Thank you for standing by, and welcome to the 29Metals Limited 2023 half year financial results. 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 Mr. Mike Slifirski, Group Manager, Investor Relations. Please go ahead.
Thank you, Betsy. Good morning, ladies and gentlemen. We will be speaking this morning to 29Metals equity raising presentation, which was released to the ASX this morning, along with 29Metals' first half 2023 financial results releases. The call and parallel webcast is being recorded and will be available for replay via 29Metals' website and also the Open Briefing website. 29Metals Managing Director and CEO, Peter Albert, and CFO, Peter Herbert, will lead you through the presentation before we open the call for your questions, at which time our COO, Ed Cooney, will also be available to answer questions. So now I'd like to hand over to Peter Albert to commence the presentation. Thanks, Peter.
Yeah, thanks, thanks, Mike, and, and welcome, everybody. Today, 29Metals released our half year financial results, launched a AUD 151 million Entitlement Offer, with proceeds primarily to be used to fund the Capricorn Copper Recovery plan. The focus of today's call will be on the Entitlement Offer, but of course, happy to take specific questions on either the Entitlement Offer or the half year results at the end of the presentation. And turning our attention to the Entitlement Offer presentation. Slides 2, Slides 3, and Slides 4 contain important information and should be read in conjunction with this presentation and the offer. Slide 5 is contents of what we'll talk through today. Firstly, an overview of the company, including our underlying strengths and potential growth opportunities.
Then, an update on the recovery progress at Capricorn Copper, and look at the growth outlook for Golden Grove. And then I'll hand over to Peter Herbert to go through the detail of the equity raising. So turning to Slide 7 and investment highlights. While there is absolutely no doubt it has been a challenging 2023 to date for 29Metals, as we've worked through the impact of the extreme weather event in early March, it is important that we zoom out and remind ourselves that this company is very well positioned to benefit from the positive long-term demand dynamics for copper and other metals critical to the global energy transition. We have two operating assets in Australia, both with +10-year mine lives in world-class jurisdictions.
Both of our key assets, Golden Grove and Capricorn Copper, have large existing mineral endowments, with a history of resources, growth, and replacement. There is significant potential to grow our greater than 120 million ton resource and greater than our 30 million ton reserves from extensions to our existing known resources or via investment in our broader tenement packages, which have tremendous exploration potential at both operating assets. Golden Grove alone has been operating continuously for over 30 years. It started off with a resource of 10 million tons, has mined and milled 40 million tons over the past 30 years, and today still has a 60 million tons - as 60 million tons in resources. So it is at least a 100 million ton system.
We have an enviable metal endowment, 2.24 million tons of copper, 2.47 million tons of zinc, as well as significant gold, silver, and cobalt. In short, we have a lot of metals in two of the world's most attractive mining regions. Turning to slide eight, a company update. It is no surprise to any of us, of course, that our half year results were considerably impacted by the extreme weather event at Capricorn Copper in early March. We all expected that. Production results were reported in our June quarterly announcement, and our financial results for the half year were released on the ASX platform this morning. Peter Herbert will talk to these in greater detail after my introductory words. Capricorn Copper recovery and restart is well progressed.
We were pleased to be able to recommence production on the first of August, earlier than market expectations. I will discuss this in more detail shortly. Golden Grove, four key areas for our growth and outlook. Xantho Extended, of course, here, the ventilation and development and recent performance has seen significant improvement. Gossan Valley, the new mining front, again, I'll talk to that shortly. And the life of mine tailings storage facility for Golden Grove, submission for approvals in the near term, and in the meantime, two years of current capacity that we have in the existing facility. And Cervantes, some great results from the recent infill drilling result, infill drilling, which we released to the market only a couple of weeks ago. On the balance sheet, Peter Herbert will talk to this in detail.
Important points are that the Entitlement Offer will fully fund the Capricorn Copper recovery and de-leverage the balance sheet. At this stage, we don't think additional liquidity will be required. However, we have received proposals for offtake finance, which we will continue to evaluate and which could potentially provide an additional liquidity buffer. Turning to slide 9, comprehensive funding plan. Summary of our funding plan, AUD 151 million Entitlement Offer and amended corporate debt facilities. Key points, equity raising AUD 151 million of underwritten, one for 2.2 pro rata non-renounceable Entitlement Offer. The offer will be at AUD 0.69 per new share. This is a 5.6% discount to TERP or an 8% discount to the last close of AUD 0.75.... And importantly, EMR, our largest shareholder, has committed to take up its pro rata entitlement.
We've received support from senior lenders, providing further covenant relief to the 1st-31st of December, 2024, with a revised amortization profile. And on insurance, AUD 24 million early initial payment advised by the insurers, with the balance of the claim ongoing. And in terms of use of proceeds, of course, Capricorn Copper recovery, working capital, near-term Golden Grove projects, and of course, balance sheet repair. Moving to Slide 10. This slide shows two key things. First of all, it shows the milestones we've achieved since the extreme weather event, such as the recovery plan for the Capricorn Copper restart. Restarting of Mammoth and Greenstone mining ahead of market expectations. A number of Golden Grove de-risking projects have been completed, insurance proceeds being receipted, the early payment that I referred to just now, and support from senior lenders.
These milestones have allowed us to assess our funding requirement and come to the market with confidence that this capital raise ensures 29Metals is sufficiently funded for our planned activities. The second part of this slide shows the further milestones we will be able to deliver to deliver on with this Entitlement Offer. These are milestones that will build the business for the future. So the restart at Esperanza South in the mid-Esperanza South in the mid-half, first half of next year, Gossan Valley development, continued increased production from Xantho Extended, the new TSF 4 at Golden Grove and the new TSF at Capricorn Copper, which I'll come back to shortly. And of course, Cervantes, to continue the drilling at Cervantes. I'll talk to all of these a little bit more in detail shortly.
Turning to Capricorn Copper, specifically, the divider there on Slide 11, that's a shot, a picture of new evaporators that have been commissioned and operating in recent weeks, and you can see the tremendous impact they are having in terms of assisting us in our water management activities at Capricorn. On Slide 12, the extreme weather event. I'm sure most, if not all, on this call are well acquainted with the events at Capricorn Copper in early March this year, so I don't intend to dwell on this slide. Only to say recovery planning and execution of phase one restart on the first of August was ahead of market expectations. Moving to Slide 13, our phased restart of operations.
We are now focused on full recovery operation by mid-first half of 2024, and thereafter, the tremendous growth opportunities that exist at Capricorn Copper, growth opportunities both at Esperanza South and Mammoth, which I'll show you shortly. But, the potential to increase mining capacity to meet the current mill capacity of 2 million tons per annum. And cobalt opportunities. One of our ore bodies has a cobalt grade of greater than 1,000 ppm. And the recent drilling results from Esperanza South have also delivered similar high-grade cobalt outcomes. We have undertaken studies as to how to deliver additional value from this cobalt, and these studies are ongoing. And surrounding the Capricorn Copper Mine, we have 1,900 square kilometers of tenements, largely unexplored by modern exploration techniques.
A great future opportunity we have on the best base metal-endowed ground in Queensland, i.e., the Mount Isa Inlier. Moving on to Slide 14, financial summary, on this slide here. I won't go through all the numbers on this slide in detail, as it's largely a repeat of what was provided in our Quarter Two release. Key points are we remain on track to be within our guidance. Total remaining recovery costs are in the range AUD 53 million - AUD 71 million, with AUD 34 million spent as at the 30th of June. And beyond first half 2024, further recovery costs are primarily associated with the water treatment plant, if we require it, at approximately AUD 37-44 million dollars. Moving to Slide 15. Tailings capacity. Tailings capacity at Capricorn remains a challenge for the medium term.
We currently have approximately six months of capacity, with a life of mine tailings storage facility planned to come online by mid-2025. We have an approximate 12 month gap. We are focused on a number of avenues to resolve these challenges. The medium-term goal is to bring on the new TSF online, TSF 3, as we call it. We are accelerating the studies to submit documentation for approval as fast as we can and exploring options to bring this facility online, potentially late 2024 or early 2025. We are engaging constructively with the regulator, and they are very positive about our plan for this new facility. Nonetheless, even with acceleration of TSF 3, there is a tailings capacity gap between current capacity and TSF 3, and there are a number of levers and options we are seeking to deliver on.
More paste down the hole, down into underground facilities, i.e., locking up more of the tailings produced. Possibly adjusting our production profile, probably in the early part of 2024, to spread out or to extend the capacity timeline that we have. Returning to deposit tailings into the E-pit, which is one of our existing storage facilities, water storage facilities, where we have deposited tailings in the past, and that's an obvious potential solution for us, and we are continuing with the process of the lift of TSF 2, the tailings storage facility, where the regulator has requested further information, and we're putting that together and looking to submit that in due course.
The company's focus is on these levers and delivering on these levers to secure continuous operations. As stated in the presentation, if for whatever reason there is a tailings capacity gap, then we would need to consider a period of suspension to operations. Slide 16. We've already referenced the tremendous potential of two of our ore bodies at Capricorn. Esperanza South, as drilling continues to demonstrate, the ore body gets wider and with better grades, and continues to be open at depth. Three holes shown on this slide, each with very impressive grades and intercept lengths. 23 meters at 2.3% copper, 70 meters at 2.8% copper, and 48 meters at 2.7% copper. All of these results outside of the current resource envelope. A potential new ore body at Mammoth. We're very excited about this opportunity.
Two holes with very impressive grades, and one of those 36 meters at 3.9% copper. This must be one of the best drilling results in Australia this year. Now let me turn to Golden Grove, Slide 17 and then Slide 18. Three key growth areas at Golden Grove. Xantho Extended, of course, come back to some of these in a, in a moment, going to 1 million tonnes per annum. Gossan Valley, the third mining front, likely to get bigger and better, just like Gossan Hill and Scuddles have done over the last 30 years. And Cervantes, underneath the Scuddles ore bodies there, on the right of that slide.
Tremendous recent results, 36.7 meters at 2.4% copper, 15 meters at 3.5% copper, 40.9 meters at 2.3% copper. All these results released recently, and also very good zinc results. We will, as usual, look to produce a resource and reserve statement in about February next year, which will hopefully include or intended to include a reserve statement for Cervantes, which should then lead into, potentially into a feasibility study. In the near term, we have a number of capital projects to support the growth of Golden Grove. I've already talked about TSF 4, conversion of the paste plant to wet tailings, being able to handle wet tailings and to directly convert the paste to go underground.
Ongoing development at Xantho Extended, and of course, Gossan Valley development from 2025. So turning to Slide 19 and a few more words on Xantho Extended growth there. And perhaps our most important development, of course, is Xantho Extended in the near term. Super high-grade ore body at Gossan Hill, a resource of 9.9 million tonnes at 2% zinc and 7.2%... Sorry, 2% copper and 7.2% zinc. As most of you know, development of this ore body has been slowed by COVID, resourcing, supply chain... COVID and resourcing, and the new ventilation fans, which again, were somewhat impacted by supply chain issues in respect of COVID. But largely behind us now, you can see the picture there on that slide.
The fans are installed and are being commissioned as we speak. Notwithstanding that, we have seen recent good improvement in both development tonne, development meters and tonnes from Xantho Extended, and we'll see this continue to grow in the near term to our targeted 1 million tonne output by 2025. Moving to Slide 20 and Gossan Valley. Gossan Valley, a third mining front for Golden Grove. Number of key factors associated with the development of Gossan Valley. Not only will it be a third mining front, providing greater flexibility and de-risking, it is a shallow and therefore more cost-effective mining operation.
It'll be a new ore body, so open, or to potential, the use of new technology as we start that, or that mining operation up. And Gossan Valley likely to grow the same way that Gossan Hill and Scuddles have grown over the past 30 years, i.e., as we get underground at Gossan Valley, establish drill platforms underground, and extend the ore body and the drilling activities at depth and laterally to continue to potentially grow Gossan Valley in future years. We're looking to bring Gossan Valley into first production from mid-2026. In summary, we can then continue to be tremendously excited by the opportunities to be delivered on at both Golden Grove and Capricorn. We have a lot of the right metals, we operate 100% in Australia, and we have multiple, multiple channels for growth.
I'll now hand over to Peter Herbert to provide further details on the equity raising.
Thank you very much, Peter, and thank you to everyone who's dialed onto the call today. Turning to Slide 23, we outline the key details of the offer. The offer is structured as an underwritten, accelerated, non-renounceable Entitlement Offer and priced at AUD 0.69 per share. A 5%-5.6% discount to TERP and an 8% discount to last close. 29Metals is pleased to have the support of its largest shareholder, EMR Capital, who have committed to take up their pro rata entitlement under the offer. The company has also continued to be well supported by its senior lenders, who have provided covenant relief in connection with the offer, which I will talk to in more detail shortly. Turning to slide, apology. Turning to Slide 23 now, which sets out the use of proceeds from the offer.
Completion of the offer de-risks the 29Metals balance sheet and enables the company to deliver on its plans. The offer proceeds will be used to fund the balance of Capricorn Copper recovery expenses, key near-term projects at Golden Grove, including the TSF 4, a life of mine facility, and the Tailings Plant conversion to support our plans at Xantho Extended, as well as additional working capital and transaction costs. At 30 June 2023, 29Metals had cash of approximately AUD 127 million, and following completion of the offer, 29Metals will have substantial liquidity, moving from a net debt to the company's senior loan facilities.
Our engagement with senior lenders following extreme weather event in March is being constructed, and in connection with the offer, our lenders have extended covenant relief through to December 2024, recognizing the scale of the recovery task ahead of the company. In addition, a revised amortization schedule accelerates de-leveraging with higher amortization in 2023 and 24 and lower amortization in calendar year 25. Additionally, we are pleased to report earlier this month on progress in respect of the insurance claim at Capricorn. As disclosed, insurers have agreed to make a AUD 24 million unallocated payment in respect of surface damage and associated business interruption.
There is, however, further work to do with our insurers in respect to progress in the balance of our claim and responding to queries in respect of the underground portion of that claim. Unsurprisingly, since the extreme weather event, the company has received numerous approaches from financiers, including strong interest from offtake financiers in connection with an undrawn subordinate facility. The company will continue to review these options to enhance its access to contingent liquidity as it progresses its plans. Importantly, 29Metals expects to be fully funded, and our plans are not dependent on additional capital or insurance proceeds.
Turning now to Slide 25, which sets out the pro forma metrics for 29Metals post completion of the offer, which will significantly enhance the company's financial position with unaudited pro forma cash of AUD 278 million, and a net cash position of AUD 31 million, relative to a net drawn debt position of AUD 120 million reported in our half year financials earlier today. The de-risking of 29Metals' balance sheet positions the company well to execute on its plans. As Peter touched on earlier, 29Metals released its financial results for the six months to 30 June, earlier today. Results for the first half were heavily impacted by the extreme weather event, with revenues of AUD 235 million for the half, down on the prior period result of AUD 356 million, reflecting lower production levels.
Cost of sales of AUD 275 million, inclusive of depreciation amortization charges, also lower on the prior period, reflecting activity levels, and a net loss after tax of AUD 307 million. The group's net loss for the first half includes significant non-cash impairment charges of AUD 206 million, comprising AUD 170 million in impairment charges at Capricorn Copper, following the completion of an impairment assessment, which considered the cost of recovery and the deferral of revenues as a result of the extreme weather event. In addition, AUD 27 million in asset impairment charges relating to flood damage at Capricorn Copper, and AUD 9 million in inventory write-down expenses across the group. Full details on the results for the first half have been released to the ASX today, and I would refer you to those documents. Thank you for your time.
I'll now hand back to Peter for some closing remarks.
Yeah, thanks. Thanks, Peter. So just the key takeaways, really, before we move to Q&A. AUD 151 million Entitlement Offer, expected to fully fund the Capricorn Copper recovery plan and de-risk the balance sheet for key growth initiatives. The Entitlement Offer is supported by 29Metals' largest shareholder, EMR Capital Investors, who have committed to take up their pro rata entitlement. We had positive engagement with senior lenders and agreement to key covenant waivers and revised amortization profile. Significant progress made on the implementation of Capricorn Copper recovery plan, with a restart of mining on first of August, mining and milling on the first of August at Mammoth and Greenstone. Confirmation from insurers of initial AUD 24 million Capricorn Copper insurance claim progress payment, and now the company is positioned for delivery of expected future growth.
Thank you, everybody, for listening to the presentation today. Let's see, we can go to Q&A, please.
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, then two. If you are on a speakerphone, please pick up the handset to ask your question. The first question today comes from David Radclyffe with Global Mining Research. Please go ahead.
Hi, good morning, Peter and team. My first question is on the raise, so maybe could you talk to how you settled on the size of AUD 151 million? Maybe some more color there on what drove that, or was the key here to eliminate all insurance proceeds risks? And then in the scenario that future insurance proceeds or other funding you mentioned, give you a, sort of a notional funding surplus here, where would you look to invest?
Thanks for the question, David. It's Peter Herbert here. I think we obviously considered a lot of scenarios, and ultimately, the decision to raise it AUD 150 is a judgment call after considering a range of those outcomes. I think we want it to be absolutely clear that the company is fully funded and not coming to market with a view that's dependent on other outcomes going our way. You mentioned insurance. We obviously remain very optimistic about that process. However, obviously the timing of that process, you know, is not certain. And so we didn't want to be at the whim of those sorts of outcomes.
As to what we would do with insurance proceeds, we'll consider that as we move through the process. You know, having a look at our balance sheet, having a look at the status of our recovery works and all those sort of usual things that you would consider. It's a little difficult to crystal ball on those, but naturally happy to have high-quality problems like in excess of capital.
Thank you, Peter.
So, sorry, David, and Peter. So, you know, we are not in a position to be able to know or guarantee what insurance outcomes will be or when they might be, David. We're very pleased to have received a AUD 24 million early initial payment. And, of course, the claim is substantial, as we've said before. But, that claim process continues on foot. But at this point in time, we have no way to say what the outcome will be and when it will occur.
All right. No, thank you. That's very clear. Then, I was wondering if we could get a bit of an update of how the operations have fared over sort of July, August, given the guidance requires a bit of a step up in volumes in the second half to hit guidance. So any more color there would be helpful.
Yeah, I'll a couple of quick comments, and I'll ask Ed Cooney, our COO, to contribute as well, David. So, but overall, we've always said that this, the Golden Grove is weighted to the second half, and that remains the same. There's no change to our guidance. And we're, and as I indicated, we're certainly in recent weeks and time pleased with the way that Xantho Extended is coming on stream. So, on that couple of quick notes or maybe a couple of comments to you, Ed.
Yeah, thanks, Ed. At Golden Grove, which I think is the intent of your question, David, I mean, our key focus at the moment is on the successful commissioning of the ventilation fans, which remains ongoing. You know, we are confident that they will pretty significant incremental volume entry flows to enable increased mining activity levels. And obviously, also focusing on continued development progress at Xantho Extended, which really those two things underpin stronger production in Q4, principally, zinc. And in terms of Capricorn Copper, look, a lot of progress in terms of commissioning of evaporators, restarting operations, and continuing to work through tailings solutions in the near term.
Brilliant. Thank you. I'll pass it on.
The next question comes from Kate McCutcheon with Citi. Please go ahead.
Hi, Peter and Peter. Thanks for the call. Just on the raise, why not come to the market back in March when Cap Copper was out of action? Why wait till now, and why put out a market announcement 10 days ago saying you weren't sounding out for a raise? Has something materially changed over the past 13 days? I mean, clearly raising now is dilutive to the kind of metrics we tend to value copper projects on, like NPV per share.
Yeah, thanks, Kate. You're referring, of course, to an AFR article, which, of course, we need to point out was retracted almost immediately. It was incorrect, and we released a statement to the ASX at that time. So I refer you to that. That was all incorrect. As to the timing for our coming to the market today, there's been quite a number of activities that we needed to undertake to understand, you know, the sizing of the raise and what work needed to be done.
As we came through the weather event and came through sort of April, May time, we were well funded and had plenty of liquidity on the balance sheet, so we had time to work through those things. Such as, you know, the detailed planning for Capricorn Copper recovery, de-risking of projects at Golden Grove, the activities or the progress with the senior lenders, insurance activities, which have obviously resulted in a, we would say, a pretty positive outcome, and a number of other activities.
So, you know, a fair number of lines of work that we undertook between sort of the weather event and today, and not related whatsoever to what you referred to in the press a couple of weeks ago.
Okay, sorry. I was just making the point that you put out a market announcement saying you weren't sounding out for an equity raise 10 days ago, and today we have a raise.
Sorry, Kate, I did- I didn't get that at all. Say that again, please.
Okay, never mind. I will follow up. And then just a second question around Capricorn Copper. You did touch on the tailings, but it's not 100% clear to me what the hold-up is with the permitting and removing the processing constraints for Cap Copper. It seems we've been talking about how the regulators are positive on the approvals for some time now. So anything you can add would be helpful.
... Yeah, thanks, Kate. So, a couple of things with the regulator, and of course, we're and will continue discussions with the regulator. They and we obviously in terms of where we are, there's two or three activities or three or four activities that I referred to in the presentation in terms of levers we have. In respect to the lift on the existing facility, what the regulator has asked for is further information around that lift and really requesting further information on which relates to the history of that facility and how it was put together originally.
We're obviously undertaking that work to be able to provide that information and really, yeah, provide that clarity for the regulator. That's in process. We have been also, as I indicated in the past, put tailings into a facility which is called E-pit. That is an option that is open to us, and we're working through that as to how and how much and when. But we think that that would probably only give us some months of additional capacity there, if we once we work through that. So there's a couple of specific tailings deposition options open to us, as well as tweaking around paste fill and also production rates to extend existing tailings storage facilities.
Hopefully that helps address your question then.
Okay, so you're saying there's no real issues with the tailings dam proposal? It's just a back and forth with information with the regulator. Is that correct?
Well, with the regulator, you know, you've got to get through those processes, Kate. So, you know, I think I was pretty clear. If for whatever reason that doesn't come to pass, then we will have a gap and there's a potential for a suspension for a period of time. We don't expect that. We don't... we're obviously working to resolve that. But our focus is on delivering those outcomes, so we don't have that outcome.
Okay. Thanks, Peter.
The next question comes from Tim Huff with Canaccord. Please go ahead.
Thanks very much, guys. If, if we could just double-click on the tailings issue at Capricorn Copper. You know, if we, if we have a look at the satellite imagery, it looks like the water treatment plant is still underwater. Water levels are slightly lower in the pit, and in the current tailings area. If you were to get the in-pit capacity to put tailings in the old pit, do you actually have sufficient freeboard to start placing tailings in there?
So Ed Cooney here. I'm gonna take that one. So we currently have an application with the regulator to increase what we call our DSA, Design Storage Allowance. So that's the volume of water we need to have in the pit ahead of a wet season coming November. So that application we have submitted is to increase the amount of water that we have in the pit. But currently, fair to say, you know, we need to have a successful wet season. We're well advanced in terms of design, execution on treatment and release for this upcoming wet season, and commissioning of additional evaporators, all in efforts to reduce the site water inventory, which we need to do.
Okay. And then maybe just staying on Capricorn Copper, Esperanza, how much has been dewatered there? How far down the decline are we at the moment?
Haven't yet commenced the watering of Esperanza South. We've obviously commenced restart of Mammoth and Greenstone. We have been maintaining water levels within Esperanza South. The intention would be to recommence dewatering and rehabilitation of ESS in the fourth quarter this year.
Okay, excellent.
Sorry, I should add, and then the intention for that timing is it dovetails into the service water reduction initiatives and activities that we've been undertaking to date.
Okay, so the water from Esperanza, obviously, that's going to be acidic to some degree or classed as acidic. Would that have to go into existing storage before for a period of time-
Correct.
or does that require any extra treatment?
So that... Correct. So that would go into existing surface water storage infrastructure, and then being treated for release in the wet season.
Perhaps moving on to the balance sheet. That $1 million revolver facility with the capital raising today, do we assume that that gets paid off, you know, tomorrow?
No, I wouldn't assume that. We'll monitor that going forward. It's not a requirement of what we're announcing today that that happens. And it's a, so it's a, as I said, it's sort of a 12-month revolving facility. But yeah, we'll sort of consider that as we move forward, Tim.
Okay, yep. Any update on the AUD 26 million stamp duty payment that's due?
No, there's nothing to update. We've had no new news on that matter. Thanks, Tim.
Excellent. All right, I'll pass it over. Thank you very much.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced.... The next question comes from Daniel Morgan with Barrenjoey . Please go ahead.
Hi, Peter and Tim. First question is on Capricorn Copper. Why not just make the decision now to have a hiatus at Capricorn until the business is on a sustainable footing? I, you know, you get the dewatering done, or more sustainably, you know, the water levels reduced, get the tailings, you know, with a clear solution there with the regulator and then restart. It just strikes me that we've got potential demobilization, remobilization, and, you know, potentially redundant costs. Thank you.
Yeah, thanks, Daniel. When we've gone through the process of working at our detailed plans, Daniel, we've obviously considered all scenarios, including what you have just described. And, from an outcomes perspective, financial outcomes perspective, there's no material difference between a stop now and a potential stop next year. What this does for us is buys us the time to ensure or endeavor to ensure that we can keep the process going. It keeps our labor force, it keeps our equipment turning, it keeps our operations in good standing, it keeps the equipment in good standing, and it secures us the opportunity to work through these issues that we have now.
From a modeling perspective, when we did the analysis, there is very little difference to an outcome that, in terms of what you propose versus what could potentially transpire sometime next year. But we're obviously working on outcomes to make sure that that doesn't happen.
Thank you. The carrying value for Capricorn Copper, if I've read it right in the release, is now down to AUD 173 million post the write-down. So I understand the need or the background to the write-down, but just can you unpack the key assumptions on what this carrying value is comprised of? Like, how, how was it set? Thank you.
Yeah, look, thanks. So, I mean, the carrying values, you know, with respect to our, you know, forward plans, that includes all the costs that we anticipate, you know, in connection, you know, with the recovery. I mean, the way, I mean, if we think about it in very simple terms, adding a significant amount of cost in the near term, and a deferral of all or revenue, out for the period until we can get, you know, restore full production, that has had an impact on the carrying value. And just for context, as you may or may not be aware, the way that the IPO worked was that, through the Golden Grove was the acquiring entity for that transaction.
As a result, Capricorn was the acquired entity, and that was written up, you know, following the, you know, following the completion of that, of that transaction. So the carrying value reflected the outcomes of the IPO. And naturally, those plans have changed with the extreme weather events. So, I suppose when you think about it in those terms, you know, not too surprising, but, you know, we think we've adopted, you know, reasonable assumptions in terms of, you know, commodity prices, you know, discount rates. They're all in the accounts today. And that we're comfortable that we have a robust carrying forward going forward for Capricorn.
So is that like a reserve case, your mine plan case on, say, consensus commodity prices or, or something thereabout? Just-
In rough terms, it's a life of mine case. It's not just reserves. But you know, we have a robust 10 year mine plan, as you know, there. So, you know, we're comfortable that it's a fair look forward on what Capricorn can achieve.
And then, last question is just, you mentioned, I believe, earlier in the presentation, you've received some potential offtake finance agreements. Could you maybe just expand on that a little bit and why, why you'd consider it? 'Cause anything of that nature, I imagine, there's a cost to these, and, you've just undertaken an equity raising, which puts the funding task, you know, the funding of the company is obviously, but on a much surer footing now. Why would you consider an offtake finance agreement that has costs?
Yeah, I mean, I think we're obviously outlined today that we've had those approaches to those discussions. And as I'm sure you'd appreciate, we've looked at a number of options recently and had a number of approaches. I suppose one thing we reflect on as we come to today is that having good liquidity, good access to liquidity has been very helpful for the company in sort of managing through this event and positioned us well to work through that in an orderly basis. And we want to make sure that the company continues to have that, you know, going forward. So, we have been looking at undrawn, you know, continued facilities that ensure that we do that.
And we wanted to be transparent around where we were today in terms of coming to the market.
Thank you very much, Peter and Team.
The next question comes from Meredith Schwarz with Bank of America. Please go ahead.
Good morning, Peter and team. I just had a question regarding impairments. Are you expecting, or is there likely to be any further impairments into the second half, as a flow on from the first half?
Certainly not. We've obviously done our impairment assessment on the basis of our forward-looking plans. So that wouldn't be our expectation, you know, on the basis of us executing the plans as we've outlined today.
Okay, perfect. Thank you. And then, also on the debt covenant, can you please remind us when the next test to the covenant is, please?
Covenants are tested on a six monthly basis back over the last 12 months.
Okay. Okay, great. And then one more, if I could. On the insurance claim, and in particular, the underground component. So, you know, you released to the market that, the insurers rejected the underground claim. Can you give any update to that, perhaps the reasoning behind or what you're doing going forward to work on the on that underground claim, please?
Yeah, sure. So the equipment and infrastructure damage, if you like, is primarily on the surface. So the portion in terms of the underground component is relatively much smaller than the surface component. So the insurers have taken a position that perhaps the insurance doesn't cover that underground equipment damage. We obviously don't support or agree with that, and we will address that as we go through the claim process. But I need to point out that the most of the damage is on surface, so which is fairly clear that coverage is in place. You know, the water treatment plant, workshop, warehouse, et cetera. So I hope that provides some clarity.
Okay. Yep. So underground is a much smaller component of the claim, and so, even if you don't, you're unsuccessful with the underground, there's still a, you know, the major component is from the surface claim.
Well, for definitely the equipment and other damage to physical facilities, yes.
Okay, great. Thank you. That's all for me. Thank you.
There are no further questions at this time. I'll now hand the call back to Mr. Peter Albert for closing remarks.
Okay, thanks, thanks, Betsy, and, and thanks, everybody, for, for listening in and calling in today. Lots of, lots of information provided today. We're, we as 29Metals are very excited about, where we, where we've landed today and, and this, this equity raise and, and the, and the path forward that provides to the company and the security of the balance sheet and our ability to undertake the recovery, programs, the near-term Golden Grove projects, working capital and, and, and, and obviously, the balance sheet repair. So we're, we're very, very, very pleased with, this, this result today, this announcement that we've put out today, and, looking forward to, a, a, a good second half of the year and, and, continued growth of the business thereafter.
If there are any follow-ups from this call, this meeting today, please feel free to follow up, to be in touch with Mike Slifirski, our Group Manager, IR, and we'll seek to address any further questions that you may have. Thanks, Betsy. Thanks, everybody.
That does conclude our conference for today. Thank you for participating. You may now disconnect.