Welcome to the Tharisa plc investor presentation. Throughout the recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted anytime by the Q&A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company can view all the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to CEO Phoevos Pouroulis. Good morning, sir.
Good morning and welcome, everyone, to this very exciting presentation that we would like to share with you this morning. It's the phased transition to underground mining. As you all know, we've been an open-cast miner for the last 15 years of our existence. As we deplete our open pit resources, we transition from the open pit and the west mine to start with to underground mining. What's very exciting about this is that we've been studying and contemplating this for a number of years. We had always planned to go underground, but it gives us the opportunity to redefine our resources, to innovate again with purpose, and to empower futures. This really is an introduction from my side, but I'm joined by my colleagues. To my left, Michael Jones, our CFO, whom you know well.
To my right, Vulela Makuni, our Managing Director of Tharisa Minerals, the Tharisa mine, and Roy Murley, our Executive of Operations. When we look at the next slide, Ilja , unlocking multigenerational value through integrated mining. We have a vision which sees a fully integrated complex where we unlock value beyond the world-class open pit that has proven its resilience through the co-production platinum group metals and chrome concentrate through very, very volatile commodity markets, geopolitical storms, and many headwinds. Through this, over the last 11 years, we've remained profitable. We've been able to distribute dividends to shareholders, and it really has proven the business case of the Tharisa model. By going underground, it allows us to continue the sustainable delivery of this co-product business model, but in a more efficient, more environmentally friendly, and cost-effective manner.
If we look at our ethos of empowering futures responsibly, we really do believe in creating opportunities for people, for the communities within which we work, and for generations to come. Unlocking this multigenerational value that we've been given at the resource, the Tharisa Mine. Safety is a key and core value of ours, and we're very proud with an industry-leading safety standard of 0.02 lost time injury frequency rates per 200,000 man-hours worked. We employ a vast number of people, including contractors across the group now, and that number is just over 4,800 people. Importantly, we have invested consistently and continuously through the cycle in our business. To date, we have invested $832 million, but importantly, we've also, through our capital discipline, returned some $115 million to shareholders in the form of dividends.
When we look at the guiding principles of what drives us as a business, we have safety at the core of everything that we do, and it's entrenched in every decision that we make. We strive for superior returns for our shareholders in that multi-disciplined capital discipline approach or multi-pillar approach. We're committed to the upliftment of the communities within which we work, and we also conduct ourselves with integrity and honesty. We have given a commitment to reduce our carbon footprint by 30% by 2030, and we're well on track to achieving that. Ultimately, we do take responsibility for the effect that our operations have on the environment. I think you'll see today that with the unique approach to the underground mining, we challenge convention, and we use technology and innovation to differentiate ourselves. These are the guiding principles of our business.
For those of you that are new to the Tharisa story, we're situated in the largest geological complex for platinum group metals in the world, the Bushveld Complex, hosting more than 70% of the world's platinum group metals. You'll see that our second development project, the Karo Platinum Project, is situated in the second largest geological formation in the world called the Great Dike of Zimbabwe, and we're in the middle chamber at the Karo Platinum Project. If we take a zoom view of the southwestern limb of the Bushveld Complex, you can see that we're well situated in PGM and chrome country, and we have the benefit of co-extraction through a very unique and innovative approach of mining the multi-layered metal reef horizon for both PGMs and chrome concentrates. When we look at our aerial view of our operations, you'll see that we currently operate three open pit mines.
The east pit, the major supplier of our run of mine to our ROM and processing facilities, approximately 70%- 75% of our production comes out of the east pit. The west pit and the far west supply the balance of the ore. You'll see from the team in the video that we'll share with you, we're proposing to start, and we have indeed started with early work preparation and make safe for the portal's development in the west pit and ultimately transitioning to a dual portal access from the east pit as well. When we talk about a smarter way forward for long-term mining success, we have the benefit of starting a new mine and accessing new technologies, artificial intelligence, smart equipment, and installing infrastructure that future-proofs our ability to extract the raw materials, the run of mine that we need in a low-cost, safe, and efficient manner.
This really transitions beautifully from our open pit mine, which has proven to be a low-cost supplier of run of mine and chrome and PGM concentrates to the world, and allows us to sustain that momentum on, we believe, a more efficient and more cost-effective basis on a mechanized board and pillar on-reef development, which the team will run through in more detail. I think as an introduction, before we move on to Roy and Vulela, we'd like to share an underground video summary of what it is that we're embarking on during this transition to underground.
Tharisa is a globally significant, vertically integrated, low-cost producer and developer of critical strategic metals with multiple assets located across southern Africa, with the flagship location being the Tharisa Minerals Mine, situated 45 km east of Rustenburg. The Tharisa Minerals Mine is extracting ore from three open pits, namely the East Pit, West Pit, and Far West Pit, and has started the phased transition to underground board and pillar mining operations, with MakeSafe development having already started in the West Pit, where the underground transition will commence. The mine is endowed by the middle and upper group reef horizons, with a total of six layers, the main reef packages being MG1- MG4. These reef packages vary west to east.
For the underground transition, Tharisa Minerals will be focusing on mining of the MG2, with an average reef thickness of 5.5 meters , and MG4 with an average reef thickness of 4.5 meters . The width of the middling section between the MG2 and MG4 reef packages is approximately 10 meters at the portal and increases to an average thickness of 20 meters as the underground development goes deeper to the north. With innovation at heart, the pre-existing independent integrated processing plants produce both platinum group metals and chrome concentrates, and operate in parallel, which allows for processing flexibility and production scalability. The underground expansion project was established to increase the life of mine development to access the multigenerational mineral resource base, enhancing operational efficiencies, environmental stewardship, and long-term value creation.
The initial development is engineered on a footprint for 10 years of underground reserves, focused on the mechanized board and pillar mining of the MG2 and MG4 reef horizon layers, with the board and pillar layout to mine the MG2 and MG4 reef packages superimposing each other. Tharisa Minerals' underground expansion is enabled by the shallow nature of its ore body, which enables more efficient and effective access with reduced development timelines as the focus is on reef development. This focus allows for ore extraction and infrastructure development simultaneously, minimizing off-reef development requirements. By ramping up underground operations from the west, Apollo, and east Orion portal complexes from 2031, reliance on the open pit operations can be reduced, as Apollo and Orion have been designed to mine 255 kt each per month at a steady state.
With a total design capacity of 510 kt per month, both portal complexes will achieve combined steady state by 2033. The Apollo mine will be developed first with three access points and an off-reef connection between the MG2 and MG4 reef horizon layers. The mine design criteria production is based on trackless mobile machinery capabilities for 10 degree traveling dip angle and a five degree side slope dip traveling angle, with stopping and development taking this into account and aligning with open pit production to maintain maximum plant capacity at 5.6 million tons per annum. The Orion mine is set for development to start in 2031 from the east pit operations, which will also access the MG2 and MG4 reef packages. For the first three years, the ore will be hauled by TMMs, which includes LHDs and dump trucks, from underground to a ROM pad on surface and to the processing facility.
After these three years, a conveyor belt system is planned to replace the mobile machinery to convey the ore to the surface. Surface infrastructure has been added for this additional mining method, with essential services, workforce support, and operational hubs being completed before the implementation of board and pillar mining. As part of our strategy, Tharisa aims to build up to a production of 200 kilo ounce of PGM per annum and 2 million tons per annum of chrome concentrate with the mining of the Apollo and Orion portal complexes.
Back over to the theme of the presentation now.
Thanks, Alessandro. I'd like to hand over to Roy now, who will run through some of the technical aspects of the underground mine.
Thank you, Phoevos. Good day all. A truly exciting journey ahead of us. Our proactive move to transition to the underground mining will secure long-term sustainability as a co-producer of PGMs and chrome ore for decades. Early work shown in the top right-hand photo focuses on stabilizing the high wall and enabling minimal off-reef mining during the deep line development. The 10-year DFS graph illustrates a deadline in the open-cast output, while the underground mines Apollo and Orion are set to reach full production by 2033. This supports and exceeds our future production requirements. Underground mining improves ore quality and metal recovery while cutting waste mining and diesel use. Mechanized mining methods enable cleaner, cost-effective operations with smaller fleets and streamlined infrastructure. The shallow nature of our ore body reduces surface impact, energy use, and enhances safety, supporting long-term sustainability as well as our ESG goals.
The geotechnical design focuses on roof support with strong pillars. As we know, our open pit are approaching the end of their economic life, driving the transition to a substantial untapped underground resource with multigenerational potential. This next phase of the mine development expands reserves beyond the current pit boundaries, enabling stable, low-risk production by tapping into an extensive underground resource phase. The definitive feasibility study, or DFS, includes an upgraded geological model and additional drilling to verify continuity of the mining below the open pit boundaries. The database comprises 639 diamond drill holes, totaling a staggering 80.6 km, with 96 holes within the 10-year DFS footprint, identifying 60.7 million tons of measured and indicated resource at 1.71 grams a ton, 60 PGMs, and 19% chrome oxide.
After applying modification mining and mine schedule factors, the estimated mineral reserve for the 10-year underground footprint is estimated at 30.4 million tons at 1.45 grams a ton, 60 PGMs, and 16.4% chrome oxide, classified as proved and probable. This evaluation and development process will continue throughout the life of mine. Next slide, please. On this slide, the blue solid line on the top illustration represents the previous indicated reserve, which has been expanded for the 10-year period in the blue area through additional drilling. We have a strong confidence in the ore body's consistency, with drilling being crucial. The Google Earth map below shows the UG1 and MG1 outcrops separated by the open-cast pits. The high density of boreholes is visible, including the input drill holes and newly drilled ones in areas within the underground footprint area.
The Apollo mine complex, with a phased portal development approach, enables early, safe, cost-effective access to reef horizons while minimizing off-reef development through the ground. Apollo portal one provides quick access to the MG2 reef horizon, followed by Apollo portal two, accessing the MG4 reef horizon. It's important to note that the MG2 mining will be leading the MG4. Apollo portal three is planned for 2029 to accommodate infrastructure installation, and this allows the current open-cast mining to be completed within that specific area. The infrastructure referred to includes conveyor belt systems, a permanent ROM pad, and the ore transfer system to the plows. Key partnerships are very important for us. Our business partners play a crucial role in advancing the underground phase by providing specialized mining services that enhance safety and efficiency in our operations.
Trusted partners ensure projects are completed safely, on time, and to the highest degree of quality and standards. Additionally, our partners supply a comprehensive range of explosives and accessories for blasting, alongside high-quality engineered mining and construction equipment across South Africa. Thank you, and I will ask Vulela to continue with the presentation. Thanks a lot .
Thank you, Roy, and good morning all. The underground transition will be aligned with regulatory requirements. As mentioned earlier on, the early works commenced in June 2025. This part of the work included the high wall safe making, the above-ground civils and infrastructure, the access to the portal, which includes water handling facility, and that work is currently underway. We have de-risked the underground transition because the environmental, social, and technical requirements are aligned, positioning Tharisa to execute the underground phase without any regulatory delays. We have also created a long-term value by regulatory alignments that underpin sustainable production, ESG credibility, which allows us to operate within the rules. The Section 102, the water use license, and the Chief Inspector of Explosives approvals are currently progressing, while the specialist studies, the public participation is already completed, and this ensures full compliance. Thank you.
Our portals are located and sequenced strategically to ensure that the Apollo at the west and Orion in the east are around the key infrastructure, which is the processing plant, the water supply, electricity, the turning storage facility, as well as the waste rock dumps. The rollout starts at west with the highlight of the key important dates, as you can see on the slide, which is Apollo that is starting, the ramp-up of Apollo, the steady state, which is then followed by Orion, the ramp-up of Apollo, as well as the combined shaft complexes that are going into steady state later on in 2031. This is not just a mine plan. It's a blueprint for sustainable extraction, balancing economic efficiency, the technical ability, the social responsibility, which underpins Tharisa's ability to deliver long-term value while reducing risk exposure.
In terms of the choice between the different reef types, the MG2 in green and the MG4 in blue, there were a couple of considerations that were put into place, but the one to highlight is the middling, which allows us to mine geotechnically safe. The mineralogy and the grade that drives the pearl split, as well as the tan pit area, which is giving us the reef width, as well as where the volumes are coming from. The next consideration was the kind of mining that we opted for, which is the mechanized mining methodology. This, the consideration was efficiency, as well as safety.
As mentioned by Roy in the earlier slides, we have chosen partners that have got a very good track record in the area of mechanized by the kind of machines that you use, which allows us to remove the people from the risky area because of the use of the mechanized mining equipment and mining method. This is going to be done by applying the skills of the current workforce that is working in the open pit. We have already started with the work of reskilling and retraining these people so that they are ready for the transition into the underground. This is supplemented with the help of our service provider, which has got a training facility with a very good track record that is going to be upskilling the community.
This proactive labor transition allows us to reduce social risk, protect community trust, as well as ensuring that we're within our license to operate. We have planned this underground so that we deploy the smart mining, connected mine, and people by introducing the backbone that allows us to use technology. The benefits of this are the ventilation safety, which allows us expansion certainty because it is purpose-built effluent and heat control systems that protect workers while enabling phased underground growth, as well as optimized cost, hence we're making use of the Venton Demands Program. In terms of how we deploy electricity, we have allowed for power redundancy in order to protect our production by making use of reliable electrical backbone, which a standby capacity secures uninterrupted operations and shield returns from downtime risk.
This by making use of the ring feed method so that when one area of the supply fails, the backup kicks in immediately. As mentioned earlier on, the kind of fleet that we deploy is from service providers that have got a proven track record on mechanized TMM fleet, which secures safe operations, reliable, and predictable cost, as well as operational consistency across all our operations. When we plan for the water, we have considered three areas. The one is the source, the recirculating capacity, and how we discharge the water to ensure that we protect the ecosystem. We've got a reliable water supply and risk control because we've got an integrated water management system that secures sustainable water balance across all catchments, and the infrastructure is designed to withstand extreme weather storm events, safeguarding both operations and the environment.
The hydrology is strategically built into mine planning and the facility layout, optimizing water flow, storage, as well as the use. This alignment reduces operational risk, supports continuous mining, and ensures regulatory compliance. Most importantly, on this slide, we hold environmental stewardship and sustainability close into our hearts because the site hydrology zones are engineered to minimize discharge to the Step From River, which is a protected ecosystem downstream. We are also using advanced systems to deliver efficient water use, reduced environmental footprints, which ensure compliance. Thanks, Ilja. We are championing sustainability across our operations in line with our visions, as mentioned by Phoevos earlier on. The socioeconomic value creation, which ensures stability and trust. By this, we ensure we do significant contributions via the taxes and community investment, which underpins our license to operate.
Environmental stewardship ensures operational resilience in terms of water security, the climate action that secures long-term operational sustainability. From an ESG alignment point of view, we are ensuring strong ESG performance to ensure investor confidence. These are just some of the examples that we employ locally because 43% of our employees are from the host community. We also ensure that we are advancing gender diversity. 26% of our employees are female. We are supporting education and skills development. We focus on investing in training, in leadership, academic sponsorships, producing some of the brightest professionals in engineering, safety, and environmental management. For example, the lady that you see on the screen is one of the students that is a top achiever who is a child to one of our employees that we have sponsored.
We are also empowering local business partnerships to ensure local enterprises that provide jobs, training, and supply development opportunities. These initiatives ensure that value creation extends beyond the mine and critical small business ecosystems. Lastly, on my slides, the introduction of the underground doesn't change any system in terms of our processing capability because all the material that you're going to be from underground is going to be treated in our existing plants, which is the current Genesis, the Voyager, the Challenger, as well as the Vulcan complex because the reef type in the mix doesn't change any significantly. Thank you.
Thank you, Vulela and Roy.
Our objective over the next five years is to deliver on this expansion and the growth opportunities, which include technology solutions which we've shared with the market, whether it be downstream beneficiation of chrome products in the form of grinding media or special alloys, and our downstream PGM beneficiation through our chloroplast process to refine our PGMs. Importantly, the growth in Zimbabwe at the Karo Platinum Project. I think it's important to note at this juncture that while we're embarking on two large growth opportunities, the one is a transition and is natural in the form of progressing from open pit to underground. Michael will unpack what that means from a CapEx profile, and it's not dissimilar from what we've been doing over the last decade.
With dedicated teams focused on the underground mining, with veterans coming out of the underground board and pillar mechanized mining, to my right, Roy and Vulela, we have a dedicated focus team that are geared to execute and deliver on the Tharisa Minerals Mine expansion. Similarly, in Zimbabwe, while we are under construction and building our processing plant and infrastructure, bringing water and power to site, we have a dedicated focus team. The risk of delivery, different profiles, different risks, and I think we have more than adequate resources to execute both simultaneously. Moving on to the pearl split and the key of the middle group reef horizons, which has really been unique to the Tharisa Minerals Mine, is that we have an enhanced PGM basket price.
Current spot prices, I think, as at the 1st of October, for the open pit pearl split at around $2,100 per ounce, with a mix of just short of 50% platinum, palladium at 17.5%, and I think almost an industry-leading rhodium content of 10%, minimal gold, ruthenium at 17.5%. A lot of interest in ruthenium with data storage centers proliferating and the demand and requirement for storage. Then iridium, crucial to the hydrogen economy electrolysers, going forward at 4.7%. When we go underground and we transition to MG2 and MG4 only, the value difference is minimal at some $2,087 on a like-for-like basis on the 1st of October spot prices. What you will see is an increase in our platinum content from the 49%- 55.3%, rarely to the detriment of palladium, which drops to 13.9%.
Rhodium still at a very pleasing 9.4%, ruthenium at 16.2%, and a slight increase to iridium at 4.9%. I think what's key here is that the chrome content and the consistency of the feed, as Roy and Vulela mentioned, will ensure an increasing production profile. As we look at that bar chart going over the next 10 years, forecasting our annual production, you'll note that the red bar being the PGM production increases to beyond 200,000 ounces of PGMs as we integrate to a fully underground mine by 2033. Similarly, chrome concentrate exceeds the 2 million tons from the 2033 point onwards. A really pleasing profile. I've always stated that we believe that this mine, on a sustainable basis, should deliver 200,000 ounces of PGM and in excess of 2 million tons of chrome concentrate.
With the consistency and the quality of underground mining, we will achieve that in this next 10-year horizon and continue beyond that. I'd like to hand over to Michael Jones to touch on some of the numbers.
Thank you, Phoevos, and good morning to our audience. One of the core philosophies of Tharisa when it relates to capital is our capital discipline and our allocation of that capital, where we have continued to invest in the sustainability for operations throughout the commodity price cycles, the growth of our business, as well as ensuring that we give a return to our shareholders. We have long planned to transition to an underground mine from the open cost, and the implementation of this plan is very much in line with that capital allocation and the discipline associated with it. In that, we'll firstly be investing in sustainability for operations. As mentioned, an additional 60+ years of mining, as well as ensuring long-term returns to our shareholders and sustainability of those returns.
If we just touch on some of the numbers for a moment, and these are just the key numbers, the CapEx for the Apollo complex is sitting at $363 million. When I'm talking CapEx in this context, it is the spend from the time the development commences until such time as that complex achieves steady state production. In the case of the Apollo complex, steady state, 255,000 tons per month, and the plan is to achieve that in Q3 FY 2029. There is then a sequential development into the Orion complex. The capital for the Orion complex, $184 million, and commencing in Q4 FY 2030. Looking at those numbers though, just to note that those are today's value numbers, so real value, real numbers. You'll note that there's quite a difference between the spend on the Orion complex and the Apollo complex.
Some of that is due to the, I'm going to say, the smart approach to accessing the Orion reef horizon. The other one is that, as Vulela mentioned, significant spend on infrastructure that is necessary for the underground mine and, as I say, one source cost of that development. Peak funding coming at a very reasonable $173 million, and that's really on the back of the on-reef developments, where after the first 30 meters, we start accessing reef on the development slopes, and that will then be processed through the plows. Just to touch on that number though, that peak funding was at the time of the definitive feasibility study.
At that point, the PGM basket price was about $1,633 per ounce, and chrome price is very much aligned where we are today between $280 and $285, and that still achieved an internal rate of return for the project that exceeded our hurdle rate of 25%. If you then move forward to the very favorable recovery in PGM prices to just over $2,100 an ounce as of today, chrome prices are very much aligned. That would, of course, reduce the peak funding requirement and also enhance the overall project IRRS. Let's touch on the mining cost, increase of capital development. That comes in at $40.8 per ton, very much in line with our current open-cost mining. If we look forward, we would expect to see an increase in your underground, sorry, open-cost mining costs as you go deeper, additional waste to be removed, and additional haulage distances.
I think that the underground mining will ensure that we remain in the lowest cost quartile of producers going forward. The question, of course, comes in as to how we're going to fund this capital project. We have cash on hand at City Dune. That's the last interim reporting that we disclose the cash. That is a group cash number of $165 million. Not all of that is available for the underground project. We are committed to various beneficiation projects at Arka Metals, Karo Platinum Project, the Zimbabwe development project, as well as long-term sustainable battery storage, Redox One projects. What we did is we put in place a bespoke funding package for the underground development. It is a corporate facility, so it's not your traditional project finance, totaling $130 million.
With an accordion, we could access a further $20 million should it be required, structure the term loan, $80 million, a revolving credit facility, $50 million. In addition, while we are going with a mining contractor model, when we looked at the economics of the contract, it made sense for us to effectively procure the equipment necessary for the underground fleet, and we are busy in the process of securing $45 million of asset-backed financing. The next slide is a much more busy slide, and I'd probably just like to focus on the dark red bars there. This is the monthly capital spend as we go through that transition capital. There you can see in the first place the spend on the Apollo project, that brief interlude in between then sequential development of the Orion complex with a much lower capital intensity.
The parallel line reflects the underground spend, sorry, the open-pit spend on CapEx over the last 10 years. Looking at about $75 million per annum over that period, just putting in context, the underground CapEx is very much in line with the historical CapEx spend. We want, of course, as we transition from the open pit, to reduce that capital spend as we reach the end of that life of mine, and we will transition that capital to be spent on the underground developments. We all know that mining is a capital-intensive industry. What we really looked at as well, just to give an indication of order of magnitude, is we looked at the last 10 years and said, what have we spent on capital, not only on the front, but on the underground, on the open-pit machinery and front? That comes in at about circa $625 million.
If we then had to take into context the $363 million for the Apollo project, the $184 million for the Orion project, very achievable and manageable based on our historical performance. That is a very high-level overview of the financial information. I'd like to hand back to Phoevos.
Thank you, Michael. Just to summarize the key milestones and the deliverables for both the Apollo and Orion shaft complexes and development timelines, we anticipate first ore from Apollo shaft. This is development ore in Q2 of our financial year 2026, so next year. Steady state is achieved in Q3 financial year 2029, achieving a monthly targeted volume of 255,000 tons per month. The first ore from the Orion shaft complex will be in Q4 financial year 2031, and thereafter achieving steady state in Q3 financial year 2033. You'll note that the monthly volume is slightly lower, 210,000 tons per month, and that's matched to our processing capacity of 5.6 million tons.
Having said that, the Orion shaft is designed to deliver 255,000 tons per month, so the opportunity for us to increase our processing capacity to 6.2 million tons is available to us, and it's a decision that we'll take closer to the time as we reach steady state for the Orion shaft. Ultimately, this will deliver more chrome tons and PGM ounces, and we believe will be a normal transition again into further processing capacity as we will have the ability to mine and produce those extra tons from the Orion shaft. In closing, really, we are powered by purpose. We believe in what we do. We believe in building projects, mines for generations to come.
It's a natural transition for us to go underground, and it allows us, Ilja, if you don't mind, thank you, the ability to maintain our lowest cost quartile position that we've managed to achieve over the last 10 years. I think what's important, and maybe a differentiator, is that we've not been scared to invest in our business. In spite of the cyclicality of the commodity cycle, we've continued to have that discipline to invest in our business to develop, and this really talks to our continued commitment to unlock the natural resources that we have the responsibility to develop and create a multigenerational opportunity for all stakeholders. When we look at what this really means, why are we doing this? It's really because there's real value in the Tharisa mine.
When we run an NPV calculation at spot rates, post-tax at a 10% discount rate, and those spot prices are $2,100 per PGM ounce and $285 per ton, and this is over the life of mine, 60 years, we end up with a post-tax NPV of $985 million. A significant value that we're unlocking, and the Tharisa Minerals Mine really is the cornerstone of the multi-billion dollar platform that we are building. When we add the Karo Platinum Project production and the additional 200,000 ounces to our book of PGM production, you can see how this scales very quickly within the next five years to be a significant producer of these critical metals and minerals that the world has realized are necessary to transition to a future world, and we believe we are future-proofing our business with this smart approach to mining and resource extraction.
With that, I'd like to thank you all for your time and move over to questions and answers. Ilja, Alessandro, over to you.
That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions. You can do so just by using the Q&A tab that's situated on the top right-hand corner of your screen. Just while the company takes a few moments to review the questions that have been submitted today, I'd like to remind you the recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation. Ilja, what I'll do is I'll hand over to you now to run through the Q&A, and I'll pick up from you at the end.
Thank you very much. I'm going to go through the questions as we come along. The first question here is on the output, Phoevos, which I think you addressed, but just to confirm, is it the combination of the two underground reefs or does this also include the open pit reefs, 2 million and 200,000 ounces?
On the chart, it sees us achieving that steady state number of in excess of 200,000 ounces and 2 million tons at the point in time where we're fully underground in 2033. I would like to believe that there's potential and opportunity to bring that forward, but at this stage, it's forecast to be achieved in financial year 2033.
Okay. I know we spoke about operational efficiencies and why we're going underground and the benefits there, but maybe going to a little bit more detail now that we have the opportunity. What operational efficiencies and cost savings do you expect underground versus open pit, and how will these offset higher capital efficiency?
Vulela. The open pit, especially at depth, it is mostly driven by the volume of tonnage that you need to move because we're currently mining close to 180 in terms of depth. At this depth, you need to move quite a substantial amount of waste, which is where most of your cost is lied. As opposed to when you go underground, the amount of tonnage that you're moving, there's less waste because you're only taking away the reef package in the 4.5 and 5.5 meter mining height. That's where most of the expense or the cost is lying in terms of you need bigger machines for the open pit versus the amount of volumes that you're moving underground. Most people will make a comment that open pit is waste mining because you move mostly to get into your reef.
Thank you. Staying with the operations that I know we spoke about in terms of the infrastructure that's required and the difference between the money that's spent on Apollo versus Orion, could we maybe add a little bit more color and flavor as to what infrastructure really is required that's different for the underground versus the open pit that we currently have and also the area that we've laid out for that infrastructure?
All right. Firstly, the infrastructure that we refer to for underground is, like we said in the beginning, first three years, we'll be hauling out our reef tons through trucks. After three years, we'll install a conveyor belt. As we superimpose the two reef horizons, the MG4 and MG2, we'll be installing the conveyor belt systems on the MG4, which is on strike.
The main dip conveyor will only be carried on the MG2 reef horizon, which is the lower horizon, and all transport will happen through all pass systems. We'll also have what we refer to as roller feeder breakers at the stoping ends, which will reduce the ultimate blast fraction to a more palatable size in terms of all transfer. In terms of the infrastructure, one of the changes there would be obviously the conveyor belt system that will be installed. Secondly, the infrastructure that we also install basically will be the transfer from the ROM pad to the plant, and that will also be done by a conveyor system. In the beginning, in the first three years, that will be done by trucking, and afterwards, it will then be replaced by a conveyor system. I think in essence, those are the major changes from open cast to the underground section.
Sorry, if I can cross this out. The question was related to the surface infrastructure. There'll be the necessary engineering workshops, change houses, storerooms, and stuff that also need to be constructed, and of course, some additional electrical work that needs to be brought to the mine for the paragon for a future date. Those are just some of the additional infrastructure approaches we've undertaken, and as mentioned, those would be for the entire mine and not just per shaft. That's a one-source thing.
I would like to also add, with Michael saying, part of the difference in terms of equipment, when we move to the Orion shaft, 18 of those trucks will be used and not additionally purchased. As we install a conveyor system, those trucks will then move over to Orion. We'll also do some uplift development to ensure that cost is also reduced in terms of the Orion shaft.
Thank you. I know this is something we've also discussed with the analysts, and you did address it in your opening slide, Phoevos, on the financial side. Could you maybe highlight further what key risks you're seeing at Tharisa moving underground and how you balance that with the company in totality?
In fact, going underground is a risk mitigate. When we look at the ore profile, the decline in production coming out of the open pit, this is our mitigation and our measure to sustain our production and, in fact, improve the quality and sustainability of our mine. We actually see it as part of our risk mitigation strategy. Execution risk is a factor that the team have considered, and by assembling a team of veteran underground mechanized mining experts, we believe we've mitigated that risk as well. The studies have been comprehensive. It was an extensive program that was undertaken through various stages of studies, and I think we've ended up with a very unique, smart approach that allows early access to reef horizon. It's very different to a vertical shaft where it takes many years to access the reef horizon.
This is on-reef development, so we get access to early cash flows and manage that capital intensity over a longer period of time, but on a measured basis. I think it's been precision engineered, as the team have said. We've managed the process very systematically and sequentially, with early works programs being undertaken, de-risking the project through all the geohydrological studies, geotechnical studies, as well as the geological confidence through the enhanced drilling campaign. From an execution point of view, we're comfortable that we're well, the risks are well managed. I'll hand over to the team if there are any other comments on the project risks.
The one that is coming to mind for me was the geohydrological work and how we deal with the water. Water is an issue, but the partner that we use to do the study is doing work in a larger area than where Tharisa is located. We've got a bigger area in terms of understanding the behavior of the water, and our proactive approach allowed us to deal with it before as part of the mining process.
You know, I might add just to Vulela's also say, and Q, in terms of the smarter design, we looked at when we develop into the reef horizon through the boundary pillar, it is at about 2 degrees up, which allows us to mitigate the risk of water ingress into the underground complexes. That adds just another layer of protection for water management. We'll then, after the ground pillar, go directly into the reef, as what Phoevos has said. That's also one of the mitigations as an example of what was placed into the risk on the register.
Thank you very much. Michael, a question for you. I know you addressed the underground costs, including capital. Maybe you can elaborate a little bit more on that and compare that to our current costs and also maybe understand the difference between the mining costs and the processing costs.
Just an understanding of where we sit on cost curves. Sure. Thank you for that question. I mean, if we look at the costs at the moment, your costs for underground and open pits are very comparable from a mining perspective. As I mentioned, mining costs increases of capital development $40.8 per ton. If we just look back at the September 2024 numbers, it was sitting there at about $40.3, so very much in line with your overall mining costs. There won't be any change in your processing costs. Those will be the same in that you are processing the material and the same volume of material through the same times. I think where we are going to have a short-term impact is that on an order sustaining cost, you will be seeing an impact because you've got a higher capital expenditure.
It is a capital-intensive project, albeit that the capital is spent over a period of 10 years. That will have a negative impact in the short term on an order sustaining cost basis. If we were to look at ourselves though on a longer-term basis, I do believe that we will remain in the lowest cost quartile. We are mining on a cost-competitive basis, relatively shallow mining. Infrastructure to build the plant is there, so I do believe that we remain in the lowest cost quartile going forward. Thank you. The processing costs, I think, are consistent. They remain the same. There's no additional processing costs, approximately 255 grams per ton, based on our half-year results.
In terms of the current open pit mining cost, in line with where we envisage the $40.8, I think key here is that that cost for the underground mining is stabilized over the life of the mine because that includes your development cost and your reef cost. I think a more sustainable cost and less inflationary or increase due to depth, haulage distances, and waste deposition.
Thank you. Michael, I know again you addressed this in the presentation with regards to the return that you were targeting at 1633, but we do have a question here with regards to what return profile are you targeting from the underground and how do you expect funding approach to impact balance sheet strength and shareholder returns? I suppose that ties in with the second question with regards to how do you look at share buybacks versus dividends?
Generally, a question on your dividend on your balance sheet and capital allocation.
Sure. I think if we look back historically, we have been very disciplined with our capital allocation, and we are in a net cash position as of today. Going forward, that is likely to change with the capital expenditure. If you have a look at the debt that we're managing on our balance sheet, it is a very, I'm going to say, conservative level of debt. We're not overdoing the balance sheet in any extent with this particular project. This is effectively, we recently had $130 million of financing on balance sheet. We've accelerated the repayment of that and have the necessary facilities in place.
Balance sheet strength, I believe, is still going to be a very stable balance sheet, a well-managed balance sheet, and we will continue to manage and beat the CapEx against the plan on that side. I also think that we also need to take into account that there are strong fundamentals for both the chrome market and the PGM market that have been historically at lows for some time. We're now starting to see the fundamentals improving those prices, which also impact favorably on our balance sheet in terms of cash generation. On the question of share buybacks versus the dividend, I think some of those are based on where we see the undervaluation of the company as a whole. We then approach the board with a buyback mandate. We've undertaken two such buybacks.
There's one that's currently still in progress, but it's really aligned with where we see the value coming through in this trading at a discount. We do believe that it's trading at a very large discount to the underlying value of the company. We do have a stated dividend policy of risk, which would be 15% of consolidated net profit after tax. We will continue to review that, and we need to review that when we have a look at where the normal economics are of commodity prices, capital expenditure, and so forth. That will be an ongoing review as we go forward.
I have a question here. What does reef mean? I think let's use the opportunity, Roy and Vulela, to discuss the reefs that we are currently mining, the co-product concept, and why we've chosen the MG2 and MG4. I think maybe sort of highlight that.
Hopefully, that answers the question here from this gentleman.
Yeah, the reef is we're currently mining the MG1, 2, 3, 4. It varies in thickness, just under 74 meters, the total package of the stratigraphy. In between these mineral hosting rocks, that's what reef is referring to. We've got some layers of waste. With the current open pit, we're mining the total package, but when you are loading it, you are loading it differently because we've made our plants in such a way that they can deal with the different mineralization in terms of the reef. When we then stack it, we then mix it. We call it blending so that the plants that are predominantly for chrome will get a different mix versus the ones that are predominantly for the PGM because you are a core extracting entity. That is one. However, when we moved underground, we did a couple of comparisons.
You'll mine one and one only, one and two. Eventually, the choice that you came up with because it had the highest financial benefit, execution in terms of safety was the mix between the MG2 as well as the MG4. There's a further discussion that as mining evolves, there might be other studies or methods that reveal that you can go back and re-extract the layers in between. That's what reef is referring to, is the rock hosting the mineral that you're mining.
Thank you, Vulela. Phoevos, I think a sort of strategic discussion we addressed earlier that we have a mine on the Bushveld, then we also have a project up in Zimbabwe. The question here relates to, can you talk to us how you think of the parallel between two large projects you're undertaking and how you will tackle those, particularly if there are any changes in market dynamics?
Yeah. I think we're in a fortunate position where timing is optimal, market sentiment around PGMs, the fundamentals of supply and particular demand growth around the criticality and the necessity for security of raw materials on a geopolitical basis supports our investment drive. As you know, these decisions take a long time. We don't make an investment decision quarter to quarter. It takes, on average, 16 years to develop a mine from first discovery. As you will know, and if those who are new to the company, we started exploration in Zimbabwe in 2018, and we're developing now seven years later, which is a relatively short timeline. From funding completion, we believe that the timeline will be 15 months to first ore and more. Near production.
What's key around Karo is it's been de-risked because, as Tharisa, we've invested almost $170 million worth of equity into the project, which has ensured that we've gone through the deep risk curve of establishing the site. Infrastructure is underway in terms of water, power, reticulation, and the civils earthworks are complete with the majority of the equipment being purchased and being assembled as we speak. It's not a case of priority because we're actually executing the expansion at the Tharisa Minerals Mine as we speak, and it has been approved by the board and the capital is available.
I think it's key to differentiate the one from the other that this is a transition and a natural transition for us at the Tharisa Minerals Mine, and it's business as usual, even though the mining methodology is changing and allows us many benefits that the team have spoken about, in particular, cost control, quality control, safety, and sustainability of feed material for our processing plants. The exciting opportunity at Karo is that it's one of the only projects of its kind, open pit, large-scale tier one asset that has scalability beyond the 10-year open pit. We prioritize both in the sense that we think timing is key and critical, and sentiment around resource security and delivery of raw materials is very favorable and very positive. A year ago this time, it was a very different world that we lived in.
PGM basket prices were some 40% lower than they are now, and the drive to secure supply of raw materials was very different. I think we're in a different world, and timing in life is essential. I believe we may be close to optimal timing on both fronts.
Yeah, we see them as great opportunities to unlock value and double our production of PGMs within this five-year horizon.
Thank you. Give us a minute. I'll speak to close the session and then close the presentation. Thanks.
Thank you Ilja everyone for your time and attendance today. It's really exciting for us to embark on this journey, as Roy calls it, as we transition to underground at the Tharisa Minerals Mine. We have all the confidence in the world in the ability for our team to deliver on the project, on time, on schedule, and within budget, and really cement ourselves in that lowest cost quartile position, which is really our focus, and it delivers those returns to shareholders and proves, and has proven, its resilience through the cyclicality. We can't control commodity prices, but certainly we can control our costs, our efficiencies, and the effectiveness within which we mine and operate.
Importantly, the positive impact that sustained continuous employment opportunities, upliftment of communities, the ecosystem that's created around these mines that grow and develop over decades is really rewarding to all of us as we see the positive impact that our investments through the support of our shareholders and stakeholders, regulators, government, afford, these environments is really rewarding. With that, I'd like to thank you all and wish you a good day further.
That's great. Thank you very much for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. On behalf of the management team of Tharisa plc, we would like to thank you for attending today's presentation and good morning to you.