Thank you for standing by. Welcome to the MMG Limited Q1 Production Report. 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 1 on your telephone keypad. I would now like to hand the conference over to Mr. Jarod Esam, Head of Investor Relations. Please go ahead.
Hello and welcome to MMG's quarterly production report teleconference. This report and today's discussion cover the operational performance of MMG's sites for the Q1 of 2024 and the outlook for the year. Joining us today for this call are key members of the MMG leadership team: Mr. Li Liangang, our Interim CEO, Mr. Song Qian, our Executive General Manager for Finance, Mr. Troy Hey, Executive General Manager for Corporate Relations, and Mr. Nan Wang, Executive General Manager for Operations. I will now pass over to Liangang, who will walk us through the highlights of the report. Following his overview, we'll open the call for questions you may have.
Thank you, Jarod. Good morning to everyone and welcome to MMG's Q1 production report teleconference. As always, at MMG, safety comes first. In the Q1 of 2024, our total recordable injury frequency was 2.74 per million hours worked, indicating an increase from the 2023 full-year TRIF of 1.57. On a positive note, we saw an improvement in the significant events with high energy exchange frequency, which was 1.11 per million hours worked in the Q1 of 2024, down from 1.54 in the Q4 of 2023. This is an increased focus from our sites on enhancing the planning and execution of tasks and reminding our people that they are encouraged to stop work if they feel it is unsafe. I'm delighted that we've successfully completed the acquisition of the Khoemacau mine in Botswana on 22 March this year.
Khoemacau is a scarce, high-grade, low-cost producing copper asset in the world-class mining jurisdiction of Botswana. An expansion project will deliver near-term production of around 130,000 tons of copper per annum. The expansion is a cost-efficient pathway to achieve production at scale with a low capital intensity. In addition to the mine and existing resources, we are also acquiring a dominant tenement package with 4,040 sq km in the emerging and highly prospective Kalahari Copper Belt. This acquisition marks a pivotal moment in our company's journey, bringing a high-quality transformational growth asset into our portfolio. Now let's turn to our operational performance for the Q1 2024. During the Q1 of 2024, we produced a total of over 67,000 tons of copper and 59,000 tons of zinc. Specifically, at Las Bambas, we produced 56,000 tons of copper.
This reflects a 4% decrease compared to the same period last year, primarily due to lower ore grades, which is mainly a result of our mining sequence. During this quarter, mining activities were conducted in lower-grade sectors as part of the development of phase 5 of the Ferrobamba Pit. To access higher-grade sectors in the Q3 and Q4 . Additionally, the concentrator consumed some low-grade stockpile ores during the Q1, further contributing to the reduction in the average ore milled grade. With an expected improvement in ore grades from the Ferrobamba Pit and the mill returning to normal operations following a planned maintenance shutdown, we expect a rebound in Las Bambas production during the remainder of the year. Our ore grades are also expected to improve in the second half with the contribution from Chalcobamba.
I'd also like to take this opportunity to update you on our community engagement efforts and transport logistics. MMG remains committed to transparent and constructive dialogue with the government of Peru and community members. Our discussions with the Huancuire community continue to progress as we work with the community towards lasting agreements for the development of Chalcobamba deposit. As a result of collaborative efforts of our Las Bambas team and the community, the contracts for the five Huancuire community companies have been extended through to the end of this year. MMG machinery and personnel are now working alongside community companies on development activities at the Chalcobamba Pit since the beginning of February this year. Regarding transport logistics, the government has extended the state of emergency for an additional 30 days, beginning on 5 April 2024.
At the beginning of April, we encountered a disruption in transportation due to a blockade on the Southern Road corridor in the Velille district. A meeting led by the national government and attended by Velille local authorities, community members, and representatives from Las Bambas was convened. As a result of this collaborative effort, the blockade was lifted on 11 April, and production at Las Bambas remained unaffected. Now, looking ahead to the rest of 2024, we remain aligned with our previously issued guidance. We anticipate Las Bambas copper production to be in the range of 280,000-320,000 tons. However, these figures are contingent upon the timing of the Chalcobamba development. Moving on to our operations at Kinsevere, we produced approximately 9,700 tons of copper cathode, making a 6% decrease from the same period in 2023.
This decline primarily stemmed from a reduction in feed grade, a move to reduce our reliance on costly high-grade third-party ores. However, this impact was somewhat offset by an increased supply from the mining activities at the Sokoroshe II pit during the quarter. In alignment with our prior guidance, we anticipate Kinsevere production to be between 39,000 and 44,000 tons in 2024. As many of you are aware, Kinsevere is now in the transition period from the mining of oxide ore to sulfide ore. Following the commissioning of the cobalt plant in the Q4 of 2023, we initiated various improvement measures in the Q1 aimed at supporting the ramp-up of cobalt production. Our sales and marketing team have been engaging with cobalt customers to align on their specific asset requirements, and we are preparing for a trial sale of 100 tons in April.
For the remaining months of the year, our focus will be on completing the installation of the concentrator and the roaster, gas cleaning, and acid plant, along with work related to operational readiness. During the Q1, we made progress in the construction of the concentrator, which included the installation of the SAG mill shell and gear ring, hydrocyclone cluster, and the flotation cells. Looking ahead, we expect to produce the first copper cathode from sulfide ores this year. This project is set to extend the mine's life to 2035, and upon reaching full ramp-up in 2025, it's expected to increase our annual production to 100,000 tons of copper equivalent. I will now turn our attention to the Khoemacau mine, a significant addition to our copper asset portfolio.
For the first time, we have included production data from Khoemacau in our report with a contribution of 9,075 tons of copper during a nine-day period starting from March 2023. We've also provided the 2024 guidance for Khoemacau in the report. We are expecting copper production to be between 30,500 and 40,500 tons starting from 23 March of 2024, with C1 costs anticipated to range from $2.30-$2.65 per pound. Our efforts in 2024 will focus on continuous mining development to expand mining fronts, increasing mining volumes, and gain access to higher-grade areas. Regarding capital costs of Khoemacau mine, we expect them to be in the range of $108 million-$138 million from 23rd March 2024.
This includes capitalized underground mine developments, continued study of the expansion project design, as well as the construction of the Pastefill plant project, construction and installation of primary ventilation fans among sustaining capital. We are committed to supporting the ramp-up of Khoemacau to achieve an annual production of 60,000 tons of copper by 2026. This ramp-up is expected to lead to an improvement in C1 costs. Furthermore, looking ahead, we plan to expand the mine's capacity to 130,000 tons, which we anticipate will further reduce C1 costs to around $1.55 per pound. Let's now shift our focus to our zinc operations at Dugald River and Rosebery, starting with Dugald River. We saw zinc production reach approximately 45,000 tons, which is a 114% increase compared to the same period last year when operations were temporarily suspended for 34 days.
In alignment with our previous forecasts, Dugald River is expected to produce between 175,000 and 190,000 tons of zinc in zinc concentrate for the full year. Moving on to Rosebery, the mine produced around 14,000 tons of zinc in the Q4. This marks a significant 49% increase from the prior corresponding period, reflecting the stable production and improved workforce availability. When including the contribution from byproduct metals, zinc equivalent production at Rosebery reached 32,000 tons in the Q1, effectively more than doubling its zinc output. In accordance with our prior guidance, we anticipate Rosebery's production to be between 50,000-60,000 tons of zinc in zinc concentrate for the full year of 2024. On a zinc equivalent basis, we expect production to be in the range of 115,000-130,000 tons for 2024. We're happy to take any questions. Thank you.
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 Lawrence Lau with BOCI. Please go ahead.
Hi. Thank you, management. I have a few questions. First of all, regarding Kinsevere, in your announcement, you're saying that you are talking to a client to sell the cobalt. So can you tell what kind of client you are selling to, or you are actually selling it back to China? And secondly, regarding Khoemacau, I think there's a clause for the mine that you have to sell the silver to Royal Gold at 20% of the spot price for a certain amount, I think up to 40 million ounces. And I would like to know what's the progress on that part, how much we have sold so far under this kind of clause, and does the management have any expectation that when will this clause be fully achieved?
Finally, I realized that you got loans from China Development Bank to help you to finance the acquisition of Khoemacau. Can you please tell us the interest rate on that particular $1 billion loan? Thank you.
Yeah. Thank you, Lawrence. I'll take the first one. Regarding the cobalt sales, MMG has been contacting with different customers, including traders and also producers globally. Our first trial sales contract will be reached with one of the Chinese with one of the producers based in China. But of course, we are open to any opportunities to sell cobalt products to try to benefit from the highest attractive prices that we can get. Regardin g the second question, Song, are you?
Yes, Liangang . I will take that question. The streaming agreement is that the deadline for that is 2039.
2039. Okay.
Also, Song Qian, can you take the third question from Lawrence regarding the loan?
Oh, yes. CDB loan is the 7-year debt funding. The interest rate from CDB borrowing is SOFR plus margin, with the margin ranging from 150-200 basis points, being lower than Las Bambas project facility.
Okay. Thank you. Thank you.
Your next question comes from Jimmy Feng with Citi. Please go ahead.
Hi. Hi, thanks, my friend, for the sharing. I have two questions. So firstly, for the Khoemacau project, this year's unit cost guidance is relatively high. So I want to check what the cost expectation will be when it ramps up to 60 kt in 2026. And the second question is also regarding the Khoemacau project. I want to check what's the D&A estimation, the depreciation and amortization estimation for the Khoemacau project this year. And also, I saw the capex guidance for this year. Would that also be applied to next year too until pre-the expansion project? And also, my third question is regarding the Las Bambas. I saw there was a roadblock on 5th April, but it was solved very quickly. I want to check that's been solved. Is it related to the government-decided state of emergency? As I saw that the meeting was led by national government.
Is the state of emergency expired in May? What's the expectation on the transportation disruptions? That's all my questions. Thanks.
Thank you, Jimmy, for your questions. So would you like to take Jimmy's questions on the Khoemacau's issue?
Okay. Thanks, Liang Cao. With Khoemacau, we have just finished the transaction and still in integration process. We are now providing the guidance just for indicative. But by the interim report, we will update the forecast, and that will provide official guidance for the whole year. In terms of the C1 cost, we do see the guidance as between $2.3-$2.65 per pound. The 2024 C1 cost guidance reflects the ongoing process to expand mining faces, increase mining volumes, and gain access to higher-grade areas. All in preparation for reaching an annual production of 60,000 tons per annum by 2026. The mine is still ramping up to 60,000 tons of copper per annum. So a higher C1 cost in 2024 was expected.
C1 costs will trend down lower from 2026 onwards once development rates reach steady state and increase in grades with mining at higher-grade area and the move to lower-cost owners' mining. I think, Troy, would you pick up the transport logistics chunk?
Yes. Thanks for the question. At the moment, transport logistics operating is normal. In context, I think you will see, as we have for 8 years, those regular small roadblocks occurring and coming off. And that is just part of operating that really remote logistics corridor in the Peruvian Andes. But the last 12 months have been very good. Stocks at the site are very low, and supplies have been running well. So while you'll never see the complete absence of small roadblocks, often related to local issues or issues with Ministry of Transport or road maintenance or other things, we are getting more and more confident as the Las Bambas team working with government and community to keep that road operating well.
Okay. Thanks. Thanks for the answer, and that's clear. I have no more questions. Thanks.
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 Chris Shaw with Balyasny Asset Management. Please go ahead.
Hi. Thank you very much, management team. I would like to check with you. What is the latest overall CapEx guidance for the year after consolidating Khoemacau? And also, what would the annual finance cost going to look like going forward? Thank you.
Yeah. So are you happy to take this, Chris, two questions?
Yes. Yes. CapEx guidance for the whole expansion target to reach would cost us, say, $800-$900 million. But that will take 5 years' time. Yeah. And in terms of the other questions regarding this year's CapEx, it's around $900-$140 million. I hope that answers your question.
$940 million. How about the finance cost going forward on an annual basis? I mean, for the entire company, not just for that one project.
So far, we don't disclose that detailed information. We are raising the fund from CDB and other banks. We have a SOFR plus margin price regime.
Got it. Thank you very much.
There are no further questions at this time. I'll now hand back to Mr. Liangang for closing remarks.
Yeah. Thank you very much for everyone attending this teleconference. Just in case you have any further questions, please feel free to contact our investor relations or corporate affairs teams. Thank you very much, and goodbye.
That does conclude our conference for today. Thank you for participating. You may now disconnect.