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Thank you for standing by, and welcome to the Sandfire Resources 2019 December Quarterly Update Conference Call. [Operator Instructions] I would now like to hand the conference over to Mr. Nicholas Read. Please go ahead.
Thank you, Rachel. Welcome, everyone. On behalf of Sandfire, it's a great pleasure to host our very first investor conference call and webcast of the year for the December 2019 quarterly activities report.I'd like to begin by referring you to both the quarterly activities report and an associated quarterly update presentation, both of which were launched on the ASX platform earlier this morning. A live webcast of this teleconference and a synchronized slide presentation are available using the BRR Media service. Just follow the link provided on the front cover of the presentation. A recording of the webcast will be available at the same link shortly following the conclusion of today's call.I'd like to introduce the Sandfire team here in Perth on today's call. Leading the call, we have the company's Managing Director and CEO, Karl Simich; and joining him, company's Chief Operating Officer, Jason Grace; Chief Financial Officer, Matthew Fitzgerald; General Manager, Geology, Shannan Bamforth. And to discuss the exciting new exploration results from Botswana, I'm pleased to welcome, for the first time, Julian Hanna, who is the head of exploration for the Tshukudu project in Botswana. So welcome to all these gentlemen.Without further ado, I'll hand over to Karl to kick off today's presentation. Thanks very much, Karl.
Thanks, Nicholas, and welcome, everyone, to the December '19 quarterly update from Sandfire Resources. And an exciting quarter it was for us. Obviously, having completed the MOD transaction and acquisition, which was announced in the last quarterly report but essentially completed during the December quarter, it really is a milestone event in terms of the company moving really to its next chapter of growth and development. So we're very excited about that.With regard to the quarter in question, just to highlight some of the key deliveries during that quarter. From a production perspective, from DeGrussa, production of 18,000-and-some tonnes of copper, up 9% on the previous quarter; and gold production of some almost 11,000 ounces, which was up 24% on the previous quarter; and a very pleasing C1 cost of $0.83 a pound, which were about 5% better than the previous quarter. I haven't got all the numbers in front of me, but I would think that the December '19 quarter is likely to be the best quarterly production we have seen from DeGrussa and, if not, close to the best we've ever seen.The first half production is almost 35,000 tonnes of copper and almost 20,000 ounces of contained gold and, once again, a very pleasing C1 cost of $0.84 per pound. And we remain with a guidance target of between 70,000 and 72,000 tonnes of copper for the year and almost 40,000 ounces of gold at an estimated C1 for the year at about $0.90 a pound. This will be an extraordinarily strong full year results. And in terms of copper production, if we achieve that guidance range, that will be a record for the year. So strong quarter, strong half year, strong year, we believe, forthcoming, and it augurs well for then being able to redeploy those funds into other key areas of development and organic exploration for the business.On the development front, I'm pleased to inform you that the optimization work on the T3 copper project that was acquired with the MOD transaction and -- is progressing very well with vigor and a very clear purpose in terms of what its objective is. So the progress is going very well with Mr. Ian Kerr at the helm of taking that thing forward. From our perspective, the most important thing with regard to the optimization work is to ensure that we increase significantly our confidence in terms of execution and delivery of the parameters with respect to that project. And we look forward to updating you on that during the next quarter, where our expectations are that we will have completed that optimization study and with the -- and plans to have also the decision to mine and funding solution for taking forward that T3 project into a mining proposition and through its construction, obviously, in a mining proposition. So very excited with the work that we're doing and our expectations of what will occur during the next quarter.With regard to the Black Butte permitting process for the project in Montana that is owned by our 85% subsidiary, Sandfire Resources America, obviously, we're a little bit disappointed. We're expecting the EIS, Environmental Impact Statement, to be completed by the last quarter, the December quarter that we're reporting in. It has not yet been completed. We are expecting it in the near term as well as the Record of Decision, which is essentially the mining permit. So we are waiting with bated breath. We are very confident that those -- the EIS will be completed and the Record of Decision will be issued, and that will be issued in the near term. But obviously, we are disappointed. Upon the issue of those documents and those situations, then we will complete and publish the feasibility study results that we are still completing as we speak. Looking further afield into the organic part of our business. We continue to being very active with the multi-pronged exploration programs across the Greater Doolgunna project and obviously, around the mines of DeGrussa and Monty, and Shannan will give you an update on that. But once again, and bearing in mind that having discovered the original resource numbers at DeGrussa, a 5.7% copper resource and Monty at 9.4% copper resource, leads to some of the highest-grade resources and wonderful, clean product that had been achieved around the globe for the last few decades. And so the opportunity there for us to create value is significant, and we continue with some programs there that we'll update you on.We're delighted to have Julian presenting a page today both relating to the exploration work that is being undertaken, again, with some vigor post the completion of the acquisition of MOD and the work that is happening there around the greater T3 project area and particularly with respect to A4 and some very encouraging results we released last week. And Julian will give you a further update. But certainly, our aspirations with respect to the MOD acquisition and then the consequences of that with -- of being able to have a project that we could take into development and a significant exploration portfolio and area of some 11,700 square kilometers, which we control 100%, is a wonderful opportunity and prospectivity for this organization is significant.From a corporate and financial point of view, once again, pleasing after the completion of the MOD acquisition where we deployed some $40-odd million, $45 million or $46 million as part of that settlement in that transaction and also paying interim dividends of, I think, somewhere in the order of $25 million or $28 million, the group still has in excess of $200 million in its treasury. So we're very happy with the position the business is in at the moment.Thank you.
All right. Moving on to safety. Safety performance for Sandfire remains solid for the quarter with company TRIFR at 6 as at the 31st of December. Our key initiatives of principal hazard management, safety leadership and culture and assurance of critical controls continue to deliver positive results, and we are actively working with our key contractors and also our new team in Botswana to continue to improve overall safety performance.Moving on to operations and, in particular, mining. Overall operations performance for the quarter was very good with all key areas delivering results in line or slightly above expectation. Underground mining production at DeGrussa for the quarter achieved 316,000 tonnes at a grade of 4.7%. Monty ore production for the quarter increased by 80% quarter-on-quarter, producing a grade of 5.9% copper, and this is in line with expectations and representing an overall increase of 59% quarter-on-quarter. The total ore production for the quarter was 407,000 tonnes at a grade of 4.9%.At Monty, another key milestone was achieved during the quarter with the completion of grade control drilling covering the whole life-of-mine plan. This drilling has been completed at nominally a 10 by 10-meter spacing and has given us a very high level of confidence on ore body grade, geometry and has enabled us to undertake a detailed stope design. While this -- while all of this information is continuing to be processed, we believe the drilling has also confirmed that the overall grade and contained metal to be materially consistent with previous estimates.Ore processing for the quarter was at 402,000 tonnes at an average feed grade of 4.9%. Both the copper and gold recoveries increased quarter-on-quarter with copper recovery at 92.9% and gold recovery at 44.5%. The key driver of the improved recoveries quarter-on-quarter is due to the excellent work completed by the DeGrussa site team on assessing and implementing optimum processing strategies for the DeGrussa crown pillar transitional ore that were causing issues back in Q1 of this year. Overall concentrate and metal production was 77,000 tonnes of concentrate produced, 18,000 tonnes of copper produced and 10,700 ounces of gold produced.
Looking at sales. Seven shipments completed for the quarter through both ports of Port Hedland and Geraldton, and sales of just over 73,000 tonnes is around 3,500 tonnes a lot behind and below production levels, and copper of 17,500 -- sorry, gold of nearly 10,000 ounces of gold in those sales.Our half year revenue numbers, just to put it into model, $313 million, and that is also subject to audit review. And we'll have our financial results around -- in around a month's time. At the end of the period, around 10,000 tonnes of contained copper, so that's subject to quotational period adjustment as well. So around 4 shipments subject to any January and February movements in copper price, as we've seen a little bit of a dip in recent weeks.Across to operating costs, a pleasing result, again, largely driven by strong quarterly production numbers, as we had modeled and as we had guided, and also that increase in strong gold production helping increase by-product credits for a C1 for the quarter of $0.83 and for the first half, $0.84. Our CapEx numbers are in line, and we'll just update, as when necessary, any of that guidance for the full year. And also, just touching on exploration evaluation for the first half, subject to audit review, are $27 million. Around $15 million of that is around DeGrussa. $5 million is for the evaluation of feasibility work and permitting work being done at Sandfire Resources in America and then some other Eastern States exploration, business development and exploration in ventures. There's also around $90 million of D&A for the first half and represented by, as you can see here, about USD 0.84 a pound. So if you convert the production numbers back, it's about $90 million for the first half across predominantly DeGrussa and Monty.On the cash side, as Karl touched on, are $46 million relating to the MOD acquisition during the quarter and $28 million for the financial '19 final dividend.
Exploration at Doolgunna continued afoot during the quarter with the aircore and EM surveying continuing first-pass exploration across the Peak Hill project, both in the Alchemy earn-in JV area and in 100% Sandfire-owned ground. This is very successful in defining the stratigraphy to allow us to focus further exploration in these areas.Pleasingly, our latest generation of moving loop EM survey tools has also identified some anomalies in the Southern Volcanics on 100% Sandfire ground that will be followed up this quarter. During the quarter, we also had RC and diamond drilling at the Morck Well Project, a farm-in joint venture with Auris, following up on geochemical and moving loop EM anomalies.In the quarter, we were also able to commence exploration on the Cashman JV with Auris. The Cashman project is an historical copper and gold workings and met gossans. Work commenced with aircore drilling and moving loop and is continuing this quarter. Positively, we are seeing the continuation of the prospective stratigraphy along strike into this project area.
Optimization of the T3 copper-silver project feasibility study is well advanced and with recent work concentrating on open-pit optimization and design, plant scaling studies and the review of overall operating costs. ESIA approval is moving forward, and we expect that overall approval soon and with mining life applications to follow. Completion of the updated feasibility study and ore reserve is expected in the June 2020 quarter and with the decision to mine to follow immediately after.
Okay. On the exploration in Botswana, just to give investors some idea of the potential of Sandfire's holding here. The map on the right-hand side, so if you look at the blue area, it's been consolidated by a group, Cupric Canyon Capital. They've just raised $650 million to develop their Cupric Canyon Zone 5 deposit, which is a 4-kilometer long, 2% significant underground copper mine, which is well in -- hitting towards -- in development now. We've done site visits. We know and operate closely with them as neighbors. But just to give you an idea, the overall resource in there, as announced by Cupric, is 500-odd million tonnes of 1.4% copper, so 7 million tonne of copper contained in the blue, 20 years of exploration. And within that, there's around about 185 million tonnes or 3.7 million tonnes of copper at 2% grade average in those 5 deposits, particularly up the northeastern end of the blue zone there. The geology that we see in the blue, we have confirmed, now extends at least for 150 kilometers into Sandfire's ground. But the orange colors to the left represent all of Sandfire's 100% holdings. The orange circles represent, just to give you some indication of the scale of what we're looking at here, copper soil anomalies at the same tenure that led to the discovery of T3 3, 3.5 years ago. So T3 has dominated the scene for the last 3.5 years, but there is much work to be done here.And A4 project, at 8 kilometers west of T3, is what I'm just going to focus on to give you examples of what's to come here. And we put an announcement out on the 24th of January. We resumed drilling mid-November soon after completion of the MOD acquisition with 4 rigs. We had immediate success in the first hole, discovering effectively -- all our geologists did a new zone of locally high-grade vein-hosted mineralization at the top of what's called the A4 Dome, shown in this cross-section here. We've increased the rig count now to 5, and we're hitting for 6 rigs, as we announced on -- last week. This target is very large potentially. It's -- this dome or structure runs for at least 5 kilometers that we can clearly see in electromagnetics, and there's no outcrop here so we rely heavily on geophysics. But it also plunges off in either end, and there are numerous facets to this particular dome. But the -- to give you some idea of our targeting. We -- the 6 rigs that we will have operating in 2 weeks' time, we've got 5 there today, will all be focused on that shallow mineralization near the top. And as we pointed out in the release, it does have -- show some early similarities to T3. So clearly, we're encouraged by that. And we're stepping out on sections in 100-meter spacing initially and see where this thing goes. We're also targeting a deeper zone we call the NPF Contact. This is a contact that hosts all of the 7 million tonnes of resources of the east end of the belt. So we can't ignore it. It's fully preserved at depth here. It's potentially for us an underground target, and we've had some early success in some wide -- very wide-spaced drilling on this NPF Contact on this A4 Dome.And I should point out that there are many domes in this district that are yet to be tested. This was highest priority because -- for 2 reasons: it looked rather similar to the T3 dome, which has the T3 deposit; but it's also only 8 kilometers from T3, so we're comfortably within trucking distance of the planned T3 pit if this thing would develop to the next level.I guess, really, if we look at drilling strategy this year, it is to really focus on high-grade potential opportunities in satellite deposits around T3. 25-kilometer radius is our current radius. We have many targets to drill over the next 6 months. We're well-funded with a $10 million to $12 million budget to do just that.At the same time, we are looking to extend our footprint down the belt to the west. And follow-ups are very encouraging early this -- in the sections by MOD 18 months ago at an area called T20. And the specific prospects within T20 itself is a huge exploration target area, 100 kilometers to the west of T3, but the targets that we reported previously were at T4 and T23. So there's a lot of work to be done. Excellent team on site, huge support from the government and the local community. And we're progressing with exploration at a big pace, effectively going from east to demonstrate a potential production over the eastern end of the belt and working our way westwards towards the Namibian border, which is 200 kilometers to the west. So that's probably a wrap-up on the exploration.
In terms of Black Butte, during the quarter, Sandfire Resources America released an updated NI 43-101 mineral resource estimate for the Johnny Lee deposit. It's worth noting that this update does not include the Lowry deposit, which has been included in previous estimates and contributed approximately 150,000 tonnes of contained copper. The updated mineral resource estimate for Johnny Lee is based on an additional 48 diamond drill holes and has yielded a Measured and Indicated Resource of 10.9 million tonnes at 2.9% copper for 311,000 tonnes of contained copper. It's also yielded an Inferred Resource of 2.7 million tonnes at 3% copper for 80,000 tonnes of contained copper.Progress towards the issuing of the Environmental Impact Statement and the Record of Decision has proved to be slower than expected and also as previously reported. While we are disappointed with the delays, we expect the issuing of the ROD, or the Record of Decision, in the near term. During the quarter as well, the feasibility study also continued and will be released following the issuing of the EIS and the Record of Decision.
And just in summary, once again, an excellent production for the last quarter. As I said, if not a record, close to a record quarter on all fronts, copper, gold and C1 costs. A great half year and guidance looking very strong for the full year. Optimization at T3, as we talked about, in Botswana, and we're looking forward to reporting on that in the next quarter in terms of other key milestones relating to mining permits, environmental permits and also decision to mine and funding solutions.With respect to Black Butte, as Jason has just updated you, we -- our expectations are still very strong. I'm confident that both the EIS and the ROD will be forthcoming, and we are continuing to diligently work away. We are active in exploration both in the Greater Doolgunna area and looking for the next DeGrussa or Monty as well as in the Botswana region with the work we're doing in and around T3 and further throughout that very prospective mineral belt.So it has been a very good quarter. We're repositioning the business. We're looking forward to a very, very exciting future. And I do believe we are continuing to be active, aspirational also in our inorganic assessments of opportunities. And our objectives are to look to leverage off certainly the increased momentum that we have got, the excellent resources within the group that we have got, access to capital markets to further extend our operational and development pipeline. So we are looking forward very much for a very positive quarter next quarter and equally a very exciting and positive 2020 for the company.Thanks very much for listening, and we open the floor to questions.
[Operator Instructions] Your first question comes from Hayden Bairstow from Macquarie.
Just a couple for me. Firstly, just on Botswana, and obviously, the drilling is being accelerated. I mean how much work are you doing to put flex into the project in terms of the build. Is incorporating at a high-grade underground straight up a possibility? Or is it literally just going to be that the base development plan for now and then -- and you'll look at sort of bringing in higher-grade ore later on?And then the second one, just on Montana. I mean this has sort of become a bit of an elusive approvals process. I mean assuming you do get it at some point this year, given you're committing CapEx in Botswana, I mean do you try and stagger these projects? Or given how long it's taken, you just want to -- if you get approval in Montana, you're just going to have to move on it and start building it straightaway.
Hayden, it's Jason Grace here. Thanks for your questions. So firstly, starting with Botswana, we're doing a lot of work at the moment on scaling studies on the processing plant. And we believe, if you like, this strategy behind that is making sure that we've got capacity to scale up either the open-pit operations with a higher tonnage rate or be able to augment our ore feed with higher-grade ore sources, whether they be additional open pits or undergrounds. So we're certainly building that into our scope of the feas study and the final design, the ability to be able to do that.
With regard to Montana and that approval process, Hayden, obviously, a little bit frustrating for us. We do believe, though, and we are confident that those -- that final environmental study will be forthcoming, and then the Record of Decision will also then follow. With regard to timing and sequencing matters, I think the vagaries of the way things have rolled out may turn out to suit the organization very well. It -- there's also -- yes, I suppose, the philosophy that we have is that we want to ensure we take maximum flexibility to continue in looking at development opportunities and potentially other aspirational operations and also development pipeline opportunities. Clearly, a close to 3% copper ore body is something that's quite enticing. If the region has got further prospectivity, on Montana, we obviously would love to establish operations there. But we do have some added flexibility in the fact that Sandfire Resources controls 85% of Sandfire Resources America. So we do have the North American capital markets. And if we continue to look at our focus of funding T3 potentially on a project basis, we were keeping parent company maximum flexibility, we do also have -- in terms of funding other situations. We also do have, and let's not forget because it's an independently listed company and has a full complement in America in Sandfire Resources America with -- under the stewardship of Rob Scargill, a full team of people that will be independently capable of taking that project forward as -- with oversight from parent company here.So I think we still feel confident from where we are that we are able to manage that project going forward. If the opportunity arises to take it forward, we will continue to push that project forward in terms of maximizing and creating and realizing that value opportunity. So I don't see us putting anything on the shelf anyway. It's going to be a matter of just organizing ourselves well and looking at the options in front of us at the time because we have a 2-listed-company scenario, and we have flexibility in terms of how we may solve, taking that project forward, whether it's consumed up into Sandfire parent or remains a totally independent listed company, which we are a shareholder in. So we can assess that depending on when we start to achieve those important milestone events.
Your next question comes from Michael Slifirski from Crédit Suisse.
Just following on from Hayden's question. I'm still, I guess, somewhat confused in that you seem to be moving at a fair pace on the feasibility study without really yet scoping out what A4 might be and how that might change things. So I'm -- how do you accommodate a concept in a feasibility study? Or are you saying that T3 feasibility is based entirely on what T3 is from a known perspective and T4 is sort of an expansion? I'm just trying to understand how you even think about it. I would have thought you'd sort of wait until you had a bit more visibility around A4 side before you finalize the feasibility study that might be blending ore from both.
Yes, Michael, this is Jason Grace here again. So the short answer to that question is that we are looking at the processing capacity to have an upside there beyond what MOD had previously done. And we believe that, that will give us the flexibility to be able to accommodate additional ore sources, whether they be higher grade or additional open-pit sources coming into the schedule.The other thing that we are doing is taking a review of potential upgrades that require minimal capital as additional projects come online in that processing plant. So yes, while we would love to have the luxury of waiting a period of time to see what comes out from A4, we're very keen to forge ahead and develop this project as we're very, very excited about the whole potential in that belt.
Your next question comes from Brenton Saunders from Pendal.
Just 2 from me. The first one is really on Monty. It's great to see that grades are up, but they're still quite conservatively below reserve grades. So if you could just give us a feel for how and when that gap will be closed. And the second one is just on the updates on the resource on the Black Butte Copper Project. I'm just trying to understand why the Lowry deposit was excluded from the update. And then if you can just -- if you could just summarize, for the Johnny Lee deposit, what the actual change in both tonnes and grades were.
Okay. For the Monty grade, the variance versus the life of mine reserve grade that's currently published is real, but we are seeing that narrowing in the coming 6 to 12 months as we start to work our way into areas that are dominated by further bornite mineralization, which carries the highest grade cores of the ore body. So we've got some very small high-grade core that lift the overall tenure of that grade, whilst the majority of the resource and reserve is in a slightly more subdued grade. So we have little nuggets of really high-grade material that will come through in the course of mining. And for the...
When can we expect that?
We'll start to see those in the next 6 to 12 months as we develop -- getting our development all the way down to the bottom of Monty, and we start to open up in line with the mining plan.
Now in terms of Black Butte, Lowry hasn't been included in the updated resource model simply because we've focused all of our efforts in terms of feasibility studies and all the permitting processes on the Johnny Lee deposit. And that will be the basis of all of our work going forward. Our previous estimates and a comparison to that and the tonnes and grade, we don't have that information with us here today. So we can't really provide any additional information.
I think, Brenton, if you want to take it offline, we're happy to sort of -- I think there was a slight adjustment in the tonnes that are -- were insignificant, and there was a bit of a grade adjustment with some in-fill grade control drilling that was done with those extra holes with greater degree of confidence and accuracy. So if you want to just send me an e-mail, Karl; or to Shannan offline, we can give you that reconciliation. There was an overall -- a smallish reduction on the Johnny Lee Upper and Lower contained copper mineralization, there's a small reduction in the grade. I think that was from just over 3% to just below 3% copper. And as Jason said, because the focus of the permitting for the Black Butte project relates to Johnny Lee, the feasibility deposit Upper and Lower, the feasibility relates to Johnny Lee Upper and Lower, the permitting relates to Johnny Lee Upper and Lower, and that is -- it's constrained. And it's important for us to get that permitted. And then subsequent to the permitting, we can then look at other resource opportunities in the region and then further potential exploration in due course. So it's really a very fixed program, very particular, very focused to achieve the milestones, to cross the Ts and dot the Is and then move forward after we have achieved certain milestones.So where in other parts of the world you might behave differently, it's very important to be -- remain focused because it is about ensuring the permit is completed and is in hand before we embark upon any other things. But -- so that you're -- so that people are aware, the original resource, global resource for the Black Butte project includes -- included the Johnny Lee Upper and Lower and also the Lowry. And -- but for the time being, we're just mentioning the Johnny Lee Upper and Lower. And in due course, there may be further information with regard to the Lowry deposit.
[Operator Instructions] Your next question comes from David Radclyffe from Global Mining Research.
So my first question is just really following up, I guess, on Brenton's question because I think what we're trying to understand a little bit more, what's going on at Monty. Given -- understand that the bornite zone's very, very high-grade and well above reserve. But I guess you're 30% through the ore body now. And if we back-calculate, that kind of implies that the grade from hereon needs to be in the order of 10% to be able to hit reserve. Is that the right way to actually think about it?
Not inter alia. I think we found that the morphology at Monty is also far more complex, as we've gone through with the drilling and, hence, the rationale for accelerating that driller so we can actually get an optimal mine plan out there. There, we'll see -- with some areas where there is a little bit of dilution. But overall, the copper tonnes are there, if there is -- there's no material change in the grade as we're seeing it at the current time. But I think we'll -- I'm not sure of the actual back-calculation that you've done there, but it does sound as that might be just a little high. But we can have a look at that and, again, take it online (sic) [ offline ], David, if you want to chase it up a little further.
Yes. Yes. Because I mean if the grade isn't that number then, because it's a pretty easy calculation, I guess, are you seeing additional tonnes? And is that what makes the overall contained copper to expectations?
Yes, we're still going through the resource model with this drilling and then with the reserves, there will be an updated number that's released to the public. So at the moment, we're working on internal estimates that are fairly embryonic in their maturity. But we continue to work through this.
Okay. Cool. And then just to follow up, just coming to Botswana. And obviously, Julian's slide was great in sort of highlighting what Cupric is doing there. So in relation to that, 2 group of people building deposits right next to each other -- well, in the same region, I mean is there -- was there any thought or is there any thought to sharing infrastructure going forward with Cupric? Or do you sort of think you need the permits to give yourself some more traction in any discussion if you were going to have one?
Yes. David, Julian here. Just -- I mean, just when you talk about nearology, they're about 100 kilometers in a straight line from T3 to Zone 5, and the main access through there is the highway. I guess infrastructure, processing plant or there's no real synergy there available, and themselves, they're looking at actually building a 5 million tonne a year process plant on site. Currently, they're using the one at the old Boseto Discovery Metals plant, which is about 40 kilometers away, which is underscaled and getting a bit outdated there. I think probably the biggest infrastructure development in this region, without a doubt, is the government's group power transmission line, which is now well progressing down the highway. It'll go within about 12 kilometers. It'll go right past our mine gate effectively on our mining license, that's 12 km from T3, and about 50 km in from the highway into Zone 5. But the main driver for that is actually the copper belt because the government is working up -- this is related to the Botswana diversifying its economy out of diamonds and into other commodities. Copper is #3. Coal is #2 on that list. Coal-fired power is very high on their agenda. And so we fit the model perfectly. So they're going well out of their way to working with the copper developers, which is Cupric and Sandfire, to satisfy their requirements for the future. It's a big, big -- it has a huge impact on this project, this power -- grid power.
Your next question comes from Paul Young from Goldman Sachs.
I think Julian just answered my first question on the upside or base case throughput you're running with in Botswana for the -- within the optimized feasibility study. Can you just confirm then, is that 5 million tonne per annum rate, is that the base case for the study?
No. No. The 5 million tonne that Julian quoted relates to Cupric Canyon for the Khoemacau project. So previously -- and I think MOD had quoted around about a 3 million tonne per annum processing capacity. Now the work that we're currently doing, and that's in progress at the moment, is looking at scaling that up slightly to be able to accommodate potential additional ore feed from the T3 open pit, but as well as accommodate additional ore sources as they potentially come online.
Okay. But you're not willing to give, I guess, a number until that study is completed, I gather?
It's -- we haven't landed on a final outcome from that study yet.
I kind of think it's more.
It will be above what has been previously quoted, without a doubt.
Okay. Right. And then, Karl, maybe just following on from your comments around Black Butte and the ROD, or Record of Decision. Can you just maybe give us some on-the-ground sort of feedback about what happened, why there was a delay, I should say? Was it purely that we ran too close to Christmas? Or were there other factors? And what gives you the confidence that you will receive that decision near term?
Look -- it's Jason here. From our point of view, this is a, if you like, a government and a permitting process. And it's not just Montana that tends to get bogged down and suffer delays in any of these types of processes. But what we are seeing in Montana, I think this is the first new mine that's been or being permitted in about 20 years. And what we are seeing from the regulators is that they are being very, very careful and very thorough and making sure that whatever decision is made is that -- will basically survive any sort of challenge or any sort of future scrutiny. But we remain very excited, and we are working very closely with the regulators and receiving regular updates, and we certainly see that we'll get approval in the near term.
And last question is on your investment in Adriatic resources. So you've been creeping there. Can you maybe just outline the -- what the strategy is here with Adriatic?
We -- thanks, Paul. We essentially embarked upon a strategy some time ago to look at the concept called Sandfire Ventures, and Sandfire Ventures was us making relatively minor investments in either -- the investments in companies that had some interesting organic opportunities or directly into joint ventures or other smaller-scale situations. And we've got a number of those investments. We have a position in corporations. We have a couple of positions in private entities, and we have a couple of separate earning joint ventures with -- in -- directly into projects.Adriatic is one of those. We've -- we started off with a position. And I think from our perspective, as I said, the geology in the region was something that we're quite interested in. That Tethyan mineral belt is something of interest to us. We see it as an opportunity to become more familiar with the region. And at this stage, it still is just an investment that the company has got. We'll assess that and assess the merits as we go from time to time. It's an investment that we're pleased is at a higher price than our investment has been on average, so that's good. And we're looking forward to that company making progress. But more than that, it really is, for us, at the moment, an investment, and it's not a core part of the business that we're pursuing. It is an investment that at this stage has gone well. So we hope for that investment position to continue to gather momentum and go well. But for us, it is just that at this stage.
There are no further questions at this time. I'll now hand back to Mr. Simich for closing remarks.
Thank you, everyone, for dialing in today and listening to the quarterly update for the December quarter. And hopefully, you have received all the information that helps you get your head around it. Looking forward to a great quarter, looking forward to the next half year being a very solid one. And we're looking forward to 2020 being a milestone year for the organization, as we do really move into the next chapter in terms of our aspirational and leveraging off where we are today as a business and those aspirational things we have in our portfolio in Australia, in the U.S.A. and certainly in Africa in Botswana. So I'm looking forward to another very positive quarter next quarter and updating you then. Thanks very much for listening in today.