So that -- it is a subordinated facility in a sense. But let's be clear, the reason why it's been provided is an exchange for offtake.
Yes. Understood. I guess the nature of the question is around our inherent caution regarding the motivations of this particular counterparty and their track record of loan to loan style facilities. So hence, why I'm going pretty deep on this and apologies, Peter, for grilling you want 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. And then maybe more broadly, sort of, 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?
Sure. So I think it's -- it's a really good question, and it's something that clearly dependent 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 that grow. That's a key piece of work for us that we're working through at the moment. And I think they are 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.
Your next question comes from [indiscernible] from RBC.
Peter and Ed, just a quick one for me. Just around Xanto Extended tonnages. I mean, at 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 at Xantho Extended over Q1, that it will be a little bit more sequentially increasing over the remainder of the year.
Yes. Thanks. So just to recap. So last year, we have achieved about [ 350,000 ], if I'm not mistaken, 1,000 tonnes out of Xantho Extended. And I think -- last quarter, I mentioned the plan for this year is about [ 600,000 ] or thereabouts. So 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 '23.
Yes. So I suppose if we think about it with the zinc grades, particularly higher at Xantho Extended that zinc production should sequentially increase over the remainder of the year?
Yes, correct.
The next question comes from Belinda Humphries from IQ Industry Queensland.
I'm interested in the workforce in the Capricorn Copper combo 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.
Yes. 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 interest of the business. And the workforce who had really made tremendous commitments to endeavor to bring the operation back to full production 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 the terms of numbers, we've got -- quite rightly said plus minus 40 people there. Belinda, many of those associated with project activities, which Ed, I think, referred to earlier on. in terms of getting operation -- getting projects in place to bring the project back -- bring the asset back as quickly as possible in terms of 29Metals people at full production when we were operating normally, you rough numbers, 18-ish numbers. I'm not so sure we've talked about that before. We're probably double that in terms of contractors as well. But for now, that's -- 40 is probably a quarter of -- 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 labor market in mining, do we anticipate having any difficulty bringing people back on when it's time to ramp up again?
Those time will tell, Belinda it's a dynamic marketplace as you obviously are aware as we are. So difficult for us to make that pretty judge that. What I can say -- so I think I said just now is the response from the workforce was desire to remain in touch and potentially to be available in the future. So time will tell, Belinda. But yes, it is a hot market right now. May be different in months to come, who knows.
Your next question comes from Adam Baker from Macquarie.
Maybe just on Capricorn. Just wondering if there's going to be any assessment of carrying value of this asset. I think, there was over $170 million in net assets at the end of last year. So will that be a an assessment of the carrying value? And if so, when will that occur?
Yes. 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 of 31 December last year, we considered a number of scenarios in testing our carrying values. And that included potential suspension scenario. So we have some level of comfort that the work done through that process, supports the [ cargoes ] 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 color with the process that we have and we'll undertake on this one.
That's good. And maybe on the insurance payments. Forecasting needs is a bit of a like box if it does occur. So good to see you 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?
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 surplus property damage. Then you've got property damage underground in ESS, and you've got the business interruption associated with the property damage that you assess. So in terms of the progress payments we've received today, they've only related to category 1 and 2 sort of service property and associated BI. And the line 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 loss production and the broader underground claim as we flagged in the announcement and past disclosures, the underground component of the claim is not resulted -- 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 service plan. It's just a significant step forward. Hopefully that answers your question.
Yes, that's good. So potentially another service insurance payment to come down the line after further engagement of insurers.
That's the objective. The claims certainly not finished.
Your next question comes from Kate McCutcheon from Citi.
If I look at my cash flow expectations that are not really helped by the amortization schedule on the debt facilities. You've essentially had those facilities from day 1 is refinancing something that you're looking at or refinancing altogether?
Thanks, Kate. I mean yes, we are. And clearly, for our senior lenders, critical for us is to be able to outline what our restart plans, capital requirements look like and I appreciate that's not just our senior lenders, that's also the broader market. So that's [indiscernible] for us to be in a position to progress [indiscernible] rapidly so much as to focus it earlier in upfront thinking as [indiscernible] has canceled orders, finding all that a clear plan forward.
Okay. And then sort of following on from Adam's question. You mentioned that you're looking at the 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 at 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. We obviously got to work through all of that and relates to your earlier question. As we indicated earlier, the current commitment is to get on with the detailed design, that's already commenced. That doesn't answer your question, of course. But that's -- in terms of the overall capital structure, which we had a couple of questions on that, as Peter said, we've got to work through all of that and look at all of 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.
All right. Just to ask the question another way, would you streamline 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 the timing of those, Kate, and it's a bit hard to answer that question definitively until we understand that and including what we want to see in terms of the strength of the balance sheet. So I understand the reason for the question, but we just can't be definitive today until we finalize that work.
I have to say we're absolutely committed to bringing the asset back and we've got 65 million tonnes at 1.8% in resource. We got almost $20 million at $1.7 million in reserve, well in excess of a tenure in my life. There's not too many resource bases like that. So 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 the long-term future locked in with the three enablers that we talked to. Clear pathway on tailings, water reduction and water treatment facility. So we're focused on all of that and how we put all that together is what we have to work through. But certainly 100% committed.
Your next question comes from Ashley Chan, Private Investor.
Just got a question just from a -- as a recent shareholder viewpoint. With the offtake agreement, is that when you talk about market-based terms, is that on the spot last 30 days or something like the last 6 months' price average or the last year price average. And then given the suspension -- the second question will just relate, can you run through the trade payables and provisions given the suspension, for example, just a wish force that stamp duty and perhaps government royalty stage payments? Or is it a likelihood, what's happened with the trial outcome for the $12.5 million and operational accruals any due immediately? I saw the balances increase from $43 million to $59 million in the last year of accounts? And are any of the provisions for rehabilitation and restoration, which is Capricorn has got $60 million, any of them go from long term to current.
So 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 of 30 days payment. Environmental liabilities, nothing changes in terms of what we've previously disclosed. Working capital, we'll work through that with our counter parties. And as I said, manage the wind down there very carefully. Just trying to think what's left outstanding in your list of questions from all of that?
The stamp duty trial outcome and operational accruals increase.
Yes, sure, sure. So look, in terms of the -- nothing unusual in terms of the changes around accruals. As I said, we'll manage those accruals down as part of our working capital cycle and as we talk to you on a couple points today. The stamp duty submission, we are finalizing at the moment. We expect to submit that shortly, certainly with in the current half. and we'll be working with the Office of State Revenue at WA terms for the 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 for answer. I guess this is just an in hindsight question. In hindsight, what would the investment have been to protect the Capricorn from a 1 in a 1,000-year flood? so that analysis was -- are we talking $5 million, $10 million? Was it like a random stuff that you couldn't have predicted against? Yes. I by one in hindsight, but I guess it's your last conference call.
Well, even in hindsight, it's very difficult to understand what -- what we can say, Ashley, is that weather event that occurred last March 8 and 2 or 3 days around that was the biggest rainfall event ever experiencing with a historical record. So very difficult for us to have contemplated such an outcome. I don't -- I think it was in excess of 1 in 500-year event or there or thereabouts what it would take to protect against difficult. However, having said that, we have put in place additional protections, additional diversions, additional protection for Esperanza South water treatment plant, we're planning on and other environmental protection measures that look to seek to protect the site against few [indiscernible] events. But if you look back in time and say what might it have cost. So it's a difficult one for us to respond to there, Ashley.
Your next question comes from Ben Lyons from Jarden.
I did miss one on the interrogation of the Glencore facility. So apologies, Peter, but one more. Just on the ability to capitalize 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 capitalize 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 tenure of the facility, you can capitalize the interest and just make those repayments between April and October '28.
It's not at the company's election. It's the -- if we're not in compliance with the senior covenants and including where waivers have been given that, that will apply. So it's -- 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 capitalized, is that how I should think about it?
Yes, all the operations aren't generating positive cash flow as per the cash flow tax. So again, it's driven by the covenants on the senior facility, Ben.
Your next question comes from Tim Hoff from Canaccord.
Just a follow-up on the insurance claim. In terms of the underground claim, given that you can't actually access the underground, it's not going to be out to be inspected. Is that essentially a sale made? Or are they able to progress this and essentially show -- 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 proved that it was lost.
Cliff again here. I'll take that one. So neither 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 [indiscernible] issues as opposed to sort of verifying the damage it suffered. Bear 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.
Yes, right. So it can still progress.
Absolutely.
There are no further questions at this time. I'll now hand back to Mr. Albert for closing remarks.
Yes. Thanks, Darcy. And thanks, everybody, for all the questions today, probably more than we've experienced in the past. So very good. I appreciate all that. I'd like to finish by outlining a number of reasons why we are positive on our outlook for the balance of 2024. Firstly, at Capricorn, we're well progressed on the safe ramp down of activity, 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, Ad Golden Grove, the improvements in development and pace performance that Ed talked to, especially, of course, at Xantho Extended and setting up -- setting it up for a successful 2024 outcome. And as we indicate everyone 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 Xantho 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 the 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 [indiscernible] leased, I did make some reference earlier to the mineral resource or ore reserve specifically at Capricorn, but also at Golden Grove, 60 million tonnes at 1.7% copper and 3.9% zinc and a reminder of Capricorn resources at 65 million tonnes at 1.8% against that backdrop of though improving base metal markets, copper pricing prices significantly up over in recent weeks and a long way that remain and get better. So looking forward to the balance of the year. Thank you, everybody, for attending today, and I appreciate your time. Thanks, Darcy.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.