MAC Copper Limited (MTAL) Earnings Call Transcript & Summary

Good day, everyone, and welcome to today's Metals Acquisitions R&R statement for CSA copper mine. [Operator Instructions] Please note, this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mick McMullen.

Thank you very much, and thank you, everyone, for joining us today. We're going to provide a presentation on our first R&R update and our 3-year production guidance. They have been released on both the NYC and this presentation and the announcement has also been released on the ASX platform. So if at any stage, we struggle or anybody can sort of follow the presentation, you can pick them up on the ASX platform. We've got the presentation here live and there's the usual disclaimer language, which again, you can read on the ASX platform version. And we've showed this slide before in terms of our growth strategy about improving productivity at the mine and exploration and sort of inorganic growth. And really today is about discussing that second bucket, which is our sort of in-mine and near-mine resource and reserve growth and production growth. This is a fairly significant upgrade in the -- both resource and reserve for the mine. And it comes on data that was basically from 2.5 months after MAC can take an ownership of the mine. So the effective date for all of these R&R updates is the 31st of August last year, any data that's coming after that has obviously got to be incorporated in another R&R plan at some point. And as you would have seen from some of our announcements with some of the drilling that we put out, there's some fairly spectacular stuff that is coming after that period of time. In terms of highlights on Slide 6 that we're talking about here now. We've increased the life of mine based on reserves only by around about 67%. We now have a reserve only life of mine out to the end of 2034. And under S-K 1300, in particular, when we talk about reserves and mine life or mine plan, we can only include proven probable reserves. I do note that in any typical year, we would mine 10% to maybe 15% of our production from outside reserves that can't be included in this life of mine or this long plan life of mine plan that we talked about. We continue to update those mine plans as new information comes to light. We have managed to increase the reserves by about 64% in terms of contained metal. And as we'll see on a slide coming up for that 11-year mine life, that is only 95 meters below where the decline currently sits. We've had a 42% increase in resources in total contained metal. Interestingly, the top 800, 850 meters of the deposit is not actually in that resource. That's all old data that we're sort of replicating. And there's a large amount of historical information in that sort of top 800-odd meters that is not in the R&R. We've been digitizing that information. It's around about 70% digitized. It is old data, and therefore, we'll need to replicate some of it. So we have been up there drilling. The reserves have been based on a copper price of $3.76 a pound. That compares to the price on Friday of $4.49 a pound. So clearly, there's a lot of extra upside in this reserve that we're coming out with now given the relatively conservative price that we've used for -- we are putting out guidance for copper production for '24, '25 and '26 calendar years. And that sees production sort of growing in excess of 50,000 tonnes of copper by that 2026 period. If we go to the next slide, I think this is a really interesting slide. The mine has had a very strong track record of replacing reserves and resources annually. So it's operated for 56 years with typically a 5- to 6-year reserve life, there's sort of some vertical ore bodies. The drilling geometry is such that you have to spend a bit of money to get ahead of yourself. But with the large backlog of core that we inherited that hadn't been assayed that we've now jumped our way through, we've looked at sort of cutoff grade and sort of ore body continuity and additional data from level mapping. And you can see here from that graph, the very material increase in total resources relative to the prior years. Now we always felt when we did the due diligence and purchase the mine that clearly, the resource base had the potential to be significantly bigger. And I guess in some people's mind, it was of a certain size that perhaps was somewhat limited in potential mine life. And I think this R&R today answers that question that actually -- this is a substantial ore body of high grade. All of the ore bodies are still open as well in more than one direction. So if we then go to Slide 8. As I said, mineral resources around about 1 million tonnes of contained copper now at a pretty phenomenal resource grade of 4.9% copper and not only have we seen a significant jump in total contained copper, Importantly, the measured indicated category has gone up by around about 83% and that's obviously the bit that you can use to convert to reserves. You can see on that long section on the right-hand side of the page, you can see there that the green is the 2022 resource and then that sort of light brown looking color is where we've added resource in the 2023 period. So that's really been no deeper than the existing resource. It's some extensional stuff to the side. It's a little bit of shallow material up through the sequence. And that small little QTS South upper thing sitting right up near the surface, which is a very high-grade ore body. The majority, which is still in the inferred category. So very little of it turns up in our reserves and our mine plan, but we see a fair bit of potential there as well. We have seen a bulking out of the ore body at depth as drilling as sort of filled in around the edges. And so tonnes per vertical meter have actually expanded as we fill out that data. So whichever way you look at it, I think 42% in contained copper and an 83% increase in measured indicated is a pretty phenomenal sort of increase in a very short space of time that our team at site and our independent resource CP and QP have delivered pretty quickly actually for us. The fact that everything is still open gives us a lot of comfort that there is potential subject to exploration results for this to grow even further. But I think the important thing is that the majority of this increase actually is at depth now greater than where we had the resource in 2022. If I go to Slide 9, this waterfall graph sort of indicates where we started out at the end of 2022, and then the production in those 8 months of the 32,000 tonnes of copper. And you can see actually through that, that whilst we have dropped the cutoff grade from 2.5% to 1.5% as a result of the reduction of costs, mainly offsite costs it really added about 47,000 tonnes of that total increase. So it's important. But actually, the biggest single change was related to interpretation of the ore body and then promotion of sort of mineralization that was known in the past that hadn't made it into the resource. On a lot of instances, some of that was on levels that we had developed and we actually had cross cuts through the ore body every 20-meter spacing and some of that stuff hasn't made it into the resource at all and sort of most mines, that material once you've got development through would be in the major category. So we've actually seen a promotion of this material from mineralized but not in any resource often is not up into the measured indicated category. So near enough to 1 million tonnes of contained copper, everything is open. This mine has produced around about 1.5 million tonnes of copper so far. And I think this -- this demonstrates that this mine has some longevity that perhaps some people hadn't quite realized. If we go to Slide 10. Obviously, CSA is a copper mine. It did start out its life as a very high-grade zinc operation in zinc copper and as we've been mining the data, so to speak, in this top 800, 850 meters. There is significant high-grade zinc with copper mineralization sitting up in there. We saw that in one of the drill holes that we announced with QTS South Upper, the QSDD0060 (sic) QSDD060 that had 4.3 meters at 14%, zinc and 4% led and a bit of copper and silver. And so as we've gone through and digitize that data, there is a large data set of high-grade zinc historical drill results on an up proportion of the mine. And as I indicated, that information is pretty dated and therefore, to be able to incorporate it into a resource, we need to go in at least win a substantial portion of it. So we've had a surface rig out there drilling and that core photo is from up near around about 300 meters below service, and that intercept of about 15, 16 meters of massive sulfide with what appears to be pretty high-grade zinc in it, and we will announce that and the other results from that part of the mine as and when they come through. So again, we aren't specifically chasing non-copper mineralization but we do see a fair bit of potential there. And the interesting thing is that's up in that sort of level approximate to where QTS South Upper is. And so in theory, subject to exploration and mine planning that material could end up sort of forming a joint mining front in that shallow part of the mine. So it's a very interesting thing. There is a fair bit of copper mineralization up there as well. And the answer today is that we know we have significant mineralization there. Exactly how that comes together into a resource and a potential mine plan remains to be seen. But again, the top 800 meters of this mine is not devoid of mineralization. And that particular drill hole is within 30 meters of current development and within 50 meters of the decline. So again, stuff that you can go on mind relatively quickly and relatively cheaply, but we do need to go and do this drilling to establish what has been mined, what hasn't been mined exactly where it is. And clearly, as shown by that piece of [indiscernible] or those portrays, that material has not been mined. So moving on to Slide 11. In terms of the reserves. Again, all of the mine plan is reserve only that we're publishing today. We've got around about 0.5 million tonnes of contained copper at a grade of 3.3%. It's a 64% increase in contained copper after the depletion. It gives us an 11-year mine life. And again, everything is open. Good grade. We have dropped the grade a little bit from where we were before, and that's a function of two things: slightly lower resource grade, although that's not probably the bigger thing. The reduction in cutoff grade as a result of the reduction in off-site costs has meant that where historical material has been left medium-grade material or sort of the lens that when you bulked it out was a little bit lower grade due to those quite high off-site costs historically, those things fell below the cutoff grade of 2.5% before. In this sense as now we've been able to include that stuff. And so again, we should be mining anything that's economic cutoff grade, again, using a pretty conservative copper price compared to were spotties or where many other players are sort of doing their reserves at and I think we should mine every ton of copper we can at $4.50 copper. As I alluded to earlier, those reserves over the next 11 years only extend 95 meters below the bottom of the current decline condition. If you look over on that little image on the right, you can see that sort of that bluey-looking shaded material, which is the new reserve and a QTS North of main ore body where about 75% of the reserves are. You can see it's actually at the same level as last year as we've just sort of bulked out the ore body as we've drilled out the edges of it. [indiscernible], again, we've extended it up and down a little bit. Again, it's a bit shallower. But I think, again, there has been a bit of a perception that we would mine to a significantly deeper depth than where we currently are in order to extend the mine life. We feel very confident that the ore body will continue on for quite some way. We know we have inferred resources that are sort of 300 meters below the bottom of the reserve. But you know what, for the next 11 years, we're only going 95 meters deeper than what we currently are in the decline today. The majority of QTS South Upper A, which is again, a little thing up on that top right new surface. You can see a very small little blocked out reserve there. Again, the majority of that material is in inferred. However, our intention is to get on mine that thing. We feel pretty confident about it. And I think the other change has been -- we've updated the modifying factors of the reserve to try and predict grades a little better. As we looked at reconciliation data, the previous reserve at 4% copper. We were typically mining at 3.5% to 3.8% on that reserve. So we think that the sort of current reserve grade is sort of more likely to be what we actually pull out. And with the bid luck, we may surprise a little bit on the upside on grade as well. Some of the inferred material is higher grade, in fact, than the average measured indicated. So again, subject to drilling and modifying factors and success in those areas as that inferred material may or may be included in future reserves. We -- or mine plan, we may see a little bit of grade than where we've got the reserve grade. But again, I think from a confidence of hitting this number, this is a number where we're very confident that we can achieve that. So long story short, we've ended up with 0.5 million tonnes of contained copper reserve at a very good reserve grade. And again, lots of opportunity to increase this subject to exploration success. Waterfall graph on Slide 12, again, just showing where that material came from. And a fair bit of it was to do with the new interpretation of geology, new information and again, slightly change of color grades. We've adopted a bit of a hybrid approach to cutoff grade. So we have a constraint on return airline ventilation at the bottom of the mine right now, which will limit the number of working phases. And so for the next couple of years, we've adopted a slightly higher cost rate of 2.2%. And then longer term, we roll back to a 1.6% cutoff grade when we can really open up the production and attempt to fill the processing plant. Now we'd like to say we will fill it. I think that's a tall order. It's a very large hungry processing plant. But I guess we have the metal now and importantly, when you're trying to make long-term decisions, we actually have the mine plan and the resource base and the reserve base to allow us to make proper capital allocation decisions going forward. Interestingly, we now have about 230,000 tonnes of contained copper in the measured indicated category at about 180,000 tonnes in the inferred category, which has not made it into the reserve. And if you were to look at the S-K 1300 report, which -- and the stuff we released on the U.S. exchange, we have to quote resources, excluding reserves, and so you can easily reference that material there in those tables. That gives us a fair bit of extra material that is subject to a bit of further work available to turn up into the reserve in future, so that's quite good. And again, we'll stick to sort of using a pretty conservative price sort of well below where spot and well below where a fair few of our peers are running their reserves at. So overall, again, we've got a great result on reserves. We've come up with a pretty good mine plan that we feel is very deliverable, and that sort of allows us to produce more metal upfront. We can -- we are not sterilizing that material between 2.2% or 1.6% for the next 2 years. We can come back and we do come back into plan and get it. But in a way, if you think about this as an open pit, we want to go online the stuff that maximizes value in the near term for us as much as we can. So going on to Slide 13. I think with this increase in the reserves, we've now established CSA copper mine as a long-life asset. The majority of the mineral reserves are actually on levels that we've already developed or sort of down to where the decline is. So the ground conditions and ventilation requirements are very well known. So again, from a risk point of view, we aren't mining off into areas that we actually don't know about. This is a pretty low-risk plan. You can see on both of those images, QTS North again, is on the left. QTS Central is on the right. The blue on both of those shows the reserves. The yellow shows the inferred resources, and you can see it's just a straight parity cutoff line after where the indicator stops, which then converts into reserves and then you go straight into inferred. And then the green material is where we have drilling defects, we have mineralization it just didn't quite make it into the resource. So with a bit more drilling on QTS North, in particular, you can see that there's a fairly good chance that, that will continue on at that same size on its way down. But as I say, we aren't actually going much deeper than where we currently are. The key to unlocking the mine, as I've said, is the Return Air Rise at the bottom of the mine, the bottom 300, 400 meters in QTS North. There's about an 18-month to 2-year work program in order to get through that, approximately AUD 40 million worth of capital to do that. And if you refer to our ASX IPO use of proceeds, we have a portion of mining in there for growth capital, and that is squarely in that bucket for growth capital. We're adopting a slightly different approach for this stuff. We're going to drive out about 200 meters away from the ore body and put those vent rises in into significantly better ground conditions. We think that actually gives us a better long-term solution than historically what's been done here. The technical report, the full S-K 1300 technical report will be lodged with the SAC at some point during the back end of this week. And that has, as all technical reports, has a large amount of detail on all of the mine plan and the annual production as a result of that and all of the ventilation and other capital is -- will be in that report as well. So moving on to the 3-year production guidance, Slide 15. So we've given a range here around about 5,000 tonnes range for each year. Again, the technical reports that we publish have to be effectively a single point estimate. These ranges are probably a more appropriate way to look at like just given the inherent variability within the ore body. But again, we can see a gradual increase in production and really, by 2026, the drivers there are unlocking the event at the bottom of the mine and QTS South Upper bringing in some reasonable production. That's based on reserves. We have a significant amount of excess processing plant haulage capacity that we are just limited with [indiscernible] at the bottom of the mine. But I think the interesting thing here is that the existing haulage and processing plant infrastructure can do significantly well in excess of 50,000 tonnes of copper. So I hear often people talk about fill the mill. That would be a great day for when we fill the mill because this is a large processing plant capable of doing well in excess of where our guidance is sort of suggesting here. We do have a large resource base now that we can sort of try and optimize as we go forward and be a bit optimistic sort of opportunistic, I suppose, to try and pick up a few of these other little deposits around. The other thing I would say is these operational turnarounds aren't linear in nature. some quarters will be better than others, but we're trying to sort of try to focus on delivering a sort of a sustained improvement as opposed to sort of looking great for a quarter or 2 quarters and then sort of production falling back and not being sustainable. I think there's been times in this mine's history when perhaps they've sort of [indiscernible] to pay fall a little bit. And we're trying to sort of get the building blocks in place so that we can get that sustainable, deliverable, gradual increase in production and sort of take it potentially beyond where we've sort of indicated here now as we learn more about the ore body. So again, a large amount of data drilling information is coming post this resource update. And so already, we're sort of -- we're working on the next resource and reserve and mine plan update already, but we wanted to update the market on where we've gotten to. So just going back to the highlights, I think we've delivered a very large increase in mine life and reserves apart from sort of the equity market being able to maybe value us a little bit better. We -- when we purchased the asset, there was effectively a 5.5-year reserve life in place, and that shaped our debt structure. And now, obviously, we have a -- we had the ability to sort of put a completely different debt structure in place given that we have a much longer mine life. So we were somewhat restricted in the structures we get put in place when we bought the asset. And I think this obviously changes the type of debt back that we can try and put in -- that we can get in place and more in AOCF is pretty busy working on that as well. So with that, I think it's been a huge effort from our team at site and our external QPs. And the tech report, as I said, will be published on our -- on the SEC site later in the week. And with that, I'm happy to take any questions from anyone.

[Operator Instructions] And we will take our first question from Ralph Profiti with Eight Capital.

Mick, firstly, you talked about this 10% to 15% of production coming outside of reserves, and that's typical for every year. I'm just wondering, is that concentrated in one particular area? And is this below reserve grade material where this is more of selective mining but still economic? Is that kind of the strategy?

No. Look, to be honest with you, it's not really -- it's sort of in and around the ore body like on each level. So it's not like right at the bottom or anything. I'm just going back to the resource slide here. In fact, if you look at the inferred resource grade, it's actually the highest bit of grade we've got. So yes, it's sort of in and around the main -- the sort of main ore body. On any given level, yes, there's probably, I don't know, 10%, maybe 15% of the stuff that we mine on every level. that would be inferred. So the way the classifications work, the bulk of that inferred is sort of below, but like dispersed through the ore body as we mine it, we do get inferred and it is pretty good grade.

Okay. Yes. And then just as a follow-up, we're seeing this bulking out at depth and presumably spatially, this is happening in all directions. And I'm just wondering, is there indications that QTS Central and QTS North perhaps come together at depth as they both sell out? Is that kind of what the geological model is perhaps telling us?

Perhaps is the answer. Categorically, we don't have enough information to be able to say but you can see there on the slide that I've got up Slide #8, there's not a lot of space between Central and North. So look, the answer is we just don't have enough information to find out what happens in between all of that. And similarly, actually between Central and QTS City South, we have another series of drill holes in there that have intersected ore rate with grades but not enough to put a resource around. So again, part of the drilling this year is to go and actually test that area and see what we can find in that gap there. I think these ore bodies are spatially relatively small, but very high grade, so a lot of metal. So you just go to drill.

And we will take our next question from Daniel Morgan with Barrenjoey.

First question is, where are you on the backlog of drilling that existed a while ago? And I guess a 2-part or like where was it at 31 August last year? And where is it now?

Yes. So when we got the keys, there was about 17,000 meters of drilling. But the time we did the cut off, I don't know, we probably still had, I would say, maybe 8,000 meters, maybe 9,000 meters but hadn't been assayed. And today, we're down around about 2,000 meters. So there was still -- from when we cut the data off, there was, I don't know, maybe another 7,000, 8,000 meters that came in from old data, plus the stuff we've been drilling as well. So there's a fair bit of new information still coming in, I suppose.

And you outlined that we're going to get the full report later this week. Is it possible to summarize the CapEx required on that 3-year window that you're talking about at all?

No, look, it's off the top of my head, I wouldn't want to give you the numbers without the report will be out in the next couple of days, I would think.

Okay. And the press has linked you to a process for [indiscernible]. Are you currently engaged in a process on this? What can you say about that?

Well, I can't really say too much, but other than that, I'm not aware of the process.

We will take our next question from Ben Catalano with Wilson.

Can you hear me?

I can, Sam, how are you?

Yes. It's Sam Catalano, brother of Ben. I just want to push you. Look I think you've done a great job in explaining and outlining the geological upside, I just want to push you a bit on the ventilation and the Return Air Rise construction. Obviously, I'm aware that Glencore tried a couple of times to put some raise bars in down the bottom and ground conditions were concerned. You talked about moving 200 meters away to better ground conditions. But I suppose how much confidence do you guys have that the ground conditions are materially different. And at what point would you need to change TAC and perhaps go to a sharp thinking as opposed to putting in a couple of [indiscernible], which are obviously going to be cheaper and easier?

Yes. Well, we've been out doing without geotech drilling in that area. So if you look at the geotechnical reports from when the previous owner was putting in those raises that didn't go so well, you'd almost say that's probably the last spot you put them, the ground emission away from the ore bodies is progressively better stepping off about 200 meters looks to be the sort of the spot where you'd want to be. And the other thing is that we'll do these leaks progressively so that it's not like they're all off and then they're all on. So over -- you'll do 100-meter raise safe [indiscernible] you'll get some additional bank, you'll do the rest, you'll get some more. So there's not an all nothing top scenario.

6 Yes. And so for the 2 -- I think it's 2x 200-meter raises, is that in terms of time frame? Is that like a 2-year sort of completion window?

Yes. We again might do it a bit quicker. But yes, 18 months, 2 years. Sorry, just before, fundamentally, when we look at debottlenecking the whole operation, what is the thing that stops you getting more production out that ultimately ends up becoming your bottleneck right now, it's sort of -- you're on the edge of it and the [ strand ], the hybrid cutoff grade strategy addresses that a little bit. But fundamentally, to get a lot more material out of the mine, you need to address that ventilation. And once you've addressed it, actually, the ore body probably could give you more than what we're putting in our guidance right now. But -- and certainly, the infrastructure can take it the challenges is like you need to do the work and then we can progressively increase where we think we might get to.

And we will take our next question from Eric Winmill with Bank of Nova Scotia.

Great. Hi, Mick and team. Nice to see the results today. Just a question for me here. In terms of 2024, when we think about this, is it fair to say Q1 is probably the lowest production quarter just given the power outage? And then probably kind of sequential increase? Or should we sort of divide by three for the back half of the year, do you think? With that...

Yes. Look, I think directionally, obviously, Q1 will probably be our weakest quarter, I think, is the short answer. Based on the amount of ore that we've got blasted and the stopes that we have about to sort of come out I think Q2 will be -- should be pretty strong. And then Q3 and Q4 will be also relatively good as well. So again, probably back 3 quarters loaded for the sort of the production, I think and we've spoken in the past about we turn over 70, 75 stopes a year. The top half of those which could be 1/3 of our metal. And in fact, we've got two stopes about to come online, which probably 20% in the middle for the year. So it's a great thing having this super high-grade ore body, but you do have a small number of stopes that drive your production. And just depending on where you are quarter-by-quarter, you've either got some more, you don't and on an annual basis, it all smooth out. But on a quarter-by-quarter basis, we do have a fair bit of variability in it. And yes, I think it's fair to say that Q1 will be the weaker quarter of the year.

Okay. No, I appreciate that. That's really helpful. Maybe just one more on the drilling. Can you just comment on how much drilling has taken place since the August cutoff? And then as it relates to that upper portion, I know you're still digitalizing still early days, but what's the plan here based on what you're seeing now in terms of drilling that off and have you done much drilling in the upper A 15 years?

Yes, look, well, we've done a bit of drilling. We'd like to do more drilling. It's a bit slow because you sort of -- you got to drilling around voyage and infrastructure but drilling from service, it's relatively quick. We'd be dealing, I don't know, 25,000 meters of drilling a year, give or take, maybe a little -- maybe 30 and so since August, we've done nearly 20,000 meters of drilling, I guess, plus whatever we had as a backlog, whatever that number was 5,000. So there is a significant amount of data that's still going to come in. And whilst I don't have the specifics of all the drill holes, we've announced some of them, and you can see that there's some spectacular results in there. And there's nothing we're seeing out of that drilling that would give us cause for concern that the ore bodies didn't continue at depth and didn't bulk out as we go down around that sort of inferred really bulking out and converting. Quite frankly, in the upper portion of the mine, we can see what the historical data is telling us, which is significant zinc mineralization over 300, 400 meters. Now it is old data, and it will need to be confirmed by new drilling. But so far, the holes that we've plugged in have hit what they were supposed to hit, where they were supposed to hit, and it's not been mined as per [indiscernible] models. So I think this ore body can continue to give us a fair bit more. So I think I could say with a fair bit of confidence that whilst we've come up with a large R&R increase here, I don't think that's going to be the end of where we get to.

And we will take our next question from Jackie Przybylowski with BMO Capital Markets.

Mick and team, congrats on the update. I just wanted to circle back with the comment you made in the prepared remarks, Mick, about filling the mill and maybe you've sort of answered this already. But can you just maybe give us some more detail in addition event raises what exactly would need to happen in the mill -- or sorry, in the mine for you to be able to fill the mill?

Sure. Look, and I sort of -- I caution people a little bit here when they sort of asked me, well, what's the mill rate of that. And look, at the back end, it will do 80,000 tonnes of copper a year. I don't -- and when we have the ore and the grade is good, we sort of ran it a week at 70,000 tonnes annualized at tonnes. But I'm not telling people that we will get to 80,000 tonnes. I think that we should just look at what we put out. The key things to getting more production, whether we partially more fill the mill is more working faces, which again is dictated by ventilation. The haulage shafts and everything will sort of will take certainly more than what I think we can get out of the mine right now better consistency, quite frankly, is the other thing and just sort of better planning in place. And again, without going into the full technical details, part of this ventilation plan is not just to have additional air at the bottom. But the current ventilation system is not perfect in that it sends cleaner down to a level, and then it actually brings the air back up the same area. So you're fighting clean air with air that's coming back up, right? So the change of the system will allow us to actually not only get more [indiscernible] down the hole but actually be more efficient because we'll have a flow-through event system. After that, it's just sort of mining what I want just getting better plans turning over stopes quicker. There's a few things that they're doing at site that allow us to turn over stopes quicker, running down that second pastefill line. So that, that allows us a bit of contingency and we can sort of run pace at sort of two parts of the mine. It's not highly advanced mining things that we have to do here. But we always come back to apart from just running the business in a well-planned manner. It always comes back to them.

Got it. And just as a second question, just also to follow up on something you were saying about looking at the old data and digitizing ultra holes and maybe winning some of them. Is that work something that we might expect to be incorporated in an R&R in a year from now? Or is there going to be some kind of midyear update between now and say, this time next year?

I would think we'll probably end up doing yes as some sort of interim update. I'm not so sure how much of that drilling in that upper area we will have in there by then but all those other stuff that we're doing, we will definitely have in. And yes, so I think at least for the next 12 to 18 months, the speed of new information will sort of -- and the impact that has will probably necessitate us not just doing an annual R&R, I suspect we're doing an annual plus an interim just given the amount of new information that's coming in.

And we will take our next question from Brett Hocker with Canaccord.

Just going back to your point around your debt stack. Could you maybe just talk to your aspirations there? What that might look like and how that might translate to the interest line just at a high level?

Sure. And again, it's in our various other sort of deck. The deck that Morne spoke to at the end of -- for the annual financials had all of our debt in there. We have, as of today, give or take, about $183 million of senior and about $135-ish million of the subordinated debt with Sprott. The Sprott facility, again, it has a variable interest rate, but it is fairly high. And so we would like to end up we're in a scenario where -- we currently have a senior debt profile of 3 years from when we closed and Sprotts at 5 years from when we closed. In an ideal world, we'd like to get everything into a sort of a senior style facility, a significantly lower cost of capital. We have the ability to call that Sprott facility in June next year and pay a 4% make-whole payment. And the interest rate on that is somewhere in the order of 13% to 14%. It depends on the copper price, but clearly, that would be an attractive return for equity holders to pay 4% to save that interest rate for the next 3 years after that. So senior lenders, in particular, we'll look at your reserve life, and they will shape the a, the quantum of debt and b, their profile of repayment based on how much mine life you've got left after the loan is repaid. Typically, you need to have 1/3 of your reserve life after the loan is repaid. So we have a 5 and half year reserve. So you end up with a 3-year term. Clearly, with an 11-year term, there's a lot of different financing options on the table. And so it would be too early to sort of try and comment on where financing will come out at. But clearly, when we did the deal, copper was $3.70 a pound, it's currently $4.50 a pound. We've raised a lot of equity, so we equitize the balance sheet significantly, and we made some big inroads in cutting costs at site. And now we have a full 11-year mine life, which is open everywhere. That's a very different credit proposition for the lenders. So I think we believe that we can get reasonably better terms out of that total profile both in terms of repayment profile and cost of capital. So it's a TBD in terms of where that comes out and more named the finance team have got a lot of work to do on it. But we now have the building blocks in place to be able to have those conversations.

And we will take our first webcast question from Tim Hoff. How large was the QTS South Upper resource? And what was in the reserve?

Off the top of my head, and again, the full detail is in the technical report, which look at may will be tomorrow when it's [indiscernible] and lodged. It's relatively small. It'd be about 13,000 or 14,000 tonnes of contained copper in it at a pretty good grade and the reserve on it is off the top of my head, it's about 50,000 tonnes of ore out of that total. So the reality is in our internal mine plan, as I say, we typically would schedule inferred and therefore, we've got enough there to make a decision to move forward with that thing. But the official reserve would be small, right? And you can see that on the slide that I showed which I'll just flip to. If you look at Slide 11, up on that top right, you can see that bluey-looking material is just really a couple of levels. But if you go back to the slide that showed the resource, the resource clearly is much larger than that. A fair bit of potential in that area and also down around QTS South and QTS South is also small in terms of spatial extent but it is very high grade. So that remaining grade in that block model is around about 7% copper. So again, it's small but very high-grade lenses.

And our next webcast question is a follow-up from Tim Hoff. How much further down is the deepest hole from the bottom of the resource?

That's a good question. I'll just go back to maybe the slide here. We would have -- so below the bottom of the reserve, we've got around about 300 meters to the bottom of inferred. And we have drill holes of economic width and grade if it would just add more drilling, probably another 200 or 300 meters below that. So if you think about mine life for the next 11 years is going 95 meters below where we are today, the inferred resource and sort of drill hits around the mineralize material continues down another 300 meters past that. So to be honest with you, I think, hopefully, after today, resource and reserve life should not be an issue in people's minds. I think you can sort of see directionally that there's obviously potential to go further longer than what we've currently put out there, just given that everything is open. The challenge for us right now is to mine more of it and mine it faster. That's the key. Because when copper is $4.50 a pound, you want to be producing everything you can.

Thank you. It appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

Well, I'd just like to thank everybody for dialing in. Again, the full technical report will get published here with the SEC in the next 24, 48 hours. But we think that extending the mine life on this thing officially that now we can talk about a full reserve only mine life out until 2034 should hopefully change the complexion of how people look at the asset but I think also people can sort of get the picture that it's a snapshot in time really from August of last year. There's been a significant amount of new drilling post that. And look, we do when we get to a level, and we go and mine it, 10% to 15% of that production from a level is outside our reserves. So can't be included in the official mine plan, but that is the reality of what happens when we get to a level. So again, it's a great time to be in copper. We've just delivered a very large increase in both resource and reserve. And we are sort of a pure-play copper producer. And with that, I'd like to close off and thank everyone for their time.

This does conclude today's program. Thank you for your participation. You may disconnect at any time.