...Good evening, and good afternoon, ladies and gentlemen, and I'd like to welcome you all to today's webinar, during which we plan to update you on our Lumwana copper mine expansion project. You'll all remember that, in 2019, we set out to build a standout gold and copper business with a focus on Tier One assets, run by a standout team, driving value and growth in a sustainably profitable way. As I shared with you during the recent Q1 quarterly presentation, not only are we making progress in delivering on our operational plans, but we are also advancing four major growth projects.
The new potential Tier One Fourmile, 100% owned by Barrick in Nevada, our two transformative copper projects comprising the Lumwana expansion in Zambia, which we're gonna talk about today, and the giant Reko Diq copper gold project in Pakistan, and then, as well as the enlarged and upgraded Pueblo Viejo gold mine in the Dominican Republic. These mines will be delivering new gold and copper into the market at a highly opportune time, demonstrating the value of Barrick's long-term planning and investment strategy, as well as the enormous upside optionality embedded in our asset base. Today's webinar is all about updating you on our very exciting Lumwana copper mine expansion. But before we show you a short introductory video, please note this customary cautionary notice regarding forward-looking information, and as usual, you can find it in full on our website. And now we will start-
Barrick is the mining industry's great explorer because we believe it's far better to find our resources than to buy them. Our geologists ceaselessly scour the world's most prospective mineralized grounds for new world-class discoveries to expand and enhance our peerless portfolio of gold and copper mines, projects, and prospects. At the same time, we've been looking inward because there are two sides to the exploration coin, discovering and uncovering. So after the merger in 2019, we took a strategic decision to prioritize our complete understanding of the geological structures underlying our enlarged asset base. It's been a very rewarding exercise, which continues to reveal the wealth of opportunities embedded in our properties. They range from North America through the Dominican Republic to here in Zambia.
Such is their size and quality that we believe by the end of this decade, Barrick will be able to grow its production of gold equivalent ounces by 30%. Also, in 2019, we made another important decision. Foreseeing the metal's critical role in the world's rapid transition to clean energy, we started to expand our copper holdings. With a lot of luck, finding a viable copper deposit and turning it into a mine will take upward of 15 years. But we didn't have to discover a new copper mine, we just had to uncover the potential of Lumwana, then still a struggling operation. The $2 billion Super Pit project will transform it into one of the world's major copper mines, and when that goes on stream in 2028, Lumwana will feed into a market where demand for copper is growing and the price is rising.
How we figured out that we can increase Lumwana's output by 70% and double the remaining mine life will be explained in the course of the following presentations. As you will learn, Lumwana's transformation into one of the world's major copper mines is the product of Barrick's commitment to long-term organic growth and our exceptional ability to recognize and realize the value of every pound of copper and ounce of gold from assets already in our portfolio. Barrick's foundational philosophy of partnership with its host countries is already rewarding Zambia. Since 2019, it has contributed almost $3 billion to the country's economy, employed an all-Zambian workforce, and started the upliftment of the forests around the mine. Barrick believes partnering with Zambia creates sustainable value for both parties.
It's a view shared by Zambia's President, Hakainde Hichilema, who says, "Our laser focus is on establishing Zambia as a global mining destination. Barrick is a key strategic partner on this journey.
Since the merger with Randgold in 2019, Barrick has been focused on transforming Lumwana from a marginal mine into a cornerstone of our global copper portfolio and an industry-leading Tier One asset within our Africa and Middle East business. Lumwana is a conventional open-pit copper operation, currently made up of the Chimiwungo and Malundwe pits, which started in 2009 and has produced in excess of 1.7 million tons of copper so far. The mine is located in the Zambian Copperbelt, situated within one of the most prospective copper regions in the world, and poses a low-risk, investor-friendly jurisdiction with a long and successful mining history.
The Zambian government has recently announced their intent to increase annual copper production to three million tonnes by 2031 , and the Lumwana Super Pit expansion provides a cornerstone to this pathway as we work to create value for all our stakeholders, including the people of Zambia, our Zambian employees and business partners, and of course, the government itself. The Lumwana Super Pit expansion provides a low risk, technically proven, low capital intensity, organic brownfields expansion that effectively doubles the mine life, providing exposure to a growing copper demand at a time when other major copper producers are focused on arresting the decline in their production profiles through high premium M&A transactions. In 2029 , our vision and—I mean, correction—in 2019 , our vision and strategy for the new Barrick included a clear mandate to grow our copper business, which we recognized as strategically important.
This was long before copper was recognized as being a strategic metal for a cleaner energy future, and today marks an important milestone in that strategy to build a sustainable, profitable gold and copper mining company focused on world-class assets. As we process the initial long lead time orders for the Lumwana Super Pit expansion, the Lumwana expansion, as the team will share with you today, sits perfectly within Barrick's strategy by delivering a multi-generational mine life, with production averaging 240,000 tons of copper per annum over three decades, and a cost profile that can withstand periods of demand volatility across multiple copper commodity cycles. Our established license to operate and deep operating knowledge of the existing Lumwana operation render this expansion a low-risk undertaking.
The geology, mining conditions, and plant characteristics are well understood and have been demonstrated within our existing operating models and independently tested through the pre-feasibility and feasibility studies that underpin this debottlenecking of the existing infrastructure to unlock a world-class ore body within the Chimiwungo Super Pit. The long-term copper demand fundamentals are clear and acknowledged globally, driven by the growth of renewables in the global energy mix and an increased focus on sustainable building construction. As can be seen on this graph, more copper supply from new projects is crucial to satisfy future copper demand in this new world. The Lumwana Super Pit expansion schedule delivers a substantial growth of production into this growing gap between supply and demand at the optimal time.
The low technical risk, combined with a well-established and advanced permitting pathway, supportive host communities, and an abundance of skilled workforce in the country, provide a solid investment foundation to capitalize on the long-term copper fundamentals and an economic engine to develop national infrastructure and uplift communities' standards of living, as Simon and Seb will discuss in more detail later in this presentation. The expansion of the Lumwana mine will transition the mine into a relevant global copper operation, becoming a top 25 copper producer and a Tier One copper mine within the Barrick portfolio with completion of the feasibility study. I will now hand over to Seb Bock, the Chief Operating Officer for Africa and the Middle East region. Seb?
Thank you, Mark. Building on what Mark's highlighted, Barrick's post-merger focus on developing a clear understanding of the geological structures underlying our assets has unlocked enormous value and potential across the group. The expansion project at our 100% owned Lumwana is just another example of this, and we are all truly excited by the transformation the project will not only bring to Lumwana, but to Barrick as a whole. By leveraging our existing ore body knowledge and debottlenecking the existing operational infrastructure, we will capitalize on some strong copper fundamentals. This expansion will position Lumwana as a long-life, high-yielding asset, capable of withstanding the volatility of the inherent copper demand cycles.
At the flat long-term average copper price consensus of $4.13 per pound, we estimate that the project will deliver an incremental IRR of 20% and a total mine IRR of more than 50%, paying back initial capital within only two years of fully ramped-up production. With its multi-generational life of mine, the project is expected to deliver strong EBITDA margins at industry-leading capital efficiency levels. Post-expansion, C1 operating costs are estimated at approximately $1.85 per pound, which will ensure that the project delivers significant operating margins at long-term consensus copper prices throughout its life. For nearly a decade, Lumwana showed poor production, performance, and efficiencies, with rising costs causing record losses and ultimately impairments. The mine was left financially unsustainable following years of high-grade mining and a lack of reinvestment.
Since Barrick refocused its strategy in 2019, after the Barrick and Randgold merger, the once struggling Lumwana has been restructured and re-engineered into significant potential, and a contributor to Barrick's expanding copper portfolio. As an example, plant throughput increased 23% to 27 million tons per annum by the end of last year, and we increased mining by 53%. Additionally, we brought mining costs down by 35% following the reinvestment of our ultra fleet and the transition to owner mining. What makes this even more remarkable is that this has all been achieved by a 99% Zambian labor force, which carried a significant expatriate contingent before 2019. These efficiencies will continue to improve as the mine ramps up in preparation for the Super Pit expansion by 2028. This expansion is driven by two key elements.
Firstly, it's to double throughput by twinning the existing processing circuit, and secondly, to significantly increase our mining volumes. Plant throughput will rise from the 27 million tons currently to 52 million tons per annum, which will effectively double the average annual copper production from 120,000 tons to a life of mine average of 240,000 tons per annum, and then in the five years starting from 2030, we will benefit from higher grade ore, which will drive even higher production levels. To support the increased plant capacity, we plan to expand the current mining fleet, which will complement Lumwana's existing ultra-class fleet, which is successfully operating in the Chimiwungo and Malundwe pits currently.
This phased ramp up will enable a competitive cost profile over the life of mine and an annual free cash flow, which is projected to improve by as much as 60% based on the long-term copper price consensus. These production and cost improvements will contribute to an estimated incremental NPV of $1.7 billion. The Lumwana expansion stands out for its exceptionally low capital intensity per ton of life of mine production, compared to other copper development projects. This is a testament to the efficient use of capital and building on the well-established infrastructure at the mine, and leveraging on our in-depth understanding of the project and regional logistics. The feasibility study is well advanced. It's on schedule to be completed by year-end, and the capital estimate from the pre-feasibility study is mature and well understood.
We expect the final feasibility study to be in line with this slide, demonstrating our confidence in this estimate. As noted previously, the design of the expanded plant largely replicates the existing circuit, which Simon will expand on later in this presentation. Post-expansion, Lumwana has an attractive life of mine cost profile, positioning the operation within the first cost quartile of the industry, excluding byproduct credits, and it ensures sustained profitability throughout the commodity cycles. I will now hand over to Simon Bottoms, our Mineral Resource Management and Evaluation Executive, who will walk you through the project details.
Thank you, Seb. As already highlighted, the Lumwana Super Pit expansion feasibility study is well advanced, and we expect to provide more detail after our 2024 mineral reserve updates. The process plant engineering has matured to a point that has allowed us to select major equipment vendors and place orders for long lead equipment, including both mills and crushers. Accordingly, we're commencing detailed engineering works this quarter, together with the expansion of our on-site accommodation in preparation for construction. We're currently building partnerships with key suppliers and contractors ahead of preconstruction ground preparation works, which are scheduled to commence at the beginning of 2025 , subject to final board approval of the project in the fourth quarter of this year.
Commissioning of the new process plant is forecast to commence in the second half of 2027, alongside relevant power infrastructure upgrades, which combined, will support first copper production from the newly expanded process plant. Once the new process circuit is commissioned, the existing circuit will undergo a series of planned shutdowns, allowing us to install upgrades while ensuring uninterrupted copper delivery throughout the expansion. The newly combined process plant is scheduled to ramp up to a 52 million ton per annum run rate during 2028. Thereafter, producing some 240,000 tons of copper in 2029. We expect further upside in the copper production in the following five years, driven by better grades from the Super Pit, and more detail will be provided in due course as our mine plans are firmed up.
Lumwana's geology is well understood and has been substantially de-risked through a major drilling campaign, consisting of 160 km of drilling. Which provides a minimum of 100-meter drill spacing across the entirety of the Super Pit, as illustrated on the slide here. This is in line with our core DNA value of banking the ore body first, thereby substantially reducing operational risk, and is underpinned by our current mine-to-mill reconciliation, which has ranged between 97% to 103% on an annual basis, consistently for the last 4 consecutive years. Copper mineralization within the Chimiwungo Super Pit is hosted within schists in a series of north-south trending shoots and flanked by bands of barren granitic gneiss.
As you can see from the serial sections on this slide, the ore body dips gently to the south and is offset by a number of east-west trending faults, which actually upthrow the ore body, bringing it closer to the surface. As part of the pre-feasibility and feasibility studies, we have developed integrated geological, geotechnical, and metallurgical models, which provide the foundation for our business plan. The mineralization within Chimiwungo Super Pit occurs primarily as chalcopyrite and bornite sulfides, which we have now domained within our geometallurgical models. The feasibility drilling program has also covered the Kamasenda and Kababisa satellite deposits, which provide lower strip ratio satellite ore bodies, which will sustain the process plant feed whilst we are stripping the large pushbacks in the Super Pit later on in the mine life.
The expansion plan is currently projected to consist of some 8.3 million tons of contained copper at an average grade of 0.53%, which we expect to form part of our year-end mineral reserve updates, subject to the conclusion of our feasibility study. This large resource base positions Lumwana to be able to become a Tier One copper deposit with completion of the feasibility study, and the process plant expansion effectively unlocks the larger potential of the Super Pit, as well as doubling the mine life, as mentioned by Mark earlier. The flow sheet for the Lumwana expansion draws heavily upon our existing knowledge base, with years of operational experience. As part of this, we have been particularly focused on optimizing the design to minimize downtime during planned maintenance activities.
The process expansion will be situated immediately adjacent to the existing operational plant, with the SAG and ball mill as a mirror image of the existing plant, designed to achieve an overall throughput of at least 52 million tons per annum. All of the design parameters that we have used are not only linked back to test work, but also compared to the existing operational data, ensuring a robust and high-confidence design. The parallel process circuit will introduce a high level of automation and modern technology through proven advanced process control systems. Once this new circuit is commissioned, the existing plant will be taken offline to install these same upgrades into the existing process stream. The integration of these new systems will provide a substantial increase in the productivity per man-hour and reduce reagent consumptions, which we forecast will enable us to deliver an overall reduction in processing cost.
As mentioned earlier, our high-confidence baseline is further enhanced by an extensive geometallurgical test work program. This, in turn, has been validated by existing operational data to ensure that we only use the most accurate process design parameters. The graph on this slide depicts all operational process recovery data points for fresh sulfide feed since 2019. Then, as we overlay the latest test work data points, you can see how it aligns strongly with the existing Lumwana operational data, albeit slightly higher grade, which is reflective of the deeper high-grade shoots within Chimiwungo Super Pit. this gives us assurance that the ore body extensions within the Super Pit share the same metallurgical characteristics as the existing mining areas.
Then finally, as we overlay the recovery curve that we've applied to the feasibility study and to the existing process operations, it is abundantly clear how well supported this recovery model is by both historic process data and newly updated test work. Added to this, we've also completed extensive comminution, flotation, and pilot-scale concentrate test work on all new satellite deposits, ensuring that our process flow sheet can cater for varying blends of these ore sources throughout the mine life. As mentioned by Seb earlier, the second key component of the Super Pit expansion will be the ramp-up of our total mining volumes.
These are expected to increase incrementally year on year from 150 million tons this year to approximately 240 million tons in 2028, and then to an average rate of 290 tons per annum from 2030 onwards. Throughout the course of this ramp-up, we will increase the current ultra-class fleet to a total of ten ultra-class shovels and seventy ultra-class trucks by 2030. A key part of the delivery of this mining ramp-up will leverage the current management experience in training up and upskilling our current equipment operators. We have already demonstrated through our simulator training programs that our top ten Zambian national excavator operators have been able to consistently deliver the 3,200 tons per operating hour that we have assumed within our mine plans.
This, in turn, will enable us to deliver a reduction in our overall mining costs. We've also incorporated a new pit rim crusher and conveying system into our mine designs from 2028. This cuts our current ultra-class trucking haul cycles by at least 15%. Then, from 2034 onwards, we have planned to incorporate an in-pit crushing and conveying circuit within the Chimiwungo Super Pit, providing continuity to the trucking requirements as the pit continues to get deeper. We recognize the significant power challenges faced in Zambia today, primarily as a result of reduced hydropower capacity, leading to frequent load shedding. As a result, Zambia has been compelled to import electricity from neighboring countries to meet the current industrial demand.
Despite ZESCO's recent agreement to supply Lumwana with 140 MW of power at the point of the expansion commissioning, we recognize that the existing energy supply infrastructure presents a considerable challenge. In partnership with ZESCO, we have conducted an independent survey of the grid, which considers both needs of the current energy-intensive consumers and anticipated future expansions across the network. Our study has provided valuable insights into the potential improvements in the delivery of existing power without the need for additional generating capacity. It is currently estimated that for every megawatt generated, approximately one-third is lost as unusable reactive power. In the northwestern corridor, where Lumwana is located, this equates to nearly half a gigawatt of power that remains unutilized due to transmission losses and network instability. As such, addressing these inefficiencies is crucial to enhancing the effective utilization of power within the region.
In order to address this, in collaboration with our engineering partners, we are in the process of designing static synchronous compensators, otherwise known as STATCOMs, which will be installed at transmission substations to effectively convert the current unusable reactive power into usable real power, thereby providing the power capacity required for the Super Pit expansion. Additionally, we plan to work with our partners to upgrade the 330 Kv transmission lines between existing high-intensity consumers in the northwestern corridor, which will further increase transmission capacity and network stability. In the interim, we've accounted for a higher-than-normal power cost within our modeled unit rates until the point that the expansion is completed and the power upgrades are in place. Our permitting process for the expansion is well underway, with the Environmental and Social Impact Assessment already submitted to the Zambian authorities, and approval expected by the end of this year.
As an operating mine, we already have our mining licenses secured over the entire project area, which gives us exclusive rights to mine the subsurface. Surface rights and water usage permits for the existing open-pit operations in Chimiwungo and Malundwe are also already in place, which effectively covers the new Super Pit expansion. The remaining surface rights and water usage permits covering the satellite ore bodies and increased water storage requirements for the project are all on track to be issued as part of the ESIA submissions later this year. We have completed a detailed multi-criteria alternatives analysis, otherwise known as an MAA, on the TSF expansion location and design options. A site immediately abutting the western wall of the current TSF was chosen because it has the least impact on our environment and communities.
Full feasibility engineering of this design is on track for completion by the end of Q4, and as we stand today, the site has been completely geotechnically drilled. I will now hand back over to Seb for the next section of this presentation.
Thank you, Simon. Partnering with our host communities, governments, and local communities is a core component of our Barrick DNA. We've refreshed our Lumwana Memorandum of Understanding with our three host chiefdoms. It's expanding its scope to include vulnerable groups, women, youth, and people with disabilities. This agreement ensures that benefits from our mining operations continue to flow back into our local communities. We've established the Community Development Committee, working with local government on key projects in education, healthcare, agriculture, and infrastructure development. These initiatives have, for example, led to the expansion of the Manyama Secondary School and setting up of an abattoir in the Mumena Chiefdom. Through our Business Accelerator Program, we develop and we empower local businesses to operate sustainably beyond the mine's lifespan.
This year, we've set a target of supporting 150 SMEs, working closely with the Ministry of Small and Medium Enterprises. Our partnership with the Technical Education, Vocational, and Entrepreneurship Training Authority has been key in addressing youth unemployment by developing skills through apprenticeships. Additionally, our Nos Vies en Partage Foundation continues to support local charities and women-led organizations. Recently, we partnered with the Vice President's Disaster Management Unit to provide food security solutions following the drought that left over six million people in need of relief. Barrick, of course, has a long track record of delivering sustainable legacy throughout our business. We are relentless in our pursuit to ensure that our mines contribute to our host countries and delivering significant benefits to our stakeholders.
The Resettlement Action Plan for our community, situated within the expansion area, covering all satellite ore bodies, is on track with positive engagements with affected households, local and traditional leadership, and also provincial leadership. The planned resettlement of 279 households will commence this year upon all households signing resettlement agreements. A key element of the Super Pit expansion is its focus on creating a sustainable legacy through the development of local capacity within the region, which will benefit both our local communities and our businesses throughout the construction and operational phases. As part of this initiative, we are planning to develop a new town for our workforce, ensuring that the mine's economic and social benefits extend far beyond the life of the mine.
Although it's still in the initial planning stages, the vision is to build around 1,000 homes, providing employees with access to affordable housing. In addition to the housing, we are planning to build a critical infrastructure, including an airstrip and an industrial supplier park. This industrial park will enable our key suppliers to establish themselves in the area, which will then create an economic hub that will fuel growth and development in the wider region. Furthermore, the operational manpower for the expansion will be primarily sourced from local communities and the greater North-Western Province of Zambia, aligning with our commitment to provide long-lasting economic opportunities in the regions we operate in. At Barrick, our commitment to no net loss of key biodiversity features remains at the forefront of our expansion strategy.
The project has been carefully designed to align with its commitment and ensuring that biodiversity preservation is integrated into every phase of the development. As I've mentioned before, a cornerstone of this effort is our REDD+ project, through which we have already committed over 100,000 hectares of forest, with the goal of protecting up to 300,000 hectares. This initiative plays a critical role in mitigating deforestation and supporting global efforts to combat climate change. In addition to REDD+, Barrick has implemented measures for forest protection and management, focusing on curbing illegal timber and charcoal production, while maintaining the boundaries of the Lwakela Forest Reserve. To ensure the success of these conservation efforts, we recognize the need for strong support and partnerships with local chiefs and community leaders. With that, I will now hand you back to Mark.
Thank you, Seb. And to wrap up, as I explained during our recent quarterly engagements, I believe that the quality and the value of our copper business is poorly understood. And as you can see from this slide, the Lumwana expansion is set to add 50% to Barrick's attributable copper production, and Reko Diq will add another 100%. Together, they increase Barrick's exposure to copper price upside by 150%. And to put it in perspective, for every $0.50 per pound change in the copper price, incremental attributable free cash flow generated by Lumwana expansion is estimated to be around $500 million over the first 10-year period.
The Lumwana Super Pit and Reko Diq are two of the organic growth projects, and I recapped how providing a powerful support for Barrick's drive to grow our gold equivalent ounces 30% by the end of this decade. It's also worth reminding you that Reko Diq will be both a gold and a copper mine, designed to produce approximately 400,000 tons of copper and 500,000 ounces of gold per year in phase II of its development. Then there's the 20-year Pueblo Viejo expansion that will produce more than 800,000 ounces per annum at a low cost. Still coming in, of course, is the giant Fourmile project, located within the Nevada Gold Mines' main infrastructure, and which is also an extension of the Goldrush project, which is currently ramping up production.
All indications are that Fourmile will have significantly more mineable resources and at much higher grades than the Goldrush project. So, ladies and gentlemen, that wraps up the formal presentation part of this presentation, and I trust that the team has demonstrated the value we have and will create through our focus on discovery and development of our great pipeline of organic growth projects, which I'm convinced our exploration group will continue to add to. So now we invite you to ask questions, and I'll hand you over to Lois to manage that process.
Thank you, Mark. For those attendees who wish to ask questions, please refer to the procedure on the screen. Click the Raise Hand icon at the bottom of your WebEx screen, wait for the unmute yourself request, and once done, ask your question. If you'd prefer to type your question using the Q&A portal on your device, click the Q&A icon at the bottom of your screen and type your question to all panelists. Okay, I'll kick off. I have a question from Marcelo Kim: "What is the life of mine strip ratio, and how does it evolve over time? What do you assume for mining cost per ton, processing cost per ton, and G&A cost per ton? What do you pay for power? How much does transportation cost to coast? Where do you send concentrate to?
Wow, Marcelo, that's quite a mouthful. I'm sure, Simon, you'll be able to take each one of those questions. I hope you managed to capture that.
Sure. Yeah, so the life of mine strip ratio is currently estimated at around 4.7. As the mine plan evolves, it does change quite drastically because as we push, as we open up each pushback in the Super Pit, we do go into high strip phases, where the strip ratio hits as high as six, and then we drop back down as we go into lower strip, lower than average strip periods. Overall, as we put in the presentation, our overall costs, all-in costs, sit including capital at $274. So this we break down, obviously, in terms of mining, and we provide the proportionate breakdowns in the pie graphs in this presentation.
So our long-term view on freight and refining costs is currently, but is lower than the current market costs, as supported by some long-term commitment contracts that we have. I think, Seb, did you wanna make any further comments on in terms of the offtake within the country?
No, I think, just in... maybe just around the offtake in the country, we have various smelters that we deliver to. We have the option to export if needed. We've, of course, seen the TC/RC rates come down quite significantly in the next, or on current spot rates, and the outlook is actually a lot lower than we are assuming in these models. We're assuming a fifty and five rate, where current spot rates is much closer to zero.
Seb, do you wanna just comment on where we're going with the mining cost, the unit cost?
So I think in terms of the mining costs, there's a few key drivers that will drive the cost down from our current levels. Of course, the increased efficiencies will drive the fixed costs like labor, et cetera, down. The ultra fleet that we've just finished commissioning, we are already seeing those benefits and as we increase the composition of our fleet to more ultra fleet pieces of kit, you'll see that, you know, our top ten excavator operators are actually currently achieving better than our feasibility averages. And so, therefore, over the life of mine, we expect to bring that down.
We'll ramp the mining costs up or down over the next few years, and we expect to get to around closer to the $2 level. In the next 10 years, it's around $2.25.
Yeah, and we also, as we pointed out in the presentation, we're investing substantial capital in in-pit crushing and pit rim crushing to substantially reduce that current mining cost. A large component of that current mining cost is taken up with the haulage of the ore to the process plant ROM pad. So by effectively, you know, installing those crushers, we reduce that haulage requirement, and therefore, that makes a substantial impact on our mining cost.
And, Marcelo, the processing costs on a blended basis over and that, that's on a preliminary feasibility numbers, is $4.30 and about $1.20, and these are per ton for GNA. But, you know, the details will come out with the final feasibility studies, which we'll share with you in the quarter four results, I believe. Seb, is that correct?
Yeah, that's correct.
Okay, Marcelo, we have a question from Anita Soni. Anita, please unmute yourself and ask your question. Anita? We can't hear you, and you're muted again.
... Can you hear me now?
Yes, now we can.
Great, thanks. It was like seven layers to get through to you guys there. So, Marcel asked a few of the questions I would ask, but I just wanted to focus in on the capital update. So, when you're talking about $2 billion, I know, I see there's a chart there that, you know, if I do the sort of eyeballing it there, it looks like it's about $2 billion starting in 2025 onward. I think originally you were looking for about $1.6 billion-$1.9 billion. I'm pulling up the old slide from last year at this time that had a 2024-2028 timeframe.
Was there anything that was pulled forward from the, you know, future capital, or is that just simply refinement of your estimates and inflationary pressures?
Anita, as you see, compared to last year, you'll see we've also changed the process plant throughput. So you'll see we're operating at 52 million tonnes per annum. The mining ramp up in terms of the fleet plays a big component in that. And also, obviously, all the costs have been updated with the latest real prices as they stand today. So it's really a combination of all those factors.
Okay. And then second question relates to the strip and the throughput. With a 52 million tonne per annum throughput and a four point seven strip ratio, is the 250 million or 240 million tonne per annum total mining rate enough? I don't think. Like, I'm back calculating, that would translate to, like, a three point seven strip ratio, not a four point seven.
No. So we continue to ramp up to 280 million tonnes from 2030 onwards.
So it's two eighty, is the ultimate number? Okay, great.
There's fluctuations in the longer term, but the longer term run rate runs at averages at 280.
And then the last question was, did I hear you say that if in the, on the exploration side, that you're looking to add grades at around 0.53 gram per tonne, sorry, not gram per tonne, per 0.53%, at year-end? Is that what you're targeting?
So 0.53% is the average grade of the current Super Pit expansion plan. So that would be reflective of what we would expect to come into reserve, subject to completion of the feasibility study.
All right, and that includes any kind of dilution or anything like that?
Correct. That, that's a diluted minable grade.
Thanks. That's it for my questions.
Okay, I'll read the question from Mike Parkin: Does the growth capital estimate include the cost of the power grid upgrades, STATCOMs, etc.? If not, what is the estimated cost of those, and which years do you expect to incur them?
Simon?
So the growth capital at the moment does not include the power system upgrades because we're working with ZESCO and our and various partners on financing arrangements for that power, for those power upgrades. Because we were not, as highlighted in the speech, we won't be the only beneficiaries on the network. There'll be a number of other beneficiaries, so it actually sits as its own entire business proposition. But we do have estimates to those costs, and we'll be incorporating more detail on that as we firm up with the feasibility study, so...
Okay, thanks. We have a question from Grant Sporre. Grant, please unmute yourself and ask your question. I think Grant's also trying to get through the layers.
Hi there?
Yeah, we can hear you now.
Hi, thanks for taking the questions. It's a bit of a follow-up on the power grid. So you know, how confident are you that sort of upgrading the grid itself and sort of improving the efficiency will give all the users the power that they need? And you know, are you confident that you don't need additional generating capacity, be it renewables or extra, you know, hydro capacity? I guess that's the first question. And the second one is just on water availability. I don't know the current water balance of the mine, or I'm not that au fait with it.
But, what about the sort of water management and, or will you have enough water for the additional processing capacity?
Right. Thanks. What I'd suggest is that Rousseau give you a background on the power, and the infrastructure, the work that we're doing, and then maybe go back to you, Simon, for the water.
Thanks, for that, Mark. Grant, can you hear me all right?
Yes. Yeah, I can hear you.
So, Grant, the generating capacity to supply the expansion to power Lumwana on the grid does exist, and there's also future generation projects which are staged that will add to this generating capacity, and that they come in the form of wind, solar, hydropower, natural gas, and even an upgrade at the Maamba Phase II coal-fired power station. And we have a power supply agreement that was signed by ZESCO, which grants us the access to the required power. However, as Mark alluded, from a due diligence point of view, we embarked on a grid stability and a grid transmission study, and we did this in collaboration with ZESCO, kicked it off in February this year and got the grid stability study outcome in June, and we recently shared it with ZESCO.
And in this, we made the discovery that there is inefficiencies on the grid. There's quite a marked component of reactive power, which is uncompensated for, and therefore transmitting the available power, as well as those that are staged in the battery of projects that are lined up, would be the limiting factor for our project, as well as the project and the further expansions and needs of the high-intensity customers in this northwest corridor. So the outcome of this is the static synchronous compensators, as well as an improvement in the redundancy and the upgrading of the transmission 330 Kv transmission line all the way from Lumwana right out through to Luano.
So that gives us the confidence that our modeling has given us is well aligned with ZESCO's Transmission Development Plan, as well as their Integrated Resource Plan. So we've taken hands with the energy, the power supply entity, and we have not gone off on a tangent trying to reinvent something. We merely made certain that the assumptions and the modeling is corresponding with their indications. Now, from a funding point of view, there are various models we're evaluating: outright financing, long-term recouping mechanisms. And ZESCO, as well as other industry partners, investors, and funders, are very keen to participate in this. So from that point of view, we believe that we have substantiated that we are on the right track.
Great. Thank you.
And in terms of the water, so the overall as a project, we're water positive, so we actually due to the pit dewatering, et cetera, we actually have to manage the excess water through construction of new water storage facilities, which I mentioned is part of our surface permitting process. So we have to manage our water balance to ensure that we have enough, that we don't actually have excess water, so and manage the tailings pool of water so that we don't. It's actually positive rather than having to manage a water deficit, so.
Great. Thank you very much. I'll just add, just going back to the question around capital. You know, this power project that we've done has been extremely constructive and again, we believe that on a unit basis, it should produce a much more efficient and lower cost power on a per unit basis. So that's the project that Simon has been referring to. And I'd also point out that as part of this partnership with ZESCO, we've been able to really manage these interruptions in the current supply from ZESCO through the infrastructure with cogeneration agreements with ZESCO that we put in place before the power cuts came.
Which allows us to run our generators and utilize the ZESCO infrastructure to make sure that we can continue to supply and contribute alongside the ZESCO power to the current facility. Back to you, Lois. Lois?
Sorry. From David Haughton: What is your expectation of life of mine sustaining capital, and how much of that is expected to be capitalized strip?
Simon?
So life of mine sustaining capital for the process facilities is estimated to be around the $550 million mark. The mining-sustaining capital, we've we incorporate into as part of the ultra fleet in, into our mining costs. That's not including the assignments in terms of the capitalized stripping, so.
Thanks. Anita has a follow-up on mining costs. "Mark, you were specific about the process and the G&A at $4.30 per ton and $1.22 per ton. Could you provide the same specifics for the mining? Would help our modeling." Thanks, Anita.
Anita, at this stage, and remember, this is pre-feas, and we'll, the detail will come out in the final feasibility study, but it's around $2.30 on a blended basis for the life of mine, and we use these all right now as current input costs. That's the way we value these projects because we, you know, we testing them at much lower copper prices than even spot.
Okay, then I've got a question from Brian MacArthur. Can you please talk about the tax structure on the expansion and any credits there might be?
You're probably the best to answer that.
Yeah, there's no specific special tax structure for this. We have the normal recoupment of the capital, so you can recoup your capital effectively over five years, and therefore, that will mean that your corporate tax will be a lot lower in this first basically to the end of this decade, really, as you recoup that investment capital. Outside of that, there's no real other, you know, specific tax rules that would apply.
I'm correct in saying, Seb, that if you look at the these current consensus, we've used a $4.13 consensus. We've tested, as we always do, the model against $3 a pound. And at $4.13, we're estimating a peak funding of about $700 million that we would have to fund. And it's about a two-year payback from the time that the operation is producing at the design run rate. Am I correct, Seb?
Yeah, that's correct.
Yeah, I can't see any more questions at the moment, but just a reminder, if you would like to ask a question verbally, please raise your hand or alternatively, please type your question in the Q&A box. I see a question from Tanya Jakusconek. Tanya, please unmute yourself and ask your question.
Hello?
I think we can hear you now. Just-
Okay, good. Perfect. Again, a way to get here. Thank you. A lot of the questions were asked, and thank you very much for the insights. I did wanna ask about the power cost. So I know you mentioned that you've assumed a higher power cost. So the first thing I'd like to know is what currently are you paying for power? Number two, what have you assumed as a power cost in your study? And number three, where do you think you're getting to on a power cost, and for what percentage of your cost is power? Thank you.
Simon, you or Rousseau?
Sure, so-
I can give a quick . . .
Sorry, go ahead.
Yeah, you go.
Thank you for the question. The current power cost from the grid is $0.095 per kilowatt hour, and then through the challenges that's been experienced in the supply, ZESCO has entered into wheeling agreements for 40% of the power that we consume at $0.145 per kilowatt hour. For our feasibility, we've assumed a blended power cost, which is higher than the $0.095, but less than the $0.145.
Okay, and then what percentage of your costs are power right now? Is it 10% of your cost structure? 15%?
Have that offhand. Simon, do you have that?
Yeah, we spent for every cent on the power cost, it adds about $5 million to our annualized cost base. So that gives you a proportionate scale.
Okay. Thank you very much. And just wanted to confirm that there's no new royalty structure and/or other that you're aware of on this Lumwana expansion. I know that Brian asked about the taxes. I just wanted to ask about royalties and other.
No, there's not.
Yep.
Yep.
Okay, great. Thank you so much for taking my question.
Pleasure, Tanya.
Thanks, Tanya. I can't see any more questions at the moment, so just to repeat, either raise your hand to ask verbally or type your question in the Q&A box.
I think no more questions, Lois?
Nothing as yet.
All right. Well, it's on the hour and very efficient. Thank you, everyone, for making the time. Appreciate it. As usual, you're always welcome to reach out to us and with any follow-up questions you might have, and we'll work on it. The key here is to try and give you a teach-in on the Lumwana and exactly where it's going. It's based on our current understanding, though, we are busy with the final feasibility study that is due out at the end of the year. It will be part of our presentation and the quarter four presentation in February. And with it, we'll, we will be delivering our. Well, just after that, our reserve and resource estimates, revised estimates.
It will be accompanied with the work coming from Reko Diq, also expecting the full feasibility results by then. Then, of course, we will have the output, the first feel of what our framework work has produced at Fourmile. Lots to share with you. Of course, we look forward to updating you on our quarterlies. This year we hold our Investor Day, which is on the 22nd of November, so look forward to some further updates there. Thank you again for your time, and we look forward to seeing those of you who will be at the Denver Gold Forum next week. Good night or good morning.