Thank you for standing by, and welcome to the Sandfire Resources June 2022 quarterly update. 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. Ben Crowley, Head of Investor Relations. Please go ahead.
Good morning. Good afternoon, everyone. Thank you for joining us, and welcome to our update for the June 22 quarter. Joining me today on the call, we have Karl Simich, our MD and CEO, Matthew Fitzgerald, our Chief Financial Officer, Jason Grace, Chief Operating Officer. Joining us in addition today, we also have Richard Holmes, our Head of Exploration, Director of Growth, and David Wilson, our Head of Technical Services. Karl will open with some introductory comments, and then we'll pass over to Matthew and then Jason, who will take us through some of the details. With that, over to you, Karl.
Thanks very much, Ben, and welcome everyone this morning to our fourth quarter and year-end results announcements with respect to the four quarters of the last financial year. Can I say at the outset, it has been probably the most significant year for the business of Sandfire through the financial year 2022. There have been two significant things that have occurred in this company's life that are transformational. Clearly, number one was the discovery of DeGrussa, and the excellent execution of taking that mine into production and then operating that at the professionalism and level that it has been operated at.
The second one is, as I've said, the year of financial 2022, where in that year, the two key things that have occurred are the acquisition of the MATSA mining complex in Spain, an extraordinary transaction, on many fronts, and also, the ability for us to press the button and commence construction at the Motheo project in Botswana. This is the year that we've had, and we're looking to build on that as we move into financial 2023.
We are precisely and particularly executing our strategy as we have articulated many times over, and we are on course on that strategy in executing delivery, building our production pipeline in terms of endowment growth, continuing but sensibly adjusting accordingly during these interesting oscillations in the market but still have very much a strong organic focus, and particularly on a focus on the closest opportunities to deliver the greatest possible success in our exploration and in our organic programs. We continue to work very, very hard in ensuring that our most valuable resources, our people, are aligned and they are empowered, and they have all the tools and resources that they need to execute their wonderful programs of work in their relevant jurisdictions with our hub and spoke model that we're applying.
What I would say, the transitions that this business is going through have been done eloquently and smoothly, and I thank the extraordinary work from the people in our team. We are developing into a global mining company, without missing a beat, and that is wonderful to see. Lots of work to be done, but the effort has been huge. We continue to make sure that we are in compliance, and we understand our balance sheet, our capital structures, the strategy, and engagement with our very critical stakeholders globally, governments, suppliers, people on the ground, and ensuring that cultures and many elements of our HSEC and staff and wellbeing are well and truly considered in their relevant environment.
Our values are our values, and our values together and the work that we do and the daily activities that shine through in our values, the culture of our business. It's a very positive and strong culture through the executive and through the entire organization, and just highlighting that we've developed a wonderful culture, and we want to keep that wonderful culture. As we roll forward, just to give you a sense of where is it we are. Scale, future-facing growth and exploration. We span the globe. We are one of the largest ASX copper-focused companies, and we've had a tremendous last quarter, the fourth quarter, that we are in Southern Africa, Botswana, where we have the most dominant ground holding in the Kalahari Copper Belt.
I dare say we have 8% of what is perceived to be the Kalahari Copper Belt. A wonderful opportunity to be a first mover effectively and to be in such a commanding position is outstanding. That is in both Botswana and through into Namibia, and we're doing exceptional work that you'll hear through the course of this presentation. We also have got a commanding and the best land footprint and holding and also the best operating facility in the Iberian Pyrite Belt with the MATSA complex, which we acquired and settled on the first of February this year.
There's been excellent work done by the team since that acquisition of integrating and of also we're seeing the beginnings, the early stages of some of those improvements that we very strongly believe we can make, but also it will take time. It's a work in progress, as you can imagine, but the opportunities continuing to come through when we see the ability over a longer period of time of enhanced performance from those operations. As well as our operations running down in Western Australia here at DeGrussa, but still performing exceptionally well from the DeGrussa operations, exploration in the Eastern Seaboard as well, and also we have our operations in America in terms of our Black Butte project, which we are slowly but surely moving through the permitting and dealing with the legal challenge.
We won't talk about that too much today. It is not a massive update. But we've got a footprint around the world and we are in, we are the solution, we are in future facing metals, we have a predominance for copper, and we do believe, irrespective of what some of the gyrations we're seeing in the market, we are in a marathon, as we do know, being in the resources sector. We have said there are only two primary industries, and extraction is one of them. The only way the globe, mankind will have anything like a reasonable future going forward is if it is to have quality extraction industry, and it is to have a sufficient supply of copper mineralization. Otherwise, we're going back to the cave. Right. We are in the right place.
We are the future, and we're very proud and very happy to be in that. Once again, we will continue, when Richard will talk about some things today, that with that very much, that DNA and flavor of organic growth and, you know, spending accordingly and adjusting accordingly during tougher times. Nonetheless, looking for organic success around where we will have substantial operations and where we have the absolute ability to critically leverage off, you know, wonderful, robust mining infrastructure. We will be focusing on where great opportunities can create great value. That's where we are. In terms of delivering growth through the course of the last quarter of the twelve months, it once again exceptional performance. We're reporting in U.S. dollars. These are unaudited.
Our gross total revenue before people start to nibble away was in excess of $1 billion, before we had some cost of sales put into that. That translates into effectively a you know a type of accounting reported net profit of around $922 million sales revenue. The margins that were able to be produced, and the business that we are in, while we need to appreciate costs and cost movements, and they've been dramatic, for many people in the industry recently, we have been able to produce expanding margins through this period, with good commodity prices, certainly pretty much up until the end of financial 2022, and demonstrated by operating margins from our two operating mines, DeGrussa for 12 months and MATSA for five months of 500 .
Close to $550 million for that period in time. It's an exceptional performance, and as you will know, we are relatively conservative in our presentation of financials, and we do write lots of things off. From operations EBITDA to group EBITDA, it's dropped down to about mid $400 million. An outstanding performance from an operating result, irrespective of marginal increases in costs through the year, the marginal profitability of the business was even so much greater, and I think that needs to be understood and it needs to be recognized. Delivering growth, the biggest single thing I said, transformational. We acquired MATSA for $1.85 billion through the year through a combination of debt, equity and utilization of some internal cash.
That transaction, effectively, to give you some perspective, the enterprise value, our market capitalization at the time was AUD 900 million or about $650 million-$700 million. Our enterprise value of a business was probably sub $200 million. We bought an asset for just a little bit shy of $2 billion. We undertook and completed a transaction that shouldn't have occurred, was unreasonable, and was about 10 times the scale of our business on an enterprise value basis. It would be like BHP buying Apple, which would be an extraordinarily ridiculous transaction that most of us on the end of the line actually couldn't fathom could happen. That's the nature and the scale of the transaction that was undertaken.
I pause at this point to thank the many wonderful women and men in the organization and also people that assisted in this business to enable us to secure and complete that transaction with the grace that it was done. I also thank all the relevant people that assisted in terms of stakeholders, whether that be banks, lawyers, financial advisors, the accounting firms. I can't thank them enough for the extraordinary effort and energy put in, and the outcome was quite sensational. This asset will be the backbone of our business for two to three to four decades to come. I would say keep an eye on this space. You'll start to see it evolve over the next few years. Production.
Excellent production for the year on a copper equivalent basis. That production was somewhere in the order of 123,000 equivalent tons of copper on a copper equivalent basis for financial 2022 when we look at the copper and the zinc. Quite frankly, reasonably pleasing C1 operating cost guidance was $1.19 for the group. We came in at $1.27. In the market that we saw towards the back end of quarter four, I think we've come in with an exceptionally pleasing position. Global opportunities.
We talk about new extensions and discoveries across the world. Leading into obviously the significant capital story for this business at the moment, the very seamless and professionally run development of the Motheo construction project, which Ian Terry's team are doing a wonderful job there in Botswana. Absolutely blown away from what is happening there. Jason will mention more about it. Clearly in line with pressures in the world. There are some increases in those input costs going into the CapEx of that operation, but fundamentally relate to the price of energy and some other consumables, and certainly something that is well and truly beyond our control, and I know the rest of the industry is experiencing.
Cash at the end of this year, financial year was about $460 million and our net debt, as we sit at the moment, is sub or just over $300 million. When I think about what's happened in the year in question, it's been exceptional to say the least. If we just have a look at group production, as I've said, fourth quarter copper equivalent, the numbers are on the page, but quarter, core quarter copper equivalent, almost 48,000 tons of copper. For the quarter and for year to date, effectively, 123,000 tons of copper equivalent in the year. That was in a sense, effectively was well and truly just over the guidance that we had put out.
On a combined basis, about 82% copper dominated. We're very much working hard trying to keep this business as a copper-dominated focused business. It will clearly have other attendant minerals that will be involved, but nonetheless, copper focus is where we want to be. On a matter certainly a matter of production for financial 2022. You know, very strong performance, you know, base metal, you know, will be our metal production and guidance for the quarter. Very strong performance in the last quarter of the year. Jason will touch on that a little bit later in terms of better grade performance, but what that might mean and going into financial 2022 through 2023.
I think fundamentally what we will see is that overall mineral endowments at MATSA is what we believe it is. It is what we bought. What we will see is volatility and oscillations because of the complexity of three mines, multiple ore bodies, multiple different styles of geology, two different types of strains between copperiferous and clean copper concentrate material, and that will cause this fluctuation and volatility. We will need to just have our minds around that, to not get too laser focused on any quarter or on any year and take that as a given. We need to have the ability to stretch our minds over a number of quarters and years and look at the smoothing effect because it will have volatility.
We've explained before, we'll explain again, that there's the C1 cost, for example, in MATSA will have everything to do with the zinc ore grade or the zinc ore price, as opposed to, you know, actual real costs. We need to get our minds around that as people that are looking into this. Zinc will be a meaningful part of the MATSA production. Jason will give you a bit more detail on that. DeGrussa production, once again, a standout fourth quarter, very pleasing results, almost approaching our stretch top end of guidance.
We got to the high 67s and dare I say it, you know, point 0.3% above what would have been our stretch target, which I think should have been recognized, as well, but essentially hit that stretch target, which was wonderful. Pleasing costs in a challenging environment. When we think about that mine having a number of months to run down, the lack of flexibility that those operators have had to deliver and delivering some of the best returns, best metallurgy recovery that they could have. It's been an outstanding result. Once again, I think I would like to congratulate the wonderful women and men at the DeGrussa site in what they have achieved.
I'd now like to hand over to Matt Fitzgerald to go through the subsequent slides.
Thanks, Karl. Just looking at Q4 cash flow, presenting a waterfall here. In total over the quarter, cash increase in the group, $73 million. You can see on the slide there for the quarter cash generation from DeGrussa and also from MATSA. There are some working capital and QP adjustments, moving through those numbers, so probably best to look in terms of year to date, and I'll talk through that on the next slide in terms of operating cash flow. In terms of growth, just over $80 million invested into growth in the quarter of Q4. MATSA took up $53 million of that for its capital development, as Karl talked about. MATSA $17 million, DeGrussa $7 million.
Probably more importantly on the next slide, as we put the year together and we deal with and look at DeGrussa over 12 months and MATSA over the five months of its cash flow generation. We have put all of the, just for clarity that you'll notice in the second point here, we'll just put all of the MATSA acquisition related cash flows into the one bar of cash impact of -AUD 149 million, just to really highlight and be able to highlight the operating cash flows more than the transaction itself. Over the course of the year as a group, increased cash AUD 32 million. As you can see for the 12 months of DeGrussa, AUD 402 million of operating cash flow. For five months of MATSA, AUD 218 million of operating cash flow.
We will see some returned in terms of QP adjustments post the end of the quarter. In terms of growth, $258 million. I'm just dealing with a bit of a breakdown of that. MATSA, $150 million. MATSA, 36. DeGrussa, 58, and Black Butte, 14. There was also, of course, the sale of Adriatic shares during the period, which assisted with our cash flows and treasury around the time of the MATSA transaction. Income tax, $134 during the year. MATSA, 28 of that. The current year 66 and also paying the remaining tax from financial 2021, which we did in December of last year to total 134. Over the year, as I said, $32 million increase in cash.
Clearly a lot coming in and out in terms of the MATSA acquisition itself, but very pleasingly across both DeGrussa and MATSA in terms of operating cash flow. We'll have some more information. These are all unaudited, of course, today. We'll have some more information when we do the June 2022 financial year call towards the end of August in a few weeks' time. Across to debt facilities and hedging. We have a total $788 million of debt facilities. As we know, $650 million of that related to the MATSA acquisition, and we will start to make the first repayments against that in September this year of $118 million and also into the first part of calendar 2023 with another $80 million.
Just shy of $200 million to be repaid against MATSA, and where that will quickly deleverage the acquisition portion, particularly of that facility. Also the corporate level and also MATSA related, we borrowed $200 million, which at current exchange rates is around $138 million, and that is due for bullet repayment at the end of September. As we said, we have a strong cash position, and that will, if the repayments and of those, is designed to quite quickly deleverage the balance sheet. As we know, we did leverage the balance sheet in terms of the acquisition of MATSA, as Karl talked about. $463 million of cash, $788 million of debt, the net debt $324 million.
As Motheo proceeds and we concentrate at this stage on the T3, 3.2 million tons per annum base case, we're also working through the financing facilities of those, and they will go to some final credit considerations and approvals in the coming weeks. We look forward to presenting the 5.2 million ton expansion case, which will bring together T3 and A4 and will also form an important part of that banking syndicate's understanding of where Motheo is and will progress to over the next couple of years in terms of production and getting up into the, as we talked about before, the sort of 50,000 or 60,000 tons of copper production per annum, which will be very important, of course, that second step of expansion for that project.
Our hedge book is important, particularly at these times, as we've seen in recent times, with both copper and zinc moving down. We just presented some numbers here for the financial year coming up. 43% of midpoint of payable production guidance is hedged in copper at a rate around 25% above the current spot price. In terms of zinc, around 44% of the midpoint of guidance is hedged at around current spot prices. As we presented before, we put in place a three-year hedging program when we bought and purchased MATSA, and that includes some 62,000 tons of copper at MATSA and some 72,000 tons of zinc as well over that period of time, which takes us all the way into calendar 2025.
That is assisting our operating margins, assisting our cash flow, assisting on all of those levels exactly as it was designed to do as we leveraged the balance sheet for the acquisition of MATSA. All right, if we now look at operations review and outlook, and starting with health and safety, across the company and pleasingly we again saw an overall improvement in CRIFR, achieving 3.8 as at the end of the quarter. This was largely driven by strong safety performance across the group and driven primarily by a lower number of injuries across the whole company. At the same time that our employee numbers and associated work hours continued to increase with increasing activity at MATSA.
Our COVID-19 response remained a major focus during the quarter, and we are pleased to have been able to continue to operate safely and continuously throughout the period. In Western Australia and Botswana, we continued to work with rising COVID-19 infection rates associated with the latest wave of Omicron variants. As Spain and MATSA have been moving into the Northern Hemisphere summer months, infection rates have come off their winter peaks and have remained relatively stable throughout the quarter.
From an environment and community perspective, Sandfire continues to be very active in all regions, with some highlights from the quarter being our sponsorship and support of underprivileged children in the Kalahari region of Botswana, our ongoing involvement in getting water resources within WA, and the beginning of the Mining Water Living Lab project in Spain, which has the aim of researching and developing innovative water treatment solutions to promote the recovery and reuse of water in the mining industry. If we now look forward to financial year 2023, at a group level, we are issuing guidance of group production of 81,000-89,000 tons of copper, 78,000-83,000 tons of zinc, 6,000-10,000 tons of lead, 10,000-12,000 ounces of gold, and 2.2-3.2 million ounces of silver. Group C1 guidance is at $1.57 per pound for the year.
The capital, we're guiding mine development, which is predominantly MATSA of $80 million-$95 million. MATSA development capital of $180 million-$190 million and sustaining strategic CapEx of $40 million-$50 million. Exploration and studies expenditure is forecast to be $35 million-$40 million, with corporate costs approximately $30 million for the year. Finally, MATSA and DeGrussa D&A are forecast to be $225 million and $16 million respectively. On a combined basis, D&A was $250 million for FY 2022. Drilling down into the production guidance at an asset level, please note that I won't go through all of the numbers here as it will be covered in more detail later in the presentation.
You'll note that for copper, zinc, lead, and silver, MATSA is either the main or the sole contributor, with FY 2023 being the first full year of production under Sandfire's ownership. DeGrussa continues to be a significant contributor to copper and gold production, despite only having four months of forecast production remaining as the operation moves to the end of mine life in October this year. Finally, Motheo is also forecast to commence copper and silver production late in the financial year. Looking now at group production throughout financial year 2023, we are also providing a quarter-by-quarter outlook for metal production. You will note from this slide that copper production peaks in the first quarter then is reasonably steady for the remainder of the year.
This trend is driven by production at DeGrussa only occurring over the first four months of the year and ceasing around the end of October as we reach the end of mine life. Gold production throughout the year follows the same path and also for the same reasons. Zinc production, and to a lesser extent, lead and silver production, has the opposite trend, with lower production expected in Q1 than stepping up over the following three quarters. The main reason for this is the progression of the mine plan at MATSA and in particular, the transition of ore sources out of Aguas Teñidas throughout the year. Please note that as mentioned before, I will cover this in more detail later in the presentation.
Finally, at a group level, during 2023, Sandfire will continue to actively invest in growth and the long-term future of the company, with the key areas being the continued development and construction of Motheo Mine in Botswana. Construction of Motheo remains on schedule with over 1,700 people on site, and the pre-strip mining at the T3 open pit remains on target. Like the rest of the mining industry, Sandfire has been subjected to global cost inflation pressures, with the biggest impacts on Motheo's development being increased mining costs from diesel, labor, and consumable costs. As a result of this, we are forecasting an increase of approximately $30 million for the development of the project.
We are also in the process of putting the final touches on the definitive feasibility study for the 5.2 million ton per annum Motheo expansion, with final completion expected in the current quarter. For exploration, Richard will cover this further, but we remain committed to building a long-term pipeline of projects across our dominant position in multiple world-class copper belts. Moving on to MATSA operations. With the formal integration of MATSA now into Sandfire now completed, we are now moving into the next stage, which is optimization, to get the best out of MATSA and ultimately establish a solid base for multi-decade operations in the area. To deliver this, we'll continue to improve safety performance through the development of the right culture and fit-for-purpose systems.
Continue the recent improvements made in mine productivity to stabilize and reliably deliver a 4.7 million ton per annum production rate. We'll use our technical knowledge and skills to extend mine life through execution of an expanded twin and near mine resource expansion drilling program, and undertake technical studies to convert mineral resources to ore reserve. Also establish a pipeline of new ore sources through investment in regional exploration. Underpinning all of this, and as Karl touched on before, will be the embedding of Sandfire's values and close alignment to strategy for all. If we now look back at the June quarter, MATSA's production for the period was very strong and exceeded expectations. Copper production was over 18,000 tons, with zinc production at just under 23,000 tons for the period.
Metal sales were slightly lower than production due simply to timing of sales, and this delivered an operations EBITDA slightly below at $51.6 million and a very good EBITDA margin of 37%. Before moving on, I would like to briefly pause on MATSA production for the June quarter. Since the acquisition, MATSA has delivered a significant improvement in mine production, with performance in the June quarter achieving an annualized rate of over 4.5 million tons per annum across all three mines. The improved performance is primarily due to key improvement initiatives focusing on short-term planning, optimization of stope design, and better management of production processes and stope turnaround.
During the June quarter, some of the improvements that we saw, particularly at the end of the March quarter, was partially impacted by lower lay-labor availability at Aguas Teñidas and slightly lower backfilling rates at Magdalena. Mine grades for the June quarter were also above plan at both Aguas Teñidas and Magdalena, and this has been driven by three key areas. Firstly, we are seeing consistent positive copper grade reconciliation from Aguas Teñidas stockwork ore zone, which made up approximately 80% of the mine ore from Aguas Teñidas during the period. Secondly, the improvement in stope design, blasting and management that I just mentioned previously, has also delivered a reduction in dilution of grade at both Aguas Teñidas and Magdalena. Finally, changes to the short-term mine sequence at Magdalena, which is responding to changes in operational conditions, delivered slightly higher grades into the quarter.
When these higher mine grades were paired with operational performance in all processing that was in line with expectations, this resulted in copper and zinc metal production slightly exceeding target and guidance for the quarter. Now, stepping out to production over the full five months from February to June, these very same themes for the June quarter resulted in very strong production results and exceeded expectations, with copper production over 30,600 tons and with zinc production at just over 38,900 tons for the period. Lead production was almost right on 4,100 tons and silver at 1.2 million ounces. With reference to Sandfire's market release dated the thirtieth of June this year.
Sandfire reported an updated global mineral resource estimate of, for MATSA totaling 147 million tons at 1.4% copper, 3% zinc, 1% lead and 39.6 grams per ton silver. This mineral resource update included a measured and inferred mineral resource estimates for Concepción, Poderosa and Castillo-Buitrón deposits, and inclusive of these new resources, contained ore tons increased by 21%, with an 11% increase in contained copper and a 10% increase in contained zinc when compared to the previous mineral resource estimate reported as at 31 December 2019. This more than replaces mining depletion over the intervening two-year period and confirms Sandfire's due diligence assessment of MATSA's significant geological potential. Since this time, Sandfire has also been working on updating the MATSA ore reserve.
Earlier today, an overall proved and probable ore reserve estimate for MATSA was reported as at the thirtieth of April this year. Now this was 31.7 million tons at 1.6% copper, 2.6% zinc, 0.8% lead and 36.1 grams per ton silver. This delivers an increase of 3% in overall contained ore tons, with an 8% decrease in contained copper and a 5% increase in contained zinc since the previous ore reserve estimate reported as at 31 July 2021. This also replaces mining depletion over the intervening two-year period.
If we now look out to financial year 2023, we are providing production guidance for MATSA of 60,000-65,000 tons of copper, 70,000-83,000 tons of zinc, 6,000-10,000 tons of lead, and 2-3 million ounces of silver. Please note that we've also included guidance on the payable percentages for all elements. Finally, noting the complexity associated with production of both copper ore and polymetallic ore across the mining operation, we have also included a breakdown of production tons and grade for each of the three underground mines.
When combined, this guidance is copper ore production of approximately 1.58 million tons at a grade of 1.7% copper and polymetallic ore production of approximately 3.15 million tons at a grade of 1.7% copper and 3.4% zinc. With total production expected to be approximately 4.7 million tons from underground mining and 4.6 million tons from ore processing for the period. Looking at the production throughout the year, it is expected that overall copper production will be reasonably consistent, with slightly elevated production in quarters one and three, and slightly lower grades scheduled in quarters two and four, delivering slightly lower production in those periods.
Zinc is a very different story, where we will start the year at a lower production rate, then step up in the December quarter to maintain an annualized zinc production rate of approximately 85,000 tons per annum. This trend in zinc is again driven by mine grade and in particular mine production at Aguas Teñidas, transitioning from a high to low tonnage rate from the stockwork ore body early in the year, which is a low zinc grade part of the ore body, and this ramp down in stockwork ore production is progressively replaced by increasing production from the massive sulfide ore from the down plunge western extension of the main Aguas Teñidas ore body. If we now look at longer term forecasts, as part of the ore reserve process, we have been also doing significant updates on the life of mine plan.
If we look at now some of the output of the longer term mine planning at MATSA, work completed to date indicates that copper production over the next three years should be reasonably consistent with FY23 and maintain around the 60,000 tons per annum mark. Zinc production is expected to rise significantly over the same period, due initially to the increase in the proportion of polymetallic ore to be mined, then an overall increase in polymetallic ore grade, which moves closer to the life of mine average of polymetallic ore reserve grade at Aguas Teñidas and to a lesser extent at Magdalena.
Moving across now to operating costs, and we've presented again as we did in the last quarter, the four historical quarters of the financial year 2022, and also presented some of the same information for our guidance numbers in terms of the financial year 2023. Just to talk through these.
Really operating costs in, again, on a gross basis, are driven by accessing new areas, and you'll see that in the mining area, the first part of the graph, and also getting to that annualized mining rate of 4.7 million tons per annum. The other increases that we're looking at, past, of course, recent inflationary pressures, are really related to predominantly zinc production, as Jason talked about, increasing zinc volumes and increasing zinc concentrate volumes. In the first half of the year, our quarterly concentrate production is around 110-115,000 tons per quarter, and it rises to a range of 120-140 in the last two quarters. Those are the drivers of what we're expecting in terms of gross operating costs.
If we're looking back, also at the June quarter for a minute, our guidance across mining, processing, general and G&A costs at MATSA was a total of $83 million, and the actuals for the June quarter came in at a pleasing $79 million. We are guiding around 4% lower costs on a gross operating basis in terms of guidance into MATSA next year, which is a combination not only of course of cost control measures, but also of course, in terms of we are getting some more cost efficiencies in terms of increased production through mining quantities and also through concentrate, as Jason talked about, also as those zinc production numbers rise. For the June quarter, any additional costs that we've seen have really been across the areas of transport, treatment and refining.
As I say, they've been predominantly driven by the higher production volumes. As a business, this is where we concentrate. We look at gross operating costs and also the efficiency of those in terms of per ton. Mining per, you know, per ton mined, per ton processed and per ton of concentrate movements. We don't generally tend to focus on unit costs in terms of C1. I'll talk about that a little bit more in a minute. In terms of energy costs, as we know, and we've talked about before, the energy costs is our big driver of MATSA's costs. We do know, of course, through global pressures and uncertainties, we've had a spike. We did have a spike in terms of energy costs into Spain, into the broader Europe.
That had an impact, of course, on our gross operating costs. We've seen some settling of those rates in recent months through into the June quarter. We are projecting around a base of around EUR 200 per megawatt hour into 2023. We've also got, of course, a number of responses which we mentioned in the March quarter, and we've added to as well, around solar farms. Some work in progress in the solar farms. First solar farm in particular and then next one at Aguas Teñidas. We're also looking at our electricity contracts, and how we are supplied with energy from various sources, and also the options under how we price those, whether that's spot fixed or hybrid pricing structures.
We're very conscious, of course, in terms of power prices. This is around pricing rather than energy security. But we are very conscious, one, that rates have settled off those highs, but still down to quite an elevated level. We're clearly watching that over time and doing what we can to protect our operating margins in terms of OpEx driven by energy costs. Looking at C1, and I did touch on this before. C1 as a measure, if you looked across to the right, any movement in C1 is across both the two quarters that we've just finished in terms of the back end of financial 2022 and looking into financial year 2023, it's really driven by zinc results.
Quarter on quarter, year on year, it moves with zinc mined areas, zinc grades, zinc production and zinc price a lot more than it moves in terms of headline costs. As I've mentioned on the operating cost slide, we are focused on gross operating costs, and the efficiency of those gross operating costs. C1 is not a great measure in terms of what we use internally, but we present it here as people also clearly want to see it. C1 is a very good quick measure of copper EBITDA margins on mining operations and on polymetallic mines like this one, not a great measure past that. The better measure for us is gross operating costs and efficiency of those costs in terms of tonnage and metal production.
We of course have seen European inflationary and global inflationary cost pressures. To some extent, our reported USD is assisted by some weakening of the euro against the USD and has in recent times reached around parity. I think it's around a dollar to 1.02 at the moment. That is assisting in terms of reported costs in that measure. Zinc looking forward, we for the purpose of guidance are basing our zinc price for 2023 on $ 3,150, which is no more scientific than particularly picking a spot at the end of the financial year. Just as a guide for anyone else who wants to run any other C1 numbers looking forward in terms of zinc price.
Thanks, Matt. Moving on to MATSA infill and mine exploration drilling. Really busy year coming up with just over 100,000 drilling at the three operations. The target there is two-thirds of this will be infill drilling. Working on lifting the confidence in the resource categories and then driving through that resource to reserve conversion. More exciting for the team on the ground, there is the mining drilling. About a third, so 36,000 meters looking at extensions to known mineralization at all three deposits, down-plunge along strike, looking at offsets. Probably the key takeaways there will be the efforts around the drilling at Sotiel. Looking for that high-grade mineralization to really help drive that operation.
I think one of the points I'd like to make is that, you know, we're still constrained for the mine ex-drilling. The development and the drilling platforms that we've got access to probably means that, you know, it's gonna take time to really test some of our high priority targets, and that's gonna take, you know, a year or two to work through in conjunction with the mine plan. Stepping on to exploration. The focus here is gonna be really building that pipeline of targets and maintaining a balanced portfolio.
Four rigs active for the year, 30,000 meters on sort of exploration with greenfields drilling split roughly 60% on the northern portion of the tenement holding, working along strike from Aguas Teñidas and Magdalena, and then 40% around Sotiel and some really exciting undercover targets there. We're really pushing the technical work to build out these 3D basin models because we want to take exploration to the next step and drive that targeting so we can start looking at deeper mineralization or when to go deeper but f or this part of the world, we're only looking at, you know, holes just testing below 400 or 500 meters, and moving that mindset to, you know, to building these conceptual models and targets and hopefully, you know, coming through with some discoveries that will support the development of the operations going forward.
All right. If we now move on to DeGrussa operations, and we start by looking at the June quarter of financial year 2022. Against a backdrop of mining industry labor shortages, rising COVID-19 cases in WA, and the rapidly approaching mine life, DeGrussa operations continue to deliver safe and reliable production throughout the period. While there's been no material impact from Omicron on DeGrussa operations to date, we do acknowledge that risk remains around potential production impacts into financial year 2023, which have not been factored into the midpoint production guidance. On the other hand, operating cost pressures related to global inflation and particularly impacting labor, diesel, consumables and transport costs in Western Australia have impacted DeGrussa C1 costs in the June quarter and are forecast to continue.
Also, as we approach the end of mine life at DeGrussa, expensive mining operation, operating costs increase as capitalized development activity reduces in the last year of operation. Looking now at DeGrussa production for the June quarter, and as mentioned before by Karl, the site team has again delivered strong results in line with mine plan and exceeding expectations. Copper production was slightly below 16,900 tons, and gold production was just over 9,000 ounces for the period. Metal sales volumes were lower than production as a result of timing of shipments, and this delivered an operations EBITDA of $75 million, with a strong EBITDA margin of 59%.
Production over the full year, and once again, as Karl mentioned earlier, the team has closed out another excellent year, delivering copper production of 67,700 tons of copper and gold production of just over 32,200 ounces for the period. Metal sales volumes were slightly lower than production at just over 65,000 tons of copper, and again, as a result of timing of shipments. This delivered an operations EBITDA of $394 million and a very healthy EBITDA margin of 63%. Now, looking forward to financial year 2023, we're providing guidance of 17,000-19,000 tons of copper, 10,000-12,000 ounces of gold, and approximately 100,000 ounces of silver. Consistent with MATSA guidance, we have also included guidance on the payable percentages for all elements.
As further context for guidance, metal production at DeGrussa is expected to occur from July to October 2023, which is the forecast end of mine life at DeGrussa and Monty mines. After this, we will undertake decommissioning of underground mines and place the surface infrastructure into care and maintenance while we continue to execute our exploration strategy in the region. Work is also ongoing on the DeGrussa processing expansion study. This study is based on utilizing the existing DeGrussa flotation plant with minimal circuit changes and adopting a simplistic approach to treat existing stockpiles with oxide reagents. To date, extensive laboratory scale test work has been completed, which has delivered encouraging results. The final step in the study is to undertake full scale plant trials in the September quarter.
The first plant trial, scheduled for July, will focus on mineralized waste and heavily transitional stockpiles, with the second scheduled for August to cover oxide processing. Following the assessment of these five trials, the final decision will be made on the future of this work. Looking at costs for DeGrussa across the period, $25 for C1 in terms of Q4 and leading to, which results in $1.18 per pound for financial 2022. Financial 2023 is expected to report higher around $1.39 on the side there. As you can see here, C1 is a lot more representative of actual OpEx levels in terms of gold being a much smaller impact in terms of by-product at around 10%-15% of gross revenue.
So fo r the four months, as Jason mentioned, July to October, expecting around $1.39 per pound of copper. We also have some gold hedging rolling off at the back end of DeGrussa as well, around $1,800 per ounce.
The exploration team continues to work at DeGrussa testing our deep conceptual targets. We're roughly 70% of the way through the program. It's pleasing to say we've certainly got proof of concept. We've hit the right rocks, the right alteration. We've had minor occurrences of copper mineralization. Unfortunately, at this point in time, no significant mineralization has been discovered. This program is timed to fit with the end of mine life, so the team are working hard to push those last few holes through, and wrapping it up late this year.
Finally, moving on to the Motheo project. With reference to our recent pictorial update released to the market on the 21st of June, we're very pleased to advise Motheo construction and development continues to proceed on schedule, with first production expected in the June quarter of 2023. Also, the 5.2 million ton per annum expansion definitive feasibility study is now in its very final stages and will be completed in the current quarter. As touched on earlier in the presentation, like the rest of the mining industry, Sandfire has been subjected to global cost inflation pressures, with the biggest impacts for Motheo development being increased mining costs from diesel, labor, consumable cost increases.
As a result of this, we are forecasting an increase of $29.5 million for the development of the project, and this includes a diesel price increase by 40% or equating to $12 million, mining contract rise and fall increases of 23% equating to $6.7 million, government import and project charges totaling around about 17% or $5 million, and a balance of other minor items contributing about 20% of this difference, totaling $6 million. It should also be noted that included in the remaining cost forecast, a total of $14.5 million of contingency has also been retained for the project. Finally, Sandfire intends to fund the development of the Motheo copper mine through a combination of cash and project debt. Selection of the syndicate of international banks is now being completed and final credit committee approvals are due in the September quarter.
September.
Yeah. This facility will be based on the initial 3.2 million tons per annum base case development, and integration of the potential definitive feasibility study of the 5.2 expansion project is expected to follow granting of the A4 mining license. Looking now at the development of the Motheo development timeline. Work throughout the June quarter has continued to proceed according to the project plan. Another very important milestone was also achieved during the period, with the permanent accommodation village now fully available for use. With the commencement of pre-strip mining at T3 open pit in late March, progress has also gone according to plan, and mine production rates will continue to increase over the coming months.
Looking forward into the new financial year, we are approaching key milestones of the completion of the process plant construction and completion of power infrastructure construction by the end of the calendar year. Given the substantial ramp up in activity in recent months and with mining pre-strip operations commencing in March, we're firmly in the phase of the project where we'll be executing across all areas, and as a consequence, the peak spend phase of the project is forecast to extend over the next four quarters. The graph shown includes the additional $29.5 million of additional costs covered earlier and provides a breakdown of spend in all key areas of the project for each quarterly period.
It should be noted that the cost shown relates to the 3.2 million tons per annum T3 only base case, which now totals $349.5 million. As touched on earlier, as we close out the 5.2 million tons per annum expansion feasibility study, it is expected to add approximately $47 million in capital costs and substantially increase the overall value of the project.
On to Motheo exploration. Obviously a dominant position in the emerging basin with a significant land holding there. Currently got five drill rigs working, currently focused on the A1 dome. We've been following up chargeability anomalies that have been identified from a recent IP survey, and that continues to attract some interest. Regionally, three rigs testing a variety of targets. A lot of work on T3, which is continuing to return large zones of sort of low tenor copper mineralization. The team's really focused there on trying to find a bit of a focus for mineralization and see if we can lift the grade profile there. We drilled the first holes in the Okwa Complex, which is about 100 km south of Ghanzi.
It's prospective for nickel-copper, low massive sulfide mineralization. We're certainly pleased with the geological results. The model's holding true and further work continues there.
Thanks, Richard, and thanks for everyone for listening in today. Just in summary, before we go to the floor of the questions, it has been the best year that Sandfire has ever had, financial 2022. We have had the biggest transition for our business. We have got some solid foundations in what is occurring in Spain and the Iberian belt of MATSA, and we will look to continue to optimize many points of leverage there, for multiple decades to come. Clearly, having a dominant position in the Kalahari Belt, we will look to get that into production, to expand that, to get into stable operations.
As a business, we will continue to execute our strategic plan, and we will continue to look to leverage off our significant and wonderful dominant positions in the Iberian Pyrite Belt and the Kalahari Copper Belt. I think in this market, our plan is totally sound. The market, as it stands in the short term, which is a blip and will not continue, and it cannot continue, given what the demands of the future will require for mankind, and we think there are going to be some fascinating opportunities over these next 12-18 months. I'll leave it with that. Open the floor to questions. Once again, thank you for your attendance for a long presentation.
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 Matt Greene with Credit Suisse. Please go ahead.
Hi. Good morning, gents. That was quite a comprehensive review, so I'll keep this pretty short. Just on, I guess just on Motheo, the project finance there. Your December results, you highlighted that the credit committee approved the $160 facility, which is about 45% of your CapEx requirements, on the base case. Now that you've selected your bank syndicate, I see on slide 40 that, you're only expecting the final approvals to come in the June quarter next year. I would have thought you would have been able to draw this after you've committed your 55% equity share to the CapEx. Which, you know, based on your profile is imminent. I'm just a bit confused as to why it's taking so long to get this project finance through the door.
Yeah. Hi, Matt. Apologies. It is the September quarter in terms of the credit approvals. There are a number of credit approval stages that go through in these banks. The preliminary approval brings them into the syndicate, gets us talking about more You know, complex terms and full facility agreements. Then it's the final credit approval that then brings them into the actual facility into the process. We expect those processes to happen in the September quarter. As you say, we have selected the syndicate banks, and we are talking to them through that detail.
What is probably more likely to happen later on in terms of the financial year, into the back end of this calendar year and probably into the second half of the financial year, is as we start to work A4 into T3 and as we release the DFS and we work with those banks into integrating really what is T3 and A4 together. In their minds, it's a two-step process. In our minds, it's really one project. We'll just be working through some of those details with those banks between the September quarter and the June quarter. In a T3 sense, we expect the next stage of credit approval, the final stage of credit approval, to happen in the quarter we're currently in.
Okay. Thanks. Just to be clear then, you expect that you could receive that $160 this quarter, and then any sort of incremental project finance on top of that to fund A4 would likely come towards the end of the financial year?
Yeah. That'll be the bit to work out in this period of time. Correct. Around T3 and then into A4. We may look to have higher leverage levels in terms of the combined project rather than T3, but we'll work that out over the coming months.
Okay. That's great. I'll just, I'll leave it there. Thanks.
Your next question is from Hayden Bairstow with Macquarie. Please go ahead. Hayden Bairstow, your line is now live. Please go ahead.
Yeah, guys, just keen to understand the cost outlook. I mean, there's obviously power prices at the moment, a key driver in pushing inflation for pretty much everything. I mean, how long do you think that settles before that starts to settle down, or we just don't really have any clarity on it, and we should just be assuming much higher prices? I mean, obviously look back over time, the prices were 50% or less of what they are now. Just keen to understand, is it just power prices that's driving these much higher costs than what was originally envisioned, or is there some other stuff about mine development and increased meterage rates or ground support, things like that have been higher than you thought?
There's a little bit, Hayden, in terms of accessing ore areas. We know that in the mining side, in terms of gross OpEx numbers, there's some money to be spent and some of that of course, go to capital on the balance sheet, but some money to be spent in terms of accessing ore, new ore areas. Otherwise, we probably know as much as you do in terms of what global inflationary pressures have been. The business has certainly adjusted to those as much as we can. As we project forward, we are looking at probably line ball, if not slightly under in terms of a Sandfire budget period as well, under Sandfire's full ownership. We're projecting that those costs
Those inflationary pressures remain, but certainly don't run at the speed that we have seen over the last six months. We're more seeing it as a bit of a, for now, a bit of a plateauing in terms of European costs. As I've also said before, in terms of U.S. OpEx, it's also a call on what the currency is doing, but certainly Euro-U.S. has come down from 1.20 down to a 1.02. That's assisting us in a U.S. sense in OpEx as well. But otherwise, you know, into the future, of course, everyone's asking the same question around numerous industries and numerous businesses, but we're controlling what we certainly can. We're seeing some positive signs on the energy, European energy cost side.
Some positive government initiatives, and some, you know, hopefully some settling in terms of, you know, Russia, Ukraine and some of those issues as well.
Just on the exploration at MATSA, I mean, it's, you sort of started putting a few holes in there. How's the confidence levels from what you had so far? Is it sort of as you'd expected or were you looking for some sort of better results than what you've had so far?
Look, given the work that we've been doing and the exposure that we've been getting, we're hoping to be more confident going forward than we were coming out of the due diligence. Yeah, very pleased with what we're seeing.
Okay, great. I'll leave it there. Thanks.
Your next question comes from Kaan Peker with Royal Bank of Canada. Please go ahead.
Thanks, Karl and team. Two questions from me. First one on costs, second one on costs as well. Just looking at slide 27, the cost guidance and that's in EUR millions, looks relatively flat, especially on processing and mining. Looks like good cost control on the site, with cost peaking this quarter. The key variability comes from freight. In case you're asking, seems like it moves around a bit. Can you please expand on that freight component? Is it based on a standard freight rate delivered into China? And I'll circle back on the second one.
It's based on market rates and rollback mechanisms, but the main thing that really hits it in terms of gross OpEx, as we've presented in this slide, is more driven by the concentrate volumes. In the first couple of quarters, we're in 110-115 thousand tonnes of concentrate per quarter, but then jumping up to more like 140, 120 for the next two. Really the gross even on the right-hand side, when you add it all up, most of those cost increases as you can see period-on-period, quarter-on-quarter, are mining, transport and treatment related. Mining is delivered in terms of delivering simply more ore, and transport and treatment refining is simply delivering more concentrate as the zinc production increases.
Sure. Okay. Also just on C1, wanted to clarify the QP adjustments flowing through to C1 for MATSA. Even, you know, given that we've seen pretty significant commodity price movements, that's disproportionately impacting C1.
The short answer is yes. When there's a QP adjustment up, it is particular in terms of C1, it's only relevant of course, for the by-product and the predominant by-product is zinc. Any zinc QP will mean an upwards or downwards movement in terms of the C1 credit. As I pointed out in that slide 29, when you look at the line of C1 and then you look at the line in terms of the zinc credit, it's clear that the zinc is clearly driving the majority of that movement around C1.
Sure. Thank you. Just final one before I pass it on. Maybe if you can talk through around what you're expecting or what you're hearing on the ground with regard to the natural gas price caps in Spain. Some people are talking, well, people are sort of talking up as a possible event or reduction in energy prices in southern Spain and their expectations into FY 2023.
Yeah, Khan. David Wilson here. What they call the Iberian. Basically the Spanish and Portuguese government have done a deal with the EU where they can cap gas prices in Spain. That came into effect in May this year and it's approved to run through till May 2023. How that's working is that it is keeping, I guess, the headline power price at that kind of closer to the 150-180 type EUR per megawatt hour. But there is, as part of the mechanism to fund that, compensation payment that all parties pay. That's why when Matt earlier said that going forward we're forecasting closer to the 200-220 EUR per megawatt hour. That's our current forecast.
That gives us some certainty, I guess, for that mechanism we're priced out till May. As we also said beyond that we're looking, we're talking to the market and looking at other, you know, supply options and structures and contract structures beyond that.
Sure. Thank you. I'll pass it on.
Your next question comes from Levi Spry with UBS. Please go ahead.
G'day. Good morning, guys. Thanks for the call. My last call of the day to finish off. Maybe a question for Jason, just to help us model the increased zinc production at MATSA. Can you just maybe give me a couple more numbers to calibrate it? Maybe the percentage of polymetallic ore versus copper ore? I think you said we assume the copper production stays flat, and the first bit is about the blend, but then it's about grade. Can you just maybe give me just a couple more numbers there to help us think about what might happen after 2025?
Up to 25. Look, in terms of that overall percentage at the moment, we will start to see, if you like, gradual climb up of that percentage of polymetallic ore. I don't have those firm numbers with me at the moment, but what we will start to do is pretty much move after this year towards that long term grade that we're seeing from the ore reserve cut in fairly consistently over the coming years. I think, you know, from our point of view, if I look at broader trends, like I mentioned earlier, we expect copper production to sit around that 60,000 tons per annum mark. And particularly with zinc production, you can see that year three that we put in there up at around about 100,000 tons.
I think longer term, even beyond that, it'll start to move in that 90,000-100,000 tons per annum mark is where we're looking at.
Right. Yeah. Yep. Thanks, Jason. That's great. Thank you.
Your next question comes from Daniel Morgan with Barrenjoey. Please go ahead.
Thank you. Just on your reserve update you've put out today, do you factor in the positive copper grade reconciliation or the scope design changes that you alluded to in your presentation today? Just talk through some of the factors you've changed since the last update. Thank you.
Thanks for that. Short answer is yes. We have factored in improvement in dilution on the back of the improvements that we've already made. You know, if our plans go, if everything goes to plan, we'll be factoring in further improvements going forward over the coming years as well. The other one is, if you look at that positive copper reconciliation, that's restricted to one single part or smaller part of the Aguas Teñidas ore body, which is the stockwork zone. It sits on the periphery of the main massive sulfide ore body itself and actually has a limited extent. We actually complete mining of that area pretty much in the second quarter FY 2023. So o verall, from an ore reserve point of view, we have factored in part of that improvement, both in the ore reserve and also in our mine plan looking forward.
Thank you. Just on your euro cost base, can you help us think on a rough guide, you know, looking through what is your euro exposure? Like, what percentage of MATSA is true euro costs versus U.S. dollars so that we can think about how things move around. Thank you.
Yeah. As you understand, it's a tricky one to get an exact number on. So certainly in terms of site operating costs, predominantly euro-based, particularly across three mines, processing facility and other infrastructure. The labor force of course is in terms of euro. Moving into things like diesel are predominantly U.S. around the world. I'll pass to Dave to see what his sort of thoughts are on a makeup. It would probably all come up with a slightly different number, to be honest. But certainly in my mind, we're probably talking about probably two-thirds euro and maybe a third U.S. But Dave may have some other details.
Yeah, I think that's right. Just going through some of the other costs, categories there. Improvement, mining are obviously in U.S. Transport costs, the inland costs, in euro obviously explains somewhat the diesel price, but the rollback mechanism within the offtake agreement's in U.S. Yeah, I think that's good.
Thank you. Just lastly, you've lost some grade from the last reserve update, if I've got that correct, on the copper and the polymetallic ore. Can you just talk through what are the key factors underpinning that? What is the outlook for, you know, your exploration? Like what are you trying to do? Obviously increase tons, but what do you think the grade piece is gonna look like on your targets? Thank you.
Yeah. Look, if you look at it, this is typical of a, if you like, a maturing mining operation. You know, every good miner optimizes the mine plan, bringing forward the highest value material as soon as possible in the mine plan. There's an element of depletion of some slightly higher grades over basically the last two years since the last reserve update. Then if you look at it as well, we have done work in terms of bringing more ore extensions into the ore reserve. You know, to me that's just typical of any mining operation as it starts to mature.
In terms of extensions, if you look at the ore reserve that we've just reported, the bulk of the drilling that was done to update that was infill drilling, which was to lift the confidence of ore reserves and firm up the mine plan over the next few years. Now, we'll continue to do that, because that's good practice, and it gives us certainty in terms of future production as we look out. As Richard mentioned there before as well, there's a large percentage for next year, which is targeting resource extensions. Now, we believe that we've got a very high likelihood of success given the targets that we're drilling. You know, we expect that we will get additional tons and grade coming into resources and ultimately reserves from that approach.
Now the grades that we expect, it's a bit hard given that we haven't drilled them as yet, but I would expect that, you know, the tenor of the ore body is retained and particularly when we look at down plunge extensions to say Aguas Teñidas and Magdalena, right? We literally, there's been no drilling down there whatsoever. Continuity of these high-grade massive sulfide zones, in my mind, should be expected as we move out.
Thank you very much.
The next question comes from Kate McCutcheon with Citi. Please go ahead.
Hi. Good morning, Karl and team. Just on your reserve update, I've noticed you pushed up your copper price just over $8,000 a ton. Some of your peers are using mid-$6,000 for reserves versus what's today at 7,500-ish. Can you provide some color on that assumption? Do you have any idea of how sensitive the pricing is to the NSR or to the cut-off grade? Can I just sneak in, are we still gonna get an updated life of mine plan for MATSA in September?
Firstly, and Dave might kick in to assist as well at some point in time. Look, we actually benchmark our peers as well as we do look at long-term consensus forecasts for copper price. We understand, if you like, that there's been a lot of movement downwards on copper price, particularly in the last couple of months. The price that we set was a little bit earlier in the year, and as you can see, we've reported that reserve as at 30th or the end of April, earlier as well. At the time, we did believe that $8,000 mark was consistent with the majority of our peers and a prudent way to do it.
Second part of your question there around, you know, is it a big driver of NSR? Yes, it is. Zinc, if you look at the remaining grades on ore reserve, is significant, but of course it is a driver of NSR value. And the third one, which was?
The life of mine. Are you gonna disclose updated life of mine plans for MATSA in September?
We'll be providing more information as when we host the site visit in September. That's certainly the intent.
Yeah.
Which will be next month.
Okay, cool.
Yep.
Okay. Karl, just when you wrapped up your comments, you said you were excited about more opportunities to come. Just to clarify, are you content with your current portfolio or was that comment meant to mean something else?
No, there's nothing other than having been in this industry for the last 36 years, Kate, is to say opportunity is great and volatility has always been an opportunity for anyone in this industry, you know, to keep their eyes and ears open for opportunities. We're extraordinarily content with the portfolio that we have presently got, and we are very much focused on optimizing the value of this portfolio and all the things that we could do to optimize operations, enhance performance, you know, find high NSR material closer to the plant site or the head frame, so to speak. Also, to work on a prioritized organic program that provides for, you know, success closer to where we can create value in a shorter period of time from what we have got.
There is nothing, you know, of any particular things, not as though we're in the middle of looking at something or doing anything. It's a general market industry comment that after 3.5 decades of looking at it and seeing the ebbs and flows of adjustments for, you know, crash of 1987. I wasn't around for the 1930s and Great Depression, but, you know, not long after. Nonetheless, when you get these massive volatile markets, it always creates opportunity one way or another. I think generally speaking for the industry, there will be some opportunities for things to happen that we might not have expected would happen will now happen in this market. People will not be able to close on transactions. Other people will be going broke.
Assets that were going to be developed will not get developed. People looking for finance for a whole raft of projects and commodity prices that are no longer existent, certainly right here, right now, will have different impacts with their equity providers or their bank providers or their streaming providers or God knows whoever else. You'll see a very different landscape. When those things happen, that's when there is opportunity. You can think laterally. You know.
Okay.
You get it back. Yeah, it's just a general market comment.
Right. Okay. Understood. Thank you, Karl. I'll see you in MATSA.
Yep, thanks.
Your next question comes from Lyndon Fagan with JP Morgan. Please go ahead.
Thanks very much. Just onto your CapEx guidance on slide 55. I noticed Matt says AUD 120 million-AUD 140 million, which is a bit higher than what I was thinking. Is that sort of indicative of what we should expect over the coming year?
Hi, Lyndon. Look, short answer, no. We are actually pushing capital development quite hard in the next financial year. That is to make sure that we're getting access to, if you like, I mentioned before, these down plunge massive sulfide ore bodies to bring forward higher grade material and particularly the zinc materials earlier into the mine plan. You know, before and previously we've said, you know, that we expect CapEx to be sort of maintained around that AUD 100 million mark. We do see that, I think, going beyond this year.
Around 100-110, that's right. We've also got a couple of more strategic projects and probably more likely once-off improvement projects to do in 2023, including things like tailings samples, and more once-off things like that.
Sorry, it's about $100 million sustaining CapEx, but then we've got to add a tailings dam lift starting next year as well. Any sense of what that adds on?
In this year that we're looking towards now, it's about AUD 20-30 million of additional projects that are special for this 2023 year, including the tailings dam.
Okay, great. A related question with the DeGrussa winding up and general inflation, is there sort of a rehab number that we need to think about? I can see the spend there is not really material for FY 2023 but from memory, it was about $30 million. Has that gone up much, or when should that be incurred as well?
Yeah. We have the provision, as you normally do for accounting in the balance sheet, which is the entire closure. We'll give some more guidance in terms of where that, how that's timed. We'll start some immediate rehabilitation as we go into care and maintenance, but the rest of it will be likely later. Care and maintenance, we expect to be about $6 million-$7 million per annum in terms of a burn rate post what is currently assumed to be closure from November onwards.
Okay. Thanks for that.
Your next question comes from Peter O'Connor with Shaw and Partners. Please go ahead.
How are you?
Karl, just talking about the CapEx question. You seem to talk about the near-term focus, about the fucking brownfield opportunities, and then you've swung back to that more bigger picture sectoral opportunities. Are you referring to your northern neighbor in Motheo? Is that the substance of your opportunities comment?
No. What? No. Not. I'm not referring to anything, Peter, at all. What I'm referring to is the concept that you would be crazy not to always look to leverage off where you have a strategic and a meaningful position. I think, you know, you can then, you know, wax lyrical and think about that. Essentially, from our perspective, we have an extraordinary, solid and wonderful footprint in the Kalahari Copper Belt, which we're developing and be in production very soon now. We'll be expanding that T3 with A4. As you know, we've been talking about that. You'll get the fuller details of that in the next quarter or this quarter that we're in. That's imminent. We're just putting the final touches on that.
Clearly, what's happening, Matt, so I think wherever we're going to have stable long-term operations for multiple decades, we will continue not only within our ground, but with other operations in a concentric circle or an area of interest to look to see whether we could potentially further enhance the value. I suppose that's where I draw my line. What you then want to extrapolate past that is up to you.
Karl, you guys have been really busy for quite a while, and your match fit, so you're good at doing the M&A transactions and building, et cetera. What capacity do you have now? Does that match fitness relate to you've got a lot of up your sleeve in terms of doing more deals or are you flat out? Does Jason roll his eyes or Matt roll his eyes when he hears you talk like that? Do they go, "Oh, no, not another one?"
No, no, no. We, I would say the word is. There is a word, but what has happened before we get to the word is that there has been a lot of work that's been happening behind the scenes in this business, the organism of Sandfire, in terms of building the talent pool, to making sure that we can attract, that we can secure, that we can motivate, that we are still working on appropriately incentivizing, a quality group of women and men that are here and a part of this culture. It's a wonderful culture and a business that we are building. They are from jurisdictions under the hub and spoke.
There are people all over the world working within this Sandfire, that it is a model that is a concept of one Sandfire policy, and we're working very hard. What I'm saying is the architecture in this business, what you don't see in Sandfire on a day-to-day basis on this piece of paper in the quarterly is probably its greatest asset. It's the engineering, it's the fabric, it's the framework, and it's the architecture in the business. That business is in a strong position. Those components are in a strong position. We continue to lift the talent pool. We continue to lift our capabilities. What I would like to say is that while we have completed, for example, the MATSA transaction, we have integrated that MATSA transaction. It is done with.
Everyone has put in an extraordinary amount of effort, and everyone is smiling, and everyone is happy on both sides of that transaction. That, to me, is the sign of a very well completed and conducted level of work. The same thing is happening in Botswana with our team of 1,700 people on the ground at the moment. I've been there numerous times. We're investing heavily in making sure the machinery here and this organism works, and it will work globally. That means to me, if we have a good plan, a good strategic plan, we do our homework, as we did, for example, with MATSA, and the plan makes sense, then we put an execution strategy together, and then we will execute.
When we say we're going to have a plan and talk about a plan and execute a plan, I will tell you now, we will execute that plan. Right? We will continue to work on assets. At the moment, the most important assets are clearly MATSA and Motheo and developing those assets. I do think as a business and also leveraging off the extraordinary quality relationships that we have with our various stakeholders, our internal people, of course, our advisors, our bankers, our investment bankers, our transactional bankers, our hedging bankers, our government officials, our stakeholders on the ground, our customers, the people who buy our product, our on-site partners, our creditors, all of those people, we continue to build great relationships.
I think going forward as a business over the next three to five, 10 years, if there are sensible things that we could do that make sense in our strategic plan, we would have no qualms and no issue with then executing them. We could bring to the table the right resources to execute it. At the end of the day, if it makes sense and we can do the homework, and we will do the homework, and prior preparation will prevent poor performance, I think anything is possible. Therefore, to close off, Peter, our imagination is our limitation. That is my view on Sandfire and what we can do. There's nothing specific we're doing right now, but I think anything is possible if we set our mind to it.
If we set our mind to it and it makes sense, then we will be able to execute. I suppose I close off by just reiterating the massive transaction had a million and one loose pieces. The way it was constructed, it was quickly executed, and I have not seen a transaction done like that on a relative basis ever before in my life, in this commodity, in the resource sector. I'll leave it at that point. I think that probably covers that.
Thanks, Karl.
Okay.
There are no further questions at this time. I'll now hand back to Mr. Simich for closing remarks.
Thanks once again, everyone, for listening to us on what has been a very long presentation of the March quarterly report and year-end results released for financial 2022 off the back of what was a previously extensive report of the third quarter of the year. I hope what it has given you is some greater granularity of detail of what is now the business of Sandfire. We're really trying to provide to you that information so that you can build up your knowledge base to get a proper understanding on what is a much better business, but clearly a much more complicated business. Thanks very much for listening. An outstanding quarter and 12 months and a very solid prognosis for the business going forward in what is even still a challenging market. Thanks once again.
We'll continue to update with the next presentation will be our full-year results. I wish you all a good day. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.