Thank you for standing by, and welcome to 29Metals Limited full year 2023 financial results conference call. All participants are in listen-only mode. There'll be a presentation followed by a question-and-answer session. To ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I'd now like to hand the conference over to Mr. Michael Slifirski. Please go ahead, sir.
Thanks very much, Nick. Good morning, ladies and gentlemen. We will be speaking to the presentation titled 2023 Full Year Results and Mineral Resources and Ore Reserves Estimates, which was released to the ASX this morning, along with our Appendix 4E and Annual Financial Report, full year results, summary release, and 2023 Mineral Resources and Ore Reserves Estimates. This call and parallel webcast is being recorded and will be available for replay via the 29 Metals website and also the Open Briefing website. 29 Metals Managing Director and CEO, Peter Albert, will present an overview before handing over to our CFO, Peter Herbert, to lead you through the details of the financial results. Peter will then hand over to Lucas Williams, Group Manager, Geology, to talk to the 2023 MROR highlights.
We'll then open the call for your questions with the full exec team available to address them. I'll now hand over to Peter Albert to commence the presentation. Thank you, Peter.
Yeah, thanks, Mike. Good morning, everybody, and thank you for joining us today. As Mike has said, whilst Peter, Peter Herbert, Lucas, and myself will be doing the presentation, we do have a full executive team here to respond to questions. As Mike said, this morning, we released our 2023 full-year financial results, as well as our Mineral Resources and Ore Reserves statement. These financial results follow on from our 2023 Q4 release and 2024 guidance we announced to the market a couple of weeks ago, and for context, they are in line with what was presented at the half year in August 2023. So hopefully, there should not be too many surprises. Everybody should be able to see our presentation, which summarizes our results, and we will refer to slide numbers as we go through the presentation.
Slides two and three contain important information relevant to today's releases. If we move to slide four, this is a snapshot of who we are and what we have, and is a reminder of 29Metals' investment proposition. To recap, we have an enviable metal endowment with 2.25 million tonnes of copper, 2.3 million tonnes of zinc, and over 1 million oz of gold, plus silver, lead, and cobalt. Importantly, our ore bodies remain open, and each of our two Australian mines, we have approximately 60 million tonnes of resources at each mine, with 10+, 10-year mine lives based on ore reserves alone. Turning to slide five.
This slide captures the progress since the extreme weather event at Capricorn and the progress we have made at Golden Grove in respect of setting up the mine for future success. The slide also outlines the key drivers for performance for the year ahead. In the year that was, at Capricorn, after the extreme weather event, we successfully recommenced mining and processing at the Mammoth, Greenstone mines in August, and the recovery plan continues as we progress phase two, which will be the restart of mining at Esperanza South. At Golden Grove, we completed major debottlenecking projects that will enable future progressively higher metal production. Three examples of major enabling projects completed last year are, firstly, the commissioning of the ventilation system to support Xantho Extended. Secondly, the completion of a tailings capacity increase on an existing facility.
And thirdly, the submission of an application for a new long-term tailings facility. We also had a site-wide focus on efficiency opportunities, resulting in sustainable cost improvements of approximately AUD 20 million for the year, largely offsetting the impact of inflation that continues to be reported across the sector. Productivity and further improvements in cost performance are a focus in 2024, with all senior managers across the group engaged in this program. In the context of the challenges we are facing, we intentionally limited spend and exploration for the year. Activity was focused on resource conversion and extension in our existing ore bodies. And for an exploration cost of only AUD 4 million, we achieved significant resource to reserve conversion, increasing reserves by over 15% to 35.7 million tonnes, including a 2.9 million ton reserve at Cervantes.
A testament to the exploration team and the quality of our rocks. And Lucas Williams, our group manager, geology, will talk to this shortly. Looking ahead to 2024, the focus is on regulatory approvals at both mines. I've talked to Golden Grove tailings already. At Capricorn, two specific near-term activities: firstly, the approval for the interim tailings capacity, critical to maintaining uninterrupted operations and to progress the recovery plan. Very close engagement continues with regulatory stakeholders and the Office of the Coordinator-General, and we expect to have a clear line of sight on the approval pathway during the current quarter. And while the timeline to an approval outcome is not yet fully developed, the regulator and the Office of the Coordinator-General have reconfirmed their commitment to work with 29Metals to achieve a result which provides continuity of operations.
There are still a few steps to work through to finalize the timetable, but we are certainly encouraged by the communications we've had with both of those entities. Secondly, the submission of an application for our proposed new long-term tailings facility. Preparation of this application is well advanced and will enable Capricorn Copper to move away from the recent cycle of regulatory approvals for short-term solutions. And as mentioned previously, an absolute focus across all areas of the business on efficiency and cost improvements. We've also continued discussions regarding potential offtake finance to provide additional liquidity, if required, as flagged during the capital raising in Q3 last year, and also the Capricorn Copper insurance claim continues to progress.
Going to slide six, and before I hand over to Peter Herbert on the financial results, a quick reflection on a tale of two halves, with the second half of 2023 showing considerably better outcomes to the first half. While Golden Grove can be a bit cyclical and Capricorn is not yet back into full production, we do expect a more balanced profile for production in 2024. Also worth recording, that even with Capricorn Copper offline for much of 2023, our sales mix remains significantly copper-focused. So not only do we have a 100% Australian production, we are focused on commodities that support the global decarbonization goals.
As our chair, Owen Hegarty, said in his communication to shareholders last week, "At every level of the business, we're entirely focused on achieving successful outcomes at both of our operations and on building the business for the future. 2024 is a recovery year to set us up for the long-term success." I'll now hand over to Peter Herbert to take us through the financial results in more detail. Thanks, Peter.
Thank you very much, Peter, and good morning to everyone. Thanks for your time. I'll start by covering the key financial results on page 7 of the presentation, and then we'll step through some of the items in detail. As reported in our December quarterly report, 2023 was an extremely challenging year. The extreme weather events, operational interruptions at Golden Grove, and lower commodity prices impacted our performance. This is reflected in our results for 2023. Group revenues were down 38% on lower production and commodity prices, and EBITDA was AUD -21 million in 2023, from a AUD +152 million in the prior period. For context, for the six months ended 30 June 2023, 29Metals announced a net loss after tax of AUD 307 million.
The full year net loss after tax announced today increased to AUD 440 million. This includes the impairments announced at the half year, linked to the damage and suspension of operations caused by the extreme weather event at Capricorn Copper. In addition, and having regard to the recovery profile at Capricorn Copper, 29 Metals determined not to recognize deferred tax assets of AUD 58 million at 31 December 2023. This is reflected as a tax expense and contributed to the net loss announced today. Remembering, of course, that these tax losses remain available to the group for use in future periods. Now turning to page eight on costs.
Site operating costs of AUD 384 million were lower than the prior period by 19%, reflecting two key drivers: lower activity levels at Capricorn Copper and constrained mill throughput in the early part of the year at Golden Grove, and cost improvement activities, mainly at Golden Grove, which partly offset industry-wide inflationary pressures and were successful in holding site operating costs at Golden Grove within 2% of the 2022 result. Consistent with reduced revenues for the period, royalties and selling costs were 38% lower in 2023. With lower production and reduced byproduct credits, group all-in sustaining unit costs increased 35% on the prior period. Turning now to the EBITDA bridge on page 9, which outlines the key movements in EBITDA from 2022 to 2023.
An EBITDA loss of AUD 21 million for the year compares to the prior period result of a 152 million profit. Three points to call out here. One, the change in EBITDA is dominated by the reduction in revenues for the period, partly offset by lower operating and realization costs. Two, net costs directly attributable to the extreme weather event are AUD 20 million, which is after insurance proceeds received of AUD 24 million and the on-sale of gas under our long-term gas supply arrangements of AUD 5 million at Capricorn Copper. Those, noting these costs exclude recovery capital expenditure, and finally, with stockpile movements and realized FX gains for the period, largely offsetting one another. Turning to the group net results for 2023 on page 10, a loss of AUD 440 million for the period.
Again, the results dominated by the impacts of the extreme weather events, with lower revenues, partly offset by reduced costs and lower D&A, the latter attributable to reduced activity levels at Capricorn Copper. Impairments, as announced with our half-year results, and the determination not to recognize deferred tax assets, as mentioned earlier. On page 11, we set out capital expenditures, which reduced to AUD 85 million for the period, from AUD 114 million in 2022. The period of suspension and reduced asset carrying values post-impairments, announced at 30 June, also resulted in lower D&A for the period. Exploration expenditure for the period of AUD 4 million was also lower as the group managed spend and focused the program on resource conversion and extension, with excellent results that Lucas will speak to shortly.
Page 12 sets out the impacts of cash flows on net drawn debt in 2023. Lower sales and commodity prices, as well as the direct and indirect impacts of the extreme weather event, impacted operating cash flows. At 31 December 2023, the group had AUD 55 million of net drawn debt after completion of the AUD 150 million rights issue during the period. Turning to page 13, outstanding drawn debt at 31 December 2023 was $146 million, or AUD 217 million in Australian dollar terms. Debt amortization in 2024 will reduce to $25 million before stepping down again in 2025. This profile assumes no refinance of drawn debt. 29Metals continues to pursue additional liquidity through continuing discussions for offtake- linked finance and progressing Capricorn Copper insurance claim, with AUD 24 million received during 2023.
Thank you for your time. I'll now hand over to Lucas to talk through the group's 31 December 2023 mineral resource and ore reserve estimates, also released today. Thank you.
Thank you for the introduction, Peter. I'll be talking to the information presented on slide 14. To begin, I'd like to set the context for 2023 exploration activity and the 2023 mineral resources and ore reserves we are reporting today. We took a targeted approach to exploration activity in 2023, with two key focuses. At Golden Grove, we focused on resource conversion drilling, particularly targeting the Cervantes ore body. At Capricorn Copper, we focused on further resource extension drilling at Esperanza South, or ESS, and resource conversion drilling at Mammoth and ESS. Unfortunately, the activity was curtailed due to extreme weather event in March of 2023. Now, turning to the 2023 mineral resources and ore reserves outcomes.
While there was a reduction in drilling activity at Capricorn Copper and the focus on increasing confidence in mineral resources at Golden Grove, we are pleased to report group mineral resource estimates now total 128.3 million tonnes, effectively maintaining the resources after depletion from production activities. Our focus on resource conversion and increased geological confidence in our resources has led to a group ore reserves estimates now totaling 35.7 million tonnes, an increase of approximately 4.7 million tonnes, with contained copper metal increasing at Capricorn Copper and contained copper and zinc metal increasing at Golden Grove. A key contributor to this result is the work completed at Cervantes. With all the effort by the teams, Cervantes contributes 2.9 million tonnes at 1.5% copper and 4.8% zinc to the Golden Grove ore reserves estimates.
Moving into 2024, at Golden Grove, the focus will continue to be resource conversion and increasing geological confidence in the large resource base, with programs planned for Xantho Extended and Oizon, both high-grade ore bodies at depth. At Capricorn Copper, we have a drilling campaign underway targeting the area east of the Porter Fault at Mammoth, following the excellent results reported during 2023. We are on the second of three holes aiming to identify the orientation and potential extension of the area identified by the two high-grade copper intervals reported last year. The first hole of the program was not drilled to completion, as it encountered poor ground conditions and could not advance through the target horizon. However, the second hole is progressing well, and we're excited by this program and the opportunity it presents to Capricorn Copper. Thank you for your time today.
I'd now like to pass back to Peter.
Yeah, thanks, Lucas, and thanks, Peter Herbert. So, Nick, I think we can go from here to questions. And, as we said earlier, we have the full executive team available here to answer and respond to any questions.
Thank you. To ask a question, please press star then one on your telephone and wait for your name to be announced. For your request, please press star then two. You're on a speakerphone, please hang up for your handset.
Hello. Sorry,
Go ahead, sir. All right, first question will be from Rahul Anand, Morgan Stanley. Please go ahead.
Hi. Thank you. Good morning. Hi, Peter and team. Thanks for the call. Look, I wanna cover a couple of things. Firstly, obviously, around cash position, but then also the reserve and resource update. So, if we start perhaps with the resource and reserve update, obviously a good, good update there and increase, obviously, given most of the commodity prices remain unchanged. I just wanted you to help me understand, you know, just the drilling programs coming up at both assets and what can we expect in terms of changes to these moving forward? That's the first part of the question, and then the second part is, just note that there's a very small discrepancy between Capricorn Copper price assumptions and Golden Grove price assumptions for copper and currency.
Just wanted to understand, why have those slightly different numbers? You know, is there anything specific to these assets that, you know, guides that? Thank you. That's the first one. I'll come back with the second.
Yeah, thanks, Rahul. In terms of the 2024 program, I'll let Lucas talk to that in a moment, but just in context, of course, we're, as we've indicated, you know, very much in preserving cash mode. So, we won't have a very extensive program. We're very successful last year in spending only a few dollars and getting the results that we have. And we would, we'd hope to do something not too dissimilar this year in terms of managing for depletion and sustaining the resource and reserve base. But, I'm probably getting out of my depth here, Lucas. I might ask you to respond to that.
And if you can pick up the second part of that question, by all means, do so. Otherwise, we might have Ed can respond to the second part. Ed Cooney's here, Rahul. He'll respond to the second part of the question. So over to you, first of all, Lucas.
Thanks, Peter. Yeah, so it's a good question. The key at Golden Grove is the conversion drilling into Xantho Extended and Oizon. So the plan at this stage is we've got these long-term dual platforms that have been developed, which is fantastic. It's gonna give us the opportunity to conduct both conversion and extension drilling from these locations. So this year we'll be just focused on the conversion side of things to begin with. So it'll be a rig across multiple months in those locations, doing that work for us. Over at Capricorn Copper, the focus really is at the beginning of the year on this near mine exploration opportunity.
So we're gonna commit to these, these drill meters, and then there'll be a period of, I guess, understanding and building up understanding on that geological information, and then that will guide us, a decision-making point at that point in time down the future. Whilst that's underway, there will be some additional conversion drilling, which happens as well at Mammoth. So we've got rigs going at both sites the beginning of the year. They'll be busy, go, collecting all this geological data for us.
Thanks, thanks, Lucas. That's, that's good. So, the second part, Ed?
Yeah, yeah, Rahul, I'll take that one. So both assets use the same long-term prices, the $3.60 copper price and FX and the like. But at Capricorn Copper, again, different competent person, and the 2024 pricing FX assumptions were based on budget, internal numbers, and then reverting to long term. So if you average that out over the reserves, you see you come out with a slightly different metal price and FX rate.
Okay, gotcha. Okay, that clarifies it. Thank you. Look, my next question is obviously around cash. That's the key focus currently for the business. I guess there's two ways to look at it. One is your government regulatory approvals. If they come through on time, you know, you perhaps can make it through without requiring additional cash, or otherwise, if your insurance claim comes through, you know, that's another way that can help protect that balance sheet from another capital raise. So can you perhaps provide a bit more clarity and update on that? Firstly, perhaps on insurance claim, just because in your introductory comments, you didn't talk about that. But then also your government approvals, you did mention that a bit in the introductory comments. Is there any further color you want to provide there?
Well, I'll take the second part first, if I can, and then I'll ask Cliff to respond, Rahul, on the insurance. So, of course, there's not, I can't provide too much more than I've said already. We're very encouraged by the correspondence communications we're having with both the regulator, DESI, Department of Environment, Science and Innovation, as well as the OCG, the Office of the Coordinator-General. There's a strong commitment from those parties to ensure and assist the company to get through the current tailings capacity challenges. There's a timeline that needs to be worked through, but we're encouraged by activities taking place in parallel to it, to see us through the near term.
So can't say too much more than that because, you know, there's obviously the work that's still ongoing, Rahul, but certainly positive sort of responses and communication between all three of the parties, that OCG, DESI, and ourselves. So on that note, I'll hand over to Cliff on to give a response to insurance.
Thanks, Peter. Thanks, and thanks, Rahul, for the question. So insurance claim, I might take a step back to start off with. I think the first important point to bear in mind, Rahul, is that, you know, this is a significant insurance claim from a quantum perspective. You can see from the financial results we've reported today, the direct and indirect impacts that we're reporting for the extreme weather event, and that it's not hard from that to sort of clearly see that it's a high quantum claim that we're working through.
As a consequence, you know, a large insurance claim does take time, and really with us, it is really, it's the process of going through the adjustment, making sure the insurer has the information they want, and, and they can see the progress that we're making in our recovery plan. In a sense, the business insurances we have are, are not that different to the insurances that each of us has for our house and our car. You know, there are certain repairs and other things that have to happen. You have to spend that money before you get it back from insurance. That, that having been said, you know, the other contextual point I'd flag, so we notified insurers promptly when the event happened of the claim.
The formal claim was in around about early June last year, and within three months of that, within two months of that, sorry, we had a progress payment. And as I'm sure you know, quite a significant progress payment of AUD 24 million in that short timeframe relative to the claim. So where we are, the insurers have the claim's really got two parts to it: the surface component, so the damage, the property damage on surface and the associated BI, and then the underground component of the claim, damage underground and associated BI with the inundation of the ESS, for example. As we've previously reported, the insurers have accepted in the entity on the surface component, and we are working through the detailed loss adjustment process there, so validating the costs as they're incurred.
On the underground, we and the insurers have a different view on how the policy responds to that, and we'll work through that, but we're sort of working through the two parts of the claim separately now, to make sure that we progress them both in as timely a fashion as we can. I guess, in closing, what I'd flag, Rahul, is, you know, we appreciate there's a lot of interest in the progress of the insurance claim. For a large claim, you know, the time that we've taken so far is not that unusual. We're working through it methodically. We've got a regular engagement with the insurers, and we're optimistic of, you know, moving another progress payment sooner rather than later.
No, appreciate that. Appreciate that. I mean, you've obviously flagged that AUD 27 million damage or loss to assets and the $170 million impairment to Capricorn. I doubt the deferred tax asset is claimable, per insurance policy of AUD 60 million. So, I guess the scope of this is probably between the $24 million you've received and up to $200 million, but it, it really comes down to what that impairment number also includes in terms of your forecast medium term. So, agree that it's a bit fluid at the moment, but if there's any updates here, please, you know, that's, that's very topical at this point in time. So I'll stop it there. I'll pass it on.
Absolutely, Rahul. Just one minor point. Remember, with impairments, that we're dealing with book value, not replacement cost. Just something to bear in mind.
Yeah. Okay, yep.
Thanks, Rahul.
Perhaps it's gonna be bigger than, in that case, the replacement cost versus book value?
Certainly different to book value.
Yeah. Okay. All right. That's clear. Thank you.
Thanks, Rahul.
Thank you. The next question will be from Ben Lyons, Jarden Securities Limited. Please go ahead.
Good morning, Peter, and everyone on the call. I'd just like to tease out some of your comments around the focus on efficiency and cost initiatives this calendar year, please. Can you try and quantify any of those initiatives that are underway? Just noting that once again, we've received a set of financial accounts with AUD 35 million of corporate costs in there, which compares to a market capitalization of, you know, less than AUD 200 million, as we speak. So I'd love if you could stitch some numbers around, you know, what sort of costs you're actually trying to draw out of this business, please.
Is that Ben, is it? I missed the intro there. Yep.
Yeah. Good day, Peter. It's Ben Lyons from Jarden.
Yeah. Yeah. Thanks, mate. I think I thought I recognized your voice, but we missed the intro. Yeah, thanks for the question, Ben. Just in terms of the program, if you like, and I'll get Peter Herbert perhaps to talk to a little of the detail that we can. But in terms of the program, but we're running that out across the whole company, including corporate, including both sites, of course. It's, you know, we've made some good headway last year, and we've reported AUD 20 million, which is, well, not insignificant given some of the challenges we had. And it's not just about cost, it's also about efficiency, because the biggest bang for your buck, of course, Ben, is to make, you know, more metal.
So it's about efficiency and costs, and where it's not just in relation to us, we're obviously very focused on our contractors and how they impact on our business, and we've got very good engagement, certainly from our major mining contractor, who is the same entity at both sites. And in terms of a structure, as I think I indicated in my notes, the management of these processes is very much in the hands of the senior managers at both sites, across the senior management group at both sites and corporately, the executive team here focused on the corporate activities. So just a bit of an overview. Pass to Peter Herbert, if you've got any more you can add to that, Peter.
Yeah, just maybe just a couple of additional points of color to give you some guidance there. We haven't put out a number around what we're targeting, Ben, but as Peter mentioned, we, you know, through the efforts that we, you know, put in last year to do things like insource or rerun tenders and the like, we estimate that we delivered about AUD 20 million of savings, you know, relative to what we would have otherwise spent. The focus of that work was primarily only at Golden Grove and, you know, was sort of the obvious things that we could, you know, grab at in that year. So this year there's a much more concerted effort to look right across the business.
So we would, whilst not giving you a sort of a specific number, what I would say is that gives you some feel for what we would see as the starting point for what we can achieve this year, and looking, you know, right across the business at all levels. The other point I would make is, you sort of referenced the corporate costs there, and I agree that looks optically large when you consider the company of our market capitalization. A couple of points to remember there. One of the biggest chunks of that is insurance costs, and that's primarily driven by, you know, insuring the operations.
This year, in the guidance, we've sought to kind of allocate those costs, you know, down to Golden Grove, at least in the first instance, to try and give a better sense of what is the true corporate cost once you take out the, you know, the operating costs that are effectively reported at center. And in addition, there's a whole bunch of, you know, non-cash costs in there as well around, you know, equity linked compensation and the like. So, a few moving pieces in there that make that number in terms of true head office costs, you know, much more than that headline result.
Okay, great.
Yeah, sorry, Ben, go on.
Thanks for the clarification, Peter. Second question, I guess, follows on a little bit from Rahul's line of questioning, just around the overall group access to liquidity. So maybe if we just remove the insurance, the potential insurance proceeds from the conversation for a sec, and focus on the discussions that you're having, clearly with your offtakers or potential offtakers, and how that might pertain to a refinancing of debt at the group level. You know, are we talking simply about the potential for offtake prepayments as one solution? Or are we talking about a much more holistic group-level solution to the debt piece, where, for example, you can term it out, and you don't have this accelerated amortization profile, which is, you know, clearly quite confronting for the next calendar year? Thanks.
Yeah, look, I think, you know, we're obviously staying in, you know, close communication with our senior lenders and working through, you know, that process with them. I mean, those discussions are, like, so it's difficult for me to be too explicit, Ben, as I'm sure you can appreciate. But, look, there's various ways you can look at it. We wouldn't. We would see any potential solution here as being a, you know, a more traditional, you know, debt product, rather than a sort of a specific sort of commodity link prepaid, but with a linkage to offtake facilities, you know, behind that. But the detail we're sort of working through at the moment, so I can't say a huge amount more at this time.
Clearly, it's a focus of the company, and we, we hope to come back to the market, you know, as soon as possible.
Okay. Thank you, Peter. And the final one, I'm not really sure who to address it to, but I was just wondering if we could possibly get an update on the CEO succession plans, please, and how the search is going. Thanks.
Yeah, thanks, Ben. Not really in a position myself to respond to that, as you say, to who to address it to. What I can say is that the process is ongoing. I believe it's reasonably well advanced, and I believe that the process is at a stage of, you know, interviews and the like, and presumably looking to have an individual person in place in the not-too-distant future, but, you know, I can't, don't know, have any more detail than that, Ben.
Okay. No, that's great. Thank you very much for your time.
No worries, mate. Thank you.
Again, to ask a question, please press star, then one on your telephone and wait for your name to be announced. Next question will be from Adam Baker of Macquarie. Please go ahead.
Morning, Peter and team. Thanks for taking my question. Just one on Capricorn, if I could. Just there's been a couple of cyclones pass through up in the Mount Isa region earlier this year. Just wondering, how the operations have fared with the increase in rainfall. You know, has that put the recovery plan off track or off schedule at this point in time? Thank you.
Yeah, good question, Adam. Thanks. I might ask Ed to respond to that.
Yeah, thanks. I can do that. So, late last year was relatively dry. Obviously, this year, we've had a few passes in the region. We have experienced some heavy falls, nothing like what we experienced last year. Probably some other areas southeast of Mount Isa were much more heavily hit this year, than us. We have had some short interruptions to site access, pretty usual for this time of year, and, you know, some heavy lightning activity. But I would say that the, you know, the enhanced surface water diversion infrastructure that we put in place ahead of the wet season has certainly ensured that, no, we haven't had any water ingress to any of the underground operations. So, we have commenced wet season.
Treated water wet season releases as the opportunities present and continuing to focus on that.
Thanks for that color, and maybe for the dewatering of Esperanza South, how's that going? You know, have you reached the bottom of the, the decline yet? Have you started rehabilitation? You know, how much more volume of water is left to extract from that mine until you could, you know, potentially restart operations?
Yeah, so we've completed the northern cave, I think, as we reported previously. We've almost completed the decline to the top of the southern cave. Our intention is to set up a raise bore pad, and we'll drill holes deep into the southern cave and establish some submersible pumps. Looking to, you know, sort of commence and complete that project early March, and that will enable us to then increase dewatering rates and rehab advance. So still, you know, still don't have the number off the top of my head, but it's certainly in excess of 50% of the water remaining underground in the southern cave that we need to dewater.
But just in terms of the rehab, Ed and Adam, as I think we reported the quarterly, going well, the fibrecrete, shotcrete, fibrecrete is standing up as we had expected and replacing all the bolts and jumbo operation down there going well, I think, Ed?
Yeah, the rehab's going well. Yep, and ground support, you know, as expected.
Thanks for that. And it sounds like you continue to have some engagement with the regulators for the tailings dam expansion. Just noting that you've got tailings dam capacity till the end of April. Is the, I think you mentioned before, the approximate build time's about six weeks, so getting pretty tight there from, you know, getting approval from the tailings dam expansion and the extension. Just wondering what the contingency plan is if you don't get that regulatory permit to extend the current tailings capacity. Thank you.
Thanks, Adam. I wasn't too sure what the six weeks reference was there, mate, but the capacity that we have at the moment is well understood by the regulators. Probably the best answer I can give you. And their and our timeline is well understood by the regulator and the OCG. And they're working within those timeframes we would anticipate to ensure that we sustain the operation. So that's our anticipation there, Adam.
All right, thanks, Peter. It was just in reference in, you know, what the actual build time for the, you know, for the lift of the ETSF lift two would take. But appreciate you may not have given that as, as guidance. Thank you.
Sorry, just to clarify. The intention of the current application is raising the design storage allowance so that the water level required to be held in the pit ahead of first of November, and an ability to deposit tailings into the pit, which we have done previously, as distinct from a second lift on the ETSF. That application is still subject to ongoing response to requests for information. So in the near term, it's the application and approval being sought is for deposition in the pit. Just to clarify. Which.
Gotcha. Thanks.
Yeah.
Thanks, guys. Thanks for the clarity. I pass on.
Thanks, Adam.
Thank you. There are no further questions at this time. I'll turn the call back over to Mr. Albert for closing remarks.
Thanks, Nick, and thank you everybody for attending today, and thanks for a good range of questions from Rahul, Ben, and Adam. So, appreciate your attendance. And, as always, if you've anything to follow up on, please reach out to any of us, and especially to Mike. We think, and we're pretty confident that we're setting ourselves up for future success here. We've came through a series, a number of activities last year. Last year, as everybody's aware, pretty challenging, but notwithstanding that, so we did actually achieve some significant milestones, whether you're talking resource reserves or ventilation systems at Golden Grove, restarting Mammoth Greenstone.
So team's doing extraordinarily well under what were fairly trying conditions, not least of which, of course, inflationary pressures, labor pressures, especially in WA last year. So, we think we've got ourselves into a position where we can advance this year, deal with those regulatory issues that were discussed and set ourselves up for long-term success here. Certainly, the reserve and resource base demand that is what we achieve. There's not too many other mines or companies in this space in the Australian context, with sort of 10-year mine lives, focused on critical minerals such as copper and zinc. So, a good. We think we believe we've got a great future ahead of us here at 29 Metals.
So once again, thank you, everybody, and reach out if you need more information.
This concludes our conference for today. Thank you for participating. You may now disconnect.