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Good morning, everybody, and thanks for joining me on our call today. I'm on Kaurna today and want to pay my respects to elders past, present and emerging. I recognize and respect the Kaurna people's cultural heritage, their beliefs and relationship with the land and acknowledge that they are of continuing importance to the Kaurna people living today. I'm joined in person by Warrick Ranson, our CFO, and will briefly take you through our performance for the quarter and our forward-looking plans and guidance for 2022 before we open for Q&A. Our team achieved some pleasing results in 2021. These were delivered despite the ongoing challenging environment that we all operate in as we transition to living with COVID. We are working closely with our workforce and supply partners to manage through this. COVID-related workforce and supply challenges persisted during the year but elevated during the last quarter as most Australian state borders reopened. We expect these challenges to continue, particularly during the first half of this year. Before we move into the presentation, it is important for me to refer to the death in September of one of our workforce, a burn and cut employee working underground. We are all greatly saddened by his death, and on behalf of the company, I again extend our condolences to his family, friends and colleagues. The next few slides are our usual disclaimer and compliance statements which are available on our website here to review at your leisure. In 2021, we achieved our group copper guidance for a seventh consecutive year, delivered on gold production and met our cost guidance, all while supporting people through another year of health and well-being challenges, border restrictions and workforce absences associated with COVID-19. We reduced our annual TRIFR rate from 5.29 down to 3.77, notwithstanding the sad loss of 1 of our underground workforce team members of Prominent Hill. I'd also like to acknowledge the death of 2 of our Brazil team members who contracted COVID-19 while they were on annual leave. We further advanced our growth strategy with major expansion projects at Carrapateena and Prominent Hill approved and they're well underway. On the West Musgrave project, the study continues to progress towards the investment decision in the second half of this year. And in Brazil, we realized a significant milestone with the start of ore mining for the stopes of Pedra Branca as our Carajás hub strategy started to take shape. Finally, our financial position remains strong with a $215 million cash balance at the end of the year plus significant liquidity available with a $480 million undrawn debt facility to support our group, along with cash flow from our operations. We also provided $1.5 million in 2021, the second year of our Stakeholder Support Program to support the resilience of our stakeholders during COVID. Support included vaccination programs and health assistance for indigenous communities where we operate in Australia and emergency food supplies and personal protective equipment in Brazil. We believe that only when we create value for all our stakeholders will we be successful and sustainable. So at the center of our strategy, we focus on value creation for all our stakeholders, employees, communities, shareholders, governments and our suppliers. The OZWay you see on this slide enables banded creation to be embedded in everything we do, such as through our global performance and process standards, and it guides our workforce on how everything fits together in the company. Our strategy sits within the OZWay and supports the achievement of our purpose going beyond what's possible to make lives better. Each element of our strategy is enabled by our strategic aspirations that focuses our work on 3 or 4 high-impact activities. One of these is our aspiration to emit 0 Scope 1 emissions and systematically reduce Scope 2 and 3 emissions across our value chain. We intend to publish our decarbonization road map during the first quarter of this year. This slide will be familiar to most people on the call as it shows an overview of our operating assets and projects at different stages of development and the type of product they produce or are expected to produce. I won't dwell too long here, but if you'd like to refer back to this, there's an interactive version on our website. Our approach is to look for copper-rich provinces, where initial or existing investments can serve as a launching platform or hub for opportunities. Mapped out on this slide are the different hubs and spokes of each of the provinces we are developing or looking to develop, their key statistics and the potential growth projects with each. We introduced a set of stakeholder value creation metrics in 2021 to provide a tangible and transparent assessment of how and where we create value. They also help drive our performance. We will report progress on each of these each year with our financial results. The Q4 activity summary slide summarizes our Q4 2021 performance. Despite the ongoing challenging environment, the agility of our workforce enabled us to achieve group copper guidance for a seventh consecutive year, also delivering on gold production and meeting our cost guidance whilst reducing our TRIF rate. We recorded revenue of more than $2 billion, a record for the company and ended the year with a cash balance of $215 million. To support growth further, we have recruited several new executive leadership roles. Michelle Ash will join us in March as our new technology executive; and Bryan Quinn will join us in April as our new strategy and group executive. I look forward to having them on the team to complement our existing team skills and experience. I'll touch on our forward plans for the year and 2022 guidance in the latter section. But first, Warrick, why don't you talk us through financials, please.
Thanks, Andrew, and good morning, everyone. As usual, let me start with capital management and some comments on the market. Pleasingly, copper pricing continued its robust path despite some softening at the end of the quarter, with utilization rates of wire and rod producers falling and a continuing weakness in the Chinese construction sector. TV manufacturing continues to be impacted by the shortage in semiconductors and that's likely to be further exacerbated this quarter with Chinese New Year shutdown. Price levels continue to be supported by supply-side uncertainties, delivery bottlenecks and elevated energy and raw material prices. The Australian dollar did, however, depreciate, aided by a stronger U.S. dollar and events in China. Whilst we have certainly benefited from this support in our revenue levels, achieving a record $2.1 billion in sales for the full year, as Andrew mentioned, there's a corresponding offset in the flow-through to C1 costs as partially reflected in our 2022 guidance. Inflation concerns are also likely to continue through 2022. And Chile, as an example, continues to creep up the cost curve with royalty changes and political policies impacting investment appetite in Nigerian regions. However, we do think the concentrate market will likely experience a modest surplus in 2022, a position recently reflected in agreed benchmark TCRCs. Whilst there is certainly upside price risk from the supply side and an increase in emission intensity focus, softening risk also remains on COVID impact as COVID impacts manufacturing and supply chains and new projects are expected to come online in the second half of the year. As mentioned, over the quarter, these pricing levels contributed to another strong revenue and subsequent operating cash flow performance. This enabled us to again close the period with no draw on our revolver, invest another $158 million back into the ongoing growth and development of the business, particularly as we commence development activities on the Prominent Hill shaft, and close the year with an unaudited $215 million in cash. Moving to cash generation, and as we noted, we had another strong quarter of cash from operating cash flows, bringing total cash flow before investing activity for the year to just under $1 billion. We continue to maintain a very strong balance sheet to support the brownfield growth projects in front of us. Trade receivables jumped at the end of the year with a strong December shipping schedule. However, with corresponding reductions in inventory levels, including the ongoing reduction in Prominent Hill open cut stocks as this process is a low-grade ore stockpiles to supplement the underground feed. With some great work by our asset teams, we generally maintain the integrity of our supply and customer chains again this quarter despite the ongoing pressures from COVID. To be transparent, though, that's becoming harder and an increasing risk for 2022 as we start to see a number of resourcing impacts from actual and close contact cases and as significantly higher shipping costs continue. We continue to proactively manage this environment and having initiated a range of initiatives across our assets to ensure we are as equipped as we can be to work through this uncertain period. As noted, we invested a further $158 million into the growth of the business this quarter. Underground mine development activities continued across all operations. We completed the Western access through the Carrapateena, acquired the second crusher and began construction of the Wira shaft at Prom Hill, as I mentioned. Exploration expenditure was relatively steady with the previous quarter as we work to increase the number of field activities as COVID restrictions continued to lift. Moving to Slide 12, we had a number of factors flowing into our operating cost performance for the quarter. Production at Prominent Hill was impacted by our safe resumption of underground mining following the fatality we experienced in September and a number of resource constraints in both equipment and manning in December. This resulted in a reduction in underground feed with residual low-grade material drop from the surface stockpiles, and together with the planned maintenance shut, reduced both copper and gold production for the quarter. Pleasingly, we did see a significant improvement in the level of broker stocks underground, which remains a key factor in our ability to maximize production flexibility going forward. Low equipment manning early in the quarter also impacted early tonnage volumes at Carrapateena until December as we flex our resources to manage total business performance and prioritize our operating activity. This has been a key opportunity for us in moving to a single contractor. Pleasingly, to Carra team were able to safely run the mill at just under 6 million tonne run rate for December, complementing the solid uplift in feed grade. We saw a gradual uplift in copper production in the Carajás albeit with a reasonable level of variability still as we began the transition to an owner/operator at Pedra Branca and reduced our contractor labor force following the mining of our initial production state there in mid-August. Also a number of aspects we still need to complete around ventilation and dewatering, the team continues to work well towards delivering a successful ramp up there. On C1 costs for the quarter, to a large extent, reflecting the overall grade and production impact from these factors, mining costs also reflect an increasing proportion of our production outcome coming from underground activity. At Carrapateena, increased operating activity also results in an uplift in common costs being allocated away from capital development through our costing model, and we subsequently maintained this position through our C1 guidance going forward. However, outside of the major uplift in freight costs and the tightness in the labor market, to their credit, the team has generally managed costs in line with our original expectations for the year. All-in sustaining costs followed the C1 trend and the usual rush to close out sustaining projects at the end of the year. Back to you, Andrew.
Thanks, Warrick. Now on to the asset performance. Prominent Hill achieved its copper production guidance, as I said for the seventh year now. Prominent Hill, I believe, has firmly established itself as a reliable producer even through its transition from an open pit to an underground mine and now to managing the integration of a shaft expansion. Underground ore mine in the quarter was impacted though as we shared resources and prioritized material movements at Carrapateena and progressively resumed activities following the fatality in September. Domain access decline development base position is now over 1 kilometers below surface, with key underground infrastructure advancing. The Wira Shaft mine expansion is progressing well, remaining on schedule and on budget. The hoisting shaft being constructed at Prominent Hill will extend the mine life to 2036, lower operating costs, reduce operational risk and lower emissions. The expansion, which was approved mid-2021, also enables generational province potential with further mine life extensions possible as circa 67-odd million tonnes of resource currently remain outside of the mine plan. We expect construction site works in the shaft collar to be completed next month, with pre sync equipment due to arrive on site later this quarter. We've started headframe fabrication and electrical reticulation works, and contracts have been placed for the mine refrigeration and underground vent fan works, which will be completed by the end of this year. Moving next to Carrapateena. Carrapateena achieved its copper and gold production guidance in a year which saw a change mining contractors and in the latter half of the year pivot to manage cave propagation and then adjust back again in line with ore production targets. In the fourth quarter, production stoping and operating development was prioritized, with support provided by Prominent Hill via additional underground mining resources. This plan yielded both record total material movement and ore movement from the line for the quarter. The mine decline progressed past the second crusher chambers access and onto the commencement of the block cave declines. During the year, 4.6 million tonnes of ore was processed, already well above the 4.25 million tonne per annum nameplate. They recorded the highest production month on record in December, with 493,000 tonnes of ore treated. This performance provides further confidence that the sublevel cave production rates can increase to circa 4.7 million to 5 million tonnes per annum once the cave propagates to surface later this year and the second crusher is commissioned. We undertook surface cave preconditioning works using hydraulic fracturing techniques in December, which resulted in positive seismic responses from the cave backs and the growth of the muckpile. Quarterly copper, gold and silver recoveries were 93%, 87% and 73%, respectively, above the year-to-date values and at or above feasibility assumptions. This demonstrates that the strong metallurgical performance seen at Carrapateena since commissioning can be maintained at high throughput rates, providing further confidence in the future performance at the site. In terms of the Carrapateena block cave expansion, work began on the access declines in Q4. The block cave expansion, which was approved at the beginning of 2021 will help us capitalize on the value opportunity beyond the existing sublevel cave operation, expand or reserves the mine life. It is about unlocking Carrapateena's potential to be a multi-generational, lowest-quartile cash cost producing province. The crusher and the large portion of the steelwork for crusher 2 is expected to arrive on site this quarter. The first major underground chamber excavation has already been completed, with the civil and concrete work expected to commence underground this quarter. Construction of the stage 2 tailings storage facility is also progressing well, with the haulage fleet now mobilized to site, construction of the haul road already complete and embankment construction now commencing. The Western access road was also completed during the quarter with the road fully operational and now being used to concentrate haulage. Ironically, last week, heavy rain resulted in many roads in North and South Australia being cut off, so it's nice to have the more permanent Western Access Road in operation. The West Musgrave study progressed well during the quarter through the course of the year with many aspects of the project now well advanced and technically derisked. The team continues to consider further value opportunities for inclusion into the project base case. Key activities over the coming months include considering options for the construction and operation of the renewable energy plant, finalizing our approach to mining operations, working with the traditional owners on the land access agreement and finalizing government approvals. The project's on track for a final investment decision in the second half of 2022. However, as I have mentioned previously, we would only consider making a positive investment decision if we were confident that we could deliver the project on budget and on schedule. Currently, there remains uncertainties regarding the duration of West Australia's border restrictions, WA's labor availability and cost inflation, all of which we are monitoring closely; the effect of which will be integrated into the project business case, the business decision and the decision timing. Moving now to Brazil, during the year, our Carajás Hub strategy took shape for the first production of ore from the underground mine of Pedra Branca processed and the Carajás East Hub processing hub and a maiden mineral resource announced for Santa Lucia. Pedra Branca team achieved a monthly record in December, processing 47,000 tonnes of production ore as the mine continued to ramp up during the quarter. We expect to reach full capacity by the end of this year. At Santa Lucia, work is continuing on an updated mineral resource estimate. Results from 7,000 meters of drilling that we recently completed will be used to inform the project study for a mid-'22 decision whether to exercise our option to acquire the interest in the project. We also intersected copper mineralization across 2 exploration targets that are within our 20 kilometers radius of the Carajás East processing hub, which we will continue to follow drilling this year. At Pantera, we completed the 2021 resource drilling program and expect that a mineral resource estimate and the study will be completed by year-end. In Gurupi, the CentroGold relocation plan, which is required for processing the court injunction removal has been completed and submitted to the National Institute of Colonization and Agrarian Reform, which is we call INCRA. There is still some way to go on removing the injunction, but it is progressing. And now on to our growth pipeline, where I'll just call out a few updates. There have been some changes to our various JVs of military exploration. These include that we entered into an agreement to sell Jericho and our Eloise JV interest to Demetallica, providing the subsidiary of Minotaur Exploration the opportunity to progress the project. We withdrew from the Breena Plains Project. The Cloncurry Alliance continued with progressive geochemical surveys and geophysical interpretation plan this year, and we farmed into Minotaur's extensive exploration tenement holding at the Peake and Denison project located in South Australia. At the Guld project in northwest Queensland, 2 magnetic and gravity targets were drill tested with Red Metals targeting Ernest Henry IOCG type deposits. The anomalies were explained by significant magnetite bearing intersected in the drill holes. Overseas, 2 diamond drill holes were completed at the Painirova JV project in northern Sweden. Assay results are pending with COVID-19 slowing in these times . We continue to prepare for drilling on the Paraiso IOCG prospect in southern Peru, which we expect to start this quarter. And last week, we also participated in the Carnaby Resources Limited placement to support them in their continued drilling of the Greater Duchess Copper-Gold Project in Queensland. On the asset timeline slide, the information on our different assets, projects, status of development and resources and reserve information are presented for you to our clients. It is provided as a quick reference to make it easier to track the estimated delivery of different assets and projects in each province, especially as we build on our growth pipeline. Looking ahead to the rest of 2022, our focus will be on safely delivering our operational targets, advancing our current growth projects and adding new growth options to the portfolio. We will also be managing the challenges associated with the transitioning to COVID norm, which we expect to include labor and supply chain interruptions. The other priorities for this year include progressing the expansion of Prominent Hill and Carrapateena, both of which unlock the potential for multigenerational low-cost mining provinces. Progressing the West Musgrave project study for a final investment decision in the second half of this year. Continuing to develop opportunities within our Carajás Hub strategy in Brazil. Expanding our exploration activities and adding new growth options to our organic growth pipeline where possible. Closely managing our costs in a significant inflationary environment. Strengthening our culture and advancing our strategic aspirations, including finalizing our decarbonization road map, holding ourselves accountable as a sustainable and responsible producer creating value for all our stakeholders. For 2022, our guidance sees copper production increase with improving grades at Carrapateena, partially offset by lower grades of Prominent Hill and lower gold production at Prominent Hill due to byproduct credits. General industry uplift in C1 and all-in sustaining costs more broadly attributable to inflationary increases in some consumable costs, higher freight charges, higher royalty payments related to price and higher benchmark TCRCs. Group all-in sustaining costs are expected to be broadly in line with 2021, with a reduction in sustaining capital, partially offset by increased C1 costs due to additional ore mined per unit production at Prominent Hill with no material change in total mining costs. We have updated the remaining years of Carrapateena's guidance for 2025 also. You may recall, we previously provided 5-year guidance from 2021 to 2025 for Carrapateena which combined sublevel cave and block cave expansion. The updated guidance covers the remaining full year period with updates to production, costs and capital expenditure. Finally, to close out with a quick summary before we move to Q&A, in 2021, we achieved group copper production guidance for the seventh year, delivered on gold production and met our cost guidance. We advanced our growth projects at Prominent Hill and Carrapateena and the West Musgrave project. We evolved our exploration activities and will continue to expand where possible. Our financial position remains strong with $215 million cash balance at the end of the year with significant liquidity available. We managed our costs in an inflationary environment. And finally, we further strengthened our cultural foundations and organizational bench strength to support the delivery of our next growth phase and our strategic aspirations. Thank you very much for joining us today. Operator, can you please remind people how to ask questions for either Warrick or myself?
[Operator Instructions] Our first question comes from Rahul Anand at Morgan Stanley.
Hi, Andrew and team, Happy New Year. Look, for my 2 questions, we can talk about perhaps, firstly, the calendar year '22 guidance. Within that question, I was hoping to touch upon Carrapateena for next year. You flagged higher grades, but are those grades in line with what you previously thought? At least we had the grade lifting a bit quicker than that, so perhaps if you can talk about what's driving that.And then within the calendar year '22 guidance, is Prominent Hill next year expected to be at 5 million tonnes per annum? Just looking at the slightly slower quarter in terms of the finish this year. That's the first question on '22 guidance, and I'll come back with one more on Carra.
Rahul, Happy New Year to you also. So the '22 guidance, of course, comes from our follow-on planning process for all of our assets. Just staying on a couple of your questions, which I think you're asking about, Carrapateena, you'll note the grade for Q4 has continued to come up towards the reserve grade. And we expect that grade to continue that sort of trend through calendar year 2022. We are building into our guidance some expected challenges, if you like, through the start of the year as we, as I mentioned, COVID is providing proving to be challenging, I think, for all of us to manage as borders reopen and we're managing cases and workforce restrictions, if you like. So I think that's going okay, but our guidance does account for that. In terms of grade at Carrapateena, grade is reconciling very well. So I'm quite comfortable that our reserve model and the mining reconciliation to that reserve model continues to perform as planned to the reserve. In terms of Prominent Hill guidance, we are continuing to expect Prominent Hill to get up towards that 5 million tonne per year number. So we have guided and we expect it to be there sort of by the end of this year and expect it to hold through to when the shaft commences. And we hopefully get it then up to the 6 million tonnes per year. And what's not included in our plan or our guidance at Prominent Hill, any benefits that we may be able to get from Papa or Walawuru. We are still working on those shallow resources and drilling those out. So potentially, that later on this year, we'll be able to release resources and/or -- and mining studies to go with them to hopefully determine there is a reserve and amountable inventory. So that could be above and beyond for Prominent Hill, but it's not included in our guidance.
And then perhaps the second one on Carrapateena medium-term guidance, you've provided the '22 to '25 production rate. And obviously, the production was heavily weighted to these years given you have that grade elevation starting from next year. So what I'm trying to get at is you flagged the 68,000 tonne per annum run rate versus the previous 70, but if we adjust for '21, then the drop in production is a bit more material than that. What I wanted to touch upon was, is this a delay in terms of accessing that grade, and that's leading to some of that higher production falling into calendar year '26, or is there any sort of lost production here that we need to be mindful of? And then secondly, on the CapEx side, you flagged some headwinds around capital items. Is there a bit more color you can provide on that? And when -- how should we sort of think about updates as you progress here?
Yes, sure. I'll ask Warrick to talk about the capital in just a moment. In terms of your question at Carrapateena. So we're now talking about 4 years as opposed to 5 years. So we're starting to get more granular in our planning and scheduling at Carrapateena. So this is more a refinement of the accuracy, if you like, of our plans at Carrapateena, and our reserve model is actually quite well drilled for the next few years. So -- this is not so much -- look definitely, it's not about lost metal or lost production capacity. It's more about an accuracy of the plan and the schedule. And as I also said, we have seen some disruptions, I guess, to operating performance with labor availability over the last 6 months or so, and we're expecting to see more challenges as we start up this year. We assume that these are shorter-term impacts, but they are building into our guidance we've issued to you. So it's not so much about lost net per se. Just more accuracy of the schedule, but also including some impacts which we're forecasting in the first half of this year due to COVID. Do you want to talk about capital, Warrick?
Yes, a couple of points there, Rahul. So one has been the escalation factors. So we're certainly picking up some additional costs in relation to the current inflationary environment. The other side, I suppose, as we get further into the project, we -- the team has, after the scope of some of their items a little bit. So that's actually also flowing through in terms of the next few years of some activities. So there's a little bit of additional items that have come into the capital program. And then certainly, the escalation, particularly on some of the mining costs, which we talked about, a little bit about before in terms of bringing additional resources and making sure that we're delivering to our schedules on those costs. So that's really an escalation factor.
Okay. Just one follow-up there, Andrew, if I may, just on your initial answer on those tonnages. So am I right in perhaps summarizing your comments as there's a fine-tuning in the timing of copper production and not in the actual production itself?
I think that's actually a correct assumption, Rahul, I think that's a pretty good summary. I mean just practically, and I think we're all sort of dealing with this around Australia and around the world at the moment. At any one time, we've got 5% to 10% of our workforce, either isolated as a result of having COVID or as a result of being a close contact with somebody having COVID. And when you take that sort of resourcing out to get workforce, that has an impact over a period of time. So that's what we're actively managing. I think the assets are doing an exceptional job at managing this because it's very dynamic. As you all know, with border restrictions, et cetera, changing, but also the controls that are required by state and federal governments and where we're imposing ourselves. So this is about trying to take that into account while we're actually scheduling out the work that we've got coming. So it's more about factoring that in through, especially the first half of this year. So it's more about timing than we've got total volumes.
Our next question comes from Paul Young at Goldman Sachs.
Can I zone in on 2022 guidance a bit? And the first question is around the Carrapateena average C1 cost that jump from $0.50 to $0.75 per pound. I mean it is what it is. Obviously, there's a lot of inflation across the industry at the moment, every company is wearing it. But I'm just interested in from Carrapateena specifically at the group level, just roughly, what are you assuming within the new guidance on a percentage basis, increase in mining, TCRCs and concentrate transport?
[indiscernible]
Yes, I do. Paul, there's a couple of things going on in these costs because just before I hand to Warrick. You'll recall that we changed contractors between Downer and Byrnecut. So there's a number of things that are going on in our cost, which I'll ask Warrick to explain both reallocation and the escalations we're accounting for.
Okay. So I mean, I think generally, our costs are consistent with our fourth quarter performance. And to a large extent, we're rolling forward off that base pool. There's a few factors that are driving the costs at the month. So the first one is the market impact. We don't receive the benefit of high commodity prices with our cost impact. So things like TCRCs, royalties, transport costs, in particular, probably at around about 12% all-in sustaining -- $0.12, I should say, to our all-in sustaining cost levels. Commodity volumes also drive the unit costs. So whilst we've expected an uplift in overall copper production, we will pick up lower gold byproduct credits in our '22 guidance across the group with lower gold byproducts per copper unit. So that's around about a $0.06 per pound differential. And then probably the other major one is mining costs, which I do want to touch on. So in fact, our unit cost per tonne of total material mine has actually stayed quite steady. It's mainly in Carrapateena, where there's not actually additional cash out of the business per se. But what we've done is to grant allocation of common mining costs. And we've got specific mining costs and then a general pool of mining costs, which we allocate between capital and operating. And what we've done in both the current year and guidance going forward is improve our costing model but also in the sense of transitioning to a block cave, part of that capitalization methodology that we've had in the past is no longer appropriate as we don't -- we really don't have a future sub-level cave benefit to allocate it against. So what you see is more cost going into operating in terms of the allocation between capital and operating. But as I said, it's not a direct cash uplift but a reallocation out of our growth capital spend. I think the other thing to know is that, generally, we're actually seeing a reduction in our sustaining capital levels between C1 and all in sustaining costs when we take that into account. So a bit of a mix in that.
Yes, okay. That's -- we're taking our words for that numbers as well. Just on Carrapateena on the guidance for '22, the 4.5 to 5 million tonnes, Andrew. I mean Carra, it's performing really well from a mining volume perspective, mining rate perspective and mill throughput, it's going really well. So just curious about how well it performed in December quarter versus the -- it implies a run rate above the 5 million tonne level. Is that really that range 4.5 million to 5 million tonnes driven by maybe lower rates when we commission the second crusher but also breaking through the surface?
Yes. Look, absolutely, Paul. Look, I think what Q4 and certainly December showed for us is that the infrastructure has absolutely got the capacity to support a 5 million tonne run rate at Carrapateena. We just need to get the mine up to that sustainable 5 million tonne per year run rate. And the 2 big enablers, the 2 critical enablers for that lift through, really, the 2 big ones is the cave getting through the surface. We can't overdraw the cave until it breaks through the surface. So that's a critical enabler. The second enabler is getting out the second crusher built because that allows us to build ore passes and take most of the trucks out of the extraction levels and decongest the work environment. And then the third one, of course, has got more to do with the macro environment and COVID controls and keeping a full workforce on site. But that's irrespective of getting up to that 5 million tonne per year run rate. But I think in summary, the last quarter in December, has given us a lot of confidence that's suggesting we get 5 million tonnes from '23 onwards. It's very achievable. We just need those couple of critical things to be completed first to be able to sustain it.
Yes, great. Excellent. And lastly, just Prominent Hill, really good progress on the shaft, all things considered with the labor productivity challenges. Just looking at the CapEx guidance for the Prominent Hill for this year. The $200 million odd or a bit above. A little bit of higher run rate, if you look at, I guess, the $600 million budget over a 3-year period, does that imply that just the CapEx for Wira Shaft and just the expansion there is more weighted to 2022 relative to the other years?
No, I think it's pretty much evenly spread, Paul. So no, I don't think we're seeing too much capital escalation at Prominent Hill. Most of these items, the big items are certainly locked in early, and we've got delivery coming here shortly. We are doing a bit of extra work at Prominent Hill in terms of modernizing facilities, offices, change rooms, et cetera, but that's sort of inconsequential in the scheme of things. But short answer is no, we're not really seeing the escalation at Prom given we locked things in early.
Our next question comes from Hayden Bairstow at Macquarie.
Just circling back to your comments on West Musgrave, Andrew. I mean what -- we've obviously got no idea at this point in terms of border opening, but there's obviously a lot of increasing pressure. I mean what would you need to sort of see to be confident that you could go ahead with that product? I mean, cost inflation aside, I mean it will be an economic decision. But logistically, if you did approve in the second half, how quickly do you need to be on the ground starting construction or -- because we would assume the borders will certainly open at some point in the second half of the year, if not before Easter?
Look, we're very comfortable and very happy with the way the project is progressing in terms of the technical scoping, budgeting, scheduling, et cetera. In terms of making a decision, as I've mentioned previously, we would only commit to a project if we believe that we can deliver that project on budget and on schedule. We are accounting for inflationary impact on the project as we speak. So we have recasted the elements of the West Musgrave project, especially with steel, concrete, freight type inputs are concerned. And we're building those into the project economics now, and we're putting in appropriate contingency accounts for possible inflation that we believe could occur. The big unknown, of course, as you pointed out, is the WA border. For us to be able to make a decision to execute West Musgrave, we will need an open border. We need to be able to move people in and out of the state and get them into the region to actually construct. We're doing a lot of work on sourcing -- contracting workforces and partners from Western Australia, but the reality is not all of them could come from Western Australia.There are foreign overseas contributors to a project like this or in state contributors to a project like this. So that is the prerequisite I would suggest before we can actually make a decision to commit to the project, and it's an unknown for us at this stage. But as you said, this is still a number of months away. So we are progressing the project with the expectation that we'll be able to make a decision in the second half of this year.
And just on Carrapateena, just circling back to the cost reallocation, I guess, between capitalized and OpEx on mining. Is that sort of insulated the CapEx increase a little bit. You've now got more in OpEx. And if there is any CapEx pressures, there's been a bit of a natural offset doing that. We're just going to see higher operating costs and no change to capital? Is that the best way to think about it?
I think it's a little bit of a mix, Hayden. So yes, certainly, there's -- we're not going crazy on capital, but certainly, there's been elements of escalation that are coming into -- to the planning going forward. So yes, I'd say there's a little bit of a mix there.
Our next question comes from Lyndon Fagan at JPMorgan.
First question is in your cost guidance, have you made any allowance for COVID disruptions? And if so, what is that amount? And then just to -- sorry to circle back again, I may have missed the breakdown, but the reason for the 50% increase in Carrapateena's long-run cost $0.50 to $0.75 C1, can we please walk through that again? I know you just talked about a reallocation between CapEx and OpEx, but I'd just like to sort of understand that a bit better, please.
I'll answer the last one first. So as I said, there's really sort of 2 elements to our mining costs. There are specific activities, which the costs are allocated to whether they're operating or capital development works. And then there's effectively a common pool of costs, which we allocate out on the basis of the activity that we're actually undertaking. So it's the last part that has actually caused the swing in our costs. So when we start always had another look at our costing model, the activities that we're doing, what we've effectively done is moved about 40-odd million dollars of costs that would have -- that's probably in our previous guidance, at least, have been allocated to capital into operating given that's the basis of the activity. And that effectively works out to be around about that $0.20-odd in unit cost impact. So that's come out of the capital growth area, and then we apply that into our C1 cost base. And that's really I suppose the biggest driver. The rest, as I said, there's a bit there in terms of pricing market, sort of base assumptions, et cetera. But the primary driver has been that reallocation. But again, I'd emphasize that from that perspective, it's not an additional cash out. It's a reallocation between our capital and operating.
And just the COVID allowance in your guidance?
We don't have a specific breakdown of the COVID allowance, if you like, Lyndon. But what I can tell you is that we're running at 5% to 10% down on resourcing at the moment. So that has been factored into our guidance. We're obviously doing a lot of things to correct that and change that. And one of the advantages we've actually had now over the previous years is given we're using the same as we are mining contract between Prominent and Carra, we're effectively treating that as one large pool of resources, which we can now allocate across both assets. So that does give us a lot more flexibility. We are working on increasing our resourcing pool to ensure we've got all the right skills and capabilities for COVID isolation requirements, et cetera. So that's a work in progress.
Our next question comes from Daniel Morgan at Barrenjoey.
My question is related to the West Musgrave project. And I'm wondering if you could just outline some of the key factors on whether the projects have a go, no go? Like what are the things that might -- yes, as a CapEx? Is it getting the power situation right? Is it the Board is reopening, getting people in? Like what are the key critical issues that this project needs to overcome to have a go decision?
Yes, sure, Daniel. So the key pieces of work we are doing at the moment so we can complete this round of study and get to a decision, include the power solution, both from a technical scope, but also the commercial model we've put around the power solutions. So for example, we build now we have a third party build to own and supply power to us. So that's one critical piece. Second piece is there's a number of opportunities the team are looking at to incorporate into the base case to improve the resilience of the project, help it deliver our strategic aspirations and make it as financially attractive as possible. So they're working on a number of those types of opportunities. We're also working on the state and federal government approvals process so we can get through to a mining lease. And we're also working with the local community on a land access agreement with the traditional owners. There's the 4 main key items we're working on within the project scope. Two additional pieces of work we're doing that are not currently in the scope that are opportunities, one includes Succoth. So we are actively drilling Succoth out at the moment to see if the geological model and the grade model holds up, and we can convert some of that to reserves, so we can then decide whether we should incorporate Succoth into the base case or not. The second is looking at an MHP option. So taking nickel concentrate through to nickel MHP and potentially work with a third party on supply of that nickel MHP into an energy storage value chain. Those who are not in the base case right now are working on those. In terms of -- the other things that I mentioned earlier on, in order for us to make a decision, we need to be convinced, we can do the project on budget and on schedule. The enabler for that include the West Australian border being open in a sustainable way that we can manage, and that inflationary environment is predictably enough that we can factor into the economics. So that's how I'm thinking about the project currently.
And is the project such -- like have you narrowed down the scale, scope of the project? Or is that still potentially open with Succoth?
The scope is converging. So we are nailing down individual elements of the scope of the project. Succoth and MHP are not necessarily contingent on us making a decision on the project. I suspect they will enable us to make future option or future expansion or scope change decisions. But we're designing West Musgrave, so it's flexible. If we want MHP later, we can. If we wanted to include Succoth later, we could. So those are not contingent on the project, and it is starting to converge.
Our next question comes from Levi Spry at UBS.
Happy New Year, guys. I think most of my questions have been answered. So thank you.
Our next question will come from Kaan Peker at RBC.
Happy New Year, Andrew and Warrick. Sorry, you covered off on 1 or 2 of these, but the call quality is pretty poor. But I just wanted to ask really around -- the first one is around why the production preference at Carra -- at Prominent Hill. And what does that actually mean? Is it -- did you pull staff across from Prominent Hill to Carra? And how does this get resolved? Is it the personnel budgeting? And is that considering to next year's guidance? And I'll circle back with the second question.
I'm not sure I clearly got that. I think you're asking about reallocation resources?
At Carra.
Right, okay. I can't quite hear your question, but I'm assuming comments about how we reallocate resources. With the sub-level cave, it is very important that we continue the propagation of the cave. And at the end of last year at Carrapateena, we saw probably above the average people being restricted due to COVID restrictions. So we took the opportunity to take some of the resources from Prominent Hill, bring it to Carrapateena at a period of time to supplement resourcing at Carrapateena to keep mining going, to keep cave propagation going, et cetera. And I think that's one of the advantages of having 1 underground mining contract and now working with us at both assets. We can now consider this as 1 team and 1 pool of resources. And I expect in the future, we will see resource allocation going the other way. We're currently not planning to have to take large groups between Prom and Carra because both assets are planning to have fully resourced teams in due course.
So that's being resolved currently? So that preferential treatment of Carra is being resolved now? So both Prominent Hill...
Yes, yes, sorry, Kaan. Yes, it has been resolved. So the teams that we took from Prom Hill effectively went across to Carra for a month thereabouts. They're all now back at Prominent Hill, so that's been resolved and Carra's working to increase its own labor pool now for this year.
And second question is on the Carra guidance to 2025. Just wondering how much CapEx was spent this year, if you can sort of break down to those 3 components? And just with also the costs, don't mean to harp on, but gold production has gone up so byproduct credits should be higher. And we've seen a $0.25 increase in C1 and a $0.30 increase in all-in sustaining costs. So the back of the envelope suggests that, that $40 million that Warrick is talking about is only a small portion of the cost increase. What else is driving that increase?
It's probably easier if we take that offline and come back to you. But I mean, there are -- as I said, there are some other factors in terms of looking at market drivers that plug on to -- so that's -- that are price related. But yes, let's come back to you in terms of the detail behind that.
And the CapEx spend for Carra in 2021?
He's asking about the actual CapEx spend for this -- last year.
In 2021?
Sorry, can I ask Warrick to come back to you with that, please? I think you're asking him, but sorry, it's really hard to hear you. But I think you were asking for the actual 2021 capital spend against the same 3 buckets we've given in the guidance range. So I'll ask Warrick to come back to you, if that's all right, after this call.
Yes, sure, thanks. I appreciate it.
Our final question will come from Matt Greene at Credit Suisse.
Just in the interest of time, I'll try to wrap this all into one question, if I may. Just on West Musgrave, your -- just your comments on the capital escalation, I guess, is a key risk. If the broader issues are resolved by year-end, do I read this as just more a case of the project economics in isolation, and therefore, risk around passing your internal hurdle rates, or do I interpret this more as risk around the group level of being -- of your ability to fund this project in parallel with the Prominent Hill and Carra growth projects that are well advanced and also likely to see some level of escalation? So is this the case that maybe if the CapEx numbers are not favorable, you look to delay FID until some of the broader market challenges settle down, and you're comfortable with your funding ability? And then just to check on that, if I -- just -- are you still looking at potentially bringing a JV partner there, and what's the sort of timing on that, if you were?
Yes. Thank you, Matt. Look, I'll ask Warrick to talk in a minute about our balance sheet and funding options that we have. In terms of the project itself, the project is, as I mentioned a bit earlier, it's converging. So the scopes are converging. There's a lot of data we got coming over the next few months on various packages, which have been repriced, recasted, et cetera. I think we've got a reasonably good hand now, though, on what escalation we expect in the project as compared to when we last released the study update that's starting to converge now. And again, that's mostly around steel supply, concrete supply, freight rates, et cetera. There's a bit more pressure on labor availability than what we originally considered a couple of years ago when we finalized the life study update. In terms of the group level and the ability to fund that, maybe I can ask Warrick to just talk a little bit about that in particular.
Yes. I mean, in terms of your question there, I mean, it's not a decision about funding in terms of the position that we're taking on the project, it's more about making sure that we've got -- we're comfortable with the project and we're certain about the capital and the composition of that. So -- and then obviously being able to deliver against that because that does obviously -- we don't want -- we want it going, obviously minimize our exposure around any additional costs that might come into the project through time delays and ongoing escalation factors, et cetera. So it's not a question -- those decisions aren't really a funding question per se. They are actually around just making sure that we are comfortable about the certainty of being able to deliver the project once we've got a final scope and opt to proceed with it.
Okay. Thanks, Matt. I'm going to assume that answered your question, and that brings us to time. So I'm going to wrap it up here, operator. Thank you very much, everybody, for dialing in. As usual, if there's any questions you have, please reach out to Travis to get the right people in the room to hopefully answer them for you. Thanks very much, everybody. Stay healthy. Thank you.