Sandfire Resources Limited (SFR) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Sandfire Resources June 2022 quarterly update. [Operator Instructions] I would now like to hand the conference over to Mr. Ben Crowley, Head of Investor Relations. Please go ahead.

Good morning, good afternoon, everyone. Thank you for joining us, and welcome to our update for the June '22 quarter. Joining me today on the call, we have Karl Simich, our MD and CEO; Matt Fitzgerald, our Chief Financial Officer; Jason Grace, Chief Operating Officer. And joining us, in addition, today, we also have Richard Holmes, our Head Exploration and Director of growth, and Dave Wilson are Head of Technical Services. So Karl will open with some introductory comments, and then we'll pass over to Matt and then Jason who will take us through some of the details. With that, over to you, Karl.

Thanks very much, Ben, and welcome, everyone, this morning to our fourth quarter and year-end results announcements with respect to the 4 quarters of the last financial year. And can I say at the outset, it has been probably the most significant year for the business of Sandfire through the financial '22 year. There have been 2 significant things that have occurred in this company's life that are transformational. Clearly, #1 was the discovery of the DeGrussa and the excellent execution of taking that mine into production and then operating that at the professionalism and a level that it has operated at. And the second one is, as I've said, the year of financial '22, where in that year, the 2 key things that have occurred are the acquisition of the MATSA Mining Complex in Spain, an extraordinary transaction on many fronts and also the ability for us to press the button and commence construction at the Motheo project in Botswana. So this is the year that we've had, and we're looking to build on that as we move into financial '23. We are precisely and particularly executing our strategy as we have articulated many times over, and we are on course on that strategy and [indiscernible] delivery, building our production pipeline in terms of endowment growth continuing but sensibly adjusting accordingly during these interesting oscillations in the market that's sensibly adjusting but still had very much a strong organic focus and particularly on a focus on the closest opportunities to deliver the greatest possible success in our operation and in our organic programs. We continue to work very, very hard in ensuring that our most valuable resources, our people are aligned, and they are empowered, and they have all the tools and resources that they need to execute their wonderful programs of work in there relevant jurisdictions with our hub-and-spoke model that we're applying. And what I would say, the transition that this business is going through have been done eloquently and smoothly, and I think the extraordinary work from the people and our team, we are developing into a global mining company without missing a beat, and that is wonderful to see. But lots of work to be done, but the effort has been huge. We continue to make sure that we are in commerce, and we understand our balance sheet, our capital structure, the strategy and the engagement with our very critical stakeholders globally, governments, suppliers, people on the ground and ensuring that cultures and many elements of our HSEC and staff and well-being well and truly have considered in the relative environment. That is our values and our values together and the work that we do and the daily activities that are showing through now these other culture of our business, and it's a very positively strong culture through the executive and through the entire organization and just highlighting that we've developed a wonderful culture, and we want to keep that wonderful culture. As we roll forward, just to give you a sense of where is it we are. Scale future-facing growth and exploration, we span the globe, we are one of the largest ASX copper-focused companies, and we've had a tremendous last quarter in the fourth quarter that we are in Southern Africa, Botswana where we have the most dominant ground holding in the Kalahari Copper Belt [ by day ]. So, we have 80% of what is perceived to be the Kalahari Copper Belt. So a wonderful opportunity to be a first mover effectively and to be in such a commanding position is outstanding. That is in both Botswana and through into Namibia, and we're doing exceptional work there you'll hear through that through the course of this presentation. We also have got a commanding and the best land footprint and holding and also the best operating facility in the Iberian Pyrite belt with the MATSA complex, which we acquired and settled on the 1st of February this year. and there's been excellent work done by the team since that acquisition of integrating. And also, we're seeing the beginnings, the early stages of some of those improvements that we very strongly believe we can make but also, it will take time. It's a work in progress, as you can imagine, but the opportunity is continuing to come through when we see the ability over a longer period of time of enhanced performance from those operations as well as our operations running down in Western Australia here at DeGrussa but still performing exceptionally well from the DeGrussa operations, exploration Eastern Seaboard as well. And also, we have our orations in America in terms of our Black Butte project, which we are slowly but surely moving through the permitting and dealing with the legal challenge. We won't talk about that too much today. It is not a massive update, but we've got the footprint around the world and we are the solution. We're in future-facing metals. We have predominance for copper, and we do believe irrespective of what some of the gyrations we're seeing in the market, we are in a marathon. As we do know, being in the resources sector, we have said, there are only 2 primaries and extraction is one of them. And the only way the globe the mankind will have anything like a reasonable future going forward is if it is to have quality extraction industry and if it had a sufficient supply of copper mineralization. Otherwise, we're going back to the cave. Right, so we are in the right place. We have a future, and we're very proud and very happy to be in that. And once again, we will continue when Richard will talk about some things today that with that very much that DNA flavor of organic growth and spending accordingly and adjusting accordingly during tougher times, but nonetheless, looking for organic success around where we will have substantial operations and where we have the absolute ability to critically leverage off wonderful robust mining infrastructure. So we will be focusing on where great opportunities can create great value. So that's where we are. In terms of delivery growth through the course of the last quarter of 12 months, and I think, once again, exceptional performance. We're reporting in U.S. dollars, these are unaudited, but our gross total revenue before people start to nibble away was in excess of USD 1 billion before we had some cost of sales put into that. That translates into effectively a type of accounting reported net profit of around $922 million in sales revenue, but the margins that were able to be produced and the business that we are in, whilst we need to appreciate costs and cost movements and they've been dramatic for many people in the industry recently, we have been able to produce expanding margins through this period with good commodity prices, certainly, pretty much up until the end of financial '22 and demonstrated by operating margins from our 2 operating mines. DeGrussa to 12 months and massive for 5 months of close to USD 550 million for that period in time. So it's an exceptional performance. And as you will know, we are relatively conservative in our presentation of financials and we do write lots of things off. So from operations EBITDA to group EBITDA, it's dropped down to about USD 400. But outstanding performance from an operating result irrespective of marginal increase in costs through the year. The marginal profitability of the business was even so much greater, and I think that needs to be understood, and it needs to be recognized. Delivering growth, the biggest single thing I said, transformational. We acquired MATSA for USD 1.85 billion through the year through a combination of debt equity and utilization of some internal cash. And that transaction effectively to give you some perspective, the enterprise value, our market capitalization at the time was AUD 900 million or about USD 650 million USD to USD 700 million and our enterprise value of a business was probably some $200 million, and we bought an asset for just a little bit shy of USD 2 billion. We undertook and completed the transaction that shouldn't have occurred was unreasonable and was about 10x the scale of our business on an enterprise value basis. It would be like BHP buying Apple, which will be an extraordinary [ resideous ] transaction that most of us on the end of the line that we couldn't fathom could happen, the taste nature of the scale of the transaction was undertaken. I pause at this point to take anyone for women and men in the organization and also people that sit in this business to enable us to secure and complete that transaction with [ upon ] with the grace that it was done, and I also thank all the relevant people that assisted in terms of stakeholders, whether they be banks, lawyers, financial advisers, the accounting firms. And I can't thank them enough for the extraordinary effort and energy put in and the outcome was quite sensational. This asset will be the backbone of our business for 2 to 3 to 4 decades to come. So I would say keep an eye on this space. You'll start to see it evolve over the next few years. Production. Excellent production for the year. On a copper equivalent basis, that production was somewhere in the order of 123,000 equivalent tonnes of copper on a copper equivalent basis for financial '22 when we look at the copper and the zinc. And quite frankly, reasonably pleasing our C1 operating cost guidance was $1.19 for the group. We came in at $1.27. And in the market that we saw towards the back end of quarter 4, I think we've come in with an exceptionally pleasing position. Global opportunities. We talk about new extensions and discoveries across the world and leading into, obviously, the significant capital story for this business at the moment. They're very seamless and professionally run development of the Motheo construction project, which Ian Kerr and his team are doing a wonderful job there in Botswana. Absolutely blown away from what is happening there. Jason will mention more about it. Clearly, in line with pressures in the world. There are some increases in those input costs going into the CapEx of that operation, but fundamentally relate to the price of energy and some other consumables. And certainly, something that is well and truly beyond our control, and I know the rest of the industry is experiencing. Cash at the end of this year. Financial year was about USD 460-odd million, and our net debt as we should at the moment is sub -- was just over USD 300 million. So when I think about what's happened in the year question, it's been exceptional to say the least. If we just have a look at group production, as I've said, our fourth quarter copper equivalent, the numbers are on the page for quarter 4 component almost 48,000 tonnes of copper and for the quarter and for year-to-date effectively 123,000 tonnes of copper equivalent in the year. And that, in a sense, effectively was well on truly just over the guidance that we had put out. And on a combined basis, about 82% copper dominated. So we're very much are working hard trying to keep this business as a copper dominated focused business. It will clearly have other attendant minerals that will be involved. But nonetheless, company focus is where we want to be. On a MATSA. Certainly, MATSA production financial '22, very strong performance in our base metal -- beat our metal production and guidance for the quarter. very strong performance in the last quarter of the year. Jason will touch on that a little bit later in terms of better great performance, but what that might mean. And going into financial '23. I think fundamentally, what we will see is that overall mineral endowments at MATSA is what we believe it entities what we bought. But what we will see is volatility and oscillations between because of the complexity of free mineral, free mines, multiple ore bodies, multiple different styles of geology, 2 different types of strange between Cooper interest or clean copper material, and that will cause this fluctuation and volatility. So we would need to just have our minds around that to not get too laser focus on any quarter or on any year and take that as a given. We need to have the ability to stretch our mines over a number of quarters and years and look at the smoothing effect because it will have volatility. We've explained it before. We'll explain again that the C1 cost, for example, in MATSA will have everything to do with the zinc 1 grade or the zinc 1 price as opposed to actual real costs that we need to get our mind around that as Peter about looking into this. So -- and zinc will be a meaningful part of the last product. Jason will give you a bit more detail on that. DeGrussa production, once again standout fourth quarter, very, very, very pleasing results, almost approaching our stretch top end of guidance. We've got to the high 67. And dare I say it 0.3% above what would have been our strange target, which I think should have been recognized as well, but essentially hit that stretch target, which is wonderful. Pleasing costs in a challenging environment. And when we think about that mine having a number of months to run down, the lack of flexibility that those operators have had to deliver and delivering some of the best returns, best metallurgy recovery that they could have, it's been an outstanding result. And once again, I think I would like to congratulate the wonderful women and men at the DeGrussa site in what they have achieved. I'd now like to hand over to Matt Fitzgerald to go through the subsequent slides.

Thanks, Karl. Just looking at Q4 cash flow presenting a waterfall here. In total, over the quarter, cash increased in the group of $73 million. You can see on the slide there for the quarter, cash generation from DeGrussa and also from MATSA, there are for working capital and QP adjustments moving through those numbers are probably best to look in terms of year-to-date not to talk through that on the next slide in terms of operating cash flow. But in terms of growth, just over $8 million better growth in the quarter of Q4. Motheo took up $53 million of that of its capital development, as Karl talked about, MATSA, $17 million; DeGrussa, $7 million. Probably more importantly, on the next slide, as we put the year together, and we deal with and look at DeGrussa over 12 months and MATSA over the 5 months of each cash flow generation. We have put all of the -- just you notice in the second point here, we just put all of the MATSA acquisition-related cash flows into the 1 bar of cash impact of minus $149 million just to really highlight and be able to highlight the operating cash flows more than the transaction itself. So over the course of the year as a group increased cash of $32 million. As you can see for the 12 months, DeGrussa $402 million of operating cash flow. For 5 months of MATSA, $218 million of operating cash flow. We will see some return in terms of QP adjustments post the end of the quarter. In terms of growth, $258 million, just dealing with a bit of a breakup of that, Motheo around $150 million, MATSA $36 million, DeGrussa $58 million, and Black Butte $14 million. There was also a cause sale of Adriatic shares during the period, which assisted with our cash flows and treasury around -- also around the time of the MATSA transaction. Income tax $134 million during the year, MATSA $28 million of that. DeGrussa current year of $66 million and also paying the remaining tax from financial 2021, which we did in December of last year to a total of $134 million. So over the year, as I've said, $32 million increase in cash. Clearly, a lot coming in and out in terms of the MATSA acquisition itself, but very pleasingly across both DeGrussa and MATSA in terms of operating cash flow. We'll have some more information. These are all rolled out over course today. We'll have some more information when we do the June '22 financial year call towards the end of August in a few weeks' time. Across through debt facilities and the hedging. So we have a total of USD 788 million of debt facilities. As we know, $650 million of that related to the MATSA acquisition, and we will start to make the first repayments against that in September this year of $118 million and also into the first part of calendar '23 with another $80 million, so just shy of USD 200 million to be repaid against MATSA and that will quickly deleverage the acquisition portion, particularly of that facility. Also at the corporate level and also MATSA related, we borrowed USD 200 million, which at current exchange rates was around USD 138 million, and that is due for Board repayment at the end of September. As we said, we have a strong cash position, and that will -- the repayment of those is designed to quite quickly deleverage the balance sheet. As we know, we did leverage the balance sheet in terms of the acquisition of MATSA as Karl talked about. So $463 million of cash, $788 of debt from net debt, $324 million. As Motheo proceeds and we concentrate at this stage on the T3, 3.2 million tonne per annum base case. We're also working through the financing facilities of those, and they will go to some final credit considerations and approvals in the coming weeks, and we look forward to presenting the 5.2 million tonne expansion case, which will bring together T3 and A4 and will also form an important part of that banking sends understanding of where Motheo is and will progress to over the next couple of years in terms of production and getting up into the -- as we talked about before, the sort of 50,000 to 60,000 tonnes, of copper production per annum, which will be very important, of course, that second step of expansion for that project. Our hedge book is important, particularly at these times as we've seen in recent times with both copper and zinc moving down to just presented some numbers here for the financial year coming up. 43% of midpoint of payable production guidance is hedged in copper at a rate around 25% above the current spot price. In terms of zinc, around 44% of the midpoint of guidance is hedged at around current spot prices. As we've presented before, we have 3 -- year -- we put in place a 3-year hedging program when we bought and purchased MATSA, and that includes some 62,000 tonnes of copper MATSA and some 72,000 tonnes of zinc as well over that period of time, which takes us all the way into calendar 2025. So that is assisting our operating margins, assisting our cash flow, assisting on all of those levels exactly as it was designed to do as we leveraged the balance sheet, the acquisition of MATSA.

All right. If we now look at operations review and outlook and starting with health and safety across the company, and pleasingly, we saw -- we again saw an overall improvement in TRIFR, achieving 3.8 as at the end of the quarter. This was largely driven by strong safety performance across the group and driven prior around really by a lower number of injuries across the whole company, at the same time that our employee numbers and associated work hours continue to increase with increasing activity at Motheo. Our COVID-19 response remained a major focus during the quarter, and we are pleased to have been able to continue to operate safely and continuously throughout the period. In Western Australia and Botswana, we continue to work with rising COVID-19 infection rates associated with the latest wave of Omicron variants. As Spain and Montana have been moving into the Northern Hemisphere summer months, infection rates have come off their winter peaks and have remained relatively stable throughout the quarter. And from an environment and community perspective, Sandfire continues to be very active in all regions with some highlights from the quarter being our sponsorship and support of underprivileged children in the Ghanzi region of Botswana, our ongoing involvement in getting into resources of WA and the beginning of the Mining Water living lab project in Spain, which has the aim of researching and developing innovative water treatment solutions to promote the recovery and reuse of water in the mining industry. If we now look forward to financial year 2023, at a group level, we are issuing guidance of group production of 81,000 to 89,000 tonnes of copper, 78,000 to 83,000 tonnes of zinc. 6,000 to 10,000 tonnes of lead. 10,000 to 12,000 tonnes per ounces of gold and 2.2 million to 3.2 million ounces of silver. Group C1 guidance is at USD 1.57 per pound for the year. For capital, we're guiding mine development, which is predominantly in MATSA of $80 million to $95 million. Motheo development capital of $180 million to $190 million and sustaining and strategic CapEx of $40 million to $50 million. Exploration and studies expenditure is forecast to be $35 million to $40 million, with corporate costs approximately $30 million for the year. And finally, MATSA and DeGrussa D&A are forecast to be $225 million and $16 million, respectively. And on a combined basis, G&A was $250 million for FY '22. Turning down into the production guidance at an asset level. And please note that I won't go through all of the numbers here as it will be covered in more detail later in the presentation. You will know that for copper, zinc, lead and silver, MATSA is either the main or the sole contributor with FY '23 being the first full year of production under Sandfire's ownership. DeGrussa continues to be a significant contributor to copper and gold production despite only having 4 months of forecast production remaining as the operation moves to the end of mine life in October this year. And finally, Motheo is also forecast to commence copper and silver production late in the financial year. Looking now at group production through our financial year 2023, we are also providing quarter-by-quarter outlook for metal production. You will note from this slide that copper production peaks in the first quarter, then is reasonably steady for the remainder of the year. This trend is driven by production at DeGrussa only occurring over the first 4 months of the year and sitting around the end of October as we reach the end of mine life. Gold production throughout the year follows the same path and also for the same reasons. Zinc production end to a lesser extent, lead and silver production has the opposite trend, with lower production expected in Q1 and stepping up over the following 3 quarters. The main reason for this is the progression of the mine plan at MATSA and in particular, the transition of ore sources at Aguas Tenidas throughout the year. Please note that as mentioned before, I will cover this in more detail later in the presentation. Finally, at a group level, during 2023, Sandfire will continue to actively invest in growth in the long-term future of the company with the key areas being the continued development and construction of Motheo mine in Botswana. Construction of Motheo remains on schedule with over 1,700 people on-site and the pre-strip mining as the T3 open pit remains on target. Like the rest of the mining industry, Sandfire has been subjected to global cost inflation pressures with the biggest impact from Motheo development being increased mining costs from diesel, labor and consumable costs. As a result of this, we are forecasting an increase of approximately $30 million for the development of the project. We are also in the process of putting the final touches on the definitive feasibility study for the 5.2 million tonne per annum Motheo expansion with final completion expected in the current quarter. And for exploration, Richard will cover this further, but we remain committed to building a long-term pipeline of projects across our dominant position in multiple world-class copper belts. Moving on to MATSA operations. With the formal integration of MATSA now into Sandfire now completed, we're now moving into the next stage which is optimization to get the best out of MATSA and ultimately establish a solid base for multi-decade operations in the area. To deliver this, we'll continue to improve safety performance through the development of the right culture and fit-for-purpose systems, continue the recent improvements made in mine productivity to stabilize and reliably deliver a 4.7 million tonne per annum production rate. We'll use our technical knowledge and skills to expand my life through execution of an expanded in and near-mine resource extension drilling program and undertake technical studies to convert mineral resources to ore reserves, and also establish a pipeline of new ore sources through investment in regional exploration. Underpinning all of this, and as Karl touched on before will be the embedding of Sandfire's values and close alignment of strategy for all. If we now look at back at the June quarter, MATSA's production for the period was very strong and exceeded expectations. Copper production was over 18,000 tonnes with zinc production at just under 23,000 tonnes for the period. Metal sales were slightly lower than production due simply to timing of sales, and this delivered an operations EBITDA slightly below -- sorry, at USD 51.6 million and a very good EBITDA margin of 37%. Before moving on, I would like to briefly pause to impact production for the June quarter. Since the acquisition, MATSA has delivered a significant improvement in mine production with performance in the June quarter achieving an annualized rate of over 4.5 million tonnes per annum across all 3 mines. The improved performance is primarily due to key improvement initiatives focusing on short-term planning, optimization of stope design and better management of production processes and stope turnaround. During the June quarter, some of the improvements that we saw, particularly at the end of the March quarter was partially impacted by lower labor availability at Aguas Tenidas and slightly lower backfilling rates at Magdalena. Mine grades for the June quarter were also above plan at both Aguas Tenidas and Magdalena, and this is being driven by 3 key areas, so firstly, we are seeing consistent positive copper grade reconciliation from Aguas Tenidas Stockwork ore zone, which made up approximately 80% of the mine ore from Aguas Tenidas during the period. Secondly, the improvement in stope design, blasting and management that I just mentioned previously has also delivered a reduction in dilution of grade at both Aguas Tenidas and Magdalena. And finally, changes to the short-term mine sequence at Magdalena, which is responding to changes in operational conditions delivered slightly higher grades into the quarter. When these higher mine grades were paired with operational performance in oil processing that was in line with expectations, this resulted in copper and zinc metal production slightly exceeding target and guidance for the quarter. Now stepping out to production over the full 5 months from February to June. These very same themes for the June quarter resulted in very strong production results and exceeded expectations, with copper production over 30,600 tonnes and with zinc production at just over 38,900 tonnes for the period. Lead production was almost right on 4,100 tonnes and silver at 1.2 million ounces. With reference to Sandfire's moment release dated the 30th of June this year, Sandfire reported an updated global metal resource estimate of -- for MATSA totaling 147 million tonnes at 1.4% copper, 3% zinc, 1% lead and 39.6 grams per tonne silver. This mineral resource update included made an inferred mineral resource estimates for Concepción, Poderosa and Castillo-Buitrón deposits. And inclusive of these new resources contained ore tonnes increased by 21%, with an 11% increase in contained copper and a 10% increase in contained zinc when compared to the previous mineral resource that reported as at 31 December 2019. This more than replaces mining depletion over the intervening 2-year period and confirm Sandfire's due diligence assessment of MATSA's significant geological potential. Since this time, Sandfire has also been working on updating the MATSA ore reserve, and earlier today an overall proved and probable ore reserve engine for MATSA was reported as at the 30th of April this year. Now this was 37.1 million tonnes at 1.6% copper, 2.6% zinc, 0.8% lead and 36.1 grams per tonne silver. This delivered an increase of 3% in overall contained ore tonnes with an 8% decrease in contained copper and a 5% increase in contained zinc since the previous ore reserve estimate reported as at 31 July 2021. This also replaces mining depletion over the intervening 2-year period. If we now look out to financial year 2023, we are providing production guidance for MATSA of 60,000 to 65,000 tonnes of copper, 78,000 to 83,000 tonnes of zinc; 6,000 to 10,000 tonnes of lead and 2 million to 3 million ounces of silver. Please note that we've also included guidance on the payable percentages for all elements. Finally, noting the complexity associated with production of both copper ore and fully polymetallic ore across the mining operation, we have also included a breakdown of production tonnes and grade for each of the mine of the 3 underground mines. And when combined with this guidance is copper ore production of approximately 1.58 million tonnes at a grade of 1.7% copper and polymetallic ore production of approximately 3.15 million tonnes at a grade of 1.7% copper and 3.4% zinc. The total production expected to be approximately 4.7 million tonnes from underground mining and 4.6 million tonnes from ore processing for the period. Looking at the production throughout the year. It is expected that overall copper production will be reasonably consistent with slightly elevated production in quarters 1 and 3 and slightly lower grades scheduled in quarters 2 and 4, delivering slightly lower production in those periods. Zinc is a very different story, where we will start the year at a lower production rate and step-up in the December quarter to maintain an annualized zinc production rate of approximately 85,000 tonnes per annum. This trend in zinc is again driven by mine grade and in particular, mine production at Aguas Tenidas, transitioning from a high to low tonnage rate from the stockwork ore body early in the year, which is a low zinc grade part of the ore body, and this brand down in stockwork ore production is progressively replaced by increasing production from the massive sulfide ore from the down plunge Western extension of the main Aguas Tenidas ore body. If we now look at longer-term forecasts, as part of the ore reserve process, we have been also doing significant updates on the life of mine plan, and if we look at now some of the output of the longer-term mine planning at MATSA, we completed to date indicates that copper production over the next 3 years should be reasonably consistent with FY '23 and maintain around the 60,000 tonnes per annum mark. Zinc production is expected to rise significantly over the same period due initially to the increase in the proportion of polymetallic ore to be mined, then an overall increase in polymetallic ore grade which moves closer to the life of on average of polymetallic ore reserve grade at Aguas Tenidas and to a lesser extent at Magdalena.

Moving across now to operating costs and was presented again as we did in the last quarter, the 4 historical quarters of last -- of the financial year '22 and also presented some of the same information for our guidance numbers in terms of the financial year 2023. So just to talk through these. Really, operating costs on a gross basis are driven by accessing new areas, and you can see that in the mining area in the first part of the group, and also getting to that annualized mining rate of 4.7 million tonnes per annum. The other increases that we're looking at of course -- past recent inflationary pressures are really related to predominantly zinc production, as Jason talked about, increasing zinc volumes, increasing zinc concentrate volumes. So in the first half of the year, our quarterly concentrate production is around 110,000 to 115,000 tonnes per quarter, and it rises to a range of 120,000 to 140,000 in the last 2 quarters. So that, those are the drivers, of what we're expecting in terms of gross operating costs. So looking back also at the June quarter for a minute, our guidance across mining, processing and G&A costs at MATSA was a total of $83 million, and the actuals for the June quarter came in at a pleasing, $79 million. We are guiding around 4% lower costs on a gross operating basis. in terms of guidance into MATSA into next year, which is a combination, not only of course, with cost control measures, but also, of course, in terms of we are getting some more cost efficiencies in terms of increased production through mining quantities and also through concentrate as Jason talked about, also as those zinc production numbers rise. So for the June quarter, as we, any additional cost that we've seen have really been across the areas of transport, treatment and refining, as I say, they've been predominantly driven by the higher production volumes. As a business, this is where we concentrate. We look at gross operating costs and also the efficiency of those in terms of per tonne of mining on mine, it's on processed and per tonne of concentrate movements. We don't generally tend to focus on unit cost in terms of C1. I'll talk about that a little bit more in a minute. In terms of energy costs, as we know, and we've talked about before, the energy cost is our big driver of MATSA's costs, and we do know, of course, through global pressures and uncertainties we've had a spike. We did have a spike in terms of energy costs in Spain into broader Europe. We've had an impact, of course, on our operating, on our gross operating costs, and we've seen some settling of those rates in recent months through into the June quarter. We are projecting around 200 - a base of around EUR 200 per megawatt hour into 2023. And we've also got, of course, a number of responses, which we mentioned in the March quarter, and we've added to as well. Around solar farms some work in progress in the solar farms, first olefin particular and the next one at Aguas Tenidas, we're also looking at our electricity contracts and how we are supplied with energy from various sources and also the options under how we price those with the fixed or hybrid pricing structures. We're very, very conscious of course, in terms of power prices. This is really main business around pricing rather than energy security, but we are very conscious, one, that rates have settled off those highs, but still down to quite an elevated level, and we're clearly watching that over time and doing what we can to protect our operating margins in terms of OpEx driven by energy costs. Moving at C1, and I did touch on this before, C1 as a measure. If you look across to the right, any movement in C1 is across both the 2 quarters that we've just finished in terms of the back end of quartile financial '22 and looking into financial year '23. It's really driven by zinc results. So quarter-on-quarter, year-on-year, it moves with zinc mined areas, zinc grades, zinc production and zinc price, a lot more than it moves in terms of headline costs. As I've mentioned on the operating cost side, we are focused on gross operating costs and how they -- and the efficiency of those gross operating costs. C1 is not a great measure in terms of what we use internally, but we presented here as people also completely want to see it. C1 is a very a quick measure of copper EBITDA margins on mining operations and on polymetallic mines like this one, not a great measure past that. The better measure for us is gross operating costs and efficiency of those costs in terms of tonnage and metal production. We, of course, have seen European inflationary and global inflationary cost pressures. To some extent, our reported U.S. currency is assisted by some weakening of the euro against the U.S. and in recent times, reached around parity. I think it's around $1 to $1.02 at the moment. So that is assisting in terms of reported costs in that measure. Zinc looking forward, we -- for the purpose of guidance, we are basing our zinc price for 2023 on $3,150, which is no more signs of particularly being spot at the end of the financial year. Just as a guide for anyone else who wants to run any other C1 numbers looking forward in terms of zinc price.

Thanks, Matt. So moving on to MATSA infill and mine exploration drilling. Really good year coming up with just over 100 drilling at the 3 operations. The time is there is 2/3 of this will be into drilling. So working on listing the confidence in the resource categories and they're driving through that resource to reserve conversion. More exciting to the zinc on the ground there is the mine drilling so about 1/3, 36,000 meters, looking at extensions to no mineralization at all 3 deposits, so down-plunge stride looking to offset. Probably the key takeaways there would be the [indiscernible] around the [indiscernible] looking for high-grade utilization to really help drive that operation. I think one of the positive to MATSA is that we're still constraint for the mine excluding. The development and the drilling platforms that we've got access to probably means that it's going to take time to really test them for high priority targets, and that's going to take a year or 2 to work through in conjunction with the mine plan. Stepping on to exploration. The focus here is going to be really building that pipeline and targets and maintaining a balanced portfolio. So 4 rigs active through the year, 30,000 meters on sort of exploration in greenfield drilling, split roughly 60% of the northern portion of the tenor holding working along stride from -- was in ends and Magdalena and then 40% around Sotiel, it's a really exciting under cover targets there. We're really pushing the technical work to build out the 3 big basin models because we want to take exploration to the next step and drive that target in so we can start looking at bigger mineralization or when it's deeper. But for this point of the world, we're really looking at holes testing about 400, 500 meters and moving that mindset to building these conceptual models and targets. And hopefully, coming through with some discoveries that will support the development of the operations going forward.

All right. If we now move on to DeGrussa operations. And we start by looking at the June quarter of financial year '22. Against the backdrop of mining industry labor shortages, rising COVID-19 cases in WA and the rapidly approaching mine life, the growth of operations to continue to deliver safe and reliable production throughout the period. While there's been no material impact from -- on DeGrussa operations to date, we do acknowledge that risk remains around credential production impacts end of financial year 2023, which have not been factored into the midpoint production guidance. On the other hand, operating cost pressures related to global inflation and particularly impacting labor, diesel consumables and crop transport costs in Western Australia have impacted DeGrussa of C1 costs in the June quarter and our forecast to continue. Also, as we approach the end of mine life at DeGrussa expense mining operation operating costs increased as capitalized development activity reduces in the last year of operations. Looking now at DeGrussa production for the June quarter, and as mentioned before, by Karl, the site team has again delivered strong results in line with mine plan and exceeding expectations. Copper production was slightly below 16,900 tonnes and gold production was just over 9,000 ounces for the period. Metal sales volumes were lower than production as a result of timing of shipments, and this delivered an operations EBITDA of $75 million with a strong EBITDA margin of 59%. Turning out to production over the full year. And once again, as Karl mentioned earlier, the team has closed out another excellent year, delivering corporate production of 67,740 tonnes of copper and gold production of just over 32,200 ounces for the period. Metal sales volumes were slightly lower than production at just over 65,000 tonnes of copper and again, as a result of timing of shipments. This delivered an operations EBITDA of $394 million and a very healthy EBITDA margin of 63%. Now looking forward to financial year 2023. We are providing guidance of 17,000 to 19,000 tonnes of copper, 10,000 to 12,000 ounces of gold and approximately 100,000 ounces of silver. Consistent with MATSA guidance, we have also included guidance on the payable percentages for all elements. As further context of the guidance, metal production at DeGrussa is expected to occur from July to October 2023, which is the forecast end of mine life at DeGrussa and Monty mines. After this, we will undertake decommissioning of underground mines and place the service infrastructure into care and maintenance while we continue to execute our exploration strategy in the region. Work is also ongoing on DeGrussa processing extension study. This study is based on utilizing the existing DeGrussa flotation plant with minimal circuit changes and adopting a simplistic approach to treat existing stockpiles with outside reagents. Today, extensive laboratory scale testwork has been completed, which has delivered encouraging results. The final step in the study is to undertake full-scale plant trials in the September quarter. The first plant trial scheduled for July will focus on mineralized waste and heavily transitional stockpiles, with the second scheduled for August to cover oxide processing. Following the assessment of these trials, the final decision will be made on the future of this work.

Looking at costs for DeGrussa across the period, $1.25 for C1 in terms of Q4 and moving to, which results in a $1.18 per pound for financial '22. Financial '23 is expected to report higher around $1.39 on the side there. And as you can see here, C1 is a lot more representative of actual OpEx levels in terms of gold being a much more -- a much smaller impact in terms of by product at around 10% to 15% of gross revenue. So for the 4 months, as Jason mentioned, July to October, expecting around $1.39 per pound of copper. We also have some gold hedging rolling off at the back end of DeGrussa well around USD 1,800 per ounce.

The exploration team continues to work at the greatest in our deep contextual target. We're roughly 70% of the way through the program. it's pleasing to say we've certainly got proof of concept. We had the right role, the right alteration, we have minor currencies of copper utilization. Unfortunately, at this point in time, a significant realization has been discovered. This program is tied to sit with the end of mine life. So the team are working hard to push those last few holes through ramping up late this year.

And finally, moving on to the Motheo project. With reference to our recent Victoria update released to market on the 21st of June, we're very pleased to advise Motheo construction and development continues to proceed on schedule, with first production expected in the June quarter of 2023. Also, the 5.2 million tonne per annum expansion definitive feasibility study is now in its very final stages and will be completed in the current quarter. As touched on earlier in the presentation, like the rest of the mining industry, Sandfire has been subjected to global cost inflation pressures, with the biggest impacts for Motheo development being increased mining costs from diesel, labor, consumable cost increases. As a result of this, we are forecasting an increase of $29.5 million for the development for the project, and this includes a diesel price increase by 40% or equating to $12 million; mining contract rise and fall increases of 23%, equating to $6.7 million; government import and project charges totaling around about 17% or $5 million and the balance of other minor items, contributing about 20% of this difference totaling $6 million. It should also be noted that included in the remaining cost forecast, a total of $14.5 million of contingency has also been retained for the project. And finally, Sandfire intends to fund the development of Motheo copper mine through a combination of cash and project debt. Selection of the syndicate of international banks has now been completed and final credit committee approvals are due in the September. This facility will be based on the initial 3.2 million tonne per annum base case development and integration of the potential definitive feasibility study of the 5.2 expansion project is expected to follow granting of the A4 mining license. Looking now at the development of the Motheo development time line, work throughout the June quarter has continued to proceed according to the project plan. Another very important milestone was also achieved during the period, with the permanent accommodation of village now fully available for use. With the commencement of pre-strip mining at T3 open pit in late March, progress has also gone according to plan, and mine production rates will continue to increase over the coming months. Moving forward into the new financial year, we are approaching key milestones of the completion of the process plant construction and completion of power infrastructure construction by the end of the calendar year. Given the substantial ramp up in activity in recent months and with mining pre-strip operations commencing in March, we're firmly in the phase of the project where we'll be executing across all areas. And as a consequence, as peak spend plays of the project is forecast to extend over the next 4 quarters. The graph shown includes the additional $29.5 million of additional costs covered earlier and provides a breakdown of spend in all key areas of the project for each quarterly period. It should be noted that the cost shown relates to the 3.2 million tonne per annum T3 only base case, which now totals USD 349.5 million. And as touched on earlier, as we close out the 5.2 million tonne per annum expansion feasibility study, it is expected to add approximately USD 47 million in capital costs and substantially increase the overall value of the project.

I'm going to Motheo exploration. So obviously, dominant position in emerging belts a significant round hole in there Terminal 5 drill rigs working to focus on the A1 dome, so we've been followed up changeability anomaly that have been identified from our leasing IT survey, and that continues to attract some interest. Regionally, 3 rigs tested a variety of targeted a little work on T23, which is continuing to return a large tenor -- large terms of sort of low tenor mineralization. So the team is really focused on trying to find a minimum focus for the mineralization, and people can look at the grade profile there. And then were first hold in the Okwa Complex, which is about a 100 k south Ghanzi prospective for nickel copper sulfide mineralization. We're certainly pleased with the geological results, the models holding drill and the further work you see in there.

Thanks, Richard, and thanks, everyone for listening today. And just in summary, before we go to the floor of the questions, it has been the best year that Sandfire has ever had financial '22. We have had the biggest transition for our business. We have brought some solid foundations in what is occurring in Spain and the Iberian belt of MATSA, and we'll look to continue to optimize many points of leverage there for multiple decades to come. Clearly, having a dominant position in the Kalahari Belt, we will look to get that into production to expand that to get into stable operations. And then as a business, we will continue to execute our strategic plan, and we will continue to look to leverage our significant and wonderful dominant positions in the Iberian Pyrite Belt and the Kalahari Copper Belt. And I think in this market, our plan is totally sound. And the market, as it stands in the short term, which is a belief and will not continue and cannot continue given what the demands of the future will require for mankind, and we think there are going to be some fascinating opportunities over these next 12 to 18 months. I'll leave with that open the floor to questions. But once again, thank you for your attendance for a long presentation.

[Operator Instructions] Your first question comes from Matt Greene with Credit Suisse.

Quite a comprehensive review, so I'll keep this pretty short. Just on -- I guess just on Motheo, the project finance there, the -- our December results, you highlighted that the credit committee approved the USD 160 million to USD 170 million facility, which is about 45% of your CapEx requirements on the base case. So now that you've selected your banks indicate, I see on Slide 40 that you're only expecting the final approvals to come in the June quarter next year, I would have thought you would have been able to draw this after you've committed your 55% equity share to the CapEx. So which just based on the profile is imminent. So I'm just confused as to why it's taking so long to get this project finance through the drill?

Yes, apologies it is the September quarter in terms of the credit approvals. There are a number of credit approval stages that go through these banks and the preliminary approval brings them into the syndicate, get some, get us talking about more complex terms and full facility agreements. And then the final credit approval, that then brings them into the actual facility into the process. So we expect those process to happen in the September quarter. As you say, we have selected the syndicate banks, and we are talking to them through that detail. What is probably more likely to happen later on in terms of the financial year into the back end of this calendar year and probably into the second half of the financial year is as we start to work A4 and into T3 and has released the [indiscernible], and we released, and we work with those banks into integrating really the [indiscernible] T3 and A4 together. So in their mind, it's a 2 step process in our minds, it's really 1 project. So we'll just be working through some of those details with those banks between the September quarter and the June quarter, but in T3, we expect the next stage of credit approval. The final stage of credit approval will happen in the quarter we're currently in.

Okay. So just to be clear then, you expect that you could receive that $160 million this quarter and then any sort of incremental project finance on top of that the fund would likely come towards the end of the financial year.

Yes. So that will be a bit to work out in this period of time, correct, around T3 and then into April. We may look to have higher leverage levels in terms of the combined project rather T3, but we'll work that out over the coming months.

Your next question is from Hayden Bairstow with Macquarie.

Just on MATSA, just keen to understand the cost outlook. I mean, there's obviously power prices at the moment, a key driver and pushing inflation for pretty much everything. I mean, how long do you think that settled, before that starts to settle down? Or we just don't really have any clarity on it, we should be assuming much higher prices as we ably look back over the time and the prices were 50% or less of what they are now. I'm just keen to understand, is it just power prices that's driving these much higher cost than what was originally envisaged? Or is there some other stuff about mine development and increased metered rates of ground support, things like that, that have been higher than thought.

They're a little bit higher in terms of accessing all areas. So we know that in the mining side in terms of gross OpEx numbers, there's some monies to be spent, and some of that, of course, go to capital on the balance sheet, but some moneys may be spent in terms of accessing new ore areas. Otherwise, we probably know as much as you do in terms of what global inflation pressures have been. The business has certainly adjusted through those as much as we can. As we project forward, we are looking at probably line ball, if not slightly under in terms of Sandfire budget period as well understand Sandfire's full ownership. We're projecting that those costs. Though inflationary pressures remain, but certainly don't run at the speed that we are -- we have seen over the last 6 months. We're more seeing it as a bit of a -- for now a bit of a plateauing in terms of European costs. As I also said before, in terms of U.S. OpEx, it's also a call on what the currency is doing. But certainly, euro, U.S. has come down from think $1.20 down to $1.02. So that's assisting us in a U.S. sense in OpEx as well. So -- but otherwise, to the future, of course, the whole, everyone's asking the same question around numerous industries and numerous businesses. But we're controlling what we -- certainly, what we can, and we're seeing some positive signs on the energy, European energy cost side, some positive government initiatives, and some, hopefully, some settling in terms of Russia, Ukraine and some of those issues as well.

And just on the exploration at MATSA, I mean, you've sort of started putting a few holes in now as the confidence levels from what you had so far, is it sort of as you expected? Or are you looking for some sort of better results than what you've had so far?

Look, given the work that we've been done and the exposure we'll be an we'll probably be more confident going forward than we were [indiscernible] due diligence. So I'm very pleased with what we're seeing.

Your next question comes from Kaan Peker with Royal Bank of Canada.

Two questions from me. First one on costs. Second one on cost as well. But just looking at Slide 27, the cost guidance matter in euro million, looks relatively flat, especially on processing and mining. So cost control on the site with cost peaking this quarter. The key variability comes from state and pieces like. Can you please expand on that freight component? Is it based on a standard freight rate delivering to China? And I'll circle back on the second one.

Based on market rates and rollback mechanism, but the main thing that really hits it in terms of gross OpEx, as we presented in this slide, is more driven by the concentrate volumes. So in the first couple of quarters, we're in a, as I said, 110,000 to 115,000 tonnes of concentrate per quarter, but then jumping up to more like 140,000, 120,000 for the next 2. So really, the gross the growth, even on the right-hand side, when you add it all up, most of those cost increases, as you can see period-on-period quarter-on-quarter are mining, transport and treatment related. Mining is delivered in terms of delivery simply more ore and transport treatment refining is simply delivering more concentrate as the zinc production increases.

Sure. Okay. And also just on the C1. I wanted to clarify the Q3 adjustments are flowing through the C1 for MATSA. So given that we're seeing pretty significant commodity price movements that disproportionate impact in C1?

Yes. So the short answer is yes. So when there's a QP adjustment up at, particularly on the instant C1 is only relevant, of course, by products, and the predominant byproduct is zinc. So any zinc QP will need an upward or downward movement in terms of the C1 credit. And as I pointed out on that Slide 29, when you look at the line of C1 and then you look at the line in terms of the zinc credit, it's clear that the zinc is clearly driving the majority of that movement around C1.

And just final one for [indiscernible]. Maybe if you can talk through around what you're expecting or what you're seeing on the ground with regards to the natural gas price caps in Spain. Some people are talking well sort of talking up as a possible that for a reduction in energy prices in some in southern Spain and your expectations in [indiscernible]?

Yes, [indiscernible]. Yes, basically, the Spanish and Portuguese government have done a deal with the EU where they can get gas prices in Spain. So that came into effect in May this year, and it's approved to run through until May 2023. And how that's working that it is keeping, I guess, the [indiscernible] power price at that kind of closer to the EUR 150 to EUR 180 per megawatt hour, but there is a part of the [indiscernible] from that compensation payment at all parties pay. So that's why when Matt earlier said that going forward, we're forecasting closer to the EUR 200 to EUR 220 megawatt hour, that's our current forecast. That gives us some certainty, I guess, that measure based out until May. But as we also said beyond that, we're looking between the market looking at other supply options and structure and contract structure beyond that.

Your next question comes from Levi Spry with UBS.

Nice quarter. [indiscernible]. Maybe a question for Jason. Just to help us model the increased zinc production that at MATSA, can you just maybe give me a couple of more numbers to calibrate it? Maybe the percentage of poly ore versus copper ore? I think you said we're assuming the copper production pace flat, and the first bit is about the blend, but then it's about grade. Could you just maybe give us a couple of more numbers there to help us think about what might happen after '25.

[indiscernible] in '25. Look, in terms of that overall percentage at the moment, we will start to see, if you like, gradual climb of that percentage of polyol. I don't have firm numbers with me at the moment. But what we will start to do is pretty much move after this year towards that long-term grade that we're seeing from the ore reserve cut in fairly consistently over the coming years. So I think from our point of view, if I look at broader trends, like I mentioned earlier, we expect copper production to sit around that 60,000 tonne per annum mark. And particularly with zinc production, you can see that year 3 that we put in there up and around about 100,000 tonnes. I think longer term, even beyond that, it will start to move in that 90,000 to 100,000 tonnes per annum mark is where we're looking at.

Your next question comes from Daniel Morgan with Barrenjoey.

Just on your reserve update you put out today, do you factor in the positive copper grade reconciliation or the stope design changes that you alluded to in your presentation today? Just talk through some of the factors you've changed since the last update?

Thanks for that, so short answer is yes. So we have factored in improvement in dilution on the back of the improvements that we've already made. And if our plans go -- if everything goes to the plan, we'll be factoring in further improvements going forward over the coming years as well. So the other one is, if you look at that positive copper reconciliation, that's restricted to one single part or smaller part of the Edwardson ore body, which is the stockwork zone. So it sits on the periphery of the main massive sulfide ore body itself and actually has a limited extent. We actually complete mining of that area pretty much in the second quarter of FY '23. So overall, from an ore reserve point of view, we have factored in part of that improvement, both in the ore reserve and also in our mine plan looking forward.

And just on your euro cost base, could you help us and kind of rough guide looking through what is your euro exposure, like what percentage of MATSA is true euro costs versus U.S. dollars so that we can think about how things move around?

Yes, you understand the tricky one to get an exact number on. So certainly, in terms of site operating costs, predominantly euro based, particularly across 3 mines, processing facility and other infrastructure. The labor force, of course, is in terms of euro. Moving into things like these are predominantly U.S. around the world. I would -- I'll pass it to Dave to see what he's sort of thoughts are on a makeup, but we'll probably all come up with a slightly different numbers to be honest. But the -- certainly, in my mind, we're probably talking about probably 2/3 euro and maybe 1/3 U.S. Dave may have some update overall.

Yes, that's right. going through some of the other costs, categories there, improvement finding obviously in U.S. transport costs to inland costs in Europe [indiscernible] steel price, but the raw mechanism with the offtake agreements in U.S., I think that it [indiscernible].

And then just lastly, you've lost some grade from the last reserve update if I've got that correct on the copper and the poly ore. Can you just talk to what are the key factors underpinning that? And then what is the outlook for your exploration like what are you trying to do? Obviously, increase tonnes, but what do you think the grade piece is going to look like on your targets?

Yes. Look, if you look at it, this is a typical of a, if you like, a maturing mining operation. So every good miner optimizes the mine plan, bringing forward the highest value material as soon as possible in the mine plan. So there's an element of depletion of some slightly higher grades of over the basically the last 2 years since the last reserve update. And then if you look at it as well, we have done work in terms of bringing more ore extensions into the ore reserves. So again, to me, that's just typical of any mining operation as it starts to mature. In terms of extensions, if you look at the ore reserve that we've just reported, the bulk of the drilling that was done to update that was infill drilling, which was to lift the confidence of ore reserves and firm up a mine plan over the next few years. Now we'll continue to do that because that's a good practice. And it gives us certainty in terms of future production as we look out, but as Richard mentioned before as well, there's a large percentage for next year, which is targeting resource extensions. Now we believe that we've got a very high likelihood of success given the targets that we're drilling, and we expect that we will get additional tonnes and grade coming into resources and ultimately reserves from that approach. Now the grades that we expect it's a bit hard given that we haven't drilled them as yet. But I would expect that the tenor of the ore body is retained. And particularly when we look at down plunge extensions to say, Aguas Tenidas and Magdalena probably literally, there's been no drilling down there whatsoever. So continuity of these high-grade massive sulfide zones in my mind should be expected as we move out.

The next question comes from Kate McCutcheon with Citi.

Just on your reserve update, I noticed you pushed up your core debt just to just over $800 a tonne. Some of your peers are using mid-6,000 versus spot today at 7,500-ish, can you provide some color on that assumption? And do you have any idea of how sensitive that pricing is to the NSR to the cutoff grade? And then can I just sneak in, are we still going to get an updated life of mine plan for MATSA in September?

So firstly, and Dave might liken to assist as well at some point in time. So we actually, we benchmark our peers as well as we do look at long-term consensus forecast for copper price. We understand it like that there's been a lot of movement downwards on copper price, particularly in the region in the last couple of months. The price that we set with a little bit earlier in the year. And as you can see, we've reported that reserve as at 30th or at the end of April earlier as well. So at the time we did believe that, that 8,000 mark was consistent with the majority of our peers and a prudent way to do it. Second part of your question there around does, is it a big driver of NSR? Yes, it is. Zinc, if you look at the remaining grades on ore reserve is significant. But of course, it is a driver of NSR value. And the third one, which was...

The life of mine -- are you going to disclose updated life of mine plans in that center?

So we'll be providing more information when we hold society visit in September, that certainly the intent.

Yes. Okay. And Karl, just when you wrapped up your comments, you said you were excited about more opportunities to come. Just to clarify, are you content for your current portfolio? Or would that commencement mean something else?

No, there's nothing other than having been in this industry for the last 36 years, Kate, is to say, opportunity is a great volatility has always been an opportunity for anyone in this industry to keep their eyes and ears and open for opportunities. We are extraordinarily content with the portfolio that we have presently got. And we are very much focused on optimizing the value of this portfolio and all the things that we could do to optimize operations, enhance performance find high NSR material closer to the plant side or the headframe, so to speak, and also to work on a prioritized organic program that provides for success closer to where we can create value in a shorter period of time from what we have got. So there is nothing of any particular things on we're looking at something we're doing anything. It's a general market industry comment that after 3.5 decades of looking at it, seeing the ebbs and flows of adjustments for exit crash of '87, I wasn't around for the 1930s Great Depression, but not long after. But nonetheless, when you get these massive volatile markets, it always creates opportunity one way or another. So I think generally speaking for the industry, there will be some opportunities for things to happen that we might not have expected would happen will now happen in this market. People not be able to close on transactions, other things will be going broke, assets that were going to be developed will not get developed if you're looking for finance before or after projects and commodity prices that are no longer existent certainly right here right now, we'll have different impacts with the equity providers or the bank providers or the streaming providers or guidelines overall, and you'll see a very different landscape. So when those things happen, that's when there is opportunity. So -- and you can think laterally.

Yes, that's, it's just a general market comment.

Your next question is Lyndon Fagan with JPMorgan.

Just on the CapEx guidance on Slide 55, I noticed MATSA is $120 million to $140 million, which is a bit higher than what I was thinking. Is that sort of indicative of what we should expect over the coming year?

Look, short answer, no. We are actually pushing capital development quite hard in the next financial year. And that is to make sure that we're getting access to, if you like, I mentioned before, these down plunge massive sulfide ore bodies to bring forward higher-grade material and particularly the zinc material earlier into the mine plan. So before and previously, we've said that we expect CapEx to be sort of maintained around that $100 million mark. And we do see that, I think, going beyond this year.

Yes. So there's around 100 million to 110 that's right. And then we've also got a couple of more strategic projects and probably more likely once-off improvement projects to do in 2023, including things like turning bandwidth and more one-off things like that.

So sorry, it's about $100 million sustaining CapEx, but then we've got to add a tailings down lift starting next year as well. Is there any sense of what goes on?

In this year, we're looking towards about $30 million of additional projects for the special to this 2023 year including the [indiscernible].

Okay. Great. And a related question, with the graph of winding up, have you -- and general inflation, is there sort of a rehab number that we need to think about? I see the spend there is not really material for Fy '23, but from memory, it was about $30 million. Has that gone up much? Or when should that be incurred as well?

Yes, Lyndon, so we have the provision, as you all do for accounting in the balance sheet, which is the entire closure. And we'll give some more guidance in terms of where that, how that time we'll start some immediate rehabilitation as we go into care and maintenance, but the rest of it will be likely later. And care and maintenance, we expect to be about $6 million to $7 million per annum in terms of the burn rate post what is currently as we closure from November onwards.

Your next question comes from Peter O'Connor with Shaw and Partners.

Karl just taking back to Kate's question. You've seen to talk about the new term focus about the like in brownfield opportunities and then you swung back to that more bigger picture sector opportunities. Are you referring to on Northern neighboring Motheo? Is that the substance of your opportunities comments?

No, I'm not referring to anything, Peter, at all. What I'm referring to is the concept that you would be crazy not to always look to leverage off where you have a strategic and a meaningful position. So I think you can then, we'll actually can think about that. But essentially, from our perspective, we have an extraordinary solid and wonderful footprint in the Kalahari Copper Belt, which we are developing and being production very soon now. We'll be expanding that T3 with A4. As you know, we've been talking about that. We get the full details of that in the next quarter or this quarter that we're in. That's imminent. We're just putting the final touches on that. And clearly, what's happening at aside, wherever we're going to have stable long-term operations for multiple decades, we will continue not only within our ground but with another own operations in centric circle or an area of interest to look to see whether we could potentially further enhance the value. And I suppose that's where I draw my line. What you then want to extrapolate past that is up to you.

You guys have been really busy quite a while and you match fit, so you're good at doing the M&A transactions and building, et cetera. What capacity do you have now? Is that match fitness related to, you've got a lot of up your sleeve in terms of doing more deals? Or are you flat out? Did Jason roll his eyes or Matt to talk back well and not another one?

No, no, no. We, I would say the word is -- there is a word -- but what has happened before we get to the word is that there has been a lot of work that's been happening behind the scenes in this business, the organism of Sandfire in terms of building, the talent pool to making sure that we can attract that we can secure that we can motivate that we are still working on appropriately incentivizing a quality group of women and men that are here and a part of this culture, and it's a wonderful culture of business that we are building. And they are from jurisdictions under the hub and spoke that are people all over the world working within is in this Sandfire, but it is a model that is concept of one Sandfire policy, and we're working very hard. So what I'm saying is the architecture in this business, what you don't see in Sandfire on a day-to-day basis on this piece of paper in the quarterly is probably its greatest asset. It's the engineering, it's the fabric, it's the framework and it's the architecture in the business. That business is in a strong position. Those components are in a strong position. We continue to link the talent pool. We continue to lift our capabilities. And what I would like to say is that whilst we have completed for example, the MATSA transaction, we have integrated that MATSA transaction, it is done with -- and everyone has put in an extraordinary amount of effort and everyone is smiley and everyone is happy on both sides of that transaction. That, to me, is the sign of a very well-completed and conducted level of work. The same thing is happening in Botswana with our team of 700, 800 people on the ground at the moment. I've been there numerous times where investing heavily in making sure the machinery here and this organism works and it will work globally. So that means to me, if we have a good plan, a good strategic plan, we had -- we do our homework, as we did, for example, with MATSA, and the plan makes sense, then we put an execution strategy together, and then we will execute. And when we say we're going to have a plan and talk about a plan and execute a plan, I will tell you now we will execute that plan, right? So we will continue to work on the situation. So at the moment, the most important thing is including MATSA and Motheo and developing up those situations. But I do think as a business and also leveraging off the extraordinary quality relationship that we have with our various stakeholders, our internal people, of course, our advisers, our bankers, our investment bankers, our transactional bankers, our hedging bankers, our government officials, our stakeholders on the ground, our customers, the people buy our product, their off-take partners, our creditors, all of those people, we continue to build great relationships. So I think going forward as a business over the next 3 to 5, 10 years, if there are sensible things that we could do that makes sense in our strategic plan, we would have no plans and no issue with executing them, and we could bring to the table the right resources to execute it. And at the end of the day, if it makes sense and we can do the homework, and we will do the homework and prior preparation will prevent poor performance, I think anything is possible. And therefore, to close off Peter, our imagination is our limitation. That is my view on Sandfire what we can do. So there's nothing specific we're doing right now. But I think anything is possible if we set our mind to it and if we set our minds and it makes sense, then we will be able to execute. And I suppose I'll close off at just reiterating, the MATSA transaction had a 1 million [indiscernible] was constructive and was executed at executed, and I have not seen a transaction online that go on a relative basis ever before in mine life in the resources sector. So I'll leave it at that point. I think that probably covers [indiscernible]

There are no further questions at this time. I'll now hand back to Mr. Simich for closing remarks.

Thanks once again, everyone, for listening to us on what a very long presentation of the March quarterly report and year-end results release or financial '22 off the back of what was a previously extensive report, of quarter -- the third quarter of the year. But I hope what it has given you is some greater granularity of detail of what is now the business of Sandfire, and we're really trying to provide to you that information so that you can build up your knowledge base to get a proper understanding on what is a much better business, but clearly a much more complicated business. But thanks very much for listening, an outstanding quarter and 12 months and a very solid prognosis for the business going forward in what is even still a challenging market. So thanks, once again, and we'll continue to update with the next presentation will be our full year results. I wish you all a good day. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.