Good morning, or good afternoon, wherever you may be across the world. I am Peter Steenkamp, CEO of Harmony. Thank you for joining us virtually today as we present our interim results for the half-year ended 31st of December 2023, or the current reporting period. Please take note of our statements. Let me begin with a summary to remind you who we are and what our strategy is. Harmony is a specialized gold producer with a growing international copper footprint. We also produce small amounts of silver and uranium. We have over 73 years of gold mining experience in South Africa and have been operating for over two decades in Papua New Guinea. Our strategy is aimed at producing safe, profitable ounces and improving margins through operational excellence and value-creative acquisitions.
Our mineral resources and mineral reserves declaration of 138 million oz and 39 million oz, respectively, presents an incredible opportunity to convert the quality ounces into shared value for our shareholders and stakeholders. Our gold tailings retreatment business, or recycling as you may know it, is the largest globally and is set to grow, supporting the circular economy. The Tier 1 Wafi-Golpu project in Papua New Guinea and Eva Copper in Australia give Harmony a sizable copper-gold footprint, which will be transformational. Currently, our diversified portfolio of operating assets includes nine underground mines, two open-pit mines, and a significant tailings retreatment business.
Production comes from four business areas, namely our South African high-grade underground mines, our South African optimized underground mines, a large and growing surface sources business in South Africa, and a growing international copper-gold portfolio, of which Hidden Valley is the only producing mine at this stage. Mining with purpose ensures that our stakeholders share in the benefits of the minerals we extract. In our presentation today, we will provide further insights in how we are creating long-term value, shared value for all of us. Over the past few years, we have set ourselves ambitious goals, and I'm proud to say that we've largely achieved them. Reflecting on the first half of the financial year of 2024, we have delivered significant improvement in safety, with our lost-time injury frequency rate improving from above seven in 2017 to 5.19 per million oz worked in the supporting period.
We maintain the belief that a safe mine is a profitable mine. We have reduced our gearing and built a strong balance sheet, which is now in a net cash position of ZAR 74 million, or $4 million. Through organic growth and investment, we continue to convert our mineral resources to quality mineral reserves, focusing on higher grades and margins. This is evident of our comprehensive pipeline of projects in execution. Group all-in sustaining cost improved to ZAR 843.43 a kilogram, or $1,403 per ounce. We achieved higher underground recovered grades at 6.29 grams per ton. Harmony generated a record operating free cash flow of ZAR 7.1 billion, or $381 million. This equates to a group operating free cash flow margin of 24%. Our acquisitions have transformed Harmony completely, having added quality ounces and copper to our asset portfolio.
We are a new company with a long and exciting future ahead of us. The effective allocation of capital has placed us in a position to return capital to our shareholders, rewarding them for investing in Harmony's story. Allow me to unpack the operational performance for this reporting period. The stellar results in this reporting period were a result of our ongoing investment in operational excellence. This has enabled us to deliver consistency throughout the gold cycle. We are therefore well-positioned to take advantage of the current high gold price. Let me give six reasons why I strongly believe Harmony will continue to deliver. First, everything we do starts with safety, which I again want to emphasize is non-negotiable. This is supported by a healthy organizational culture. Operational flexibility and predictability in our planning ensure that we consistently deliver on the tons alongside higher-grade ounces.
Harmony has always controlled what we can, with cost being one key factor. With a rand cost base, we have a stable and predictable cost structure. The strong partnerships that we have built with our stakeholders enable us to maintain a social license and continue operating successfully. Our substantial mineral resource, based on 140 million oz, presents an abundance of opportunity to grow our mineral reserves through internal investments. But let's look at the numbers supporting these statements. We are seeing a continued improvement in safety performance. It requires a daily commitment, and we are confident that we will ultimately achieve the goal of zero loss of life. Our proactive culture of safety and care has resulted in our lost-time injury frequency rate trending lower. Group lost-time injury frequency rates improved to 5.19 per million oz worked in the first half of this financial year.
Our operational results demonstrate that a safe mine is a productive mine. An incredible amount of work goes into ensuring that our workplaces are made safe. We have continued safety awareness initiatives to reinforce that safety always comes first. Regrettably, four of our colleagues have lost their lives in the mine-related incidents since the start of this financial year. Each loss of life is a stark reminder that more needs to be done. We mourn the passing of these colleagues and will work tirelessly to ensure that each Harmonite returns home safely. Improved planning allows for better flexibility and predictability. This, combined with the acquisition of higher-quality assets, resulted in a remarkable improvement in recovered grades. Underground recovered grades in this reporting period increased by 11% to the 6.29 grams per ton from the 5.68 grams per ton year-on-year.
This now exceeds the upper end of our full-year guidance. This has primarily been driven by the high-grade underground mines in Mponeng and Moab Khotsong. Consequently, production increased by 14% to 26 tons of gold, or 832,000 oz, and we expect to meet or exceed the upper end of our FY2024 production guidance. These charts perfectly illustrate how effective capital allocation has transformed Harmony. We continue to see an improvement in our all-in sustaining cost in both rand and US dollar terms. Our rand all-in sustaining cost improved by 5% to ZAR 843,000 a kilogram. However, we delivered a remarkable 12% improvement in US dollar all-in sustaining cost to just over $1,400 per ounce.
This considerable shift down in the global all-in sustaining cost curve has been a function of the higher grades, well-managed cost increases, and increase in the production and prices of silver and uranium at the Hidden Valley mine and Moab Khotsong operation, respectively. With over 90% of our inputs sourced in South Africa, we have been largely protected from the rampant global inflation. In addition, our labor and electricity cost increases are predictable, allowing us to manage our costs effectively and deliver as guided. We are a proud South African gold producer and are fortunate to sell our gold in U.S. dollars. As a result, our all-in sustaining cost margins are now over ZAR 350,000 per kilogram, or $600 an ounce. Improved safety and higher grades translated into higher production. This was further supported by a strong rand per kilogram gold price received.
This allowed for higher margins, driving record operating free cash flows. Total operating free cash flows increased by 265% to ZAR 7.1 billion, while operating free cash flow margins expanded to 24% from the 9%. In US dollars, we generated $381 million in operating free cash flows, up 237% year-over-year. To put this in perspective, we generated more operating free cash flows in rand over the past six months than we have in the previously full-year period. The majority of our total free cash operating flow comes from our South African high-grade operations at the Hidden Valley in Papua New Guinea. Our South African high-grade underground mines contributed 31% of the total production, but delivered 45% of our operating free cash flows at a margin of 34%. Let me remind you that the South African optimized underground assets continue to serve the company well.
These mines produce 40% of the total production and generated 90% of group operating free cash flows at a margin of 11%. Keeping in mind that we are investing significant capital to expand our South African surface operations, these assets produce 17% of the group production, generating 11% of the operating free cash flow at a margin of 17%. Hidden Valley produced 12% of the group production, but contributed 25% to the total operating free cash flows and had a phenomenal 50% margin. Sustainability and ethical mining are integral to the operating model at Harmony. Responsible stewardship is about balancing all aspects of ESG. We support the circular economy through decarbonization, more specifically through energy efficiencies, renewable energy programs, and green energy mix. Effective waste management through waste rock and tailings retreatment. We also donate waste rock dumps to our communities for aggregate production.
We promote good water stewardships, prioritizing the recycling and efficient use of this scarce resource, and we contribute to the resilience and prosperity of our host communities through benefit sharing. This makes Harmony a partner of choice. Mining with purpose is what we are all about. True sustainability is embedded in all our decisions that we make. At Harmony, we believe in actions over words. As a result, we continue to receive positive external recognition for our efforts in sustainability. We have once again been included in the FTSE/JSE Responsible Investment Index. Our inclusion in the Bloomberg Gender-Equality Index for five consecutive years demonstrates we foster gender diversity and inclusivity. We always treat our employees fairly, without bias or prejudices of any kind.
We have received a Score A from the CDP for Best Practice in Water Management Strategy in 2023, and our near-term and longer-term carbon reduction targets have been validated by the Science-Based Targets Initiative as we aim for net carbon zero by 2045. Because life of mine is finite, we are continually investing in converting our resources to reserves while striking a balance between capital intensity and shareholder returns. Harmony presents a substantial opportunity to invest in an exciting gold copper-gold story. Our resource base, which includes copper, is too big to ignore. We are in a fortunate position that we can deliver on our long-term plans through internal investment as we convert these resources to reserves. Our production profile has been significantly de-risked, and future production will come from a combination of South African surface and underground gold, Papua New Guinea copper and gold, and Australian copper.
Our quality growth pipeline is aimed at creating long-term value as we take our projects up the value curve. Feasibility studies to determine the possibility of safely extending Mponeng and conducting the pillar extraction of the Tau Tona have been completed. I'm delighted to announce that we have received board approval and will commence with the Life of Mine Extension project in Mponeng in the West Wits region. I will unpack more on Mponeng in the next few slides. We are conducting various exploration drilling activities across all our jurisdictions. The Eva Copper feasibility studies are being updated, and negotiations to permit Wafi-Golpu are also continuing. We are making good progress with various projects currently in execution. The Moab Khotsong Extension, Mine Waste Solutions Tailings Extension, and Hidden Valley Extension are all progressing well, and further details are available in the next year.
Now moving to Mponeng Life of Mine Extension project. After Mponeng was acquired in 2020, we began a comprehensive update of the feasibility study to determine if we could extend Mponeng's Life of Mine. After a 2-year study, we now have an optimized mine design, which ensures we can extend the Life of Mponeng both safely and profitably. The project meets all our investment criteria. Mponeng is an incredible mine with an existing world-class infrastructure. It is a mine with access to two excellent ore bodies, namely the Carbon Leader and the Ventersdorp Contact Reef, or VCR as we call it. Both of these economic horizons have exceptional grades north of 9 g/t. This major project will convert over 3 million oz into mineral reserves, delivering an average steady-state production of 260,000 oz per annum, or 8 tons per annum of gold.
Once the project is complete, we are forecasting a cash contribution of about ZAR 2.5 billion per annum from this project at a real gold price of ZAR 1.1 million a kilogram. Because of this high grade, the projects will have an attractive real all-in sustaining cost of ZAR 768,000 a kilogram, or $1,290 per ounce, based on current assumptions and estimations. The life of mine will be extended from seven to 20 years, ensuring Mponeng remains a top-performing asset in our portfolio until at least 2044. Capital expenditure for these projects will be manageable and affordable. This project will be self-funded through internal cash flows. With a substantial mineral resource of 24 million oz, this is another example of how we continue to extend our production profile by converting mineral resources to mineral reserves.
We are proud that in our hands, Mponeng will reach its true potential and deliver a significant positive social impact. This embodies how Harmony creates long-term value for its shareholders and stakeholders. A de-risked modular approach will be taken to access three high-grade blocks. Safety and health were at the forefront of our design, methodology, and mining practices. The project will focus on mining the two ore bodies namely the VCR and Carbon Leader. This will ensure that we maintain a high level of flexibility. The extension is only about 270 meters deeper. This will target early gold by accessing the Carbon Leader through a ramp system at the 120 level, and the VCR will be accessed through both the west and the eastern side. Lastly, we will also mine the VCR portion of the Tau Tona shaft pillar, which provides additional high-grade ounces.
This profile is purely for illustrative purposes and includes both approved plans and projects still in feasibility. Adding to the Mponeng Extension, Eva Copper, and Wafi-Golpu, Harmony can remain a 1.5 million producer well into the future. Importantly, the Mponeng Extension combined with Moab Khotsong Extension will deliver over 400,000 high-quality, low-cost ounces per annum for more than two decades. This will ensure strong future cash flows at higher margins. There is significant potential within our asset base for further value to be unlocked through future mineral resource conversion. Bear in mind that this illustration also excludes any potential future value-creating acquisitions that form part of our strategy. Capital guidance for FY24 remains unchanged. Capital for early works development from Mponeng was provided for in the FY24 capital budget. We estimate ZAR 7.9 billion in project capital over the life of the project in real terms.
Capital guidance for FY25 onwards will now include the Mponeng Extension project. The Mponeng generated ZAR 1.9 billion in operating free cash flow in the reporting period in this particular six months. At an annual estimated CapEx of ZAR 1 billion, or approximately $50 million US dollars, this project is therefore affordable and at a low capital intensity. Harmony has a sizable and well-sequenced project pipeline. Our project timing is deliberate and ensures our project capital remains affordable and does not put pressure on our balance sheet. These projects are catalysts for meaningful sustainable production and expand our margins within the driving cost down in the future. Now, allow me to hand over to my colleague and Financial Director, Boipelo Lekubo, to run through the financials. Over to you, Boipelo.
Thank you, Peter. I'm pleased to present our exceptional financial performance for this reporting period.
All U.S. dollar figures and conversions are in their annexures . Group revenue for this financial half-year increased by 35% to ZAR 31 billion. EBITDA increased by 114% to ZAR 17 billion. As a result, headline earnings per share increased by 226% to ZAR 9.56 per share. With ZAR 9.8 billion in available headroom through cash and undrawn facilities, our balance sheet is well-positioned to execute on our project pipeline and acquisition ambitions. Through operational excellence and consistent production, we have healthy margins at current gold prices. At ZAR 1.2 million per kilogram, or $2,000 an ounce, our all-in cost margin is at 33%. This is essentially the margin available after all major capital. Our all-in sustaining cost margin is 42%, and our cash operating cost margin is 68%. We are therefore well-positioned with good buffers to absorb any adverse movements in the gold price.
We have an effective hedging program in place with 20% of our production hedged over 24 months. The rand gold hedge book was maintained at 20%, or 558,000 oz, at an average forward hedge cover of over ZAR 1.256 million a kilogram. Returning cash to shareholders alongside our growth aspirations remains a key priority. Harmony's dividend policy is to pay a return of 20% net free cash generated to shareholders at the discretion of the board of directors. The strong operational performance and exceptional net free cash generation resulted in a record interim dividend of ZAR 1.47, or $0.08 per share declared, which will result in a record payment to shareholders of over ZAR 1 billion. This has resulted in a 12-month dividend yield of just over 2%. Cumulatively, we've paid ZAR 2.7 billion in dividends since 2016.
With ongoing confidence in our plans, controlling what we can such as safety, production, and costs, we aim to stay true to our dividend policy. Thank you, and back to you, Peter.
Thank you, Boipelo. In conclusion, Harmony is a company that delivers sustainable, predictable, and flexible operational performance with well-managed fixed cost structure. Our guidance for FY2024 remains unchanged, and we are confident that we will reach the upper end of our production guidance and the lower end of our cost guidance. Through our embedded sustainability practices and quality ounces, we are a company with a long reserve life. Our geared exposure to the rand per kilogram gold price continues to provide us with good tailwinds from both revenue and marginal perspective. We have two significant international copper projects that complement our existing gold assets. We understand our ore bodies.
We have strong technical and exploration capabilities, and we are the partner of choice wherever we operate. As Boipelo mentioned, our flexible and strong balance sheet supports our growth pipeline. As a gold mining specialist with a growing international copper footprint, we are passionate about what we do and about transforming our gold into long-term value for all stakeholders. This is mining with purpose. Thank you, and I'll now hand over for questions.
Thank you very much, sir. Ladies and gentlemen, our first questioner is from Adrian Hammond of SBG. Please go ahead.
Hi, Peter. Thanks for the presentation, and well done on a great set of results. Your share by far has been best performer globally over the past year. I guess the question is, can you sustain this incredible rating of yours?
I want to reference slide 21 where you foresee a gap in your production profile, even worse the international projects you have in the pipeline. Is that something that bothers the team that they wish to fill, and does that mean you're going to do more in M&A? That's the first question. Secondly, we don't have a capex number yet on that, and perhaps you can enlighten us. How do you manage to de-risk this project going forward? Do you think you're going to need a partner there? Doesn't it make sense? Then, thirdly, I like your comments in the commentary around uranium, which has become more of a material revenue generator for you, but you do say you're going to explore further potential. Can you expand on that, please? Thank you.
Okay. Let me just get to the first question.
Obviously, in that straight-up kind of where we were with where we want to get the mines to, there is that gap there where we will probably go down to about 1.2 million oz. But one must remember that there's also much better quality ounces at the time, and I think the margins of the portfolio of assets we have at the time were good. There are some opportunities to fill that gap. One is obviously to do more surface sources. But we are also, Adrian, always looking at what we can do in terms of an acquisition or a kind of a merger that potentially can take us over that and take us forward. Obviously, when we do then an acquisition, it needs to be very near-term production or already in production kind of operations.
We have a new business team under the leadership of Johannes van Eerden that really does wonderful work. We're currently in Miami there at the BMO, and Johannes is here with us trying to find why we can do that. We are always looking at that opportunity that's going to get there. The Eva Copper CapEx, we are Eva will the work that we've done thus far on Eva shows that it will be a slightly bigger mine, but a much longer-life mine that we currently have there.
There are a few amendments we want to do in terms of the permits that remember, we bought this mine with a full feasibility study and fully permitted, but we want to make a few amendments to that permit, and it's really on the back of energy mix, water management on the mine, and also the diversion of a creek that now has to be a little bit different than we originally thought it should be. We hope that these things will be viewed by the Queensland government as minor. If it's minor, then we can most likely take it to the board in the middle of next year, the Eva Copper project, and then obviously try and get approval for that.
If it's major, we actually have to go through a much different process, which is now to get public participation, although nothing of that will be something that we think that will ever stop the project. It's just going to delay it for a while. Talking about the capex for that then, we would obviously come with a capex plan as part of the feasibility study and when we bring it to the market. But most likely, it will be a combination of proceeds out of our current facilities and also cash flows from operations, and maybe a little bit of a project finance on that. Remember, Eva will be a kind of a short-term, two-year-built, short-term, and immediately after that, we will generate capital cash because of the low strip ratios and everything else that we have there. On the uranium, that's a very interesting question there, Adrian.
There's a few opportunities. Obviously, we get uranium from the ore that we take through our plants, which is both our ore and also the ore from Kopanang mine that goes through our treatment legacy plants and Mispah plant. At the beginning of that, we have uranium facilities. But they are obviously either through also retreating of dumps, good uranium operations. Obviously, Shiva is a massive uranium mine that used to operate in that area, currently it's in business rescue. We haven't got a plan in terms of how to increase uranium, but at the moment, there's a massive big tailwind in terms of cost because we'd obviously get it as by-product credits in Moab Khotsong.
Unfortunately, that's the only uranium plant that we have, and potentially, we have a project team at the moment that's doing a lot of work to see how we can potentially increase that.
Sure. Do you see the partnerships with local players there?
Potentially, we can. But remember, we all have this one plant, and that plant is fairly full at this point in time. We are treating our ore, and through the Mispah plant, we're also treating Kopanang ore now.
Okay. Understood. Enjoy your time in Miami. Thank you.
Thanks.
Thank you very much. Next question is from Arnold van Graan of Nedbank CIB. Please go ahead.
Yes. Good morning, Peter, and good afternoon, everyone else. Peter, first of all, well done on the results. It's good to see Harmony crystallizing the value of the gold price. Well done.
On the back of not just the high price, but also very good operational performance. My question, very similar to Adrian's question, maybe with a bit more detail, but I just want to get a sense of how sustainable the higher grades are at Moab and Mponeng. It's phenomenal to see that. We love to see that. But are you going to continue mining at these rates for the next year or so? Then, I guess the question that goes with that is, what's driving these high grades? Is it where you are in those ore bodies? Is it the result of your operating performance and additional development? Can you just give us some comfort that in six months or 12 months from now, when we are back, we'll still be seeing similar grades and not a big step down? That's it for me. Thanks, Peter.
Arnold, the African grades are quite sustainable. Where we're mining now at Mponeng is obviously we mine through the lower-grade faces. We're now in the higher-grade faces. Remember, that was always the argument when we also bought the mine from AngloGold Ashanti at the time. They said the grade is low now, but it's going to be much higher going forward. We are residing in Mponeng there, and obviously, mining is great. We strongly believe you always have to have a great mix with a middle mine that must perform well. Now, the middle mine performed very well in the last six months and will most likely continue to perform well going forward, but it's always the one that is structurally quite complex and has some sort of an issue always with seismicity and things like that.
But we think where we plan to mine is what we're going to get the grades. There's also some very good grades from the Tshepong South operation, which is that faces that we're mining in, which was better than we expected. All the other grades were actually according to plan, although it was high, it was planned that way. The one area where we'll have a great drop in the latter part of this year will be at Hidden Valley. We are mining through that big reef that we've explained to the market that we're going to hit. Actually, last six months, we were in that big reef. There will be some of that still coming through in this quarter. We're in. We still haven't processed all the big reef ore yet, but then we'll go into lower grades, the typical 1.1 versus the 1.6 that we currently have.
It's quite a bit still, that's 10% of our production, so that will be we're very comfortable with the great guidance that we said will beat the upper end of it, and we are in good grades going forward. It's all in all, but all the operations performed well and great, not only Moab, and that obviously was spectacular, but every other mine has actually done quite well as far as grade is concerned.
Thank you, Peter. That's all from me. Cheers.
Thanks, Arnold.
Thank you. The next question is from Leroy Nguni of HSBC. Please go ahead.
Hi. Good afternoon. Thanks, Peter. My first question is around your guidance. You've had excellent operational performance in the first half of the year.
I understand the seasonality going into the second half of the year, which is normally a bit weaker, but are you anticipating anything other than normal seasonality that's going to have an adverse impact on your operational performance? Because keeping your guidance flat or unchanged does sort of suggest that. If you could please give us a bit of color on that. Then, just an update on the turnaround efforts at Target and how those are going. Are you still on track to have turned that mine around by the middle of the calendar year? Then, my third question is, has the fatality at Mponeng had a significant impact on your operational momentum at that mine?
Good note. The guidance, we said that we'll at least get to the upper end and probably beat that.
We don't foresee any issues other than seasonality, but I talked about Hidden Valley that obviously will have lower grades in the fourth quarter and even in this quarter. Probably March month will be to normal grades. But other than seasonality, there's nothing that we believe that is in our horizon that will really drop production. Everything is going well, but we always have a slow startup after Christmas. It's like, I wish I can one day say that we can get through Christmas without having issues with a restartup. But everything over the Christmas period in terms of restarting the mines and everything else like that was done, barring what happened at Kusasalethu, was actually totally on plan, et cetera. Target, we are glad to say the project is behind us. The crushers are running. The conveyor systems are running. Everything is down now to the bottom of the mine.
We still just completing final parts of the workshops down there. We will have a much better target going forward, and we obviously now can have much shorter travel distances, etc. Very happy with that. Then, Target will now obviously create the flexibility that we need and everything else because it was a very difficult project to execute without any seismic. In PNG, we had quite a senior person in our operation that actually went into a hot area, a very experienced person at a mine captain level that's obviously also experienced in the team that he used to be a pit captain, and unfortunately, went into a hot area where they shouldn't have. They actually instructed not to go. That had quite an impact on the mine, more from a moral perspective or the culture because it was quite a strong individual, tastemaker on the mine, a very sad incident.
But other than that, it was actually an area that was not really a production area. It was actually a vamping area that he went into. I think we got through that, but a very sad event and obviously always reminding us about not taking risks, not doing things that we shouldn't be doing. It's a culture that we want to emphasize in Harmony. But I don't think the Mponeng event will have a big impact on Mponeng itself.
Thank you. That covers it. Maybe just one follow-up. Where do you expect the all-in sustaining costs for Target to land now that you've executed on all that you needed to change there?
It will come down. I think in the next year, we would certainly be in a good profit situation at Target. I'm looking forward to that. Obviously, we're with the planning process now.
The planning cycle is well underway, but we expect it to come in nice profit situations for Target going forward. But this year, it will still be tight because of the flexibility that we still need to have in the ore body, and that will be busy creating as we speak.
Perfect. Thanks, Peter.
Thank you very much. We have no further questions on the conference call.
I do have some questions here. Can you hear me?
Yes. Thank you, Steven. Go ahead.
All right. Let me see where to start here. I think, Peter, it's also just a couple of questions here from a few of the analysts that have questions about just the second half production relative to first half.
I know we have spoken about the guidance that was unchanged, but really just asking if there's going to be any material change in the second half given that we're tracking north of 55% in terms of guidance from the first half.
And again, as you said, when we gave feedback to Arnold, there's nothing that's actually different from this year to last year for this half, the previous half, except for Hidden Valley, which will have a lower grade going forward. But the rest of the operations are in the same faces, same areas that they're mining, and operations actually should continue barring the seasonality that we have with a slow start in January and February. Other than that, I think we'll be good.
Okay. Just another question from Arnold here in terms of the EVA CapEx numbers.
Obviously, we haven't updated the market yet based on the numbers, but maybe just some indication as to how far out could we expect this project to be pushed? I think you did touch on it briefly, Peter.
As I said, it all depends if we get these amendments to be minor or major. If it's minor, we can most likely start the latter part of this calendar year, start obviously targeting to take it to the board in the final yield results, which is more or less August when we take it to the board for approval, and then after that, start with early works. That will be the target, a best-case scenario. Obviously, if we have to go on an amendment of the conditions or the permits, that take a little bit longer.
We may agree to do some early works earlier, but we just want to make sure that we get that answer first from the Queensland government in terms of those amendments to the permits that we would like to introduce.
Could take some questions here in Johannesburg. I see we've got some Mponeng-specific ones that we could direct at Beyers.
We have another follow-up question on the conference call from Leroy Nguni. Please go ahead.
Thank you, Peter. I was just curious, the Mponeng Life Extension project, does that trigger any of the resources that have that deferred consideration payable back to AngloGold Ashanti attached to them? I know there were certain areas of the mine where if you extended into that area, you had to pay a royalty or a deferred consideration back to AngloGold Ashanti. Does that impact that at all?
Yes, it is.
It's a small amount, but per ounce, what's that amount again? In terms of the existing infrastructure, I think it's $20 an ounce. Above 250,000, but it's $5 an ounce, something like that for the below infrastructure. That will trigger it. It was taken into account also in a feasibility study. That will trigger the below infrastructure. Everything below infrastructure, obviously, the shaft pillar will not attract that, but everything below infrastructure will attract that deferred payment. At the moment, we are also paying because we are doing more than 250,000 oz per calendar year, we are paying a royalty of $20 an ounce to everything above 250,000. That's also as part of our results in the results there. It's in the book, too, as well.
You can see under the high-grade section, point one and two under the Mponeng, it just tells you what the deferred components of that sale agreement were.
All right. Got it. Thank you. I'll have a look.
Jared, and then perhaps we can just take some questions here in Johannesburg as it relates to Mponeng specifically. Let's perhaps touch on one that René Hochreiter raised. Beyers, in fact, can ask this question to you. It's just about the development of the ramp at 4,000 meters. It is concerning, according to René. Usually, you carry development at those depths behind overstowed areas and destressed areas. How will you handle the stresses without destress over-stowing?
Thank you, Marianne and René, for the question. I think perhaps just a bit more color on the improved mine design for the Mponeng Deepening project.
It will, in fact, be three separate sets of infrastructure for three target areas of the ore body. Starting at the first one, which is the carbon leader, early gold, that's, in fact, infrastructure, René, or a ramp that will be created from 120 levels. That's above levels where we're currently mining, well within the capability of understanding the rock mass and the stress regime and the seismic response in that area. On the deeper side of the mine, it's the two sets of infrastructure towards the east and the west on the VCR horizon. On the east, it's going to be a two-level decline sink, and on the west, it's going to be a three-level spiral ramp on the west. Now, it's important to realize it's only about 270 meters that the mine will be made deeper.
From the 4-kilometer base, it's not that we're doubling the depth of the mine, so we're quite comfortable that we do understand the support requirements and the rock mass behavior, René, at that depth. It's that little bit we're taking that ramp in the picture on the screen now. The green ramp is the ramp that is going to be developed at depth deeper.
Thank you, Beyers.
I may add, René, is that we do have the kind of support systems now that can in actual fact, when we do the declines in any case, we don't do it under distressed areas. We do have the support regime too, in actual fact, support that. We also very obviously, one of the biggest, biggest concerns was to do we have the capabilities and management of seismicity in these deep-level mines.
In Mponeng, seismic activity over 1,000 sq m per 7 sq m mine, seismic release rates actually came down over time because of the configurations we use, the pillar configurations we currently use, the leads and lags that we manage, the support systems that we put in, the quality of backfill that improved over years, and then obviously also the steel nets that we currently have in all our working places. We think we've got we really got the state of the art and the understanding and the know-how to do this, and that is what we make our specialists in this environment, specifically that. We have a very strong track record of seismic management since Harmony took over there and even prior to that, the work that AngloGold Ashanti did. We are very comfortable that we ticked that box and allayed safety concerns.
Peter, thank you.
Jared, again, I'm just going to ask Boipelo. We've been asked by Arnold van Graan just to chat a little bit about the stream coming to an end at Mine Waste Solutions and what that would do to the free cash flow. Then, Boipelo, while we're addressing questions to you, there was a question which has since disappeared. Just the IRR that was assumed for the Mponeng extension and specifically also the gold price that was used in finalizing that feasibility study, please.
Sure, Marianne. For Mponeng, that gold price was ZAR 1.1 million a kilogram, the IRR at 17%. Then just on the first question, just with regards to the stream, I think that adds about it's 25,000 oz that remain, and that will add about ZAR 700 million to revenue. Thank you. Thanks, Boipelo.
Perhaps just the last question for Asia and Johannesburg, and then we'll hand over to Miami again. It all feels quite multinational. Beyers, this question is a tough one, but I'm going to ask you. This is from Chris Nicholson at RMB. He wants to know, ZAR per ton costs were up 22%. Chris, but I'm sure you've seen that our oil and sustaining cost is coming down. ZAR per kilogram, have you noticed? It's actually moving towards the left of that graph, just saying. The ZAR per ton costs were up 22% year-over-year at the South African underground with the South African underground assets, 14% at SA overall. Could you comment on this high level of inflation, and what do you expect the ZAR per ton inflation to run at into 2024?
Thank you for the question, Chris.
Harmony has always targeted improvement in our grade to help us manage inflation. We're not immune as the other miners to inflation, and the key drivers of higher than normal inflation were, in fact, our electricity costs in South Africa. That number increased by 19%, which obviously added to the rand per ton inflation number. The other one that was slightly elevated, although we believe it's well understood and it's fairly manageable for us on our long-term agreements, is our wage numbers. South African wages escalated by 9% over the period. Then the third one, which we might mention in the booklet as well, was royalties, which was actually quite a significant increase. Those were the ones that stood out, but obviously, we're continuously managing our production, consistent, predictable production, as well as improvement in grades to help us manage inflation.
Thank you, Beyers.
Jared, we'll hand over to you and Peter in Miami so there'll be any further questions. Jared, any further questions?
No, but nothing on this side. I don't know if there's anything on the line on Chorus Calls still that's potentially coming through.
We have no further questions on the conference calls.
Maybe I could just wrap it up then, if that's okay, Jared. Just thank everybody for calling in today. It's an odd time for actually South Africa to do it in the afternoon, but it's early morning here. There's a wonderful sunrise here over the Atlantic Ocean that we witnessed out of our room. Fantastic to have you guys here. Looking forward to coming back to South Africa at the end of the week. Thanks again for dialing in. We appreciate that.