Now I'd like to hand the conference over to Mr. James Palmer, CEO. Please go ahead.
Thank you. Good morning, all. James Palmer here, and thanks for joining this 29Metals update for the March quarter 2025. Today we'll be speaking to the presentation released this morning alongside our March quarter report. Joining me are Ed Cooney, our Chief Operating Officer; Peter Herbert, our Chief Financial Officer; and Kristian Stella, our Group Executive Corporate Development. It's great speaking with you all again. What was another quarter of significant milestones for the business? The team are delivering on commitments and on track to deliver full-year guidance. On slide three briefly before getting into the quarter results, the 29Metals investment thesis remains strong. It's all about copper, which remains a critical metal as the world transitions further towards electrification. At 29Metals, we have two assets: lots of copper, over 2 million tons of contained copper and resources across Golden Grove and Capricorn Copper.
Both assets have long-life potential and significant geological upside that we have plans to capitalize on. Slide four lays out our key priorities: health and safety first always, and a great result on this front with zero recordable and zero lost-time injuries during the quarter. Across the group, discipline in productivity and cost improvements, which remain a focus. At Golden Grove, it is all about the drumbeat delivery: delivery of 2025 guidance and delivery of Gossan Valley first ore in H2-2026, both of which remain on track. At Capricorn Copper, it is all about the imperatives for a successful and sustainable restart, with water reduction the immediate focus. Fantastic progress made on this front during the quarter and post-quarter end, with a successful wet season delivered by the team.
Significant progress made on reducing water levels on-site to the tune of 1 GL since I joined the company 12 months ago.
Turning to slide five to talk through the quarter in more detail. On safety, our TRIF and LTIF both were down over the quarter on the back of zero recordable and zero lost-time injuries during the quarter. A fantastic outcome and a result of remaining focused on safety first always. Operationally, a solid quarter delivered by the team at Golden Grove, where operational challenges were well managed to produce 4.1 kt of copper and 17 kt of zinc, remaining on track for full-year guidance. TSF4 is now complete with the first deposition of thickened tails during the quarter, a significant milestone that sets the asset up for the long term and a big investment now behind us. Activity is ramping up on the Gossan Valley project towards first ore H2-2026.
We're working towards key approvals during the June quarter, recruitments ramped up, and key tender packages have been progressed during the quarter. At Capricorn Copper, I'm pleased to say we've had a very successful wet season. All the opportunities were realised for treated water releases. For the quarter, we released 0.3 GL of net water inventory reductions, the largest quarterly inventory reduction since the decision to suspend operations. Over the wet season, the team achieved approximately 0.5 GL of treated water releases, more than offsetting additions from rainfall, resulting in a big negative water balance for the duration of the wet season. Post-quarter end, water levels were reduced further to now be below the maximum operating level for the first time since the extreme weather event two years ago.
A key milestone towards resetting the compliance footing of the asset and positions us well with the regulator as we continue our focus on water level reductions and progress our application for long-term tailings. I'll now pass to Ed to talk through Golden Grove in some additional detail, and I'll then provide an update on Capricorn Copper prior to Peter providing a corporate and finance update for the quarter. Over to you, Ed.
Thanks, James. Moving on to slide seven. As mentioned, another solid quarter of safe production delivered by the team at Golden Grove with just over 4,000 tons of copper and 17,000 tons of zinc produced. Tons mined from Xantho Extended accounted for about a third of total ore mined during the quarter, which was down from about half the prior quarter. That is really owing to two factors.
Ventilation was constrained due to mechanical issues with an underground primary fan. That fan has been replaced, and a fully rebuilt spare is expected on-site in early May. Secondly, the localized impact of seismic activity, which was associated with a narrow dolerite intrusive intersecting the Xantho Extended decline and one of the production levels, resulted in access restrictions late in the quarter. Production has fully recommenced post-quarter end from Xantho Extended with decline advance expected to recommence early May once the site team have completed the rehab of the decline. An update to the full-year mine schedule, which incorporates these interruptions, is expected to replace up to 100,000 tons of Xantho Extended ore with largely copper ore from other Gossan Hill and Scuddles ore sources, with no impact to 2025 production guidance.
On the surface, a planned four-day grid outage for routine maintenance by the power provider contributed to approximately 10% lower ore tons milled versus the prior quarter. We did mobilize a temporary diesel power station ahead of the outage to sustain underground operations, which resulted in a build of ROM stocks at quarter end that will be used to recover the lower milled volumes for the remainder of the year. Moving on to slide eight, pleasing unit cost performance for the quarter with C1 costs and AISC of about AUD 0.76 and AUD 2.07 per pound of copper sold respectively. As previously mentioned, ROM stocks were built during the planned four-day outage by the power provider.
This build in ROM stocks combined with finished zinc concentrate stockpile build resulted in an AUD 23 million credit to C1 costs versus a AUD 10 million charge in the prior quarter, which contributed to the lower quarter-on-quarter unit costs. Capital expenditure reduced substantially in the March quarter, reflecting the completion of TSF4 and the ramp-down of associated project activity. On to slide nine, where we can see the result of that capital expenditure in TSF4 and the initial deposition of tailings, which occurred on schedule during the quarter. The photos on the slide hopefully provide some context to the scale of the facility. For reference, the thickener you can see in the background of the picture on the right-hand side of slide nine is 30 m in diameter and equivalent in height to a multi-story building.
Owing to its scale and thickened tailings deposition methodology, TSF4 is expected to enable lower tailings deposition cost for the life of mine. In addition, the upfront investment now in long-term tailings capacity is expected to de-risk future tailings permitting requirements relative to the incremental approach of building stage lifts on smaller facilities adopted at Golden Grove in prior years. Productivity improvements and cost reductions remain an ongoing focus at Golden Grove. Slide ten outlines two other productivity initiatives in addition to TSF4, which were progressed during the March quarter. Specifically, a trial commenced post-quarter end to test the potential for battery electric loaders to deliver health benefits by lowering diesel particulate emissions and heat generation underground. With Golden Grove's underground ventilation constraints, the opportunity to then in future increase truck forward production rates.
Also, a secondary portal to Gossan Hill was established during the quarter, which is expected to provide additional ventilation and production flexibility from next month. As shown on slide 11, the team achieved a 10% reduction in unit cost and a 16% increase in production from 2023 to 2024. In part, this is really due to the ongoing cumulative impact of initiatives like the ones outlined on the prior slides, which do drive productivity and unlock production growth. This production growth is planned to continue into 2025, with the midpoint of guidance representing a 7% increase in copper production, a 15% increase in zinc production on a copper equivalent basis, and an 11% increase in production for 2025. On to slide 12, which outlines the progress made on the Gossan Valley project during the quarter, which remains on track for first ore during the second half of 2026.
Specifically, several responses to regulator requests for information were completed during the quarter and post-quarter end to facilitate progression of the mining proposal approval in the June quarter. Other project works during the quarter included commencement of grade control drilling to inform the initial six months of the mine plan, recruitment of the remaining Gossan Valley project team, and progression of tender packages for the mining contract and surface infrastructure. We did award key contracts for the surface civil construction and box cut post-quarter end. As Golden Grove's second highest grade ore source in reserves, it's an exciting project for 29Metals and an important next phase of investment to enhance the long-term value of the asset. Gossan Valley will provide production flexibility as an additional independent mining front. Being relatively shallow and analogous with other ore bodies at Gossan Hill, it is expected to be relatively straightforward to mine.
Importantly, it will act as a replacement higher grade ore source for declining ore production from Scuddles. As shown on slide 13, the Gossan Valley resource remains open at depth. The inventory we have today is sufficient to underpin the investment decision to commence development, but we are looking forward to testing extensions to the resource, predominantly from future underground drill platforms as we progress development. Hopefully, we will build on the long and ongoing track record of mine-life extensions demonstrated at other Golden Grove mining fronts. More broadly on exploration, we are ramping up spend in 2025 after a two-year period of reduced activity to conserve group liquidity. We are spending approximately 3x more on exploration this year than we did in 2024, with slide 14 showing where those funds will be allocated. We look forward to keeping you updated as the 2025 drilling programs progress.
I'll now hand back to James to talk a bit more about Capricorn Copper.
Great. Thanks, Ed. Turning to slide 16 and Capricorn Copper. The size of the prize at Capricorn Copper remains significant. We have a plant and other infrastructure that will support a future sustainable restart. Underground, lots of development leading to the very substantial copper metal endowment within the approximate 1,900 sq km tenement position in the prolific Mount Isa Inlier Base Metals Province. To unlock this value, we first need to deal with the water on the surface. To this end, it's with great pleasure that we can talk you through the very successful 2024-2025 wet season. With the benefit of the investment made in water treatment and treated water release infrastructure through 2024, the team at Capricorn Copper were successful in utilizing all opportunities through the 2024-2025 wet season for treated water releases to Gunpowder Creek when flow events occurred.
Treated water releases combined with ongoing mechanical and natural evaporation achieved a net 0.3 GL reduction of surface water inventory during the quarter, the largest quarterly water inventory reduction since suspension of operations. Water level reductions, including via treated water releases, continued post the quarter end to deliver total water inventory reductions of 1 GL for the 12 months to date and re-establish surface water inventory below the maximum operating level, an important and significant milestone towards resetting the compliance footing of the asset. Overall, a fantastic result with a negative water balance maintained through the wet season, further progressing the asset towards a future sustainable restart of operations.
With the benefit of the wet season now behind us, the surface water inventory below the maximum operating level, we continue to progress the constructive dialogue with the regulator in relation to the parameters associated with future dewatering of underground workings at Esperanza South and in relation to progressing approvals for long-term tailings. An assessment of tailings options has confirmed TSF3 as the long-term tailings storage option to prioritize and progress through the approvals process, and we're targeting submission of an application in the September quarter. Slide 19 outlines the ongoing progress on the ramp-down of operating and capital expenditure at Capricorn Copper. Total operating and capital costs were again reduced by more than 20% versus the prior quarter, with further cost reductions planned through 2025 as activity ramps down following completion of the successful 2024-2025 wet season. A great result all around at Capricorn Copper.
I'll now hand over to Peter to talk through finance and corporate.
Thanks, James. Good morning to everyone. During the quarter, we were pleased to complete the refinancing of the group's senior facilities. Turning to slide 21, this outlines the revised amortization profile of the group's senior secured debt facilities following completion of the refinancing. The refinancing reduced outstanding leverage via $18 million prepayment of senior debt and extends maturities of drawn facilities into 2028. This results in $74 million less scheduled prepayments over the two years to 31 December 2026, freeing up significant liquidity for the business. The refinancing also simplifies our capital structure with a revolving credit facility consolidated into the term loan, as set out on this slide. This removes the overhang of the step-down in the RCF in October 2025 and the maturity of the facilities in 2026.
Importantly, the refinancing gives 29Metals the flexibility to invest in the development of Gossan Valley by the extension of loan maturities and exclusion of Gossan Valley capital expenditure from the debt service cover ratio covenant calculation. We're very pleased with the level of support offered by senior lenders and alignment on the group strategy. Turning to slide 22, 29Metals finished the quarter with unaudited available liquidity of more than AUD 180 million. This was consisting of AUD 166 million in cash and available headroom under the group's offtake facility of $10 million. Cash outflows during the quarter included significant planned one-off payments. These included the remaining IPO-related Golden Grove stamp duty installments, which were paid as a lump sum, and AUD 30 million of refinancing costs comprising the $18 million prepayment and associated transaction costs. 29Metals also reprofiled its remaining gold hedges during the March quarter.
29Metals had approximately 10,000 gold ounces hedged and due to settle in 2025. Post-reprofiling, these ounces will now settle over 2025 and 2026, split equally between the two years. Reprofiling of these out-of-the-money gold hedges assists in smoothing group cash flows over 2025 and 2026. Turning to group sales, 29Metals' unaudited revenue of AUD 142 million for the March quarter was AUD 42 million lower than the prior quarter result, primarily due to timing of shipments. Reduced sales flowed through the lower quarter-on-quarter operating cash flows at Golden Grove, contributing to reduced quarter-on-quarter liquidity. Cash outflows at Capricorn Copper were AUD 11 million for the March quarter, aligning with the AUD 12 million of operating and capital expenditures. As James mentioned, we expect ongoing reduction of cash outflows at Capricorn Copper as activity ramps down following completion of the successful wet season.
Yesterday, 29Metals announced an in-principle agreement with insurers for the full and final settlement of the insurance claim for loss and damage resulting from the extreme weather event at Capricorn Copper for AUD 115 million. This will result in a final gross payment to 29Metals of AUD 54 million, noting the group has already received AUD 61 million in progress payments thus far. The final payment is subject to finalisation and execution of formal documentation, which is expected to occur during the current quarter. The in-principle AUD 115 million full and final settlement includes both the above-ground and underground components of the claim. Reaching in-principle agreement is an important milestone, enhancing group liquidity and balance sheet flexibility as we focus on delivery against the group's near-term strategic objectives. James, back to you.
Great. Thanks, Peter. Thanks, Ed. Another solid quarter delivered by the team. Zero recordable, zero lost-time injuries. A testing quarter well managed at Golden Grove, where we remain on track to deliver our 2025 plan. At Capricorn Copper, a successful wet season, significant water level reductions, and demonstrating capability to deliver negative water balance through the wet season. We continue to remain laser-focused on delivering against our plan for 2025 to unlock the embedded value within the 29Metals portfolio for the benefit of all stakeholders, while never compromising on our commitment to health, safety, and well-being. With that, we're happy to take your questions.
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 Adam Baker from Macquarie. Please go ahead.
Good morning, James and team. Apologies about a miss at 1:00 P.M. on today. Just saw a comment on the toll treatment of ore stockpiles at Capricorn. Just wondering if you could touch on that. Is this meant to be material? What's the quantum of stockpiles? Thanks.
Yeah, thanks, Adam. Peter here. I'll take that in the first instance. We've trucked about 40,000 tons of ore to Mount Isa to put that through. In terms of outcomes for the business, we don't expect it to be overly material from a cash flow perspective. It's sort of low single-digit millions type of result. I think importantly for us, Adam, we'll learn a lot. We've not put ore through that mill in the past, so this will be a pretty valuable experience in understanding how it goes through there and how that might play into our future there. We're sort of at the early stage of that, so we expect to kind of see results of that through the current quarter, and we'll sort of update accordingly as we go from there.
Do you have much in the way of stockpiles other than that 40 kt on site at Capricorn? Or is it only quite a small level of stockpiles left there?
Yeah, just a small amount of ROM grade stockpiles. That was remaining when we suspended the operations. Operationally, it also gives us the benefit of sort of clearing the decks, so to speak. There are additional lower-grade stockpiles there, but the focus is on understanding how the ROM grade stockpiles have gone in the first instance.
Got it. Thank you. Maybe just on the surface water inventory at Capricorn, good to see that you've got it below the maximum operating levels on site. Just wondering on your goals on how much further you'd like to see that surface water inventory reduction. Do you have a target in mind, or are you still focused on trying to get that as low as possible at this stage?
Yeah, thanks, Adam. James here. I might take it to start with, and then I'll pass to Ed. I think, and actually maybe just picking up on the toll treatment, I think, again, it just shows good work. The team on the ground, they get to clear the decks as well as the relationship. We're always talking with Glencore. Good opportunity that they've capitalized on. As far as water, yeah, I mean, hopefully as you heard and saw there, I mean, a gigalitre less than we had 12 months ago. Very pleased with the work the team have done. We've said more than one wet season, so you start to play that forward. You have another one of these wet seasons, so we're now below maximum operating limits.
We do need to progress that much further, but you start to say, if you have another wet season like the one we've had, I think I heard from you, do you have a target? We don't have a target there because we don't control the weather. What we do control are all the things that we have now demonstrated we've controlled. Whatever the weather does, we're able to either evaporate when it's not raining or release when the creek is flowing. The team are well set up for that, as well as reducing costs that we've started to really demonstrate. We don't know what sort of wet season we're going to get, but we'll be prepared for that. Ed, anything you'd want to add?
Probably the only one is now that we have started making good inroads into decreasing the surface inventory, we're starting to turn our mind to underground. We've still got about 500 ML underground. Ideally, that wasn't there. The other focus is really, now that the wet season's passed, just making sure that we are operating the evaporators very cost-effectively to maximise any opportunities during the dry season.
Thanks, James. I'll pass it off.
Thanks, Adam.
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. We'll now pause a moment to allow for any questions to register. Once again, that is star one on your telephone. Thank you. There are no further phone questions at this time. I'll now hand back to Mr. Palmer for closing remarks.
Great. Thanks for your time today. Yeah, we've delivered another solid quarter, not without its challenges, but those challenges were very well managed. We remain on track for guidance for 2025, 7% up on copper, 15% up on zinc on 2024. We've made great progress on water at Capricorn Copper, turning some of our attention to other restart imperatives like tailings. Overall, I think you can see the potential for the next two years to be very different to the last two years at 29Metals. Thanks. Have a safe and productive day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.