Thank you, Ashley. Good morning, ladies and gentlemen. Thank you for joining us at such short notice to participate in this call today, to discuss the announcement of the ramp down of mining and milling activities at Capricorn Copper and suspension of operations. 29Metals CEO and MD, Peter Albert, will speak briefly to the announcement before opening the call to questions. We only have limited time available before we have to join scheduled calls with other stakeholders, but we will endeavor to address as many questions as possible in the available time. We might not have definitive answers to all the questions, as a number of work streams are still progressing, but we will endeavor to provide a further update with March quarterly, expected to be released on April 23rd, and subsequent updates as work streams advance. I'll now hand over to Peter to lead you through today's announcement.
Thank you, Peter.
Yeah, thanks, thanks, Mike. Today, we've announced the suspension of operations at Capricorn Copper. Over the past 12 months, the team at Capricorn Copper has worked tirelessly, facing considerable challenges during and after the extreme weather event experienced in March 2023 last year. That effort has delivered significant progress in recovering the asset, including reinstatement and enhancement of water management and diversion infrastructure, implementation of water recycling and reuse regime, and the partial restart of operations in August last year. However, between late January and mid-March this year, Capricorn Copper experienced an extended period of rainfall as a result of the weather in the region following consecutive tropical cyclones.
On top of the accumulated water of last year's extreme weather event, this has resulted in a steady accumulation of water held on site, despite the best efforts of the team and 29Metals' substantial investment in water management infrastructure, such as multiple mechanical evaporators and water treatment systems. However, impacted by an inability to discharge sufficient water at the levels prescribed by the regulator. As a result, water levels in regulated structures on site are currently at similar levels to the levels following the March 2023 extreme weather event.
This is not where we had hoped to be nearly a year post that weather event, and with water at these levels, 29Metals has taken the decision to halt dewatering of Esperanza South Underground Mine, ESS, and in turn, delaying the restart of mining at ESS, outlined in the Capricorn Copper recovery plan, required for the return to full operations. Given the delay to the restart of mining at ESS, the operational performance since August 2023, and current water levels on site, we've had to take the very regrettable decision to suspend operations as the most prudent path to protect our people, manage environmental responsibilities, and preserve value for the asset. Our focus now is on the safe transition of the workforce and asset to a suspension phase, with the safety and well-being of the team at Capricorn Copper, our first priority.
29Metals is providing all the necessary support for our people as we work through this difficult process. Mining and milling activity will ramp down, and preparedness of the site for suspension of production will be progressed over the coming weeks. Thereafter, a small team will then be required at site throughout the suspension period. Capricorn Copper remains a tremendously valuable asset, which will deliver considerable value in the future. For the period we're in suspension, we will focus on the key enablers for a restart and recommencement of mining and milling, stronger than ever before.
These being: reducing water held on site to stabilize water management infrastructure, establishing the long-term tailings storage capacity, installing the new water treatment plant, and providing a reliable and sustainable source of water suitable for mining and milling operations, and achieving required regulatory approvals facilitated by Capricorn Copper's Prescribed Project and Critical Infrastructure Project status, as proclaimed by the Queensland Government. And finally, evaluating opportunities to enhance and improve productivity and reduce the cost base. The asset remains a substantial Australian copper endowment, with almost 65 million tons in mineral resources, 19 million tons of ore in reserves at 1.7% copper, supporting an at least 10-year mine life. There aren't too many assets of this quality in the Australian landscape, with established infrastructure and organic growth opportunities.
During the suspension, 29Metals will continue to progress the growth potential of Capricorn, including the targeted exploration activity, which is currently underway to test the new mineralized zone identified last year east of the Mammoth ore body. We're very excited about that, that potential new ore body. And from a balance sheet perspective, the suspension of operations will reduce cash outflows in the near, nearer term. In addition, 29Metals continues to focus on productivity, sustainable cost reduction initiatives, and progressing the Capricorn Copper insurance claim and offtake finance arrangements to provide additional liquidity. On that note, I will stop there, and, Ashley, we can open the call for questions to answer to Q&A. 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 a speakerphone, please pick up the handset to ask your question. Your first question comes from Michael D'Adamo with Canaccord. Please go ahead.
Hi, guys. Yeah, thanks for the update. Just sort of touching on your tailings storage capacity, and the approvals you obviously need through the government. Like, if that doesn't happen leading into the next wet season, like, do you kind of foresee that you'll be able to handle this as it is? Or is this sort of gonna be, like, an ongoing thing, do you think? You're just sort of praying for a less wet season, I guess?
Well, we, Michael, we're not obviously working through the time required in terms of the suspension, and I'm not in a position to be clear about that at this point in time, because we've got a few work streams in progress, as Michael said earlier on. In terms of tailings, two activities there. One is the continued application for putting tailings into the E-Pit. That hasn't gone away. We're still focused on that, and still looking to execute that and get an approval there. And now, that provides us with a relatively short-term tailings solution.
Our longer-term tailings solution is always TSF3, the long-term tailings solution, which when expanded will give us a, effectively a life of mine tailings storage facility. That is, that process is still very much ongoing, and a submission for that application in the near term. So, that's our focus on tailings. The commitment from the Queensland Government in terms of Capricorn Copper Prescribed Project status, Critical Infrastructure Project remains in place. And so we're very confident that we'll get the right outcome in terms of a future tailings storage facility.
Awesome. Thanks. Thanks, guys.
Your next question comes from Mitch Ryan with Jefferies. Please go ahead.
Morning, Peter and team. Just wondering if you can put any color around what you think the current suspension period is likely to be, or what you would need to see for it to commence, recommence operations?
Yeah. Thanks, Mitch. Anticipated question, of course. A bit challenging to respond at the moment. I know that will provide some frustration, Mitch. Well, as indicated in the announcement and my words earlier, we're focused on two or three things to achieve that outcome. Obviously, we have to reduce the current water inventory held on site. We're working on that. We're working with the relevant departments in the Queensland Government on that. Establishing the long-term tailings storage capacity, which was a previous question from Michael. The detailed design procurement of water treatment plant facilities are the three key components to bring us back into operation.
We're focused on all of those, and the plan is to update the market, yourselves, as soon as we have some clarity in terms of the timeline associated with each of those activities. So can't give you a definitive at this point in time. A fair bit of work to happen, of course, Mitch, and we will update as soon as we possibly can.
Okay, thank you. And finally, my, my other question is, does this suspension in any way impact the discussions you're having with the insurers on the insurance payout?
No, no. As I indicated, the insurance activities in terms of that claim are ongoing. And we're obviously in regular dialogue with the insurers, and likewise with, in respect of, potential additional offtake finance arrangements, which we've described to the market in the past. So no, no change to any of those, Mitch.
Okay, 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 Adam Baker with Macquarie. Please go ahead.
Morning, Peter and team. Bit disappointing, no doubt, but you can't control the rain, unfortunately. Just wondering, with the, you know, regards to suspension of operations, you know, what does this now mean for the company from a perspective for, you know, environmental bonds? You know, are you gonna require any additional payments to Capricorn, moving forward now that you've suspended it? And also just on the balance sheet, you know, how you're looking there? I know you had over AUD 150 million in cash at the end of the December quarter. But, what does this mean for the, you know, the covenant relief that you did have outstanding on the debt? Are there any changes, now that Capricorn is suspended on that front? Thanks.
Yeah. Thanks. I'll just lead off, and we have Peter Herbert on the line as well, Adam, so I might pass to Peter to address a couple of those comments or questions you made there. But not anticipating any change in respect of environmental bonds, et cetera, in terms of our interaction with the government and the various government bodies. We are very much in close contact with the government, and they remain very supportive of Capricorn Copper, understand the regretful decision today. And we will be working closely with them to get this operation back up as fast as we possibly can, in a better state than we had it before, and focusing on productivity and reducing costs.
If I may, turn to you, Peter Herbert, to address Adam's subsequent questions there?
Sure. Thank you, Peter, and thanks, Adam. Look, no, no direct and immediate payments as a result of this. However, naturally, we'll be winding down operations and there will be some costs associated with, with those, with, with that winding down of operations on site. The covenant waivers that you referred to, no change to those that we'd previously secured back in August, October of last year, as a result of the announcement today.
Thank you, Peter.
Okay, thanks. Thank you. And, yeah, do you have any idea of, you know, what your suspension hiatus costs would be for Capricorn moving forward? Do you have a kind of ballpark figure that you think you could indicate?
Yeah, Adam, I can't give anything definitive at this stage, as one of the work streams. Obviously, there's a fair bit of activity, as you would imagine, in terms of contractors and our team, et cetera, that we've got to bed down. Notwithstanding that, one way you might want to look at it is what was our cost during the suspension period of the June quarter of last year. That's probably the best feed we can give you at the moment. Obviously, we will finesse those numbers and look to manage them appropriately. But that's probably the best feed I can give you at this point in time, Adam.
Okay, thank you. Okay, good luck. Cheers.
Thank you.
There are no further questions at this time. I'll now hand back to Mr. Peter Albert for closing remarks.
Oh, okay. Well, thanks. Thanks, Ashley. Thanks, everybody, Adam, Mitch, Michael, for your questions there. I'm sure there will be plenty more questions as you digest the announcement and work through that. And like Mike said up front, I appreciate people coming on the call at such short notice. Obviously, we couldn't give a lot of notice on this, as it was. It's very, very live and just came out this morning. Please follow up with any questions you might have for any of the team. Mike, obviously the key focal point, but we'll endeavor to address anything else that comes through. But as indicated through the call, plenty of work and activities happening. So we're...
As we work through those, and we get resolution, and we get outcomes in terms of timing and costs, et cetera, we will seek to update, update the market as soon as we possibly can. Thank you, everybody. Thanks, Ashley, and have a good day.