Thank you for standing by, and welcome to the Stanmore Resources Limited Q4 activities report, hosted by Director and Chief Executive Officer, Marcelo Matos, and Chief Financial Officer, Shane Young. All participants are in a listen-only mode. There will be a presentation followed by a Q&A 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. Matos. Please go ahead.
Thank you. Good morning, everyone, and thank you again for joining us on the call today to discuss this time the Q4 activities report for 2023 that we just released this morning. As usual, I will start with a summation of the release before inviting everyone for the opportunity for Q&A. Starting with safety, as usual, we maintain a good record compared to industry averages. However, we are disappointed to report four recordable injuries and a serious accident during the Q4. This accident was related to a totally avoidable leg fracture whilst one of our contractors was disembarking from a dozer. This obviously led to a thorough investigation and audit of all our equipment compliance to try to avoid such incidents in the future.
We remain focused on maintaining our good safety record, and we are now focusing our safety program on leading initiatives and also pivoting our reporting focus from the TRIFR, which is the Total Recordable Injury Frequency Rates, to the serious accident frequency rates, in line also with the Queensland Government regulators, to ensure that we do whatever it takes to prevent those serious accidents from reoccurring. Moving to overall highlights for the quarter. Very pleased to report strong operating results, full year saleable production finishing above our guidance at 13.2 million tons, flowing also onto strong sales performance of 3.8 million tons in the quarter, and 13.1 million tons in the full year.
Which was helped by the strategic purchase of surplus logistics capacity to offset the constrained logistics systems, that this was discussed in previous occasions . And of course, generally improved availability in the system, despite congestion leading up to the end of the year, with especially with wet weather, the last days of the year. This demonstrates the resilience of our operations in a year that started with a headwind back in January 2023, with a lot of wet weather, and if some of you may recall, the force majeure and the amount of rain that was experienced in DBCT back in early 2023. So we always had our sales profile back-loaded and in recovery mode, but very pleased to see that we finished up with a strong performance and above our guidance range.
During the quarter, we also announced various transactions that included the agreement to sell the southern area of Wards Well to Peabody. A transaction that we believe is truly value accretive to Stanmore. They're providing also a competitive alternative to optimize the development of Lancewood in the future. We also closed out a busy December with the purchase of the remaining 50% interest in the Millennium and Mavis assets, as we just announced just before the new year. Overall, the quarter translated into closing cash and net cash positions of $446 million and $126 million respectively, leaving us in a strong financial position heading into 2024.
In relation to operations, South Walker Creek had another solid quarter, despite the plant shutdowns for both the dragline 28 and our wash plant, as some impacts from wet weather, especially towards the end of December. Run-of-mine production was lower, quarter-on-quarter, in line with mine sequence, which was planned, was not surprising. But with strong inventory levels supporting stable, salable production and sales. Overall, South Walker achieved above guidance saleable production and has set some fantastic records, including run-of-mine tons of 7.97 million tons, and an all-time record of annual saleable production of 6.26 million tons, as total waste, blasted, BCMs and averaging yield.
It's a pretty strong year for South Walker, and we look forward to seeing new benchmarks that the operation will be able to set, especially following the completion of the MRHC and the expansion projects, which are now in a full steam. Poitrel closed out the year with an exceptional quarter . Run of mine increased by 37.5% on the Q3, in line with a back-ended production profile for the year, which was always expected, as indicated in all our previous interactions and releases. Strip ratios also continued to improve, noting that this excluded the capitalized volumes from Ramp 10 North, box cut, which, in fact progressed well during the quarter, concluding the year in line with our original plans, despite the wet weather impacts earlier in 2023.
Various production records, including total material moved, ultimately result in the site achieving above guidance for 2023. This is notwithstanding finishing the year with very strong ROM inventories of 925,000 tons to underpin also a strong start for 2024. Isaac Plains managed consistent performance on the December quarter, with strong opening inventories mostly offsetting parts from wet weather and some CHPP outages. Overall, the complex closed out the year with saleable production of 2.9 million tons, just below the upper end of our guidance. And we are pleased to report that another 113 hectares of rehabilitation was completed at Isaac Plains East, additional to the strong performance that we had also in 2022.
Lastly, in relation to the Millennium Complex, aside from our acquisition of the remaining 50%, the operation is recovering from the geotechnical challenges experienced in the Q3, with volumes from the underground continue to ramp up to what we hope can be steady state, with the 2 production units during the Q1 now in 2024. We do intend to incorporate our expectations for the Millennium Complex in our guidance numbers going forward, now that we own 100% of the asset, and we're reporting volumes and EBITDA and the numbers overall above the line, relatively to what we've been doing to date. With a further update expected to be provided when we release our full year results in the end of February.
Touching briefly on our ongoing projects, South Walker expansion, to lift our saleable production to 7 million tons per annum by early 2025, is progressing well, with all approvals in place, and key contracts awarded for the CHPP expansion and for the 3 additional hire truck and excavator fleets earlier this month. Supporting this project is also the earlier Y South pit development, with box cuts to be capitalized and access already obtained in the Q4 in 2023, and the first blast expected now in the Q1 2024. Y South was always contemplated as part of the life of mine plan for South Walker, but we decided to bring forward access, as part of the expansion plans to optimize strip ratios and costs and ensure a consistent flow of volumes, especially from the southern pits, closer to the CHPP.
Y South is literally adjacent to the CHPP, so it's one of the closest pits to the CHPP. So two of our additional excavator fleets that are being mobilized as part of the expansion ramp up will be actually allocated to Y South development. Over 1 million BCMs of material was removed in the quarter for MRHC. 90% of ancillary infrastructure works is complete, and the project's progressing well, on time and on budget. The first stage of the Ramp 10 North box cut at Poitrel was completed in November, delivering the anticipated volumes for 2023, despite some of the delays driven by the wet weather challenges early in the year, as you all may recall.
Looking ahead, we are looking to continue the second stage in 2024 to open up the full strike in Ramp 10 by the beginning of 2025, as always been predicted. At Isaac Plains, waste blasting at Pit 5 North commenced in the quarter. First ROM was mined in December, and as we indicated in the past, 1.4 million tons of ROM is expected to be mined between 2024 and 2025. Lastly, exploration progressed well in the quarter. A lot of our focus has been on the Lancewood project, but also in progressing and better defining our Nebo West tenement, which is part of the South Walker complex as a whole. Groundwater monitoring boreholes and ecology works are advancing well to support baseline data required for our environmental approvals for Lancewood.
A pre-feasibility study for Lancewood is expected to be completed in the Q2 of 2024, which will include the assessment of development options, both on a standalone basis or utilizing the upgraded infrastructure at Peabody's Centurion Complex, which is the new name for the former North Goonyella mine, as contemplated in the transaction that we announced on the 26th of October, 2023. So we look forward to update everyone once the pre-feas results are completed and available. On the market landscape, overall prices remained relatively stable over the last quarter, with a pickup in demand in China for imported met coals from pre-winter restocking and some turbulence with Chinese domestic supply from safety-related shutdowns. Still stable availability of non-premium products with continued competition from Russian volumes.
Unfortunately, the relativities against PLVs remaining wide through to the end of the year. Nonetheless, markets remain buoyant despite ongoing margin pressure on our clients, with the steel producers. We remain pretty well positioned to benefit from any reversion of relativity to historical levels, which we expect to happen inevitably at some time in the near future. Like in 2023, 2024 started with some unfortunate wet weather in northern and central Queensland. Many mines and logistics systems heavily affected. We got a lot of rain just before the new year, close to 200 mm in 24 hours at South Walker and Isaac Plains, just as an example, and just under that at Poitrel.
In South Walker, we did experience some outages in our train loadouts and CHPP, due to lightning and loss of power and some burned out relays. So a bit of a curveball. Nice challenge to the start of the new year and to make sure that we start a full throttle, but recovery is on the way. I think we're pretty confident that we should be able to be fully recovered by the end of Q1 to our original production plans. Of course, under the assumption that we don't have any more significant wet weather. Like in January 2023, sales have been heavily affected, though, in January 2024, especially due to railways and port downtimes.
There was a lot of cancellations of trains and partly due to railway, but also to port performance. As some of you may be aware, there's a cyclone approaching northern Queensland now, so we need to monitor it closely, of course, to understand potential further impact to our shipment lineup. But all previous Q1 sales plans, our previous Q1 plan was pretty strong. We did plan for a strong Q1 on an annualized basis. And this may mean that although we have some impact in January, assuming we are able to recover, we still may be able to close Q1, hopefully in line with our usual annualized quarterly volumes. But of course, we're gonna have to monitor the performance of the logistics change in the next few weeks.
I'll hand over to Shane. We'll provide an overview of corporate updates and close out the summary before the Q&A.
Thanks, Marcelo. Stanmore closed out 2023 in a strong financial position again, ending with net cash of $126 million, inclusive of available cash of $446 million, and aggregate debt of roughly $320 million. This includes some significant one-off cash outflows during Q4, including around $53 million for the special dividend declared in November, as a corporate tax payment of AUD 120 million in December, as signaled in the September 2023 quarterly activities report. Furthermore, as has been noted previously, our capital program was much more weighted to the H2 of the year, and specifically the Q4, with a step-up in spend on the aforementioned, mentioned projects impacting overall quarterly cash flows.
As noted by Marcelo, we announced a number of important transactions during the quarter, including the sale of the southern portion of the Wards Well mining lease and the purchase of the remaining interest of the Millennium Complex, comprising of the Millennium open cut and Mavis underground operations. Wards Well transaction is significant for our overall vision and strategy. It brings forward value by monetizing an undeveloped area that realistically would not have been mined for some decades by Stanmore, and was logically suited to be accessed by Peabody in conjunction with their re-entering of the North Goonyella mine, now renamed Centurion, to the south. However, it also helps facilitate a development pathway for our Lancewood asset, offering an infrastructure solution via an ability to access latent capacity at the Centurion wash plant and/or washing capacity through a capital investment into that plant.
This is in addition to framework agreements that will support partnerships in the extraction of value between our neighboring Peabody and Stanmore operations. Regarding the Millennium Complex transaction, Stanmore had already invested into the capital development of the Millennium and Mavis Downs mines via a AUD 90 million debt facility, which is now wholly intergroup. Think the streamlining of ownership now also supports short-term working capital requirements as production is ramped up to a steady state during 2024, as providing potential synergies that may be realized with our neighboring Poitrel mine, particularly as Millennium coals are already washed at the Poitrel wash plant. The purchase of the remaining 50% also allows us to consolidate this position, as Marcelo mentioned earlier. And we will include Millennium with the rest of our portfolio for performance reporting purposes from January 1, 2024, going forward.
Finally, on guidance, as has already been highlighted, we're very pleased to report that total saleable production finished just above the top end of our previously reported public guidance. This is a testament to the quality of our site leadership and operations teams, as the quality of our assets, particularly in a year that was characterized by a number of challenges, such as the logistics constraints of the H1 and generally back-ended production profile. We look forward to providing further updates on 2023 performance on free-on-board cash cost and capital, together with our release of our annual results in February. I'll now hand over to our moderator so that we can take your questions before Marcelo provides his closing remarks.
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 Jim Zhu from Barrenjoey. Please go ahead. Pardon me, Jim, your line is now live.
S orry. Hi, Marcelo, Shane. Just a couple of questions from me, please. Marcelo, you mentioned some pretty significant impacts on sales in January this year due to wet weather, 200 mm of rainfall at South Walker Creek, in just 24 hours. Can you give, give a bit more color on the production impact we might expect? I mean, how many days was mining at South Walker affected? And, what is Stanmore doing to mitigate the impact of wet weather, just seeing that cyclone currently continues to move towards the coast.
Thanks, Jim. Yes, it was, I mean, a pretty wet year-end, okay? Interestingly, as you, as you know, South Walker is a pretty, let's say, large mine from a strike length standpoint. So just for, for a reference, for example, our southern pits were a lot, let's say, a lot more impacted than the northern pits, okay? So of course, we are now trying to, to, rig a little bit our, our sequences to be able to deal with some of these water issues in the southern pits. I think the good news is we did end, you know, the year with strong stocks at South Walker, okay? So that's helping the line up, especially in January and February, in order to make sure that we, we can service some of those shipments.
In relation to what's coming now and with the cyclone and how aggravated the situation may be, I think we need to wait and see, Jim. DBCT has just advised yesterday they are commencing weather preparations, okay? So vacating berths, starting equipment tie-downs and the likes. So, we are now trying to make sure we watch closely and work closely, especially in relation to shipments that are about to be nominated to avoid the surge exposure. Overall, from a production standpoint, we're still confident that we should be able to recover well.
Wards Well, interestingly, was a lot less affected compared to South Walker and to Isaac Plains, and compared to early in 2023, where it was probably one of the worst affected ones. But again, the resilience of South Walker and the flexibility we have there, given the number of pits in mine, and the quality of roads and the ability to, let's say, spread, you know, much rock and much rock and drive in wet weather is enhanced. I think it's always proved to be pretty robust. So Isaac Plains is less flexible to a certain extent.
We don't have the same number of pits or flexibility as we have in South Walker, but, you know, recovery is on the way, and I think it's looking positive. I think the main concern will be system performance, Jim, because not only us, a lot of people were as affected as us in terms of train cancellations and shipments. So everyone in the same way as 2023, everyone will be trying to catch up in February and March. So I think it will be a race, okay, to get into trains and send boats out. So there's a prioritization, let's say, method in the below rail or in the precinct, in the Goonyella chain.
We need to make sure we remain tier one, or worst case tier two, to make sure we get prioritization of train paths to get our railways and our boats out. Lots of work at the moment. As I said, the plan always contemplated a strong Q1 than usually. So hopefully, despite the impact, we can still perform, let's say, a normal annualized Q1, okay, if you look at our guidance we provided in late November.
Okay, thank you very much. Maybe just moving on to the dividend. In the special dividend announcement, you mentioned a one-off catch-up tax payment of $155 million-$170 million in mid-2024. Will you be provisioning for this upcoming tax payment in how you think about your final dividend for this year? Or will that just come out of 2024 cash flow and therefore affect next year's dividend?
T hanks, Jim. That's a, that's a good question. I think it's, it's something that'll probably go into the mix overall as we contemplate the dividend and whether to declare a dividend, final dividend for 2023. You know, as we consider other, you know, confirmed and known payments. I guess the advantage with that though is that we have been considering that, you know, in our overall cash flow forecasting and contemplating that as an operational cash flow as we would for any tax payments year on year. So, so it's not necessarily something that formulaically goes into a formula that calculates a dividend. It would be more something that is just considered in terms of overall cash requirements.
So, it's, it'll be one for the board to contemplate, but it wouldn't necessarily go into a calculation until such time as that we get there and consider the overall future cash flows for the business.
Okay. Thank you very much.
Thanks.
Thank you. Your next question comes from Brett McKay, from Petra Capital. Please go ahead.
Good morning, gents. Thanks for your time. Just a few questions from me. Just wanted to chat through Poitrel. It's had a cracking quarter from a production point of view. Can you just outline some of the reasons why the ROM volumes were as high as they are? Strip ratios coming down, you know, it looks like it's set up to be in a strong position going through this year into the completion of Ramp 10 box cut next year. Can you just maybe talk through some of the improvements that have come through in the December quarter?
Brett, I think a combination of things. I think sequence definitely one of them, stripping performance in Poitrel overall, those performance being fantastic. And yield was a bit of a good, let's say, a good surprise as well. Okay. So if you recall, we've done a lot of grade control yield reconciliations, okay, Poitrel, especially post-acquisition, and after, let's say, incorporation of the whole tech services and geological models into our belt. And the—I mean, we've been getting some good, let's say, actually, outcomes relatively to what we actually were, we've revised as part of those reconciliations.
I think as a combination of both, I think it was a, I mean, focusing, of course, of a, a bit more on, on coal to get into the wet weather with good in-pit inventories and ROM stocks. As you see, we have 900-1,000 tons, so we wanted to be in a good shape for the weather, for the wet season in terms of coal availability, but also yield. So I think it's productivity, sequence, prioritize a bit of coal towards the end of the year, ahead of wet weather, but also slightly better yields in the Q4. So I think it's good. I think Poitrel is well shaped for 2024. You know, we are already mining coal at Ramp 10. We are starting auger mining very soon.
Actually, we got approvals to mine some of the high walls in the southern pits, as we explained in the past. So there'll be a bit of volumes coming out of auger mining Poitrel. It's pretty well set up for 2024 . And as we always explained in the past, once Ramp 10 is fully developed, you have a stable strike, you know, and as improved strip ratios going forward.
Thanks, Marcelo. Just quickly, can you go through some of the dynamics which give you confidence of that reversion on the PCI prices back to the longer term average this year? Is there still some additional, you know, Russian PCI floating around the market that still needs to wash through, that you can see that coming to an end in the next three to six months, that will allow that relativity to close back up?
Look, I think the first answer to Russian is yes. Russian coals are out there, and of course, they're being cleared in, I mean, they have been cleared in markets like China, India and Southeast Asia, which just happened to be also the, let's say, the key spot markets and the key growing markets, especially for India and Southeast Asia. So of course, that's not helping relativities. Then, so availability of PCI has been quite stable, okay, in the market, where the premium, let's say, top of the food chain, which is a PLV type of hard coking coal, have been tighter, you know, mostly driven by production constraints in some of the major miners, as you're probably aware.
So, I think tighter, you know, premium supply and more stable availability of, let's say, PCI and semi-soft, has kept that relativity wide. The reality is, PCI is probably as low as it can be from a relativity standpoint. As I said in the past, so cheap now from a value use standpoint, not only for steel makers to improve the injection rates, but also for them to even use a bit of PCI in the coke plants, okay? We have seen some steel makers already, you know, talking about and buying PCI for to use in coke plants, given the wide differential.
I think we need to watch and see, Brett, it is a, let's say, it is a distortion, and I find it hard to be sustainable for too long, given where it is now. But as I said, it's still under, you know, it's still under pressure because of tightness in the premium side of the market, which is what's keeping the PLVs high, okay? Because on the demand side, things are not very strong now. Things are quite stable and to a certain extent weak. China's been, you know, producing well, as you know, from a steelmaking standpoint. There's been steel out of China going to India. That's putting pressure on the Indian steel makers , of course.
There's a bit of coke production capacity starting in Southeast Asia, which is good for the demand of met coal, but on the other hand, puts a bit of pressure on all the merchant coke plants elsewhere in India and China, which are also sometimes consuming seaborne coking coal. So I think if anything, this weather disruptions is helping a little bit to keep the market stable, okay?
Given a bit of weakness we are seeing in on the demand side, but the reality is that steel makers, because of the pressure on margins, they've been destocking a lot, to an extent that they're not ready really for any supply disruption, or if you have any significant weather-related supply disruption, given the amount of destocking they've made in the last few months, you know, they could be caught by surprise. So, I mean, we need to watch and see, Brett. I think, as I said, I find I struggle to see PCI relativities stay, staying at these levels for another year or so. I think, I mean, from a value use and from a cost standpoint, from a steel maker perspective, they should normalize.
Russian coals are out there, and I don't think there's a lot more to come, you know, from, there's no significant expansions out of, of Russia that we are aware of. And, but because they are out there and in the spot markets, okay, in the markets that are growing, I think it's putting, of course, pressure on our seaborne, all the PCIs.
Okay. All right, thanks, Marcelo, and thanks for our strong results today. Cheers.
Brett?
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Jon Ogden from Eastern Value Limited. Please go ahead.
Morning, Marcelo and Shane. Thank you very much for the presentation. Great year. Just a few for me. Just on the PCI, can you give us the numbers in terms of what the discount is now to the premium low-vol, and what it normally is, please? Just in general, on the market, can you just give us any thoughts for 2024 in terms of, particularly China, I think, because obviously there's a lot of noise about China's economy being in trouble. Are you seeing that at all, that you're worried about demand from China in 2024? Is that overdone? Any thoughts in general in terms of direction of the market with supply and demand?
And then just on Millennium, can you give us an idea of how you see that developing in terms of production and costs and the quality of the coal produced? I just note that you only paid AUD 1 for the other 50%, so it just sounds like there's problems there that might take some time to work through to get that into a profitable mine. So maybe you can just tell us what you're gonna have to spend to get that up to speed. And if you've got any thoughts on the CapEx roadmap for the next 2, 3 years, given those projects. I mean, these are some years that are gonna be big CapEx, others less. I know you can't give full guidance, but if you can just give us on your thoughts on that. Thank you.
No worries, Jon. Starting with the market. Look, China, I mean, they just released numbers, and I think they did reach their GDP expectations, which was a bit even surprising to some. Steel production was strong, okay, despite some of the challenges. We are seeing a pickup of importing in China. And interestingly, when we have a weaker India buying, especially in the last few months, that there was a lot less buying in India for met coal. You are seeing a lot of the, let's say, the spot references and what's driving the market's been also a bit of the Chinese market. So it's coming back to what used to be years ago.
I don't think necessarily that's the long, sustainable longer term, given that India is where the growing market is. But to a certain extent, you are seeing, like the domestic met coal prices in China also helping to give a bit of support, to the seaborne, let's say. I'm talking the top of the chain, premium low vol coking coals. PCI is, from a relativity standpoint, as low as it is, as it has been. It's just north of 50% relativity against hard coking coal. It's extremely low. Long-term averages are about 70%-80%. So as I said, it's - I mean, we need to hope to see that normalization, you know, at a certain point, hopefully during 2024.
But as I always been saying, PCI is extremely cheap for steelmakers now. So it is cheap for them to increase injection rates of PCI, but also even to use a little bit of PCI as in their coke plans. So I personally hope to see a normalization and believe that we should see a normalization up from this 50%. There are some pretty high cost PCI producers out there, not only here, but also in Russia. Fortunately, we are not one of them. So I think we are in good shape, and prices where they are now, they're still we are still making very good margins for, you know, from a PCI standpoint.
Market-wise, in terms of trends, no, look, it is a flat steel market overall. I think despite that, we are seeing, you know, met coal remain steady above $300 levels. I think that highlights, you know, the constraints, especially on seaborne supply, okay, overall. I'm talking about the overall met coal spectrum, which is similar to, I mean, what was true at the end of 2022, okay? With weak demand, but weaker supply, which is quite interesting. India will grow again, you know, and I think they will grow demand again, and they will pick up imports in 2024. They are commissioning new coke oven facilities, and they should. Some of them may reach completion and commissioning during 2024.
They are very active in trying to secure additional supply sources, okay? And, I mean, that includes Tata, JSW and other, the big steelmakers, but also the state-owned ones, like the Steel Authority of India. U.S., from a supply side, U.S. is, I mean, it's increasing marginally during 2023. There's still plenty of Mongolian supply going into China. I spoke about Russia already, but there's a lot of tightness in the premium hard coking coal category, especially with the major miners in Australia. You know, we've heard talks of some of them recovering, expecting recovery in 2024. And I think we need to see, because there's also weather disruptions.
And, there's a new producer in Queensland ramping up, okay, which is the Olive Downs mines, and I think we need to see how that may impact the market. But there's not a lot more beyond that in terms of new supply. So again, I think there is definitely weakness in the steel markets. China, interestingly, is producing, you know, well. Steel production is strong. They have constraints in metallurgical coal production domestically, hence they've been importing, growing the imports of met coal. But again, I think long story short, PCI relativities are low, as I was explaining to Brett, Jon, before, and I do believe that we should see some improvement.
You know, if not back to historical levels in the very short term, but at least from where they are today during 2024. I think the next question is. I'll touch maybe the CapEx first. We've released an update on guidance for 2023 and 2024, just in November last year. What I can say is we've closed 2023 just slightly above our upper end of the 2023 range, okay? Which is actually a good thing, okay? Because we've. Some of the projects, like the MRA project, the Poitrel level that was completed ahead of schedule, and the Ramp 10 catching up happened, you know, progressed well and some of them better than planned.
And that explains a little bit also to, let's say, some of the cash movements in the Q4, given that November and December was, were very strong in capital, okay? Which puts us in a good position in 2024. As you saw, the 2024 profile is, from our perspective, is actually below what we were envisaging a year ago if we were looking at 2024, based on the given the guidance range we've provided. So we have spread a little bit, have smoothened the capital profile a little bit. We pushed a couple projects back into 2025.
So we are seeing, let's say, a 24 that's slightly lower than we envisaged a year ago, but there's a bit more in 25, where we would- we decided to be a bit prudent in 2024, you know, to just to, to reduce a little bit relatively to where, what we did in 2023. As far as going forward is concerned, 25, we're always saying that we should be back, going back to 25 by Q2 or Q3 of 2025, more to a normal Sustaining CapEx level. But with some of this, you know, postponement of some expansion from 2024, 2025, we may, we probably. 25 will be a slightly, a touch above what we would otherwise expect, but as I said, most of the investment campaign, at least the, the ones we have now, will be done in 2025.
I think, beyond that, we have all the capital projects. We have Lancewood, which is a growth project, quite prospective, quite interesting, that we actually hope to be able to be making an investment decision in the near future. But I don't think it's a 25 story. I think it needs environmental approvals, and if anything, it's something for 2-3 years from now, from an investment decision standpoint. Millennium, you wanna comment on Millennium?
I guess on the Millennium deal, I think the inquiry there was on the purchase price. I mean, one thing to note in our announcement that we made in announcing that deal, that there was a royalty attached to that . So I think it's probably not appropriate to consider that a $1 deal. That the royalty kicks in at certain coal prices being achieved, as, you know, return on investment. So it's a deal that does still provide upside in the purchase price beyond the $1 deal.
But from our point of view, I guess, what it does is it gives us full control of the asset, which allows us to streamline things administratively and also consider the, you know, working capital needs of that, of those development areas as we move into steady state production this year. So I think that there's real benefits in that. We're already providing an Australian dollar facility of AUD 90 million into that asset, that now becomes a 100% owned asset. So in terms of return on investment, stand to receive 100% of the profits, notwithstanding that royalty arrangement .
Maybe just to add to that, the Millennium project now is fully set up. So I think the fixed cost structure is or the cost structure is mostly fixed, okay, with the underground contract, mining services contract we have in place. Going forward, it's all about getting the tons and of course, having some supportive coal prices. I think fortunately, coal prices are still very supported, so I think we need to get the tons, and we need to see, you know, the production ramping up to where we always envisaged. I think we're gonna be supporting, you know, the team to achieve that, incorporating Millennium now as part of our normal management routines that we have for all the three assets.
It was always contemplated to be a short-term project in the Mavis underground, and then moving into either the Millennium underground, or now we have a bit more flexibility because we also have some other prospective potential undergrounds as in our portfolio. So that gives us a bit of flexibility in going forward to use, let's say, that expertise and the equipment we have now in Mavis project. But the original plan was always to extend life into the Millennium underground .
Thank you. Thank you very much for the answers. Just one other quick one just occurs to me. I just wonder if there's any buyer's remorse, as it were, from the Queensland Government on the royalties? I mean, has there been any other discussions that they might have realized that's very detrimental to further investment in the industry? And Queensland is obviously absolutely crucial to the met coal global supply. So I mean, any chance they might wind back a bit on royalties? Thank you.
Look, thanks for the question. I mean, it is something that you can see in our financial results and annual results, where we typically highlight the size of the check going to the Queensland Government as a result of those royalty changes, and have done in the past. So it's a big check to write. We continue to discuss with you know, working with industry groups such as the QRC in ways and means that we can influence government policy. But at the end of the day, we're getting on with business as we need to do from this point forward. There's been no indications of changes at this point, but, you know, we'll continue to make sure that people are aware, and the government's aware of where we stand on the issue.
I think there's a new premier in Queensland. There's been some initial meetings with industry representation and some signals of intention to reengage on a positive foot at the beginning of 2024. But I think the general message is, I think we agree to disagree on royalties, but let's see where else we can work together for the benefit of Queensland and the industry as a whole. So I mean, that's the general messaging. So, I mean, there's not a lot of expectation that under the current government, there will be changes to the existing policies.
Thank you. There are no further questions at this time. I'll now hand back to Mr. Matos for closing remarks.
Thanks everyone for your questions, and the ongoing support of all of you, our shareholders. It's been fantastic to engage with you again during 2023. We all look forward here to meeting many of you again next month, after we release the full annual results. As usual, I'd also like to take the opportunity to thank our employees and contractors who are invaluable in the ongoing success of our business and performance of our business. Thanks everyone for your time.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.