Good morning, ladies and gentlemen. My name is Sylvie, and I will be your conference operator today. At this time, I would like to welcome everyone to Lucara Diamond 2023 year-end results conference call and webcast. Note that all phone lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, and if at any time during this call you require immediate assistance, please press star zero. During Q&A, you will need to press star one to queue up for questions and star two to remove yourself from the queue. Mr. Lamb, you may begin your conference.
Thank you very much, Sylvie, and welcome everybody to the Lucara Diamond Corp. Q4 2023 results. This is actually our year-end call. On the call with me, I have Glenn Kondo, the company's CFO, and John Armstrong, our VP, Technical Services. We'll just jump straight into it. First slide is obviously the cautionary statement. Please feel free to read through that at your leisure. And specifically looking at the year-end highlights, obviously there was an interesting year for the company. Total revenue was $177.4 million. This was in line with our revised guidance on the sale of 380,000-odd carats through the three sales mechanisms which we have.
Total cash flow at $63.4 million, and operating costs of 28.75 a ton processed. That's actually a really good number. Slightly higher than what we had last year, but in a Botswana inflationary environment, we benefited quite a bit on that one from exchange rate depreciation of the pula against the US dollar. I think the big highlights of the year is obviously the recovery of some very special stones. The 1,080, now called the Avis Star, which was our fourth stone, over a thousand carats recovered, since we started production. That came out in August of 2023. And we can touch on... I'm sure somebody will ask a question about that.
It's currently being analyzed, and we'll most likely look to put a plan out for that stone sometime in 2024. Now, total investment in the underground project was $101.3 million. Most of that focusing on the shaft sinking and then towards the grouting programs, and then towards the back end of the year, getting into the lateral development at the 670 level, and we have some pictures on that. I think from a very important aspect for us is the environment in which we have our employees work. Another very safe year for us with zero LTIs and zero reportable environmental incidents. Overall, we were in line with our revised guidance, and I'm sure we can touch on later the revised guidance.
But more important to look forward to what we're planning on achieving in 2024. One thing that the resource has continued to do is ongoing delivery of specials. 600 and few specials recovered during 2023, including 22 stones larger than 100 and five of those being larger than 300 carats, which is in line with what we've seen previously. And again, an indication of the reason why we're going underground and what we can expect. The one almost close to the end of 2023, tried to get it done in 2023, was the execution of the amended project financing package. I'm gonna hand off to Glenn to look at that in a couple of slides.
What was announced earlier this week is the renewal, not the renewal, the reentering into a, an agreement with HB Antwerp, specifically with regards to the qualifying diamonds that are larger than 10.8 carats. Moving on, I'm not gonna spend too much time on this one. Essentially, the adjustments to the lender package were really around, movements between the term loan and the working capital facility, but the total debt package remained at $220 million, as it was, originally compiled in 2021. We have seen, a lot, a lot more focus on, on how we will be managing this moving forward.
At the end of the year, we had drawn $125 million out of the project loan facility, $15 million from the working capital facility, and we had actually drawn $15 million from the standby guarantee provided by the lenders as well. Now, one of the important components that we're gonna focus on this year is filling up the cost overrun reserve accounts or the COF. That currently sits at $36.9 million as of the end of 2023. We want to get that done. That gives us protection for the project, but also then anything which we would get from large exceptional stones will then flow into cash flow versus flowing into the COF.
One of the key areas, and I don't think we touch on it in too much detail in here, is how we're planning to fill the revenue gap. And that specifically comes up in 2026, 2027, as we start to process more of the low-grade stock material, but we can touch on that a bit later. Moving on then specifically to the underground project, as I mentioned, $101.3 million invested in 2023. That is on the sinking of the production shafts and the ventilation shafts, and both of those were at the 670 level, which is 348 m below surface or below collar. Where the lateral development was done, and that lateral development is now being finished.
John, correct me, how many total meters of development there?
It's about 230 m total development on the list.
Thank you. So that's now been completed. And when we get into the pictures, any water which you see is actually drilling water. It is extremely dry down there. And I think that is testament to the quality of the work which was done further up in the shaft as we mined through the Thabala sandstones and the aquifer there. So really seeing the dividends coming from the work, which was done in the earlier part of 2023. Other activities on site were the commissioning of the temporary bulk air coolers. Actually, it's fantastic. You go to site, it's 40 degrees outside, you go down the shaft, and it's on average, anywhere around the 20 degrees Celsius-23 degrees Celsius.
So we're seeing the effects from those temporary bulk air coolers, and work is progressing on site on the main bulk air cooler that will be running during normal operations. Additional to that, a lot of the major engineering packages are now almost complete, and we're really working through 2024 on the RFQ and getting the lateral development contractor on board for when we get to the bottom of the shaft. Which is gonna start to really be a focus towards the end of 2024. Thanks, John. Looking into 2024, we're planning on spending up to $100 million again, on the shaft sinking, lateral development. We have started sinking again, actually at a, I'm gonna say, a fairly rapid rate in the production shaft.
Where we stand at the moment, the production shaft is about 413 m below collar. So very, very good progress being made on the production shaft. Most of the lateral development was conducted from the vent shaft, so the vent shaft is now going back into sinking, and within the next 10 days, both shafts, approximately 10 days, both shafts will be sinking, while we just do a required rope change. But no, no major issues there. Things are actually moving in a very, very positive direction with regards to the shaft sinking. In terms of the planned grouting events, that was taking the learnings from the back end of 2022 into 2023. We are setting ourselves up for a very positive sinking through the Mea.
This is the aquifer that sits just above the granite basement. And if anybody has any questions, John can--he'll be very happy to answer those in the Q&A period. We are also finalizing the procurement of the underground equipment. This is specifically for the lateral development, and the commissioning of the permanent bulk air cooler system will also happen during this year. So just jumping into one or two images. So you can actually see, so the round section, I don't know if we can point, but, is the vent shaft, all that lateral development has now been completed. But we wanted to show a couple of pictures just facing in different directions, as to the quality of the work which is actually being done.
I want to draw your attention to view three, the view north, where we've got. You can actually, if you zoom in there, you'll be able to see the wire mesh, the support and how dry it is. So very happy to see that. This is gonna be our first drilling or the drilling horizon, which will be closest to the surface, and ground conditions appear to be very good in those areas. Moving on, just from the production shaft, you can see some of the civil works happening there, the shotcrete of those areas. That is currently what has been completed in the vent shaft before they start sinking again. But the quality of the work being very, very good, as we move on.
So moving on, I'm gonna hand over to John, just to take us through diamond recoveries through 2023, and what we can expect for the underground. Thanks, John.
Okay, thanks, William. Good morning, everyone. The purpose of this slide is just to reinforce that, out of the +10.8 carat proportion of our production, we were, you know, achieved between 60%-70% of our revenue, and that comes from, you know, between 5%-7.8% of specials historically. Since 2012, we've had 34 diamonds in excess of 300 carats, and as William reported earlier, we recovered our 4th +1,000 carat gemstone in August of this year. We've sold approximately 11 diamonds, or more-- actually, I think it's now 12 diamonds for an excess of $10 million.
It represents an excess of $240 million of revenue, which is not modeled into the resource, and it's not modeled into the diamond price assumptions going forward for the underground. The image on the lower left shows the cumulative carats by year. You can see that in 2023, we had recovered approximately 20,000 carats of specials from 602 individual stones, 22 of which were over 100 carats and 5 over 300 carats.
What I would draw people's attention to is that, for the first time in a couple of years, we had a more, a mixed, production going through the plant, with approximately 70% of the feed coming from the south Lobe, and 29%-30% coming from a combined center and north, hence the lower volume of specials that's in line with our expectations around the size distribution models for each of those, Lobes. I think that something that we'll point out on this slide and the next slide is that, in the first years of underground production, predominant ore type to go through the plant will be the EMPKS, which has the coarsest size distribution, of, between it and the, MPKS.
And we anticipate that in those years, we'll see about a 50% increase in the volume of +10.8 carats recovered, as shown on the image on the right. Based on our historical production, we can see that about 30% of the +10.8 production comes from diamonds in excess of 100 carats in weight. That's based on historical production. We can see the image on the lower left shows the historical split between 2015 and 2020. We can see what the model predicts for the remainder of the life of mine, so that's the underground and the open pit. And we can see the underground model trending there.
So we can see that, you know, going forward, about 30% by volume of +10.8 carats will be in excess of 100 carats in size, and that's a significant factor in driving the economics of the underground, our expectation around the continued recovery of large high-quality gemstones. And I think the other point I was gonna make is that for those that like to keep track of these things, the five diamonds in excess of 300 carats last year, one weighed in at 862, one at 342, the 1,080, a 692, and a 474 carat stone. So some pretty significant recoveries as we go forward.
This slide just reiterates some of the points that I've made, but it also shows an image of the 1,080 carats on the left, and the 692-carat stone on the right. My comments around the 1,080 would be that what you see on the left side of that particular diamond is an area which has a series of inclusions. This particular diamond measures about 82 mm, and its long axis. We did have a 111-carat diamond come off that left side of the diamond. It was broken in the bin before recovery in the XRT machine. And when we put those two pieces together, the length of that diamond is actually 87 mm in length.
So it's actually one of the longest diamonds that we've recovered, at Karowe. So I think the takeaway from that is, don't focus on the left side of the image. You focus on the right side of the image of the 1,080, because it is a very spectacular, high-quality Type IIa, white diamond.
I'm just gonna jump in there, John. The 111-carat piece has already been polished, and the quality of the diamonds coming from that piece, and it had lots of inclusions, so smaller stones, but all D-color stones, which does give us a very good reference, very similar to what we saw from the 374-carat piece that was polished off of the Lesedi. Moving on then, through the year, we used the 3 sales platforms that we've been using for the past few years. A normal rough tenders, this is for diamonds, which don't qualify for Clara, smaller than 10.8 carats. And there's only about 360 over the 390,000 carats is sold through tender. So still a very important component, for us.
We had about 10% of our revenue generated from sales on Clara. That's in around the $15 million-$20 million mark. Clara is important for us, not just from a provenance perspective, but also gives us a very good window into the market, specifically on the polished diamond side. As I think always, the most important thing for Lucara is the recovery and sale of our plus 10.8-carat stones. As we announced earlier in the week, we have reentered into an agreement with HB.
Having seen the quality of the diamonds which HB actually produces, and having a much more detailed understanding of the actual business, we've relooked at a lot of the metrics around which the contract is managed, the information used to drive the sales through the platform, and we believe that moving forward, the mechanism by which we can manage the information flow and what actually happens to our diamonds, can be better controlled within the company. Just because this is one of our wholly owned subsidiaries, we do have more information on Clara. To date, we sold about $104 million worth of value through Clara, just shy of 58,000 carats. We are still looking to onboard additional third-party diamonds onto the platform.
But we will look to see how best we manage the Clara platform and move this forward. Just in terms of our closing sales, a lot of information on the slide. It's easy if I just let you read it on your own. I did mention the 1,080, that stone was named the Avis Star, and you can see another image of that on the right-hand side there. But the slide here just gives a breakdown of where our revenues came from in 2022 and 2023. And obviously, when I look specifically at Clara, for example, the volume of the carats sold, the revenue associated with that, that's obviously very, very contingent on the production mix, which we see coming through the overall process.
I'm gonna hand over now to our CFO, Glenn Kondo, who will take us through the overall operating highlights for 2023 and the fourth quarter.
Okay, so. In terms of production, Q4 was a very good quarter for us. If you look at ore mined at 608,000, that was well within expectations for the quarter. Ore processed at 704,000 for the quarter was a very good result. In terms of tons processed, we had an average grade of 14 carats at CPHT.
... which results in roughly 98,000 carats recovered during the quarter. And that shows the continued strong carats recovered through the year. In terms of carats sold, we sold roughly 112,000 carats. That's largely due to the higher quantity of tender goods sold during the quarter. There was a reduction in the plus 10.8s that we had during Q4, compared to the prior year, and you'll see that translating into the overall drop in revenue for the quarter. In terms of operating costs per ton, we're slightly up at 32 per ton versus 26 last year, and that's largely a reflection of the increased mining that we did during the quarter.
Plus, we've had high inflation in Botswana this year, running at roughly 11%, and partially offsetting that was the stronger US dollar to the pula. In terms of revenue, we did $37 million during the quarter, and that's roughly $6 million down from the prior year. The lower revenue was driven by the reduction of the sale of 10.8 carats during the quarter. Roughly, we were lower by roughly 1,200 carats for the quarter, and that's really due to the product mix that we had during mining in Q4, and also reflects the HB agreements where we had, due to the termination, we had less goods transferred to or on sale to HB.
In terms of the adjusted EBITDA during the quarter, it was down by $11 million during the quarter. The cost, this is a reflection of the cost increases that were due to inventory movements following an increase in diamonds sold in Q4 compared to the prior year. We also had higher production volumes, also contributed to the increased operating costs during the quarter. If you look at the other main item in terms of the cost increase were the legal fees. We had, due to the termination of the HB agreements, plus the rebase negotiations, that contributed another additional $1 million to overall costs. In terms of net income, Net income last year was $7.1 million for the quarter, and this dropped to $36.7 million loss during the year.
What you'll see is a couple of large items here. We have recorded a clear impairment, and what we did was look, we looked at the overall results for the past few years, and it is loss-making. So we looked at overall potential book value for the asset in Clara, for Clara. We came down to a book value of roughly $6 million, which resulted in $11 million write-offs during the quarter. The other big drop is for deferred tax. We had a one-time hit in terms of looking at the deferred tax rate. So we looked at the effective tax rate for the life of mine, and it went from 32% to 35%, and that reflects the forecast cash flows when we did the rebase model.
So a higher tax in the future tax rate resulted in us taking a $22 million charge to the P&L at the year-end. Just turning to the year-end, just in terms of the year-end, in terms of the overall financials, the one to look at is really the ore processed. If you look at it, we had a very good year in terms of ore processed. It's a record production year for Karowe. Roughly 2.8 million tons processed during the year. Again, John went through the production profile. It was split between South Lobe 73%, 22% from the Central Lobe, and 5% from the North Lobe, and that compares to 100% from the prior year.
In terms of carats recovered, we recovered 395,000, compared to 335,000, so it's a 60,000 increase compared to the prior year. And that reflects the, it's, it's largely in the smaller goods in terms of the less than the 10.8. That's, that's what's caused the overall increase in, in, carats recovered this year. And again, you'll see that reflected in the overall revenue that we're reporting. In terms of carats sold, we achieved 379,000 compared to 327,000, and the increase in, in diamonds sold again is due to diamonds sold on tender. Diamonds sold to HB were pretty much in line with the prior year.
In terms of revenue, we do see a revenue drop of $37 million, and the, the decrease in revenue reflects the change in the product mix. With 10+ 10.8, there was a decrease in the amount sold there. During 2023, 26% of the carats were recovered from, the Central Lobe, the North Lobe was 71%, and the South Lobe was seventy... Sorry, South Lobe, Lobe was 71%, 3% from the North, and that compares to 100% from, South Lobe in the prior year. If you look at adjusted EBITDA, adjusted EBITDA is roughly $32 million lower than the prior year, and that reflects the decrease in revenue of $35 million, and pretty much all the other costs were in line with the, with the prior year.
In terms of net income, there was a drop of $61 million compared to the prior year. That does reflect the EBITDA decrease of $32 million, and we did have the impairment for Clara coming in at $11 million. And we also had a loss on the swap. We currently have an interest rate swap in place for the duration of the principal of the project. And what we found this year is that the forward-looking curve is decreasing interest rates. And what that does is, when you do a mark-to-market, it results in a change from a profit last year to a drop this year. And that results in a $12 million decrease in overall net income.
Thanks, Lynn. One thing I also wanted to just point out when we look at the financials, and this talks specifically to the quality of the asset. We, when we announced the rebase in the back end of Q2 2023, we stopped drawing from the term facility, and we look back at the $101+ million that were spent on the underground. A significant amount of that was actually spent from operating cash flow. For us, that does demonstrate, again, the strength of the revenues, even though those revenue numbers were down. The operation can continue to support that.
I think when we look at the $683 million estimated total CapEx for the underground, and only a $220 million term facility, of which $190 is the actual term loan, it does again show that the quality of the asset and our ability to fund that from working cash flows. I'm just looking at the 2024 guidance. These numbers were provided in the press release last year, so I'm not gonna read through everything. I think the real focus for us this year is gonna be on the total diamond revenues. There will be, compared to last year, the shipment of goods to HB. There is obviously a translation into when we actually get paid for some of those, so they'll flow into this year.
But really, I think the numbers are pretty standard compared to what we've seen over the past 10-12 years. We are getting through the material in the bottom, but more south load material, and that's really what translates into the higher revenue numbers. Thanks, John. One of the specific areas which we need to focus on through this year is really demonstrating the relationship that Botswana has with diamonds. It is becoming more and more important for us to focus on these areas, specifically with the external threats that we see from lab-grown diamonds, et cetera.
And for us, the most important thing for investors to know, one of the very important things for investors to understand is the role in which we play in what has transformed a country from very, very poor in 1966 at independence, to now one of the top five GDPs in Africa. And a lot of what we're seeing with the work which we're gonna be doing with HB moving forward, is going from what we see as aligning ourselves with the strategy that the government wants to put in place, where they can see beneficiation of the diamonds. And that's the glitz and the glamour, and that's where we start off on the left-hand side of the slide. But it's what comes from that.
It's the employment, it's the ability to participate in gender-based violence and sports activities and education, and really start to work with the local communities to drive, number one, first listen, but then use what they their needs and their requirements to drive our ESG programs. And I think we've really done a fantastic job in working with the local communities. We've set up and sponsored hardware stores, firms for farms. We've sponsored a goat farm, which had incredible results. They actually produce fodder. We're now seeing increased demand for fodder, which increases the quality of the livestock. And it's really, for us, listening to what is actually required from a cultural aspect. What are the Botswana people find as important?
Working with the Lundin Foundation, how can we best support the local communities to drive individual businesses? And this is an important component for us, because even though we're gonna be mining on the underground, well beyond, I think, 2040, when the Karowe mine does eventually go into shutdown mode in a decade or two's time, we wanna make sure that we've actually left sustainable businesses which appeal and talk to the culture of Botswana. So just moving forward, under the... We are signed up to the UN Global Compact. We have 10 out of their 17 goals to transform our world, which we are aligned to. And this slide really talks to how we actually align ourselves to fit in, and I wouldn't say comply.
We don't wanna just say, "Well, we're complying," because complying means it's a box-checking exercise. But we're actually driving value through the programs, et cetera, that we have. And the people that we have on site, the passion that they actually show for the programs that they're working on, is evident. When you sit down with them, then you can really see that they are making a difference in people's lives, and that's really where the importance comes when we start to look at our sustainability programs. So moving on to the last slide, there's a lot that makes us excited. From what we've seen, from what we've spoken about now, what we see, the press release, which I'm sure some of you already seen, is that the resource never disappoints.
From when we announced the first 239 carat stones back in 2013, the resource has, as we've mined in the center, now the South Lobe, and the South Lobe just is this complete anomaly. When I was in Sweden recently, I mentioned that not in my lifetime, kids' lifetimes, et cetera, will there be another asset the same as the Karowe mine, in terms of just what it can produce. The resource has continued to show that even through 2023, and we expect the same at the start. We've got a good start in 2024. The most important thing is, for us, the development of the underground, and that's really gonna be the focus. That sets the company up.
We can benchmark ourselves against the information that we've used to drive through the mine or previous aquifers, and we use that to guide and manage our risks moving forward. In terms of the open pits, as Glenn went through, very, very strong operational performance. The guys that are running the plant, running the pit, are doing an exceptional job. And they are the ones that are really now driving the revenue for us to continue the underground development. In terms of the resources and the Lundin Group support, this is one of those things where I think Lucara and really the Lundin Group companies are very, very well-positioned.
Because of the support that we get from our major shareholder, the support and the guarantees that they have provided for the term loan, et cetera, it does position the company in a very, very strong... very, very strongly for managing whatever we might see coming at us in the future. Even though it's the last point there, I think the one of the key aspects is working with the government of Botswana, working with the Botswana people, on sustainability, ESG, and really creating an environment within the company where it's not just about mining diamonds. That is the most important thing.
I think as we move forward in demonstrating the value that mining actually brings, and not just diamond mining, not just mining in Botswana, I think mining as a whole, the value that brings to the local communities and the places in which we operate. Thank you very much. Sylvie, if I can hand it back to you then for Q&A.
Certainly, sir. Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touchtone phone. And if you would like to withdraw from the question queue, simply press star followed by two. And if you're using a speakerphone, we ask that you please lift your hands up before pressing any keys. Please go ahead and press star one now if you have any questions. And your first question will be from Raj Ray at BMO Capital Markets. Please go ahead.
Thank you, operator. Good morning, William and team. I have a few questions. I'll go one by one. First, on your Q4 revenue, is it possible to give us, like, a rough estimate of how much of that decrease in per carat price was a result of the mix versus diamond market condition and not having the HB agreement in place? And then on the HB agreement itself, is it possible to spell or lay out what... If there's any changes to the new agreement that you have in place, apart from what you already mentioned, having more control over the sales process and value realization? I have a few more questions after that.
Okay. Thanks, Raj, and good to hear from you. Obviously, the first question is, it's not an easy one to answer. I think the volatility which we've seen in the rough diamond market through 2023 was quite apparent. So as you mentioned, there were three specific factors that led to a lower revenue. The first one was, when we provide diamonds, because we stopped providing diamonds to HB in September, October, and into November, that obviously has a significant impact of when the revenue is received for those stones.
Because of the way the agreement is structured, they get an opportunity to assess the stones, and when we have an agreement, then there's a certain time period before the-- that's called our initial value for the stone is paid, prior to them polishing and selling it. So that has an impact. How much that was would be fairly difficult to quantify, but it may actually be as much as between 5% and 10%. If we looked at the market dynamics, prices from where we started off the year were still down by somewhere between 5% and 8%. And we recall, we measure that in line with the regular tenders, which we were having each quarter, so that's another 5%.
With us mining in the North and Central Lobe in the first half of the year, I'll give you an example. On average, we will recover 140-170 specials per quarter. In the first quarter of last year, it was only 96. So that obviously plays quite significantly into the revenue generated in the first half of the year, which would have translated into lower numbers in the back end of the year. In terms of the, the HB agreement, obviously there's a lot of confidentiality around that. I think the, the, the most important one is a reduction in the fee which we-- or the margin which we pay. That obviously adds direct value to us.
In terms of retaining money within the company, I'd say that is most surely one of the most important commercial factors. One of the and then in terms of the overall management, we now have steering committees. We're looking at providing information to help them manage their business better, their flow of diamonds out into the market. But it's-- there's a lot of confidential information within the agreement. But I think, as I mentioned, the ability to understand their business and how we actually benefit from it, is gonna add significantly to us being able to manage what our numbers should look like moving forward.
Okay, that's great, William, thanks for that. A couple of cooperation questions. One, on your 2024 guidance in terms of the whole process, what split should we expect from the south versus the central and the, and the north? And the second question is, with respect to the underground development, given that you have had some time to look at the whole scope of work, do you see any potential for accelerating the project or any cost savings? And also, how are your underground development rates stacking up right now versus your expectation?
Okay. I'm gonna hand off to John, just to go through the expected production mix for 2024.
Yeah, thanks. So the expected production mix for 2024 is gonna go back to what we'd seen in the period 2020 to 2022. So it'll be skewed more to the South Lobe. So anticipating over 90% of the carats to come from the South Lobe during 2024.
In terms of the underground development, this is what I love about underground: it's linear. You can't blast round 3 unless you've done 1 and 2 in sequence. What we are seeing is that the efficiency of sinking has improved dramatically. And I, John, if you wanna jump in here. I think, when we go back to when they first started sinking, there were the teething problems, et cetera, and it was taking them quite an extensive time to blast around. They started off doing 2 m rounds, they went to 3 m rounds. We're now doing plus 4 m rounds in the shaft sinking, and what was taking well over, in some aspects, 60, 70 hours, they can do that in under 23 or 24 hours.
So we are seeing a significant improvement in the cycle times, and obviously, the progress made per cycle time. So when we look at the production shaft, I would say both of them have very, very high-performing teams in it now. When we got into the lateral development, there were, again, the learnings that you go through was the transition from the shaft sinking into the lateral development. So we do see areas where we can improve, and it's got to be on almost a day-by-day basis, you'll see improvements. And it's not, we're gonna make a day up. We're talking, if we can make up 20 minutes here, but you make up 20 minutes, but you got to do that 20 minutes.
You save that 20 minutes 1,000 times during the sinking process. That's really where we started to gain ground. The schedule is very tight. I won't sort of say that there's loads of flexibility in the schedule. And I should have mentioned this during the presentation. So because we have such a tight schedule, the focus really is on where can we get better quality material to fill the revenue gap in 2026, 2027, which was the result of the rebase. So we've tasked the guys on cycle that. They've already thrown some numbers out there. They are very, very nice numbers because it means that we can get more South Lobe material in. It's a little bit early to speak about that.
We are hoping to have something which we can message to the market early in Q2. And it's really running additional mine plans, et cetera, to see what we can do in the pit. And there's a couple of options there. But to gain access to additional South Lobe material, just as an infill, so we don't see the drop in the quality of the material that the mill processes. And I mentioned quality of material because we have more than 10 million tons of material on surface. We've got plenty of material to process, and when we did some stockpile processing in November of 2023, it produced a fantastic run of specials.
We know that the material is there, but we'd rather have a much higher level of confidence in what's going through the mill, and if we can get that from the pits, that obviously adds significantly to that.
And if I
Great, if I can just elaborate a little bit, Raj, on the question about accelerating things. I think if you read the MD&A, you'll see mention that we have picked up time against the rebase in the ventilation shaft, and the production shaft, because we did some unplanned grouting in September, is a little bit behind the rebase, but they've actually picked up quite significant amount of time. Through 2023, we put a lot of effort into, as William said, understanding the cycle times and improving that. We made changes to how do we introduce the concrete to the underground. We made changes to the shutter design for pouring of the cement liner. The crews improved dramatically in the execution on the grouting events.
We made some, you know, minor changes to the kibble design. So the kibble is what brings the rock up from underground. We've installed longer slides on the jumbo and, you know, cumulatively, all those things have added up to us being able to execute the cycle times at budget or better than the budgeted rates. So we've seen some improvement there. We're not... You know, we're taking those days, and we're, and, you know, at some point in time, there'll be a decision about how what the schedule looks like, and that'll probably happen through the back end of this year with an annual update to the mine plan. And ultimately, as we mentioned earlier, we completed the development on 670 level.
There's lots of learnings from that as we break away from the shaft and onto the level, and the cutting of the station, then the lateral development. And those lessons will be taken forward when we do the work on the 470 level coming up, in the latter part or the mid-part of this year. So all those things, you know, as William mentioned, the schedule is the key, and that's the focus every day, is ensuring that we don't slip and that we improve and time and pull the back time as best we can.
Thanks a lot, John, for that. And lastly, with respect to the cost overrun facility, is there a time by which it needs to be fully funded for the $61.7 million?
Yeah, Raj, we have to fill it by June 2025, and based on where we are-
Okay
... and the time is.
Okay, okay, that's good. Thanks a lot, guys, and all the best.
Thanks.