Thank you for standing by, and welcome to the Sandfire Resources March 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 for Sandfire's quarterly call for the March quarter. My name is Ben Crowley. I'm Head of Investor Relations for Sandfire, and it's my pleasure to introduce the presenters for today's call. We have Karl Simich, our CEO and Managing Director, Matt Fitzgerald, our Chief Financial Officer, and Jason Grace, our Chief Operating Officer. Karl will take us through the highlights of the quarter, and then Matt and Jason will step through some of the details. As you will appreciate, with this being the first quarterly report for the MATSA operations, there is a lot of new information in this presentation. In the interest of time, and to leave as much time as possible for question and answers, we will move through some sections more rapidly than we might normally.
Please feel free to contact me if you have any questions which are not addressed in today's presentation or in the Q&A. With that, over to you, Karl.
Thanks very much, Ben. And thanks, everyone, for joining us today. It's a great pleasure to present our March quarterly results and to reflect on what's been genuinely a transformational period for Sandfire. I don't use the words lightly because with the completion of the MATSA acquisition and the strong progress we're making in Botswana, Sandfire is now substantially a different company to what we were just a few months ago. Underpinned by a diversified international portfolio of operating assets and a strong development and exploration pipeline, we have well and truly embarked on the next chapter of the Sandfire story. If there's one key message I'd like to get across to you this morning, is that the overarching theme of this next chapter is of growth.
Delivering growth in production, revenue, cash flow, profits, and returns to shareholders, and ultimately growth in the depth and the quality of our business. The group production profile is set to increase from a historical range, averaging between 65,000 and 70,000 tons of copper per annum over the last decade. Rising up to around 100,000-110,000 tons of copper equivalent basis in the financial 2022 and 2023 year. As Motheo comes online next year, group production will steadily increase towards around 160,000 tons of copper per annum on a copper equivalent basis from financial 2024 onwards.
With the continued optimization, expansion, and exploration success across our portfolio, and a strong platform to consider future M&A opportunities, our ambition is to drive this towards greater than 200,000 tons of copper production as we move into the second half of this decade. Importantly, this rising production profile is being delivered into one of the most attractive markets that we've seen for copper, zinc, and other future-facing metals for over the past decade. Just on our strategy, we've spent considerable time and effort over the past few years preparing our business for this transformational new era. I've talked before about the 5 key pillars of our strategy, and it is important to reiterate them here as they form the core of our approach.
They are: execute delivery on what we've got, build and sustain and grow a production pipeline, accelerate discovery, align and empower our people, and optimize our capital structure and stakeholder engagement. These five pillars are supported by our core values as a business: honesty, respect, collaboration, accountability, and performance, which collectively are our very positive culture, and we are very proud of that. Executing on strategy. If there's another key theme this quarter that I'd like to emphasize this morning is that we are executing efficiently and diligently on our strategy across all key areas of our business. I'll leave it for you to read the slide in greater detail, but it provides a good summary of how we have performed in each of these key strategic areas during the quarter. Just to quickly turn now to the March quarterly highlights.
As I said at the opening, the March quarter marks the start of an exciting new chapter for Sandfire, and gives investors their first glimpse into the depth, capability, and trajectory of our expanded group. Before handing over to the team, I'd like to briefly run through a few of the key highlights from my perspective. First, Sandfire is strongly leveraged to a very strong and rising metal prices. Despite the cost inflation we're seeing across the world, we are generating strong revenues and healthy, greater operating margins. Ultimately, in any business, it's about the margin. This is evidenced by strong financial results we published today with quarterly sales revenue of in excess of $340 million, and a very strong EBITDA at a group and operating level of circa $200 million.
This reflects not just the strong commodity prices we've experienced during the quarter, but also the fact that our high-quality operations are all set in the bottom of the global cost curve. Our operating EBITDA margin order of magnitude is 62%, and quite honestly, it's an exceptional result. To put it in some perspective, this is nearly $3.50 a pound of copper produced, or alternatively, nearly $7,500 a ton of copper produced. One of the other key highlights of the quarter was undoubtedly the successful completion of the MATSA acquisition, and also the speed and the professionalism with which the MATSA operation has been seamlessly integrated into the Sandfire global business.
In the 2 months or so since we've got the asset, MATSA has performed well and in line with expectations, if not slightly better than the guidance numbers we issued in February. Jason and Matt will shortly run you through the detail on this. As a result, we've been able to strengthen our production guidance for FY 2023 to between 90,000-95,000 kilograms of copper and also 38,000 tons of zinc. Together with other ancillary production of commodities, our copper equivalent production order of magnitude for FY 2022 would be around 115,000 tons of copper equivalent. We've seen a slight increase in OpEx cost guidance to $1.19 per pound, and this reflects the inflationary environment that is impacting most businesses around the world at the moment and is, I think, still a very credible result.
Fourthly, we have some of the best metal exploration ground available to us anywhere in the world. With a very attractive global exploration program, we have some incredible opportunities for near mine extensions and new discoveries. We'll have a substantial spend. We control two of the world-class copper belts in the Iberian Pyrite Belt and also in the Kalahari Copper Belt. Fifth, our team in Botswana is doing an incredible job. The Motheo copper mine is already approximately 58% complete and progressing on time and on budget towards first production in quarter four or the June quarter of financial 2023. That in itself is a phenomenal result in an environment where people skills and material are scarce and almost everything is subject to cost inflation. Finally, in summary, we've had an incredible year, incredible growth platform and runway ahead of us.
We also have a very strong cash holding of just under $400 million and a net debt position of around $400 million. We are well-placed to continue to execute our strategy. Before I hand over, it would be remiss of me not to mention the value proposition for Sandfire. Given as we're looking down at the pipeline of two long life assets with significant and exceptional exploration potential, and based on the last quarter's results and the current economic environment and commodity prices, you know, the EBITDA margin of our business is probably an order of magnitude between $600 million-$800 million.
If one was to take $700 million as a number and multiply that by peer comparisons and the range of between 4-8 as a multiplier of EBITDA, it would give you a value proposition range for this company today of between $8-$16 and a midpoint of $12. As I've said numerous times before, we're almost half price. As I see this morning, we're trading at somewhere around the $6 mark. I think from a value proposition, Sandfire is in an excellent position for its current shareholders and potential future shareholders to participate in that value growth of our business. On that note, I would like to now pass over to Jason Grace, our Chief Operating Officer, and then Matt Fitzgerald, our Chief Financial Officer, to give you some greater detail.
Thank you, Karl, and welcome to everybody on the call today. Starting with HSEC, across the company, we saw an overall improvement in our TRIRFR, which was 5.1 as at the end of the quarter. This was largely driven by a lower number of injuries across the whole company, at the same time that our employee numbers and associated worked hours increased with the MATSA acquisition and increasing activity at Motheo. 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, we continue to work with the rising COVID-19 infection rates and close contact rules within the state. In Spain, the peak of the Omicron wave occurred in December and January, with infection rates falling ever since.
In Botswana and the USA, infection rates have also continued to fall throughout the quarter, noting that it's now been several months since our last positive case at Motheo. As a highlight for the quarter, Sandfire was also very proud to introduce the Youth Development Program in Botswana. This program is designed to provide training and employment opportunities to young people within our local communities in the Ghanzi region and ultimately put in place an enduring legacy for all people in the area. Now moving on to operational highlights across the company. Q3 was a strong quarter for Sandfire, particularly given that completion of the MATSA acquisition occurred on the first of February, with Sandfire immediately exercising operational control and instantly becoming a major copper and base metals producer in Spain.
Group consolidated Q3 production totaled 27,774 tons of copper, just over 16,000 tons of zinc and slightly under 7,000 ounces of gold, with both MATSA and DeGrussa contributing according to expectations. This performance has supported the company to strengthen full year guidance slightly to 91,000-95,000 tons of copper, approximately 38,000 tons of zinc and 30,000-34,000 ounces of gold. Even with the inclusion of MATSA production for the two months for the quarter, copper remains the dominant contributor to revenue. Building on this theme, and with reference to the production graph shown, the acquisition of MATSA delivers a significant step up in copper and zinc production for Sandfire at a time when prices have continued to move higher. This is driven by global economic growth and the accelerating transition to a lower carbon future.
This also allows the company to maintain and build operating margins despite global inflationary cost pressures. If we now look at progress on key growth initiatives for the March quarter. In Botswana, the Motheo Copper Mine construction continues to proceed according to schedule, with first production expected in the June quarter of 2023. Construction activities there have continued to ramp up with over 1,250 personnel now on site. During the quarter, we achieved a very important milestone with pre-strip mining at the T3 open pit commencing on schedule. The 5.2 million tonne per annum expansion feasibility study is also progressing well and remains on track for completion in the June quarter. In the USA, the Lowry deposit resource definition drilling program is now well advanced, and work continues on optimization of the Johnny Lee feasibility study.
Our global exploration group also continue to be very active across Australia, Botswana, the USA, and with the acquisition of MATSA, now also in Spain.
Looking across to FY 2022 group guidance, in addition to production and the strength in production guidance, as both Karl and Jason have mentioned, we also have the slightly increased FY 2022 C1 unit cost guidance, which has now been reset to AUD 1.19 a pound across the group, across DeGrussa and MATSA. CapEx for the year is expected to be around AUD 62 million. There's AUD 24 million remaining for the June quarter, an estimated AUD 24 million remaining for the June quarter, and AUD 20 million of that is related to mine development activities at the MATSA mine in Spain. Motheo for the year, Motheo's project development, is expected to be around AUD 142 million for the financial year, and we'll have some more detail with the update, in that section shortly.
Also twelve million of sustaining CapEx, which is also predominantly at the MATSA mine in Spain. Exploration and valuation studies for the year increased to sixty-five million, now including some additional exploration plans in, again, in MATSA, the sixty-five for the year. Corporate costs expected to be around twenty-eight, seventeen corporate, and around eleven of business development activities within that number. As we've previously flagged, we expect around seventeen million dollars of MATSA's acquisition costs, the MATSA acquisition costs, to hit the P&L in this financial year. Of the total transaction costs of around fifty million, we expect a third to end up in the P&L, a third go against the equity of the balance sheet, and a third also go off to set against the MATSA debt in the balance sheet.
For the first time, we are just giving some indicative numbers. We have not completed as yet the price allocation accounting process for the MATSA acquisition, but we're giving you some indicative numbers at this stage, which we'll firm up for the next couple of months. Around AUD 200 million per annum of D&A on an indicative basis for MATSA. That includes, as we note there, both the acquisition and the scheduled ongoing mine development CapEx that we'll see each year. As a rough split at this stage, the 200 would be around AUD 150 million of the acquisition costs amortizing and around AUD 50 million of ongoing mine development capitalization amortizing as well, for a total of 200. DeGrussa, 130-140.
I'll just move quite quickly through the headline financial results. A number of them have been mentioned previously. Sales revenue for the quarter, AUD 343 million, obviously props up to a very strong strong revenue for AUD 650 million year to date. As Carl mentioned, strong EBITDA margins on those, and we're adding around $90 million a month in terms of operating EBITDA. Operating and group EBITDA, that's after corporate, after BD, after those other costs, come in still well and truly above 50%, so at 54% and 53% respectively for group EBITDA margin. Cash flow generation is also strong, as you'd expect. Pleasingly, as we know, these operations have very relatively minor CapEx schedule, particularly in terms of MATSA.
Really just has its underground mine development activities and plus some sustaining CapEx, but no major capital programs that also cut our cash flow. From day one of taking the reins at MATSA, we have obviously generated significant cash flows, and we'll see that a little bit more in some of the EBITDA graphs to follow. CapEx Q3 AUD 60 million and year to date AUD 119 million. Moving across to that segment EBITDA contributions, we're just breaking out in terms of operations. EBITDA AUD 115 for DeGrussa for the three months of the March quarter, and approaching $100 million EBITDA for MATSA, which is the two months of February and March of our ownership. Moving across the page, Black Butte, Motheo, going through the P&L, and also Australian costs, corporate exploration and other, take us to a group EBITDA of a very healthy $187 million at a group level.
To add to the waterfall that we put out with our half year results at December, we just rolled that forward. You can see the first three bars there are clearly part of our holding cash from the equity raising in September, October last year, and also the debt drawdown for MATSA and the MATSA acquisition itself, which was the funds on top of the $300 million deposit that we had paid during the calendar year of 2021.
The operating cash flows and growth are shown there, AUD 172 million between DeGrussa and MATSA, the cash flows from operations, and then AUD 72 million of growth, which includes, mine development and then a few other parts. Income tax dividends gets us to our closing pretty strong closing cash position of AUD 390 million. As Karl mentioned, puts us in a net debt position of about AUD 410 million. Moving to financial position, the cash numbers restated there, around AUD 300 million of total assets on balance sheet. We are well-placed to make our debt repayments during the course of this year. We have a corporate facility of $150 million US.
It is an Australian-denominated facility, so it's AUD 200 million, and those repayable in September, which we're well placed and have the cash clearly to repay that. They're also have some first repayments coming up on MATSA, which clearly that operation is running well and should be able to well and truly service its obligations. Probably a current sort of project for us at the moment is, of course, finalizing the target $160 million Motheo project finance facility. That agreement is well advanced with the short list of banks. That'll be initially based on the T3 project, and then later on we'll look at any options about expanding that in terms of A4 development following the outcomes of the feasibility study.
All right, if we now move on to an update on MATSA operations. As mentioned earlier, the acquisition of MATSA was completed on the first of February, utilizing a combination of equity, project level debt, corporate facilities, and cash. The financing facility is now fully drawn, and the three-year hedging program is also now in place. If we now look at MATSA integration and operation optimization. Operational integration is now well advanced, with work extending across the areas of operational excellence, alignment of policies and standards, and reporting systems and governance. Near-term key projects have initially focused on the period to June 2022, and are now extending out beyond this timeline and will support issuing of guidance for FY 2023 in July this year.
The key projects in these areas have included the confirmation of near-term operational plans and budgets, review and updates of mineral resources which are now well advanced, which will in turn support updates of the life of mine plan and ore reserves. Ongoing work on plant readiness, recovery, and concentrate product optimization is well advanced as well, and mining production and delivery is already delivering benefits and results for the operations. Looking out longer term, we also continue to establish a strong base at MATSA for a multi-decade operations, which is underpinned by a strong safety culture at MATSA, alignment with Sandfire's values, an in-depth understanding of the key drivers of value, and a commitment to operational excellence to lift and stabilize mine production.
A focus on the ongoing growth of mineral resources and ore reserves, and in line with Sandfire's D&A as an explorer, a commitment to a long-term investment in exploration across the Iberian Pyrite Belt. Circling back to the March quarter, MATSA production for the two months to March was very strong and met all expectations. Copper production exceeded 12,500 tonnes, with zinc production at just over 16,000 tonnes for the period. Metal sales were slightly lower than production, due simply to the timing of sales, and this delivered operations EBITDA slightly below $100 million, with a very healthy EBITDA margin of 63%.
Underpinning these results, over recent months, the MATSA team has delivered a consistent improvement in underground mine production, with performance in March exceeding the mine plan and achieving an annualized mining rate of 4.9 million tons per annum. The improved performance is primarily due to improved short-term planning approaches, and particularly a strong performance in production scoping, and pleasingly for Sandfire, all three mines contribute to this higher output. Moving on to MATSA-based metal concentrate production. MATSA produces four concentrate products. That includes a cupriferous copper concentrate, a polymetallic copper concentrate, a zinc concentrate, and a lead concentrate. You'll note the breakdown of Q3 concentrate production, recovery, and grades for each of these products, with a total of 102,569 tons of concentrate produced for the period.
Looking out to the five months to June 2022, we are very pleased to maintain and slightly strengthen key production guidance for the period at approximately 27,000 tons of copper, approximately 38,000 tons of zinc, approximately 3,000 tons of lead, and approximately 1 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 the production of both copper ore and polymetallic ores across the mining operation, we have included a breakdown of production tons and grades for each of the three underground mines.
When combined, this guidance is copper ore production of approximately 500,000 tons at a grade of 1.45 million tonnes, at a grade of 1.9% copper and 3.8% zinc, with total production expected to be approximately 1.95 million tonnes for the period.
Moving now to base metals concentrate production guidance for the five months to June, which is also strengthened, to total between 220,000 and 230,000 tonnes for the period.
Looking at operating costs for MATSA for the two months to March, a very pleasing C1 copper margin of $3.91. It does include some QP adjustments in a period with a rising copper price. Even with that taken out, it would still be $3.60. On either measure, very, very strong generation in terms of margins at MATSA. Right on guidance in terms of cost guidance at $0.94 per pound for the Q3 C1 and C1 guidance for MATSA for the financial year, the five months up to $0.98. The five months to June to $0.98 per pound, which was previously $0.94 per pound. These strong margins are, as we've said previously, offsetting, in part higher energy operating costs.
This is at a gross level, so it's primary product and also byproducts, in euro, which is a major measure, of course, for the MATSA and the mining operations. We have, of course, seen, as we're all aware, a spike in European energy prices, and we certainly reflected that in our expectations of guidance, shortly after we acquired MATSA. We have seen energy prices around 27% higher than the budgeted levels. However, we do have some relief in sight with the EU looking to put some measures in place that do correct, in some ways, some of the market movements that we have seen. I'll talk about that a little bit more in a minute.
Clearly, we are also exposed to global inflationary pressures and pressures across, as most of the economy is, of course, and the global economy is across labor, cement, spares, services, costs all increasing in those areas. The graph on the right shows you what that looks like in terms of mining and processing. The mining area had some additional OpEx in the March quarter, so that's why it does spike up. Certainly, by the energy prices of things like the processing plant, which is around 50%, energy based in terms of its processing costs, and also across into some areas like transport and to some extent treatment refining as well.
Right across to the right-hand side of the page when you look in total, there has been a step up, clearly, between the September and December quarters, EUR 20 million per quarter into these two quarters, March, and then into our guidance in June. There's some more detail around that in the back of the pack as well. Focusing on MATSA energy costs, as we talk about that spike in terms of energy costs, we're just showing you what that spike looks like in the graph on the right. For some relativity, the spot at the moment is around EUR 220.
As I said, we did hear some measures, some suggested measures coming out of the European Union yesterday, the day before, talking about whether so there could potentially be some capital cost of generation from imported gas. That can, of course, make this market go a little bit, as it has in this case, do some strange things. We have looked at some of that. If those measures do in fact come in, we would expect at this stage to see the second half of the June quarter potentially drop from what we've been assuming is around 250 EUR per megawatt hour to reduce by around 100 EUR per megawatt hour if those measures do come in.
Of course, post-June, we'll then, of course, look at, in terms of guidance, and see where the energy market hopefully settles with some of these, the spike that was seen. We also, of course, have Sandfire's medium and longer term renewable energy initiatives, and we are studying those at the moment and going out to some,
The exploration is currently focused on resource to reserve conversion at the existing mines to extend mine life and enhance operational planning, as well as step out drilling, targeting near mine resource extensions. During the quarter, five drill rigs were active, testing near mine targets and expansion of known mineralization. Drilling was also completed at the Poderosa project to test extension of mineralization at depth and define the southern boundary of mineralization. Mineral resource estimates for both the Concepción and Poderosa deposits are expected to be completed in June. Intersected low-grade pyritic massive sulfides up to nine meters in thickness. Follow-up drilling is planned for the June quarter to test for strike extensions and possible increases in grade. Two holes were also drilled and completed at the 100%-owned Aldeia dos Elvas project in Portugal.
Both holes intersected black shales and disseminated pyrite, which are interpreted to be the local copper-bearing horizon. Further geophysical surveys will be undertaken to determine the extent of the prospective stratigraphy. If we now move on to an update on DeGrussa copper operations. Against the backdrop of mining industry labor shortages and rising COVID-19 cases in Western Australia, DeGrussa operations continued to deliver safe and reliable production throughout the March quarter. While there has been no material impact on DeGrussa operations to date from this, we acknowledge that risk remains around potential production impacts during the June quarter, which have not been factored into the midpoint of production guidance.
On the other hand, as Matt mentioned, operating cost pressures relating to global inflation, and particularly impacting labor, diesel, consumables, and transport costs in Western Australia have impacted DeGrussa's C1 costs in the March quarter and are forecast to continue into the June quarter. As we approach the end of mine life at DeGrussa, higher mining operating costs are forecast to increase quarter-over-quarter as capitalized development activity reduces. If we now look at DeGrussa production for the March quarter. As mentioned before, the site team again delivered strong results in line with the mine plan and in line with expectations. Copper production exceeded 16,200 tons, and gold production was just under 7,000 ounces for the period.
Metal sales and volumes were higher than production as a result of timing of shipments, and this delivered an operations EBITDA slightly below $115 million with a very strong EBITDA margin of 62%. Moving on to DeGrussa copper concentrate production. A total of 69,000 tons of concentrate was produced for the quarter at a grade of 23.5% copper, 3.1 grams per ton of gold, and 31 grams per ton silver. It is also worth noting, and giving the team a wrap here, the excellent copper recovery of 94.4% for the quarter, which is outstanding performance. Looking out to the full financial year, we are very pleased to maintain and slightly strengthen key production guidance at 65,000-68,000 tons of copper, 30,000-34,000 ounces of gold, and approximately 300,000 ounces of silver.
Moving on now to copper concentrate production guidance for the full financial year. The expected total concentrate production guidance is also slightly strengthened to approximately 280,000 tons for the period.
Talking about margins and costs. At DeGrussa also achieved a C1 margin of above $3 per pound. Just a reminder, at the time of the massive transaction, we did put some copper hedging in place at the back end of DeGrussa's copper production, and that is reflected in that $4.29, as you can see, copper price in the graph on the right. Even with that, a strong margin of $3, over $3 a pound in terms of payable copper. Costs, as Jason mentioned, we've got cost pressures as many others do in the West Australian industry and globally. We have upped our full year cost guidance to $1.24.
As Jason also mentioned, we are expecting higher C1 costs to be reported from DeGrussa in the June quarter, upwards of around $1.40-$1.50 a pound for that quarter. That'll bring us in the full year, we believe, around the number that we have guided there. Gold is also hedged in terms of the by-product credit at around 1,800 an ounce, alright. For the Q3, $0.35 offset got us to a quarterly result of C1 $1.24 a pound.
Looking now at DeGrussa exploration. Approximately 3,200 meters of reverse circulation and diamond drilling was completed during the quarter. The company also commenced drilling deep targets, which were generated from the 2021 exploration strategic review. The first of these targets, at the Homestead Prospect, was drilled to a depth of 866 meters and intersected the mine sequence. While no economic mineralization was identified, the intersection displayed encouraging characteristics, which included chlorite-altered zones, magnetite-rich exhalites and disseminated sulfides. Follow-up downhole geophysical surveys will be completed in the June quarter. At the Morck Well prospect, which is part of the Auris joint venture, native copper was intersected in several holes. Further work is required to determine the significance of this occurrence.
Finally, during the quarter, exploration in regional New South Wales was significantly limited due to high rainfall and COVID-19 restrictions on travel. Sandfire also has withdrawn from the Endeavor Joint Venture as the project failed to meet the required technical hurdles. If we now move on to the Kalahari region and in particular development of the Motheo copper mine. With reference to our recent periodic update released to the market on the fifth of April, we're very pleased to advise that Motheo construction and development continues to proceed on schedule and on budget, with first production expected in the June quarter of 2023. As part of this, 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 for a $160 million debt facility has now been completed, and finalization of terms is also well advanced. This facility will be based on the initial 3.2 million tons per annum base case development, and review of the 5.2 million tons per annum feasibility study will occur during the June quarter. The 5.2 million tons per annum expansion feasibility study is also tracking well and remains on target for completion in the June quarter. Looking now at the Motheo development timeline. Work throughout the March quarter has continued to proceed according to the project plan. Another very important milestone was achieved during the quarter with the commencement of pre-strip mining at the T3 open pit occurring in late March.
This occurred approximately 1 week ahead of schedule and mining is currently making excellent progress. Looking out to the remainder of the financial year, the only remaining key milestone to be achieved is the completion of construction of the permanent accommodation village. Now drilling down to key progress for the March quarter. In addition to the commencement of pre-strip mining, some of the key recent developments include the construction office building has been now completed and is occupied and operational. The A-three junction road construction is now nearing completion. Earthworks for the process plant is now 98% complete. Plant civil works are approaching 50% completion, with foundations progressed for the primary crusher, SAG mill, tail thickener, and retaining tunnel vault. Construction of the 750-room mine village, accommodation village, is advancing, with 160 rooms now occupied.
Construction of the 132 kV transmission power line is advancing, with tower construction and assembly well underway. The structural, mechanical, and piping installation contract has also been awarded, and the SAG mill components are now in transit to Botswana. Given the substantial ramp up in activity in recent months, and with mining pre-strip operations now beginning, we have entered the phase of the project where we will be executing across all areas, and as a consequence, we will also be entering the peak spend phase of the project, which is forecast to extend over the next four quarters. The graph shown provides a breakdown of spend in all key areas of the project for each quarterly period, and it should be noted that costs shown relate to the 3.2 million tons per annum T3-only base case, which totals $319 million.
As touched on before, we are continuing to move forward with the 5.2 million ton per annum expansion feasibility study, which is expected to add approximately $47 million in capital costs and substantially increase the overall value of the project. If we look at exploration in the region, the Sandfire team in Botswana continues to explore the company's significant landholding in the Kalahari Copperbelt, with 7 drill rigs active during the quarter. Work around the Motheo Copper Mine project targeted high-grade copper-silver mineralization, with two drill rigs focused on the A1 dome and the T2 prospect west of the Motheo mine. Belt-wide exploration also continued, with 5 drill rigs drilling a diverse range of targets.
Drilling at the T4 project continued throughout the quarter, stepping out in both east and west directions along a broad zone of copper anomalism and following up on structural positions in the Lower D'Kar Formation. Results continue to show the presence of anomalous disseminated copper and vein-hosted mineralization. Exploration also commenced for nickel and copper magmatic sulfides in the Okwa Magmatic Complex, which is approximately 100 km south of Hansa. During the quarter, a helicopter-borne magnetic, radiometric, and gravity survey was completed over the northern portion of our tenements. Finally, moving on to the Black Butte project in Montana. Our key areas of focus have been to firstly continue to deal with the legal challenges associated with regulatory approvals. More importantly, we've been undertaking additional work to add value to the project.
In line with this, the Sandfire Resources America team continued to work on enhancing the Johnny Lee feasibility study outcomes throughout the quarter. During the quarter, a 14,000-meter resource definition diamond drilling program at the Lowry deposit, which is 1.5 kilometers east of the Johnny Lee deposit, continued throughout the quarter. This work will support an update of the Lowry mineral resource estimate and a pre-feasibility study on the deposit. Subsequent to the end of the March quarter, Sandfire Resources America announced the results of the state district court legal challenge related to its mine operating permit. The district court judge has granted the plaintiff's motion for a summary judgment stating that the Montana Department of Environmental Quality violated the Montana Metal Mine Reclamation Act and Montana Environmental Policy Act in its analysis of the project.
Sandfire Resources America notes that both parties have 45 days to propose remedial measures to the judge, after which she will hand down the remedial actions and at which point we will have a clearer picture of the impact, if any, on the project development timeline. Sandfire Resources America is reviewing the legal decision and will be in a position to provide further updates once it has evaluated the latest information.
Thanks very much, Jason. Just in summary, once again, thanks, everyone, for listening. It certainly has been a transformational quarter for Sandfire Resources. From our perspective, we will lift from this platform. Looking forward to building, optimizing, and growing from where we are at the moment. We have the great growth platform. We do have a global vision. We have these production hubs that are long-life production hubs, either on stream or coming on stream, with significant strong pipeline in terms of opportunity growth for further development, optimization and exploration of organic potential.
In turn, the team is refreshed, the team is focused, and we've got an excellent, you know, hub and spoke strategy with very, very good team members across the globe and well and truly aligned with our objectives now, the growth we are seeking. We do have significant support structures and many of our stakeholders and the balance sheet to execute on our strategy. As I mentioned earlier on, the value proposition for the business is significantly different in our minds from where the market is at the moment. On any sensible multiples would have a range of between AUD 8 and AUD 16 a share, and as I said, the midpoint of 12.
On that note, I will just call the conference to a close and open the floor now to questions. But once again, thank you very much for your attention today in what has been a transformational quarter. There is a lot of information, as Ben mentioned earlier. To the extent we don't get through those questions, please approach Ben offline, and we're more than happy to run you through the very, very detailed and comprehensive information that we've supplied you with today. Thank you very much for listening.
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 Rahul Anand from Morgan Stanley. Please go ahead.
Hi, Karl, Matt, Jason. Thanks for the opportunity. Karl, perhaps I wanted to touch on MATSA. For the month of March, you mentioned that the mine was able to produce at 4.9 million tons per annum. You have mentioned previously that de-bottlenecking to take the mill to 4.7 is pretty easy and requires next to no CapEx. Could you update us on that? I mean, how should we think about that 4.7 million ton rate in the near term? When do you expect you can get there? How should we think about further expansions, perhaps to five? Is there a significant amount of CapEx required for that? What are some of the key limiting factors to get you there?
Thanks, Rahul. It's Jason here. Look, firstly, we're really pleased with how things are going over in MATSA at the moment. The team's responded very well to the changes over there, and we have some key people from Sandfire embedded into the org structure. And that's working really well. In terms of mine production, look, we've seen a steady increase probably over the last four months, so even dating back slightly before us taking ownership of the project. We're confident we can get up and maintain that 4.7 million tonne per annum rate going forward. Given where we're at at the moment, we are preparing for potential some volatility around that or a bit of variation.
A lot of our efforts at the moment are really focused on lifting that mine production to 4.7 and stabilizing that there. If we look at moving beyond that's work that we are undertaking as part of our life of mine plan update at the moment, and we'll be in a better position to be able to provide full guidance on that probably in July when we issue guidance for FY 2023. Overall, I think during the DD, we had identified that there was scope to increase that plant capacity up to approximately 5 million tonnes per annum rate. Dave, what was roughly the CapEx required for that?
Yeah. Dave Wilson here, Head of Technical Services. Look, to get to 5 million tonnes, there is some minor modifications needed in the plant, the biggest thing being a duplication of the power line in which the MATSA team has started to work out permitting for that. Then there's some upgrades to crushing, grinding, et cetera, and a few other bits and pieces. The capital was in the order of EUR 15 million-EUR 20 million, but that was at a very, very early stage of study, and we'll need to dig into that a bit more. We'll also need the modification of our approvals from the government, which we believe will be relatively straightforward, but it is a process we need to work through.
Got you. Okay, that's very helpful. Thanks for that. I guess a follow-up on the cost side of things. That energy information is really helpful, so thanks for that. In terms of the other parts of the guidance, just wanted to understand in terms of incorporating higher levels of TCs in the zinc market currently, are those already part of guidance? Also, you know, what zinc price are you incorporating in terms of your guidance for the copper production cost at MATSA?
Yeah. Thanks, Rahul. Matt here. Sure, probably the second question first. We've got some detail back into the appendices at the back of the pack, which show price achieved and also C1 guidance assumptions across the group, and also for the individual operations. I'll probably steer you in that direction just to make sure you pick up the right thing for the right quarter.
TCs.
Oh, sorry. Yeah, TCRC. Yes, we have reflected some increases into our full year guidance numbers, some adjustments, I guess, for what we expect across the zinc treatment refining charges. To some extent, we've had to obviously estimate some of those. There's some estimate even at the back end of the March quarter itself. We expect all of that to settle by the time we get to the middle of June.
Perfect. Okay. Final question from me, around DeGrussa. Just noticed obviously that great drop-off quarter on quarter and, you know, that's fine. There could be variability. I just wanted to understand perhaps the drivers there. Was it Motheo? Was it DeGrussa? And then also, how are you thinking about that variability going forward now that you have developed the mine basically to end of mine life?
Hi, Rahul. Jason here again. Look, you're absolutely right. You know, given the nature of these high-grade ore bodies, there is a variable grade. Given the high metal content, particularly at places like Motheo, it does have an impact on the short-term schedule. Yes, the grade is varying at the moment. It's all according to plan. According to our reconciliations at the moment, generally very positive, right across both of the deposits. The level of knowledge that we have going out to the end of mine life is very good, given that we've developed virtually everything, and we've grade controlled all of our remaining resources and reserves as well.
Perfect. Thank you very much. I'll let someone else ask a question. Thanks.
Thank you. Your next question comes from Paul Young from Goldman Sachs. Please go ahead.
Thanks. Hi, Karl, Matt, and Jason. Another question on MATSA, the performance in March. Yeah, it's a great result, you know, mining at 4.8 million ton run rate or thereabout. Maybe a question for you, Jason. Just curious about, you know, that rapid increase in the space of three months. It seems almost too good to be true, to be honest, considering that, you know, Trafigura had the same sort of opportunity to, you know, to increase by 20% year-on-year. I'm just curious about, you know, sustainability. You said there's a variability going forward, but, you know, what's really driven this?
Has it been, you know, I don't wanna use the term, but, you know, maybe cherry-picking sort of larger stopes near surface, and/or how much of it is just the fact that, you know, the labor force is more productive and working more hours per day? I'm just trying to get an understanding of, you know, how have you achieved that so quickly?
Well, look, Paul, thanks for the question. Look, firstly, I kinda touched on it before. We have seen a steady increase over recent months, and that did start with the previous owners, and particularly the team over there, they have been very focused on making sure that they were lifting mine production up to 4.7 million ton per annum rate. What we've done really since we came in, and I'll give you every assurance, we're not high-grading the place, and we're not taking easy tons out, right? We're now the owner of this asset, right? For let's say, for decades, at least. We're not gonna do anything stupid, especially in the first couple of months of production. What we're seeing at the moment is particularly with, we have continued a lot of those initiatives.
We're bringing in, if you like, some of our expertise and our skills, particularly an Australian operator's mindset into the mine, mining operations as well. We're starting to see these things really start to have some benefit. I touched on it before, you know, it's still very early days with us in terms of operating the mine, which is why I'm a little bit, you know, I do caution and say that we may see some variability. A lot of our efforts will be stabilizing at that 4.7 million ton per annum rate. At this stage, you know, we're confident we can maintain that going forward.
Yeah. Okay. That's great. Again, well done. And to turn around so quickly. Just a second question on the zinc grades, particularly Magdalena. Yeah, how sustainable is that? Is that high zinc grade? I presume not, considering that you guided to a drop in the June quarter.
Yeah. Look, during this quarter, we did get a positive reconciliation on zinc grades, particularly out of the Magdalena stockwork zone. We have definitely got the benefit from that as well. But if you look at guidance and the guidance that we've issued, it's basically in line with our original budget and mine plan for the year. We haven't banked on that going forward.
Okay. Thanks, Jason. Moving over to Botswana. Project 60% complete. Less labor pressures in Southern Africa with the workforce out of South Africa and Botswana.
Yeah. Look, firstly, that 60 or the 58%, that's committed. Just to clarify on that one. What we're seeing over there, particularly around labor, access for labor over there is good in Botswana and Southern Africa. What we are seeing is like everywhere else, there is inflationary pressure. I think Botswana, basically the last 12 months or recent times, inflation over there is running at about 10%. There are pressures on labor. Fortunately, we have well advanced on a lot of our commitments and contracts, and we continue to monitor that and try and manage that going forward. At this stage, as we said, everything's on schedule and on budget.
Thank you. Your next question comes from Kaan Peker from RBC Capital Markets. Please go ahead.
Hi, Karl and team. Thanks for the opportunity, and congrats on the good quarter from MATSA. Just wanted to ask two questions on MATSA. Initially on the cost, and I think to build on Rahul's question. I think $0.94 per pound for this quarter. However, your cost guidance implies a higher cost in 4Q. Given the polymetallic nature and the number of moving parts, can you maybe talk through some of those reasons why the 4Q costs are expected to be higher? I'll circle back with the second one.
There's a few elements to it. It's a challenging one to unpack a bit, but I'll do my best. The Q4 quarter, as Jason touched on at MATSA, will have the grade variability we expect, and we're currently planning to. If you have the lower, particularly on the copper side. Zinc's relatively in line, I think, but on the copper side, certainly lower. That at a headline basis would take C1 up in the first case. We're also, as I talked about before, expecting, still planning and/or budgeting, planning and forecasting energy costs around that AUD 250/MWh level. That's obviously a high level of energy cost which impacts various parts of the business.
Where we do have that zinc benefit, though, of course, is on the production side, particularly on the zinc price side. That sort of brings it back as well. It's a real offsetting between a little bit higher, a little bit lower in a production sense, a little bit higher in an actual gross cost sense.
A little bit lower in terms of zinc price. You come back to a very similar number, as we said at the start, 98 cents for the year. That fourth quarter, as you rightly said, we're expecting that to be above a dollar. There is some further guidance in terms of that, the tables at the back in terms of both those production numbers and also C1 guidance for the June quarter. For MATSA, as we sit at the moment, we're expecting fourth quarter about a dollar per pound for MATSA for the June quarter.
Sure. Thank you. Just quickly on TCRC, just wanted to confirm that the price mainly on benchmark, not spot?
Yes. Based on that, through a negotiation with Benchmark, yes.
Sure. Just finally, throwing over just that medium-term options around power. I think previously, there was talk about 2 new solar farms currently being constructed. Is there anything beyond this that can maybe add to the conversation?
Yeah, I'll take that. There are two solar farms under consideration. One is pretty well advanced, so it's going through permitting at the moment, and it's a 20-megawatt solar power station that would physically be located down near the Sotiel operation, but would connect into the whole network for MATSA. I think the latest estimate of that is to be online in the second half of calendar 2023. The second solar farm, which we expect would be a similar size, possibly, you know, that's still to be determined, is in the early stage of study. We're in the process of identifying and locking in locations. We would put that one up around the Aguas Teñidas Magdalena mine area.
That one's a little bit further off, and we probably don't have firm dates on that one yet.
Anything beyond those two being considered?
At this stage, no, that's what we're doing. Clearly one of the things we will be working through over the next number of months is just exactly what our longer term strategy is on electricity supply and electrification generally. That's it at the moment.
Sure. Thank you.
Thank you. Your next question comes from Levi Spry from UBS. Please go ahead.
Good day. Thank you. Well done, and thank you very much for the extra detail. Questions around MATSA throughput I think have been answered, and also the costs. Can you just talk us through grades, so FY 2023? Is there any reason why we wouldn't expect reserve grades to be mined? On to Jason, I guess.
Yeah. Thanks, Levi. Look, like I said, we are working through at the moment. We're actually well advanced on mineral resource updates. We expect to release those really in the June quarter, so prior to the end of the year. They are forming the basis for us at the moment to update our full life of mine and ore reserves. Short answer is we'll have much better information coming out early in the new financial year as part of guidance. Until then, basically the existing reserves are the best way to project forward.
Yep. Okay. Thank you. Just understanding other options medium-term, like this Concepción target. Realistically, given the cross-section there, [uncertain] , what realistically how soon could that come to the mine plan? What are the grades in there? Could that displace some of the low grade Sotiel material in time?
Look, we're actually just compiling our maiden inferred resource for both Concepción and Poderosa. We'll have a look at that in terms of concept studies fairly soon after that, and we'll be in a better position to be able to answer those questions. That's why we are trying to fast-track and bring forward these projects so we can look at the optionality that we have around them and where they fit in the life of mine plan.
Yep. Okay. Thanks, Jason.
Thank you. Your next question comes from Lyndon Fagan from J.P. Morgan. Please go ahead.
Thanks, guys. Just looking at next quarter's guidance, which is about 16% higher overall on a unit basis, obviously that's being driven by lower copper output to some extent. When I sort of trace it back, it looks like your mining costs fall from over AUD 40 a ton into the high 30s. I'm just wondering why that's coming down.
Yeah, Lyndon, mining's probably the one that's the most variable in terms of what we're looking at in terms of growth. Not all of those mining costs directly impact or touch ore, if that makes sense. There is ground support work I know that the guys are doing in the March quarter. There's other work in terms of in the operations, planning for future projects, planning for future headings and things that aren't really ore driven. As you said, and you can see in the cost slides that we put up, mining's remained relatively stable, whereas of course we've been also increasing in terms of a tonnage rate. Really it's those, that March quarter did take some of those extra underground workings.
Okay, thanks. Just back on the copper grade, so guidance next quarter, 1.7%, down from 2.2%. Is this the sort of volatility that we should come to expect going forward? Sort of back on Levi's question about, you know, should we just plug in the reserve grade or is there something else t hat we need to think about. I realize you're coming out with your new statement soon, but any more help on that would be great.
Yeah, Lyndon, it's Jason here again. Look, it is the nature of these deposits, so VMS, that they are particularly variable in nature. Particularly if you look at, say, even Aguas Teñidas as an example. You know, we've got the main ore body itself, which is almost about 30 or 40% higher grade than places like Stockwork, Castillejo. So it really does depend on the mining sequence and when we are able to access ore during that period, that does have a big impact in terms of grade variability. So look, short answer on that one, yes, it's likely to be variable going forward. We should have a better handle on that as we start to go through and start to do more detail into our mine plans. But overall, that's pretty much it.
Thanks. Just a final cost question on MATSA. Just transport costs relatively high in the quarter. Is that a sustainable level to go forward with? Obviously, oil prices and diesel are up, but was there anything else in there that we need to think about in terms of stripping out? Or is that a pretty kind of business as usual type rate?
Yeah, I think you're pretty safe at this stage until we have the new guidance, Lyndon, to take that June quarter as a pretty solid indication, I think.
Okay, thanks very much.
Thank you. Your next question comes from Hayden Bairstow from Macquarie. Please go ahead.
Good morning, guys. Just a question on costs at MATSA. I mean, if you go back to obviously when you did all the DD and then sort of gone the last sort of year. Aside from energy prices, which are sort of, you know, beyond your control, I mean what's been the variability on what you expected, particularly around sort of, you know, cost per meter and sort of development rates of the various three mines for versus what you thought when you bought it?
I'll probably start maybe, Hayden. It's, I don't think obviously a global inflationary environment is not lost on people, and sometimes those inflationary rates are also very generalized around countries. Some of these more remote mines probably have a higher effective inflation rate than what the country would be. We have seen various things change from labor to goods to services between probably 5% and 25%. Now it all summarizes down to 10s and 15s and those sorts of things. Clearly it doesn't operate. There's an inflationary environment. That's as I mentioned before. That's why we're seeing on a quarterly basis about EUR 20 million increase. It is hard to put your finger on these things. Remote mining operations, of course, almost everything touches a truck to get in there.
You're always touching energy in some form, and it is tricky to trace that back necessarily to the driver. Very easy when you know how much power you're using from a line, and you can measure it. As we know, everything that moves around the world touches power and energy at some point. Really all of those inflationary impacts come into both labor and services and goods at MATSA at the moment.
Yeah, I mean, the only thing really to add. Hayden, Jason here. You know, if you look at it, labor over there is significant. There's been a 6% increase there that we had to live with there basically from the start of this financial year. That was in line with the collective union agreements over there, which are basically indexed to inflation. Inflation's been running at about 6% over there. That's had an impact. As Matt kind of said before, the impact of diesel, consumables, the whole lot sort of penetrates into every piece and everything we do in every part of the operation down there as well.
Okay, great. Just on the ore bodies, I mean, you're obviously doing all this resource work at the moment, but work you've done around, particularly Sotiel, which, you know, had a lot of resources that weren't in the sort of mining inventory assumption. I mean, what? How is that project looking given what you're finding regionally? Is it starting to stack up as something that will be added into the mine life or is it still more the regional stuff's where the upside is?
Yeah, no, it looks like Sotiel, we expect that we'll bring in more tonnage. We're doing the work at the moment, but my expectation is that we will bring in additional reserve tonnages over there, and particularly in the Elvira portion of the ore body, which is a more copper-dominated section of the ore body and also probably a higher NSR or higher value part of the ore body as well. I would expect that's one of the things that we are looking at in particular with Sotiel about how that could add value. Potentially looking at optimizing that production rate out of Sotiel as well, right across the three operations.
Oh, great. Thanks guys.
Thank you. Your next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi, Karl and team. I'd also like to just reiterate the extra transparency was very much appreciated by the market. Just on DeGrussa. Can you just run through what does the end of the mine life look like in terms of, you know, when is last production? You know, how much, you know, metal is left? Is there anything in stockpiles? You know, just touch on the cost inflation we're seeing towards the end of the mine life. Thank you.
Daniel, Jason here again. If we look at it at the moment, we're expecting to finish mining operation, underground mining in September. Processing is likely to either finish late that month or carry over slightly into October. In terms of costs, we actually just finalized our contract agreement going out to the end in terms of details, including rise and fall estimates as they currently sit. We do have a good handle on the estimated costs going out right until the end of mine life.
We also have a staff retention scheme at the DeGrussa as well, just to maintain that quality of, you know, miners and quality of operators right up until the last day, 'cause the DeGrussa will clearly make money right up until the last day. We're sharing some of that risk and reward with our people as well, which is also factored into all of our numbers and our guidance as well.
Thank you. Just following up on, circling back to that zinc treatment charge discussion, is there anything you can help us with regarding price participation, you know, on this? You know, so what is the level at which that kicks in and the rates and things? Just, you know, want an understanding for what happens if zinc prices go up or down and the impact on the costs. Thank you.
Yeah, the zinc TC is likely set to inch higher, which is gonna be at 230 base price with a 5% inflator above $3,800 per tonne zinc price. I think it's pretty consistent with what we're seeing with other producers.
Thank you. Can I just clarify that I think you were indicating just at MATSA that you're gonna have a July update, certainly to guidance, but is that also going to coincide with a, you know, reserve update, life of mine, et cetera, or is that something that might come slightly later?
Look, we're working towards a July update on all of that. We will have to see how that goes 'cause there is a lot of work to be done between now and then, but certainly we'll provide an update sometime in that first quarter of next year on everything.
Okay. Thank you very much for your answers, gents.
Thank you. Your next question comes from Kate McCutcheon from Citi. Please go ahead.
Thanks for the call, Karl. Can I have some context on MATSA, please? How many phases are you operating currently, and where do you want to get to? Or perhaps, what are the key operational levers to work on?
Yeah, Kate. Look, given that there's three operating mines, all at different, slightly different, mining methods and also different production rates, we have multiple phases of operation, over different ore bodies as well to make sure that we're getting the blend. I couldn't tell you offhand exactly how many we have at the moment, but it is there. It is designed to basically sustain that 4.7 million ton per annum rate.
Okay. Yeah. Can I just talk about June quarter copper grades at MATSA? What is driving those sub 2% copper grade expectations at the two mines? Is any of that different dilution or recovery assumptions, or is that grade control the straight grade per se?
Yeah, I kinda touched on that before. We have very different ore bodies, even within the individual underground mines. Depending on where we're accessing ore from, particularly in any sequence, we'll deliver those variable outcomes. Particularly, you know, I mentioned before, stockwork at Magdalena. You know, it's typically, we generally forecast that to be lower zinc. As I touched on before, we've actually had a positive reconciliation in the March quarter, which has delivered us better than expected results partially. If you look at it over at Aguas Teñidas, portions of the ore body like Castillejo/Hito is much lower copper grade. I believe that we have some higher tonnage coming out of that portion of the ore body, which will drive lower grades for the quarter.
Okay. To be clear, there's no change to the mining assumptions since you've had the capex per se, it's just the sequence?
That's correct.
Okay.
Yeah.
Yeah. Thank you.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Paul Young from Goldman Sachs. Please go ahead.
Yeah. Hi again, gents. I cut out there a while ago, so not too sure if this question's been asked. Switching over to Botswana, just curious about from a capital expenditure perspective. I know you're tracking to budget and you're 60% complete, but wanna know what percentage of CapEx is committed. Have you used any contingency at all? I presume that one of the reasons you're on budget is you ordered long lead items early and labor inflation in Southern Africa is certainly tracking well below what we're seeing in Australia.
Hi, Paul. Jason here again. Firstly, I'll start at the back end of your question there. Yes, one of the reasons that we are tracking well is that we were very organized in terms of ordering long lead items up front. That's one of the reasons as well that we are able to maintain our current schedule going out. Two questions there.
Yeah, just the contingency.
Oh, sorry.
Contingency remains, as you can see on page 39, over the next 4 quarters. We still have allowances of contingency around, I think it's around AUD 10 million per quarter. Certainly still within that.
Yeah. If you look at it as well, in terms of that 60%, I did clarify that before. I'm not sure if you did hear that, but that 60% relates to commitment, not completion.
Yeah. Got it. Okay. All right. That's good to know. As far as committing to the remaining CapEx, like what items are we talking about?
Here, James, just to get an idea of.
I mean, being very open, across the board in terms of construction, I think we're looking really good. There is pressure on the mining pre-strip. Particularly what we're seeing over there, I touched on it before, inflation over in Botswana is running at about 10%, so there is pressure on labor there. Particularly a lot of mining consumables, i.e. diesel, explosives. We are seeing escalation in those costs, which may come in at a point in time and rise and fall under the contract. At this stage, we're looking okay. We will review that and monitor it very closely as we go forward, and we'll provide any further information if the situation does change going forward.
Yeah, that's great. I'd say that's in line to if not below what other companies are reporting. Yep. Okay. Thank you.
Thank you. There are no further questions in the queue at this time. I'll now hand back to Karl Simich for closing remarks.
Everyone for listening today to this very transformational quarter, March 2022 for Sandfire. We look forward to updating you again soon with the June quarter and then ultimately the full year results. As we sign off, I would like to just thank everyone that's been involved with our various stakeholders from the board, the executive leadership team, for all of our expanding group of wonderful people, employees and permanent contractors, service providers and other suppliers that we utilize. It has been over the last number of months and quarters a very busy period for us.
I would like to thank them for their effort, their unison, their harmony, and how they have worked in full and utter alignment in our business to achieve and to be at the platform that we are at. Also as well, our bankers, our investment banks, our debt providers, and our shareholders and a number of supporters. Thank all of you very, very much for being aligned with us, supporting us, and we look forward to a wonderful future from this company off the base that we are just establishing as we speak at the moment. We'll be delighted to present you with further information going forward. Thanks very much and have a wonderful day.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.