I'd now like to hand the conference over to Mr. Michael Wall, Managing Director and CEO. Please go ahead.
Thanks, Ashley. Good afternoon, everyone, and thanks for your time this afternoon. There's a lot of material that we've released today, and we decided to push the conference call back from our normal time back a little bit later to give people hopefully an opportunity to look through what we've got. I think today or this morning this update is mostly about federation, because we've done a good amount of work in getting the feasibility completed, but also making a fairly substantial pivot in how we want to develop this project. Therefore, we have taken a bit of extra time to do that. End result is we are pursuing highest value. Now becomes, because we are using existing infrastructure, becomes more of a portfolio call on how we fit everything together.
At the same time this morning, we released the mineral resource and ore reserve report for the year and our FY 2023 guidance, now that we have a better fix on the Hera commitment this year. Importantly, with Hera, actually now how everything else fits or how Hera fits into the rest of our portfolio. As we are chasing now or pursuing approximately half spot pricing, AUD 480-odd million worth of mid-term projects in NPV, existing sites with operating cash flow. The changes that we need to make to those sites, to not only get a more resilient operating performance among the headwinds of economic conditions at the moment, but also making sure that we have the runway ready for these projects coming on.
Also what we'll see here is that it's a large organic pivot into a different commodity mix in the business, and that's really exciting for the group as we continue to extend lives, as well as pivoting into a larger exposure of copper and zinc within the portfolio. To do that, first I'll just run through a summary. I'm just gonna move over to slide nine. First and upfront, talking through the highlights of the Federation feasibility outcomes. We indicated earlier in this year we were seriously considering different alternatives to how or what the processing solutions were for the Federation ore body. What has come very clear for us in finalizing feasibility studies is that the best value and most compelling investment we have is leveraging the existing infrastructure across our other two assets in the Cobar Basin.
As Federation, with the values you can see, is the highest value, it would mean the ore body will get priority into the existing milling infrastructure. Just to step back and have an upfront look at Federation, it's an underground mine, similar mining methods that we use at all our three operations. It's in our backyard. Even after only two years of resource drilling and one year of infill drilling to convert, we have a 4 million ton production target, which I must weigh with the pace for approval, as well as the drilling and the timing and the feasibility, is a great turnout in terms of these metrics across only 4 million tons. A reserve of 2.2 million tons, costing 17% less Zn equivalent.
In some other commodity terms, that's roughly a 6% copper equivalent or a 9 g/t gold equivalent. With operating costs average across the LOM at AUD 190 a ton in steady state outside of ramp up and ramp down in and around AUD 180 a ton. The NPV ranging, depending on prospects between Bloomberg consensus and spot pricing between AUD 200 million and AUD 400 million NPV with IRRs just shy of 40% through to 70%. This, I think that goes to those figures go to why we see this as such a compelling investment for the business. One of the real points with this is that we have opted to take a more resilient approach. I will use that word quite commonly today because you can see economic conditions out there.
We're talking about cost increases, capital execution risks, input costs, and capital blowouts in other projects around. We've opted to do that, significantly reducing capital. It utilizes existing infrastructure that we clearly understand process flows on, and it helps us prioritize the higher-grade ore body. We see that as the lowest risk, more resilient setup, for the operation. With that being said, because it does need to fit into the rest of the business, it's not gonna have its own mill. It's important just to come back and have a look at what the context is for the direction and how we see it coming together. If you can go over to slide 11.
So our strategy, foundational base metals really is where we are going, and that's on an organic basis, with particularly federation that we talked about, but we can't forget about Great Cobar in this. Our strategy is pursuing the highest value, and that is through three-five projects and bringing on these projects and making sure as a business we are run well. Optimizing of our assets, extending lives, reducing costs, maximizing use of existing infrastructure, and then adapting of the portfolio, particularly the commodity mix within the business, as well as the life extensions through continuation of a really successful exploration program. That becomes our strategy. It is fairly similar, but we, with two key things to see as particularly pivot in the commodity mix.
That's leading to what needs to happen with the business to be able to get our assets to fit around this opportunity. Moved over to slide 12. You can see laid out what we've needed to do and why in terms of today, and then getting around what needs to happen for the future. I'm just gonna touch on a couple of the high points here. Me as a management team, we recognize clearly the second half performance last year was challenging for us. There's a number of internal and external resources we've deployed into the assets to get this performance right. That's particularly focused on not having repeat incidents and making sure the engine room, that which is the three operating assets, run well and run resiliently.
At Peak, the transition to owner mining that we flagged earlier in the year now are in its final stages and has pretty much been completed through the September quarter, with only a tail end of works to be done. In focusing on Peak and maximization of cash flows, we've opted in the headwind of operating costs, labor, equipment shortages, and input costs on the rise. We've opted to actually scale Peak back to 550,000-600,000 tons on a yearly basis. This is about making sure that every ton of ore we mine has a margin and is profitable. We've scaled not only the operation but also the processing facility to suit that mine output. It's allowed us to pull roughly a 10% reduction in our cost per ton process.
I'm gonna cover that off a little bit more once we get into the guidance for the individual assets in the group a little later on this afternoon. Hera has completed transition to a new mining contract, and we have kicked the decline away. I'm gonna talk about that a little bit later on this morning. We've got it returned back to three active stope areas after Q3 and particularly through Q4 last year, increased rehab requirement underground as well as some mobile equipment reliability issues. Dargues has, as we're aware during the year, we did impair the asset. We've now got it running operationally very reliably. It's grading and finishing for us.
What we are planning to do, we've actually submitted a modification to actually increase its throughput with very minimal capital requirement. That capital requirement really is just the cost of the application for the modification to the plant. We know it can do approximately 417,000 tons per annum. We just need to amend the annual consent for it. Again, I'll cover that a little bit later on. Additionally, through the year, with the release of Emerald, you'll see a 5% increase in our resource base over the prior year, giving us approximately 29 million tons across the business in resources. We manage to continue to keep growing that resource base. That is what needs to fit around what the future looks like and what tomorrow looks like.
We've talked about Great Cobar earlier. We released the PFS for Great Cobar in January this year, and we'll see with the outcomes of the feasibility report today for Federation combined values, again, at high pricing of approximately AUD 480 million. That's what we're pursuing in terms of value. It's capital light in that we are looking to use the existing infrastructure, and that means the optimization of that existing infrastructure and the operating assets around this, and then continue to adapt the portfolio as there's a significant shift in commodities towards the foundational base metals. We remain gold in the portfolio, and that provides pretty an important and natural hedge for those base metals. In summary, it comes to really improving our asset quality. Moving over to slide 10.
Really, it's the key discussions around this morning are gonna be around funding pre-production capital. We have AUD 108 million in development load coming in pre-production for Federation. It has been de-risked, as I mentioned, by opting not to build a new milling facility for it and go with the existing infrastructure. Of that capital load, over 60% of it is in development. That is all decline and lateral development, and the remainder particularly in on-site and offsite infrastructure. There's very little in terms of processing plant upgrades. In pre-production capital, we do plan because we are gonna be utilizing both Peak and Hera mill for this opportunity to provide upgrades with the Peak mill for another regrind mill. That's approximately AUD 7 million. Other infrastructure requirements, minimal compared to the overall spend.
It's a key move, leveraging the existing infrastructure, reducing the capital, and therefore reducing the risk. I think there has been. We saw speculation last night on funding. Now, we have been exploring what our funding options are for the business and the asset, in particular. To make sure we get the most flexible long-term, funding arrangement into the business that matches the business and these assets. Certainly has been done in challenging, conditions for the business. As a result of where we are with, the preparation of this asset, changes to the operating assets that we've made, and taking a little bit of extra time to chase the optimal funding package for this and the business ongoing, we have actually decided for prudence sake to sort of pause on the decline until such time we get that funding, arranged and in place.
That delivers or maintains a strong balance sheet, as during the period of time, we have continued to invest, particularly through Q4 and into Q1 this year, significant amounts of cash into growth projects within the year. Just in the September quarter, AUD 15 million in growth across Federation and TSFs, and then continued to pay down loan repayments and cash backing of this combined roughly $9 million . That heavy capital load in conjunction with an operating performance in transition from the Q4 performance through to now has resulted in relatively flat cash from operations, meaning our cash balance ended up at approximately AUD 46 million at the end of the September quarter.
Balance sheet remains in good shape, and we will be pursuing the best mix of funding whether that's in between the debt packages that we have or have been looking at in terms of moving forward, as well as any other ways that we can strengthen the balance sheet or get the balance sheet in shape to move forward. Just in summary, that's an overall summary of where we've been over the quarter. It really comes down again, just to pursuing these asset qualities, in particular these two projects, matching them into the existing operation, reducing our risk, and then continuing with exploration and a real transition in the commodity mix within the business. Let's move into section two. I'll move down to slide 12.
I think I'm going to come back into the individual assets in a minute, but painting a picture of how this all fits together and the assets and the packages of land that we have. Looking at slide 12, between the two operations between Peak and Hera, we have a terrific network of roads, approvals, mines, camps, tailings facilities, processing facilities, and exploration tenements. That offers us, with the approval strategy with all our assets, ultimate flexibility between the components of the mines. We now look at the business, particularly in Cobar, as instead of two separate operations, two separate projects with multiple ore bodies and two processing facilities, all connected by road approvals and other infrastructure. Just move over to 17.
That portfolio gives us the runway in which to integrate these two assets, between Federation, Great Cobar into the business. That's great. I think if we look at last year, AUD 240-odd million in revenue and AUD 167 million EBITDA. Slide 22. Between those, between the three operations and our ability to fit in two really exciting projects into the business that are organic within the business at a much reduced capital profile and therefore risk that goes with it. If we move over to 18, two projects of Federation and Great Cobar utilizing this, the existing mills. Again, just to reinforce, this is averaging up of our asset quality, whether it be value plus operating costs and where they are with approval is the key message behind what we're trying to achieve here. Dive in a little bit deeper.
If we move over to 19 and cover off some of the non-financial metrics of the Federation project. Single decline access from a box cut. The surface and MIA area is only to support the underground and surface crushing. We've got road haulage that will take material from Federation MIA area to either the Hera plant or the Peak plant. There is some power modifications. Tailings facility already exists, and we're in very late stage of approvals, which I will cover a little bit later on. I'll put some commentary around the implications of closing of the decline. Valuable asset for us. The only addition we'd really need to make to the Federation or to the Hera plant is the addition of a tailings filtration facility on site because we need to be able to.
We need that material for the paste fill at the Hera, the Federation underground. Pending decline recommencement, first wave production expected within 12 months from recommencement of the decline. Moving over to 20, a snapshot of Great Cobar. As mentioned, we released this TSF earlier this year, in January this year. Just to reinforce it, in that period of time, it's now been increased. The resource has been increased 45 odd % to 7.7 million tons. It's 3% copper equivalent. The really important part of this project is that it's actually already fully approved and consented through the New South Wales Government. The MIA areas exist either at the northern mine portals or back at the peak infrastructure.
Decline is off existing workings and as I mentioned, the increase to the 7.7 million ton resource. Importantly, wide open at depth, and the latest results that we printed during the year show the exciting tenor of that mineralization as it dips away from the existing PFS mining area. Moving over to 21. I've given a brief snapshot of the outcomes of the resource and reserve report, but particularly the key highlights. 7.7 million tons measured and indicated. 2.2 million ton reserves at Federation, again, only after two-three years of drilling, just averaging 16, nearly 17% zinc equivalent. At a group level for Aurelia, a 5% increase in our resource base and a 30% increase in the ore reserve.
That comes off the back of a nearly 60% increase in our resource base in the prior year. Continuing to deploy the drill bit, and we are, you know, with the exploration packages that we own, that is converting into resource, reserve, and ultimately life extension in front of the mills. Moving over to 22. I talked about the commodity pivot within the business. You can see the FY 20 22 revenue mix of over 50% to gold. Illustratively coming on with these two projects that we've got coming, will go to nearly a two-thirds contribution to our revenue mix from copper and zinc. I think everyone. I don't think it's difficult to not be able to see the actual global demand for those two commodities in particular.
For us, they're near-term, we own them, and they're right on our doorstep. Across a 29 million ton resource, that's longer lives in the right commodity and much lower risk than building brand new sites elsewhere away from infrastructure. Moving on to 19. Underpinning all of this is our sustainability performance. As a company, we have focused on this. It is a core part of our business.
The point I particularly wanna call out today, if we move over to 20, is that in interactions and consultation with key stakeholders in the areas that we operate, it's been that the board has made a decision that after some consultation that has already occurred and to be continued, that we will be engaging or continuing to engage with our First Nations people first to change the name of Federation. This is very much in line with our commitment to the deep connection to its First Nations people in our area. Just moving. I think it's time probably to dig in more detail into Federation.
I particularly wanna talk about where the what we see as the optimized position, which we've already covered in terms of the utilization of existing mills. Also where we see how we are gonna split the ore and how it's gonna be fed into individual sites, and also remaining upside within the business as we have only been drilling, we only had discovered it three years ago. Moving over to slide 23. As I mentioned earlier, it was clear that the current production target of 4 million tons, that the highest value option for this asset was to utilize existing infrastructure. That means road transport from Federation to either Hera or the Peak business.
That does result in significant capital reduction and particularly protects us, as I mentioned earlier, about the challenging conditions for large scale capital development within the businesses. It utilizes existing infrastructure and, in conjunction with not only that control change, the consenting process for the asset is really well advanced and still on target for mid-calendar year, so June next year. The beauty of this is it actually allows us, because that consent, we are applying for 750,000 tonnes of capacity and a standalone processing plant or upgrade at Hera.
We will retain that flexibility into the future and gives us the options as to where exploration and increases to resource and reserves justify the best place to put incremental or large scale increases into our mill in Cobar, we retain that optionality between it being at Federation or Peak. That's a great opportunity, and it's a great flexibility to retain within the business. Let's move on to 24. As the ore, 600,000 tonnes of ore. It's interesting how the separation of that happens underground. As I mentioned earlier, it's driven by the higher gold content, and the way Federation mineralization occurs, we see through prior or through the exploration program, visibility of three high-grade gold shoots through the mineralization.
It's those high-grade shoots that define the high grade that can go to Peak and the remaining grade goes through Hera. It's actually a stope-by-stope separation for high grade and remaining grade as opposed to bucket-by-bucket. Moving over to 25 to talk about upside. Now, there is always, you know, from a feasibility through to execution, there's always optimization. We still have drill results that didn't make it into the feasibility that came through in the finalization of the program from March through to June, this year. We've printed those results. They didn't make the cut. We needed to draw the line in the sand for the material that we're assessing in the feasibility.
There's still that upside remaining within the business, let alone the fact that we've only drilled it really from a resource perspective for two years and the remaining year on infill. The real upsides for us becomes that the ore body still remains open along strike and at depth. The leverage to every year of extension of this asset is huge in terms of what a steady state post ramp-up EBITDA looks like. That's the number there of AUD 126 million quoted at spot prices to note. Those upsides are incredibly valuable considering the productivity of the ground in, you know, we hold in the Goldfield basin. That's the asset quality. That's the. We've been through the pursue bit.
We'll go through the asset quality, and that is really what we're sketching out to achieve here subject to getting the optimal sort of funding package for the continuation of the Peak Mine. Moving into the existing assets, I will talk about what we need to do to these assets to be able to fit Federation in and also talk to the guidance in the year now that we've done the work on the feasibility. Just move to Peak. The transition to owner mining at Peak is vastly complete now. That commenced in FY 2023 and is, in the majority of cases, complete now. September, we see the majority of that transition completed during the September quarter.
In addition to that, as I mentioned earlier, we have opted to scale Peak back to ensure complexity is reduced and we end up with the strongest cash flow position for the business going forward. That means the processing facility has been scaled back to approximately 550,000-600,000 tonnes. We see the reduction, approximately 10% reduction over the FY 2022 cost per tonne, and we retain the flexibility there to ramp that back up in time when required for Federation ore feed to come into the asset. Peak production through the year for FY 2023 compared to FY 2022 and that 10% reduction in the operating costs for the asset. Move over to 28. Talk to Hera, Federation. Transition to a new contractor at Hera was completed in FY 2022.
As I mentioned earlier, we've returned the asset to the three asset type area, which is really important to ensure that we get the mill fed fully in this period until Federation comes on. Loader availability has been improved, and we have moved into a situation now where there's much less remote communication required on the ground support. Similarly here, you can see that AUD 10 a tonne operating cost, about 14% reduction. That's very important for the business. Throughput remained steady in the year, just noting that the consented limit of 355 is 1. This year, the prior year of 365 was nuanced between the consenting limit being 355 for a calendar year. We had some upside available in the final financial year to take it to 365.
Gold at 37,000 saw production in head grade and controlled cost control within AUD 95 a ton. The grade constraints on the asset, the optimization of that asset has actually increased its throughput. That is requiring a modification of the consent, and Mod 5 has been submitted, which gives us a 13% increase in throughput onto 300 million capacity. It will, though, remain under careful watch in terms of us making sure there is a detailed operational review completed on the asset to ensure we get optimal value on that asset for this current position. The movement to 30, to look at group guidance business, and we can see gold slight reduction on the prior year with gold primarily head grade reduction and volume reduction at Peak and a slight grade reduction at Dargues.
Just under 90,000 ounces for the year. Zinc and lead materially the same to FY 2022. All-in sustaining costs. This year, I'll note we are guiding on Bloomberg consensus and costs. All-in sustaining costs at AUD 1,900 for the year on the basis of our views on the base metal prices. Growth capital, excluding Federation of AUD 9 million, is majority tailings facilities across particularly the Peak asset. Growth capital at Federation, again, subject to the review of financing and the recommencement of the decline at approximately AUD 44 million. Exploration valuation this year, at AUD 15.5 million on the basis that the infill program at Federation has been completed.
Based on the timing at the end of September quarter now, we have got the reconciled production numbers in, so you can see the run rate through the September quarter is aligning to full year guidance for the business. I will make a note here that we haven't been able to provide September quarter all-in sustaining costs, because we haven't closed the month-end accounts from September yet. We will release that number in the upcoming September quarterly report late this month. What I will indicate is that the September quarter results and all-in sustaining costs will be higher than guidance as the changes to the assets of Hera and Peak from Q3 and Q4 last year flow through into Q1 and those actions made within the business that I mentioned earlier.
Then we very confident that it will then transition down to an average of $1,900 an ounce for the full year. Moving through to slide 32 and just to wrap up the final piece in the presentation this morning. The continuous growth of both our resources and reserves is being driven by not only the exploration country, but the continued investment into exploration. You know, eight years now of roughly eight years or six years to the day of continuous growth in equivalent production comes from that investment, and that will continue through the course of the year.
Moving over to 33, we can see just the sheer strength of the exploration country that we control across the Cobar Basin, and particularly some of the recent work with Falcon Surveys, continued on-ground exploration activities within the business. Again, just to summarize, we have been pursuing the full value of the assets that we have in front of ourselves. We have matched the existing sites and infrastructure for the projects, and we continue with the exciting exploration life extensions and commodities within the business. There was a lot in that, everybody, and thank you for your time. I might just hand it back to Darcy, and we might move to questions, 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 two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Dylan Kelly from Ord Minnett. Please go ahead.
Yes, good afternoon, team. A couple questions from me. Appreciate there's a lot of content to get through here. Michael Wall, can you just take us back to slide 24, where you talk about the movement of ore from Hera to the two plants? Can you just walk us through this here? Am I right in thinking there's a 60/40 split between Hera and Peak? 600,000 tons of ore you can truck roughly, say, 120,000 tons up the road to Peak. The basic movements of those are independent of the grade. You're shipping a 17% lead zinc ore there. The remainder, I think less than say like 10% of zinc goes to Hera.
It's like 200,000 tons. Is that the right way to be thinking about it?
In time it is, Dylan, that's right. There is a couple of early constraints within our approvals that we just need to be aware of first. We are currently approved to truck 100,000 tons between Hera and Peak now. The consent that we are going for, that we are expecting to have mid calendar year next year, so in June next year, allows that trucking increase to go to 200,000 tons per annum. And then beyond that, we can reapply or we can modify our consents to increase that trucking between the sites. I think that's the first key points with that. In terms of the ore split, you're right. It really is about making sure that both mills are full and that we get the best revenue mix.
The split is approximately right. Remembering the Hera plant was designed for a combined base metal of around 7%, and we'll be coming up to call it 15% or perhaps less through it, but it will be a constraint on throughput at those base metal grades. Around 330,000 tons a year is probably the maximum, our estimate of the maximum we'll get through the Hera plant. That leaves the balance of 250. We just make sure that we've got the higher grade and the remaining grade split right. But in essence, it's roughly those numbers, but 250 type split is really the high level number that we're aiming for.
Okay. The economics of trucking that sort of distance don't necessarily move the needle too much. What is it? So of a 100K haul, what are we talking, like AUD 20 a ton, on an AISC basis, somewhere north of 400? It's not gonna move the needle too much for the economics, is it?
No. It's just a bit north of 20. I'd call it 22 dollars a ton. I think overall mining cost here, including the trucking, is 108 for this asset. I think the key thing here to be focusing on is there's logically a transition point to where increased recovery, the capital cost in getting increased recovery as an upgraded plant will overtake the trucking costs. You get a better benefit by putting that capacity in there. Across a 4 million ton production target, that crossover is not achieved. We get a better economic outcome for the business by incurring the trucking costs, minimizing the capital, and utilizing the Peak plant for the high grade. There's simple equations for it.
At some point, though, there's no doubting that if successful drilling continues on that resource and it can be increased over time, then at some point that option may become or should become available. What we're setting out to achieve here, rather than locking in on a high capital in a high-risk period, large capital investment right now, from a value perspective, waiting a year or two to drill out further doesn't just pull back on value and gives us the opportunity to not only just assess whether it's a new plant, but we may opt to do incremental de-bottlenecking improvements at either Hera or Peak to get more capital effective increases. That flexibility remains for us. That's the work we're ongoing. I mean, at the end of the day, feasibility, we're not at FID for this.
FID is not due until we get consented and, you know, the industry can change in that period of time. Really we're retaining flexibility through the approvals and what we're planning to do here with the opportunity to drill further and make those decisions on capital deployment later and in a more effective way.
Just to point out around capital cost for this, you've said this already, it's been written in the notes there. How much was the standalone process option, if it got built a whole new plant?
It's an additional approximately AUD 100 million.
All in, close to AUD 300 million bucks.
Yeah. Just shy of that.
Just shy. It's okay, cool. AUD 108 million cost initially. You're looking to self-fund that from this point forward. Can you just walk me through, you know, how that spend's gonna look and how we think about the funding options from here?
Yeah. Not self-funded, Dylan, I think that's the key. I think we have been assessing what our funding options look like for it, but there's no doubting that we are not self-funding for the pre-development capital of Federation. That's an ongoing program now that we are deep into. From a debt side, we have and we will be looking into other options as to whether it's strategic offtake, strategic partners at either asset or head co level, equity and also the debt packages that are available within the business. We are taking that time to step back and assess that correctly. As I mentioned earlier, that's driving a decision for us to pause the deep time for a period of time until that funding package has been assessed and landed.
Understood. Just, finally, and I realize I'm asking way too many questions. When it comes to the cash balance for the last quarter, I'm not too sure if Ian's on the line. Can you just walk us through the difference between, what is it, if I believe AUD 77 million at the June quarter end and this quarter's down to around AUD 46 million. What were the different elements apart from cash flow? I think it was cash flow neutral from the assets this quarter.
Thanks, Dylan. Basically, the operations and working capital comparison was fairly flat. We did incur about AUD 19 million of CapEx, of which AUD 4 million was sustained capital and AUD 15 million on growth, which is made up of Federation of seven and Peak TSF for four and some exploration across the sites, primarily targeting Federation. We also paid down our term loan of AUD 4 million, cash backing of AUD 5.5 million, and then had some other accruals across our loan leases paid out. That was the bulk of the movement for the period.
Understood. What was the total term loan principal down to now?
It's down to 10.6.
Great. Okay, great. Still sitting pretty in terms of cash. Great. I'll pass it along to patrons, and I'll circle back with some more. Thanks.
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. The next question comes from Michael Evans from Acova Capital. Please go ahead.
Hi. Good morning, Dan and team. Thanks very much for that presentation and all the information. I'm just going to be quick on following up on one of Dylan's. For that truck capacity, you applied for 200,000 tons. Is there any reason why you haven't applied for a bit more? Looking at page 12, I think you're averaging about 260,000 tons, aren't you? Going from Federation to Peak over the life of the mine, and there's a profile on page 12 of the announcement. Is there any reason why you haven't applied for more than 200,000 tons? Am I missing something there? I'll start with that question, Dan, if that's okay.
That's no problem, Michael. I think what I'm gonna do is just take a bit of a step back in time here to set the context around why that's the case. The consenting process or the consenting plan for the Federation asset started 18 months ago. There's a very well-considered, and you need to be in New South Wales, or for that matter, in Australia, in terms of navigating consent for these sorts of projects. We started 18 months ago, if not more, not long after discovery, really. At that point in time, as we started to see grade coming on from the continual drill out, and we formed pretty quickly a view there that there was going to be a meaningful asset here.
We kicked off the consenting program with, at that point, a scope in mind for us, based on the grade coming through of a significant upgrade to the plant at Hera or a rebuild of the plant at Hera. That formed the scope of the scoping study that then went straight through to feasibility. In that preparation, we didn't know at that point that we would be seriously considering building a new mill at Federation, and we opted to apply for the flexibility to truck between sites at that point. We landed on 200,000 there, at that point, well before we thought about the full Peak and more capacity going up the road.
It was a speculation at that point in time as to what the best tonnage would have been. I think that then once you go into a consenting process and you set a scope like that, you have done all your environmental impact studies around that 200,000 tons. If that gets changed late in the consenting process, you almost go back to ground zero in your timetable for consent. When we looked at it and said, "Okay, well, I think we need to have additional capacity," and really the flexibility to put all of Federation up the road would be a great outcome. There is a consenting process that you have to step through.
Our plan at this point is, and you'll see it's quite common to modify the existing consents that whilst we have 100,000 already consented, that gets us started. We will get the consent next year at some point. It's now low risk, we believe. That's up to 200,000, and it is not a time-consuming and complex step to then modify the consent, and we get a lot lower risk of consent time blowout to get the majority of the project underway. That's basically the background context.
Yeah. No, that's fantastic. Thanks for that. Just a couple more questions. On the Peak mines, there'll be sort of the run rate going forward, 550-600. It's great, Cobar. The feasibility study that was released for Great Cobar at the beginning of the year. We assume there's no change to that as a result of today's announcement and today's sort of agreed plans. If Great Cobar declines, just remind me where that's still being progressed. Is that still mining as of right now? The second question on the. Do you wanna answer that first?
Yeah, I'll answer that one first if I can, Michael, yeah.
Sure.
The Great Cobar decline is approved. Additionally, the overall, the whole project is approved, so it can commence. The decline did start a few years ago, and it's been pulled up since, and we haven't gone back in to continuation of that decline. The subsequent result of the prioritization of high-grade ore, which is Federation into the existing milling capacities, means that Great Cobar will be pushed out for a period of time and integrated once we start seeing the timing of peak production. If it's been in the timetable, it's pushed the decline commencement and pushed out definitely 12 months from now to 15 months from now.
Okay.
That means it's time to develop the decline and bring it into production. Pending no further discovery at Kairos or Peak North, that allows a base load of, call it, 3,000, 3% copper at 500,000 tons into the Peak mill, with the balance, the 800,000 coming from Federation. It actually fits really nicely in terms of what we know as mine life of the Peak asset now and the timing of the Great Cobar decline. Fits around Federation utilization of that mill.
Okay. Thanks. I'll have a closer look at that timeline. Just finally on the offtake from Federation, just remind me, was the offtake from Hera, is that all Glencore? I assume that's just selling from the Hera mine. It's not related to the mill, right? If you've got an offtake contract in place for Federation or will the stuff that goes to Hera go to Glencore, or is this sort of up for discussion and negotiation?
Hi, Michael, it's Peter here. I might answer your question on that one.
Thanks, Peter.
The existing offtake agreement we have with Glencore at Hera relates to the bulk concentrate produced from the Hera mine. Going forward, concentrate offtake for Federation is a subject for negotiation.
Okay. Great.
Thank you. Your next question comes from Anthony Wallace, private investor. Please go ahead.
Yeah. Hi, Michael Wall. All four of us have been through, so I probably won't get into too much detail. I just wanted to for you to comment on the AFR article that was in the paper with regard to a AUD 60 million equity raise on the weekend. That article certainly hasn't done the share price any good today with being down 30%. Would you like to comment on that?
No problem, Anthony. As I mentioned earlier in my presentation, we have been exploring funding options, and we have talked to a number of our major shareholders in terms of what options could be available in terms of funding, whether it be via equity or other. Yes. We have been in discussions, and I've got to say it's pretty disappointing to see leaks like that, but that's the market we work within. The answer is yes. We have had some discussions, but we've opted now as a business to pause, take stock of where we are, settle the existing assets, and work through what is the best funding package for the business, including the development of Federation into the future. I think it's like with feasibility.
We need a bit extra time to get it right. I think in terms of the funding to go forward with Federation, we would do the same. I think the market out there at the moment with what's happening internationally, and I think taking a little bit of time to do that's right. I see the speculation came. Yes, we have had discussions with major shareholders.
Okay. Basically you can rule out any sort of raise in the immediate future pending further discussions with your major shareholders.
You know, at the end of the day, like I said, I think, Anthony, we are looking at all our options for the business. That's what they are. Reality is at the moment that we've got the Federation decline on pause. We've got to retain that flexibility to find the best funding package to do it. It may be through debt, equity, strategic interest in either asset or head office level with offtakers or other strategic investors. Those options are available for all businesses all the time, and we will assess what that looks like going forward. I'll keep everyone updated on it.
What it is, Anthony, I think the key point here is that we have opted to pause the decline until we get that funding optimized for the business, and that is the most prudent way forward at the moment, focused on getting that done and getting our assets in a really resilient shape.
What would it cost to continue with the decline and to continue with that exploration that was going to be done once that decline was done?
I think this to get the decline done. I think you've seen the pre-production capital, 55% of it is in the decline. I think in FY 2023, it's approximately AUD 38 million to continue that decline. That is now, that's the majority of that is well into all of it, is in underground development, because the infrastructure's done. I think people will have seen the photos and the releases and we'll put some more stuff out in this quarter. Yeah, this is done, camp's done. We have, as Ian said, put already AUD 7 million in this quarter and probably a similar number in the quarter prior. Approximately AUD 38 million to keep going this year and the balance to AUD 50 million in the next year.
Okay. Exploration, you've dropped about half of what the spend was last year on exploration. Is there any new areas you're exploring or you're just working further on Federation at Great Cobar?
No. The reason exploration's a lot less than last year is because there was over AUD 10 million, actually closer to AUD 12 million last year, and the exploration budget was purely aimed at infill for Federation, not actually I guess regional exploration. The balance here at AUD 12 million, or sorry, 15 is focused on regional exploration, particularly in and around the Federation area, and up around Peak and I think on-ground, following up from Falcon Surveys and others doing some on-ground regional exploration. Yes, we do. Although, you know, we'll always be assessing that and just making sure that we've got the capacity for that exploration ongoing.
Okay. Do you still own the Nymagee project?
Yes.
Okay. You haven't farmed that out at all because there's another mob that's looking around that area as well.
Yeah, no, we haven't. We still own that.
Okay. All right. Thanks, Dan.
No worries. Thanks, Anthony.
Thank you. Your next question comes from Hayden from Mace. Please go ahead.
Hi, Dan. How are you? Just wondering about the holding costs on holding the decline. Do you have any indication of that, like, cost per month from just pausing Redpath?
We will probably cover that in a bit more detail in late October with the quarterly release. If we can get there with it, then we'll cover those sort of numbers when we get to that. You know, we had a couple options with the pausing of that decline. Our contractual arrangement, you know, Redpath are a terrific counterparty here with us and, you know, under that contract we can terminate or we can suspend or, you know, an option to suspend for a period of time. We'll come to a bit more disclosure on those as we settle those and move down over the next few weeks.
Okay, great. I look forward to that.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Wall for closing remarks.
Thanks, Kathleen. Thank you, everyone, for your time. Just to reinforce a couple of key messages. You can see strategically what we're trying to achieve in the business, and it's that the pursuit of where the highest value lies in our packages, and that's really at this point, the existing operations being set up to handle these projects coming. AUD 480-odd million in NPV in near-term either approved or close to being approved projects is what we are chasing. Making sure that we can access that we can match existing sites in and around those high priority projects, and reducing the capital spend in the business and consequently significantly reducing execution risk on those projects.
I think really exciting, and this is a key piece for us, you know, a pivot in our strategy to a different commodity mix being that is right in front of us. It's organic, a significant copper resource growing at Great Cobar, a significant exposure to zinc in Federation with the continuation of that asset. Really does drive us towards an area in the market that there are not many players, and that's a valuable move, I think, for all involved within the business. Thanks for your time. I appreciate there is a large volume of material out today and some quite, well, critical moves within the business, and we look forward to the September quarter production release and update later this quarter. Thank you, everyone.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.