Thank you for standing by, and welcome to the 29Metals Limited December quarterly conference call. All participants are in a listen-only mode. There will be a presentation followed by a question -and -answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mike Slifirski. Please go ahead.
Thanks very much, Lexi. Good morning, ladies and gentlemen. We will be speaking this morning to 29Metals December quarterly activities report, which was released to the ASX this morning. This call and parallel webcast is being recorded and will be available for replay via the 29Metals website and the Open B riefing website. 29Metals Managing Director and CEO, Peter Albert, will present an overview, overview of the quarter, the year, and 2024 outlook before handing over to COO Ed Cooney and CFO Peter Herbert to lead you through the detail of the quarter. And then we'll open for your questions. So now I'd like to hand over to Peter Albert to commence the presentation. Thanks, Peter.
Yeah, thanks, Mike, and good morning and welcome, everybody. Thank you for joining us this morning. Today, we have the Chair of 29Metals joining the meeting, Owen Hegarty. Owen's on the line. Owen, would you like to say a few words of introduction?
Couple of opening comments. Good on you, Peter. Well, thank you very much for that, and thank you to you and to Mike. I really just wanted to, Peter, take the opportunity to thank you, actually, for the past several years that you've been with us here at 29Metals, and prior to that, of course, managing the assets that are now inside 29Metals. So highly appreciated. You know, got us through to the point of IPO, got through the IPO, got through various other challenges there, and now the company is in strong position to go forward and, you know, look forward to continuing to work with you, Peter, during the next few months as we go through that transition.
You know, as far as all that is concerned, I can report, indeed, that that particular executive search is on schedule, on time, on budget, on plan, so that's going pretty much according to plan. So, Peter, we deeply appreciate all of that, and thought I'd take the opportunity to say that to everybody, apart from wishing everybody a happy new year for 2024. Look, as you say, and Mike, looking ahead to this year, there's plenty of work about to come here, plenty of chat about the last quarter, strong quarter there, and plenty of talk about what's coming forward for this year, and we, I can assure you, looking for again another strong performance, good turnaround, good improvement, and good growth during 2024.
So pretty exciting. In terms of the macros out there that, you know, and I know everybody on the call here gets these things coming at them all day long, but we take a very positive approach to the outlook here. We're not unaware, of course, of some of the macro headwinds and various other geopolitical uncertainties and so on. But generally speaking, we're looking for growth. The world will continue to grow. The energy transition has left the station, and there'll be good commodities growth there for copper and zinc, and that, what we call the geopolitical tension, will make sure that gold and silver stay under pressure, too. So we're looking forward to that.
So it's an exciting year and very much looking forward to it internally and externally. And finally, I should say, Peter, and to everybody, if anybody's got any questions, queries, or comments of me as the Chair or any of the other directors, then as usual, please fire them through. We're open and very happy to talk to any of those particular items that you might be interested in addressing to us. So Peter, with that bit of an intro ramble there. Back to you, Peter.
Yeah, thanks, Owen. And now I'll sort of move into the presentation of the quarterly results, outcome, and the guidance for 2024. Thank you, Owen. So in this last quarter, we've made significant progress at both Golden Grove and Capricorn Copper. As always, the safety and well-being of our people is our primary focus. The total recordable injury frequency rate, TRIFR, continues to fall and is now at 6.5 for the group. Although we did have two lost time injuries during the quarter, it is worth noting that for the 12 months period, our TRIFR is down by approximately 35%, and our lost time injury frequency rate is down approximately 25%. Really outstanding, great results and a testament to our operating team's focus on safety.
During the quarter, we also implemented mental h ealth a wareness t raining across the company via the Black Dog Institute. We extended our mental health first aider program at Capricorn Copper and completed the new statutory supervisor training required under the WA, Western Australian Mine Safety Management System at Golden Grove. Turning to production, at Golden Grove, we achieved a very significant increase in metal production, with nearly 21,000 tons of zinc and over 5,200 tons of copper, compared to 8,600 tons and 5,500 tons, respectively, for the prior quarter. Zinc production in the quarter was impacted by an overcall on grade for a particularly high-grade stope out of three milled during the quarter. Ed will explain in more detail later or later on.
Overall, we met copper and gold guidance for the year, but the underperformance of the one stope at Xantho Extended in December meant we missed zinc guidance by less than 5% and about 2,400 tons in gold guidance by approximately 1,000 oz. Overall, a good production quarter from Golden Grove, and especially Xantho Extended, demonstrating the high quality of this ore body and the benefit of the de-bottlenecking projects we completed during 2023. At Capricorn, during the quarter - sorry, staying at Golden Grove. During the quarter, we made the submission to the regulator for the next tailing facility at Golden Grove, called TSF4, and subject to regulatory approval, we plan to have this facility in operation in the first half of 2025.
At Capricorn Copper, the focus remained on recovery, with significant reduction of on-site water and continued production from the Mammoth and Greenstone ore bodies. A tailings thickener shaft failure in November impacted the planned copper production, although continued improvement in copper production was achieved with 2,400 tons produced. The thickener was repaired and came back online earlier in January. The most significant outcome for Capricorn Copper during the quarter was the Queensland Government's declaration of prescribed project status, as well as critical infrastructure project. This provides the Office of the Coordinator General, also called the OCG, the powers to facilitate timely decision-making for key approvals. An extremely strong show of support for the full recovery of operations and the long-term future of the site.
Another significant achievement at Capricorn has been the re-entry into Esperanza South, a sub-level cave, which was flooded in the extreme weather event last March. To date, we have removed approximately 160 ML of water from the cave and rehabilitated the first upper levels of the mine. Consistent with our expectations, inspections of the upper levels indicate the fibre crete is largely undamaged, with bolts requiring replacement. During the quarter, we also made a revised application to increase the holding capacity of the Esperanza Pit, called the EPit, and resume tailings deposition in the EPit, noting we have previously put tailings into that facility. A number of discussions have been held with the Department of Environment, Science, and Innovation, called DESI, as well as the OCG and other government departments in respect to this application, and we anticipate an outcome in this current quarter.
As most on this call would know, securing our ability to resume depositing tailings into the EPit is our pathway to continuous operations as we complete the design, approval, and construction of the long-term tailing facility at Capricorn, TSF3, and we expect to submit the application for TSF3 in the near future. As has been previously advised, a refusal of the application, if that were to happen, to redeposit tailings into EPit, would result in Capricorn Copper being put into care and maintenance for a period until TSF3 was constructed. As noted previously, working very, very closely with the government departments to secure the approval to be able to put tailings into the EPit. Costs across the group were well controlled in the quarter, despite materially higher activity and higher production.
In the face of continuing inflationary and labor pressures, overall costs for the group were within or below guidance. We estimate that the cost out and productivity initiatives across the business achieved approximately AUD 20 million of savings, and this focus will have a renewed effort in 2024. Unaudited cash at 31st of December was AUD 162 million, and Peter Herbert will talk to financial outcomes shortly. On the exploration front, the first of the two holes to be drilled at Capricorn Copper across the fault at Mammoth encountered poor ground and was pulled up a little short. Although the approximate 500-meter drill that was drilled did result in some good and encouraging geological outcomes. The second hole drilling has commenced.
At Golden Grove, the Cervantes program has concluded, and the results are being incorporated into the resource and reserve estimation, which is due for publication by the end of February. The insurance claim for Capricorn Copper recovery remains in progress, and we will advise outcomes as they are realized. Now, turning to guidance, 2024 guidance. 2024 guidance is released today with the December 2023 quarterly report. Given the current uncertainty around Capricorn Copper, we're not providing full year guidance for Capricorn at this stage. Golden Grove year-on-year improvement for all metals reflects an increased production from Xantho Extended. Copper metal guidance is 18,000-22,000 tons, against approximately 18,000 tons produced in 2023. Zinc metal guidance, 54,000-61,000 tons, against approximately 51,500 tons produced in 2023.
Gold metal guidance of 17,000 oz-25,000 oz, against approximately 14,000 oz produced in 2023, and silver metal guidance of 700,000 oz-1 million oz, against 775,000 oz produced in 2023. In respect of cost guidance for Golden Grove, increases in guidance for mining and processing costs, which combined is AUD 320 million-AUD 365 million, as compared to 2023 outcomes of AUD 306 million. This increase due to increased activity and continuing inflationary pressures. An increase in TCRC guidance of AUD 68 million-AUD 78 million, compared to AUD 51 million in 2023, reflecting a production profile, changes to benchmark terms, and zinc concentrate at TC escalators.
An allocation of AUD 7 million-AUD 8 million at full cost to the site, previously reported as centralized costs. This allocation principally relates to Golden Grove's share of group insurance and labor costs incurred to directly support operations. The combined sustaining development and growth capital guidance is AUD 59 million-AUD 75 million, compared to AUD 50 million in 2023, with the growth capital comprising TSF4 for construction and a proportion, or a portion rather, of Xantho Extended development capital. For the group, exploration guidance between AUD 4 million-AUD 7 million is to support the planned drilling east of the Mammoth ore body at Capricorn and continued resource conversion drilling at Golden Grove. Corporate cost guidance at AUD 21 million-AUD 23 million is after the allocation of some group costs to operations, as previously noted, for Golden Grove.
So now I will hand over to Ed Cooney to talk in more detail about our operations, and then he will hand over to Peter Herbert to talk in more detail about financial outcomes. Over to you, please, Ed.
Thanks, Peter, and good morning, everyone. Well, Peter has spoken to our safety metrics and outcomes for the quarter, so I'd like to begin with progress against our recovery plan at Capricorn Copper. A relatively dry November and December period has enabled further water reduction during the quarter, with Mill Creek Dam being in compliance in terms of water storage volume at the prescribed date of first of November, representing a vertical drop of approximately 2 meters. Dewatering rates from the underground at Esperanza South progressively increased during the quarter, with the North cave now fully dewatered, and the decline, which transitions from the north to the South C ave, currently undergoing final dewatering and ground support rehabilitation has commenced. Larger capacity submersible pumps on-site are awaiting completion of planned dewatering holes, which once installed, will further increase underground dewatering rates from the South C ave.
In the absence of creek flows during the December quarter, there was no opportunity for treated water release. However, with recent rainfall in the creek catchment, controlled releases have since commenced from the flooded workshop area. Overall, notwithstanding recent rainfall, the input of Esperanza South water from underground into the pit, the expanded evaporation system, limited freshwater take from the lake, plus the release of water to the creek, have largely maintained the reduced Mill Creek Dam water level and an approximate 3-meter vertical reduction in water in the Esperanza Pit. In terms of production activities, while the December quarter saw an improvement on the September period of all mined, milled feed grades and copper production, failure of the tailings thickener shaft exacerbated water quality issues being managed in the settlement ponds.
This had a direct impact on mining and process plant runtime, negatively affecting copper production outcomes in late November and December. The shaft was replaced ahead of the planned commencement of January's milling campaign. Nonetheless, copper production for the quarter, at about 2.4 kilotons, was a significant improvement on the prior quarter. Looking ahead, progress continues to be made on a number of key capital projects, with a focus on design and on-site survey activities for a new long-term storage tailings storage facility. Completion of these works will lead to the application submission for this facility, expected in the near future. Design of a replacement water treatment plant has progressed from concept level to the detail stage.
As Peter mentioned, we submitted a revised application for an amendment to the Design Storage Allowance within Esperanza Pit, and approval to resume deposition of tailings for an interim period until the new tailings facility is approved and constructed. With existing remaining tailings capacity in the Esperanza TSF until the end of April, we continue to work closely with various government departments to enable sustained production outcomes, including a return to full operations, with Esperanza South coming back online in the second quarter. Moving on to Golden Grove. Mining volumes were marginally lower than the prior quarter due to a greater proportion of ore trucked from depth at Xantho Extended, while mill tons were consistent with the prior quarter. During the year, a number of de-bottlenecking activities were undertaken, including commissioning of the new ventilation circuit, introduction of Auto Mine, and the commissioning of a new underground fuel bay.
Despite the ventilation fans encountering multiple commissioning problems, mining activity, as measured by both development and production, increased at Xantho Extended quarter-on-quarter. For the full year, tons mined from Xantho Extended increased to approximately 330,000 tons, which was a significant lift from the 180,000 tons mined in 2022. In terms of full-year metal production, copper performed well and was in line with guidance. However, as Peter mentioned, we fell short on zinc. The site team put in a tremendous effort to successfully mine and mill the planned ore sources required. However, expected zinc grade from one of the planned high-grade sources underperformed, resulting in a circa 2,500-ton shortfall in zinc production.
The zinc grade underperformance was primarily due to additional chalcopyrite within a broad zinc ore zone, not previously identified at the current 20-meter drill spacing. The net result was greater copper produced from the stope, but less zinc. We do retain a very high level of confidence in the geological resource models, with overall zinc reconciliation at Xantho Extended within 3% of the model estimates to date. Development performance at Xantho Extended continued to improve during the December quarter, with another record achievement set, and the site team remain absolutely focused on further ongoing improvements in this area, which is a key driver of future production growth from the ore body. Peter mentioned the 2024 guidance ranges earlier for Golden Grove.
We anticipate additional volumes through the process plant this year as we benefit from no mill throughput curtailment, as we experienced in the first quarter of 2023, partly offset by an additional planned mill reline. Increases to production across all metals is expected as we deliver further year-on-year improvements to production rates from Xantho Extended. The zinc guidance, in particular, reflects the mining schedule updated for closing phase positions at the end of 2023, with a significant improvement in development performance at Xantho Extended in the second half of 2023, only partly offsetting early underperformance earlier in the year. In terms of approvals activity, an important application for the site's new tailings facility was submitted in the December quarter, and a subsequent information request response has been provided in January. Procurement of associated long-lead items and the design is currently progressing to plan.
Additionally, we anticipate submitting our application for Gossan Valley approval later in the March quarter. I'll now hand over to Peter Herbert to discuss financial outcomes of the quarter.
Thanks, Ed, and thanks, everyone, for joining us this morning. I'll start with revenue outcomes for the December quarter. Our quarter revenue of AUD 141 million, and that increased approximately AUD 40 million on the prior quarter result. Golden Grove achieved higher copper sales, despite flat metal production quarter on quarter, reflecting the timing of shipments. Lower zinc sales, despite a material increase in zinc metal production, as concentrate volumes on hand increased, consistent with production outcomes weighted to period end. Capricorn Copper achieved an increase in copper sales of more than AUD 20 million in the quarter, reflecting the ramp-up in production activity. Copper, as a percentage of total revenue for the quarter, was approximately 70%, an increase on the prior quarter result, 58%. This increase reflects higher copper sales at Golden Grove in the quarter and the continued ramp-up operations at Capricorn Copper.
Realized metal prices were broadly flat in AUD terms, the prevailing zinc and gold prices in USD terms, rising slightly, while copper was slightly softer, and the Australian dollar was largely flat as well. Looking ahead to 2024, Golden Grove production sales outcomes are expected to be slightly weighted to the second half, and at Capricorn Copper, we expect March quarter performance to be broadly consistent with the December quarter, albeit absent the impact of the ramp-up challenges that Peter and Ed spoke to earlier. Turning now to costs. At Golden Grove, site costs for the December quarter of AUD 91 million were higher than the prior quarter result of AUD 81 million, reflecting increased activity, contract rates, and nearly 50% increase in concentrate volumes produced during the quarter.
Selling costs, comprising TCRC and transport costs, were broadly in line with the prior period, despite an increase in concentrate volume sold, reflecting a greater weighting to copper concentrates during the quarter. Capital in the December quarter continued to track to the bottom end of guidance. For the year, total capital of AUD 50 million was below the bottom end of guidance, being AUD 68 million, reflecting lower than expected TSF procurement commitments, decisions to defer non-essential capital, and lower rates of development advanced during the year. At Capricorn Copper, site costs increased to AUD 31 million from AUD 19 million in the prior quarter, reflecting the ramp-up in activity during the period, albeit still below the March quarter run rate, given the ongoing suspension of Esperanza South and the impact of the ramp-up issues.
C1 and AISC unit costs for the quarter declined 14% and 18%, respectively, however, were mainly elevated ahead of the restart of Esperanza South. Recovery costs for the December quarter were AUD 16 million and included costs associated with the commencement of ESS dewatering. For the full year, recovery costs of AUD 61 million was below the bottom end of guidance of AUD 70 million. Efforts to identify cost-saving opportunities, primarily in Golden Grove in 2023, an increase in production at both sites has delivered reduced unit costs in the December quarter. The identification of cost and efficiency opportunities has been encouraging, and there is a focus on expanding these efforts into 2024, with improvements in unit costs to come from resolving ramp-up issues and executing our plan to deliver higher production in 2024, particularly the production of mining and milling from Esperanza South.
We're working with our teams and business partners to identify and extract further operational efficiencies and delivering further opportunities to streamline and simplify our business. 29Metals finished the quarter with available cash of AUD 162 million, a decrease on the September quarter position of AUD 227 million. The movement in cash reflects the timing of sale of Golden Grove and the buildup of concentrate in the drifts, as mentioned earlier. The impact of the ramp-up issues at Capricorn Copper, reducing production by approximately 1,000 tons of copper, which has since been resolved. The timing of the corporate costs, including the payment of insurance premiums and a further AUD 10 million dollar principal repayment and interest costs during the quarter. No proceeds from 29Metals' ongoing insurance claim were received during the quarter.
However, progress continues to be made on the surface components of the claim for property damage and business interruption. The group had unaudited net draw on debt of AUD 52 million at the end of the quarter, an increase on the unaudited net debt position at 30 September of AUD 15 million. After principal repayments, gross drawn debt declined to $146 million at year-end. 29Metals continued to evaluate opportunities to enhance access to liquidity during and post-quarter. Discussions on a potential offtake facility were advanced. Finally, 29Metals has been in communication with the WA Office of State Revenue, and based on this correspondence, expects to finalize the stamp duty payable in connection with the acquisition of Golden Grove during the first half of 2024. 29Metals maintains a AUD 26 million provision in relation to stamp duty.
Thank you, everyone, for listening. I'll now hand back to Peter Albert.
Thanks, thanks, Peter, and thanks, Ed. Lexi, we could now move to any questions at this point in time. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on speakerphone, please pick up the handset to ask your question. Your first question comes from Kate McCutcheon from Citi. Please go ahead.
Hey, good morning, Peter, and best wishes for 2024. The comments in the quarterly on insurance, what does making progress mean exactly? What is still in the works there? Any color you can provide in terms of scope versus what you thought it might be and timing around that?
Thanks, Kate. Always a challenging question, and understandably asking the question. The discussions with insurers are ongoing, positively ongoing. I think in the quarterly, we reflect on the indemnity provided by the insurers in respect of the surface property and related BI. So that's advancing and moving ahead, and as noted in our discussions earlier, as we get to resolve those outcomes, we'll certainly keep the market well informed. And once we get through that, that's the time to engage more significantly with the insurers in relation to the underground component of the insurance. So work in process, I can't really advise any more, Kate.
Not that there's any more to advise, except the work and the process is ongoing and has advanced, and we're actively engaged with the insurers.
Mm. Okay, got it. Thank you. And then Golden Grove guidance on zinc seems to be a bit lower than the five-year outlook you previously provided. Is there anything to call out there? And just a related part of the question, after spending on capital, even if I strip out the growth at Golden Grove, it's been some time since that asset generated free cash. From the comments, it seems like you're looking at it closely as a business in terms of what you can do to bring costs down. But what are the key levers there? I guess the question is, you want to be mining for cash, so what are the things that you're looking at there?
Do you want to talk about the guidance on the tons, Ed?
Yeah, I'll tackle that one, Kate. I mean, principally, it's due to closing face positions at year-end. If you recall, we did have a number of delays, somewhat frustratingly, with the booster fans at Xantho Extended. Obviously, they're now resolved, and additional improvement projects, such as fuel bays, et cetera, completed, which sets us up well. Having said that, you know, the improvement that we saw late in the year wasn't enough to offset the shortfall early in the year, which effectively means that, I guess the total ore tons from Xantho Extended plan for next year is slightly lower than where we had previously guided.
Okay, got it.
Yeah, Kate, it's Peter Herbert . I might just talk a little to the cost question that you raised. Look, great question. As you'd expect, there's no single silver bullet with these things. We're focused primarily on driving increased efficiencies across the site. And Ed talked to things like building a fuel bay underground to improve efficiencies out of that fleet. And this really is something that we're engaged very closely with our partners, you know, including groups like Byrnecut, to help us achieve those efficiencies. You know, looking at the teams, how they're structured and set up to drive greater output underground.
You know, equally, at Capricorn Copper, you know, we have experienced those ramp-up issues in the December quarter, and we would hope that those are now resolved and that we can drive greater productivity on that site, in the March quarter.
Okay, yeah. I guess, my question was around the ability for Golden Grove to generate free cash and the outlook there. I know it, it's not a specific question, but just that asset hasn't been making that. So looking forward, that would be good to see.
Yeah, absolutely. And we're, I can assure you we're very much focused on that as well, Kate.
Okay, thank you.
Yeah, just to add to that, Kate, I mean, I did make reference in my comments to the savings achieved in 2023, with a backdrop of the, you know, not insignificant inflationary pressures and labor pressures. So, and that a lot of focus on contractor management and efficiencies across the business and very significant input right across mostly Golden Grove, of course, because Capricorn Copper in a different status last year. But significant achievements with that backdrop, and as I noted earlier, that process is accelerating and advancing and be a renewed and continued focus this year. So look for those opportunities, certainly, aware of the concerns there and we're focused on making that operation as efficient as we possibly can.
Okay. Thank you, Peter.
Thank you. Your next question comes from Tim Hoff from Canaccord. Please go ahead.
Thanks very much, guys. First off, congrats, Peter, on your retirement. All the best for the future.
Thanks, Tim.
I was just looking at page two and just having a look at the Xantho Extended, your ramp-up rate there. Ore mined is 140,000 tons close to sort of a run, a steady rate, run rate there, or is there more sprint capacity?
Yeah, so that reflects a good increase quarter on quarter. I mean, as we've mentioned, you know, development rates impacted earlier in the year by ventilation, which effectively did mean that we were constraining mining activity in terms of limiting truck movements and the like. So for the year, we achieved about 330,000 tons out of Xantho Extended. Ultimately, you know, where we want to get to is sort of around the 1 million-ton mark. So even on the December quarter, there will be further increases over time, as we bring online or open up more development sub levels, and produce from a higher number of stopes from that ore body. So continual improvement, you know, over the coming years, even from the December quarter, right?
Thank you.
I don't think—o h, sorry, Ken. Ed, I don't think we can understate the benefit of the ventilation system, which is, we've certainly we experienced some significant problems right up to the point of getting them commissioned and back into operation from about, well, sometime in the third quarter, and you see the improvement from there. So you know, that they're now up and running and providing the appropriate ventilation as well as the other projects that Ed referred to in terms of the fuel bay and the AutoM ine system, which again, was a project for last year.
So those activities will lead to continuous and continued improvement as Xantho Extended, and as Ed said, the target is to get to 1 million tons from around there. Bit of a repeat there, Ken, and thank you for your comment earlier in respect of myself. Thank you.
No worries. Thank you. And then perhaps finally, TCRCs regarding to an up year, year on year. Just noting that, in our screens with TCs falling this year, understand there's an escalated. Can you just step through that and how that functions for us?
Yeah, sure. So a bit of a mixed bag there for the TCRCs in 2024. The higher zinc production forecast year-over-year is obviously part of it. The escalated linked to the same price under those existing offtake agreements are a key driver there. And this year will be the year where that impacts the most based on the schedule of escalations that we have in place under those agreements. So next year, we would expect an improvement relative to this year, all things you know being equal in terms of price and production. But yeah, that's the key driver for TCRCs this year.
Any high copper stopes you can take instead?
I'm so sorry, I didn't catch that. Sorry.
Sorry. I was gonna say, any, any high copper stopes you can take this year instead of the high zinc?
Well, I think we're always looking to optimize that profile, of course. But, yeah, we'll always evaluate that as we go forward.
No worries. Thank you very much, guys. I'll hand it over.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Rahul Anand from Morgan Stanley. Please go ahead.
Oh, hi, team. Thanks for the call. Happy New Year. First one's just a follow-up from Tim's question. I just wanted to press a bit more on the TCRC side of things. So firstly, can you update us in terms of what your base rate to the zinc treatment charges are, and, you know, where does the additional TC kick in in terms of price and also the length of the contract? I remember seeing an announcement a while back, which talked about midpoints of the contract. So this is obviously a high year, as we were talking on the previous question, but I just wanted to understand what those numbers were, first of all.
And then, just following on from Tim's question as well, are there any volumes involved here, or, is this simply a year-on-year contract, whereby if you produce less zinc this year, then you essentially pay lower TCRC in dollar million terms over the life of contract? That's the first question. Thanks.
... Yeah, sure. So in 2024 and 2025, there is 100,000 tons in each of those years remaining out of these contracts. So they, they are the volumes covered by, by this. You know, once they're delivered into, then that obligation is complete. And the details are in the guidance section, just for your reference on page 11, but the base escalator is 230 for those 100,000 tons, and the escalator kicks in at a price of $2,050 per ton. So, that's US, I should say. So the details are there, and it covers 200,000. And next year, the average price will increase again, relative to this year.
So then after the 100,000 tons, that's it? We go back to a normalized TCRC contract. Is that right?
Yes, that's the balance. Yeah, that's right.
Okay, brilliant. Okay, that's very clear. Thanks for that. And then the second question's around Golden Grove in terms of your stope reconciliation. Just wanted to understand, you know, the size of the problem, so to speak, if you wanna call it a problem. Obviously, you talked about having a bit more copper than zinc, but what's the delta in terms of the reconciliation here? Are there any concerns in terms of going forward that we should have in terms of that, you know, good reconciliation that you've had in the past, changing to perhaps a bit more strenuous relationship with that reconciliation? Thanks.
Yeah, so we've mined 10 stopes, Rahul, in from Xantho Extended. The model reconciles within 3% for zinc in the aggregate. Obviously, there's some pluses and minuses. That particular stope where we had a 2,500-ton shortfall was about a 20% delta to the negative. You know, we've had a look at, you know, this year's stopes. We don't anticipate issues of that nature recurring this year. Having said that, you know, we... It is an estimate. It is based on 20-meter drill spacings. You know, it's a rigorous process signed off by a competent person. We do have it reviewed by external third parties at that certain interval, so we do have good confidence in the estimates.
Having said that, you know, we will take another look at, at potentially some of the drill spacings in certain areas of the ore body, as we would from time to time, as we do resource estimate updates. So, in short, you know, not concerned. Yes, it did catch us out, and it was a specific high-grade source at the end of the year, so the timing was difficult, but still have good confidence in the models.
Okay, and then just perhaps the final one around Xantho Extended still. How does the ore sequencing look now going forward into the next couple of years, perhaps, proportionally? How much are you expecting out of Xantho Extended? And I'm just trying to get an understanding of how that impacts grade and how we can think about cash flow generation at the asset. Thanks.
Yeah, so I mean, the work we've done to inform the guidance, you know, looked at year-end phase positions and the detailed plan for 2024, not beyond. In terms of what we released previously, if I'm not mistaken, the midpoint of Xantho Extended production was, you know, sort of circa 650,000 tons in 2024. We're probably targeting about 100,000 tons in the plan below that for this year.
Got it. Okay, that's all for me. Thank you. I'll pass it on.
Thank you. Your next question comes from David Radclyffe from Global Mining Research. Please go ahead.
David, we can't hear you, David.
Oh, sorry. Hopefully, you can hear me now. Apologies for that. Sorry, Peter.
No worries.
Question, just coming back to Capricorn. I just really want to clarify the timing here for a tailing solution. I think previously you'd mentioned maybe that there was a six-week lead time following any approval to being able to stack, and whether that you've been able to do any work there or not. And if I'm reading that right, does that mean we're really sitting here with only a couple of weeks of potential time before there is a... If there's no approval, there would be an interruption?
Not quite. So we have previously deposited tailings into the Esperanza Pit. It's relatively close to the process plant, relatively straightforward, you know, infrastructure in terms of a single deposition tailings type. So any lead time to enable that to recommence is actually relatively short. So that 6-week timeframe you mentioned, they're not quite correct for the Esperanza Pit. Yeah, so we'd be able to turn that on reasonably quickly.
Okay. And is there any—I mean, obviously, you've got special status there, and you've had that for, I guess, a couple of months. You're actually seeing that that's actually achieving anything, or I think previously you've talked about it seems to be quite a slow process with the Queensland government. Has anything actually changed after getting the special status?
Well, thanks, thanks, David. Well, the special status was, which we got, I think it was, November eventually, was a, was a very rapid outcome, very great support from a number of government entities in terms of turning that around extremely quickly. So very, very positive from that respect. There was no requirement for anything to be enacted from that outcome until we went through the process of the next approvals submission. So it was not accepted to maintain and keep the relevant departments informed and involved, but no specific activities were required.
Obviously, now that we've made the application, we're in that process, the level of information, the level of discussions increases, and we're in that stage at this point, at this point in time, to ensure that we get the right support at the right time from the right government bureaucracies. And OCG, the Office of the Coordinator General, will and is leading that effort. So nothing. Your question sort of suggested that, or it may have implied that there was nothing happening there, but it's all happening in the background, but certainly in the early stage days, nothing required to happen, David.
Oh, no, no, that's helpful. I mean, it's obviously, it's hard for analysts from the outside looking in to get a picture of whether things have sort of improved on the permitting side or not. So that's where the question was going, but thank you for that. I'll pass it on.
Thanks, David.
Thank you. There are no further questions at this time. I'll now hand the conference back to Mr. Albert for closing remarks.
All right. Thanks, Lexi, and thanks everybody for today, and thank you for all the good questions coming through. We here at 29Metals are significantly encouraged by the 2023 quarter four achievements at both Capricorn and Golden Grove. As the Chair said earlier on, so setting ourselves up, we consider for a successful 2024. Throughout the challenges of 2023, our team has stayed focused, committed, and we achieved most of the goals we set after the extreme weather event occurred at Capricorn in March last year. The teams at both sites continue to address any challenges we faced professionally, focusing on safety, great safety performance, as I referred upfront in my discussions, and while overcoming the issues that we have confronted in as rapid time as possible.
As I said earlier, now looking forward to building on the end of our positive 2023 year outcomes as we move into 2024. Thanks again for attending today. As the Chair said earlier on, I'm always here to receive any follow-up on any questions that you may not have had addressed today. Please send them through. Mike would be your first port of call, but we're always here ready to respond. Thanks again. See, have a good day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.