Speaker #1: RAS CFO, Anthony Rechichi, our COO, Michael Holmes, and our Head of Investor Relations, Matt Collins. We'll refer at times to figures and tables in the quarterly report released earlier this morning, so it may help to have that document at hand.
Speaker #1: As always, front and center, I'll start with safety. The 12-month moving average lost time injury frequency rate, or LTIFR, finished the September quarter at 0.
Speaker #1: An exceptional performance. Down from 0.3 at the end of June. It's an excellent result and a credit to our people. There weren't any environmental noncompliances or significant incidents reported or significant environmental incidents reported during the quarter.
Speaker #1: Now, to that end, we maintain our focus on leadership discipline and continuous improvement to support our safe and reliable operations. Our objective remains a safe workplace for everyone.
Speaker #1: Turning now to production performance. Group Gold production for the quarter was 83,000 ounces. Accounting for the rain impacts, production was in line with our expectations, and noting our guidance for this year with production slightly higher in the second half.
Speaker #1: And Michael will touch on this in a little more detail shortly. Our role in sustaining costs was 3,617 dollars an ounce, and that included a non-cash stockpile drawdown charge of 114 dollars an ounce.
Speaker #1: Now, this is above our full-year guidance, as you would expect in the first quarter of a year weighted to the second half. And on that point, I reaffirm we're hold our FY27 guidance.
Speaker #1: On cash, Regis increased its cash and bullion by 93 million during the quarter to 1.28 billion, at 30 September. Now, that's after a 53 million dollar in tax payment, and it also includes a receipt of the 51 million dollar break fee from Vault Minerals.
Speaker #1: Reflecting the strength of our financial performance in the second half of FY26, we declared a fully franked final FY26 dividend totaling 20 cents per share.
Speaker #1: Now, this included a 5 cents special dividend, which returned the Vault fee to our shareholders immediately. I note we have now paid these dividends after the end of the September quarter, and that's a total of 152 million dollars that went out.
Speaker #1: Look, our messages and our actions remain consistent. Regis operates quality assets with strong leverage to the gold price. We're debt-free, we sell all our gold at spot, and we take a disciplined approach to investment and capital returns.
Speaker #1: Now, I'll touch on McFilamy's and last week's Federal Court judgment, along with our board changes and a couple of other items at the end of the call.
Speaker #1: At this point now, I'll hand over to Michael and then subsequently to Anthony, who will provide more details on operations and financial performance respectively.
Speaker #1: Michael.
Speaker #2: Thanks, Jim. Thanks, Jim, and good morning, everyone. As Jim mentioned, our 12-month moving average lost time injury frequency rate is now at 0. Teams have done a great job to go over 1 year without a lost time injury.
Speaker #2: We continue to work on improving safety, focusing on our critical hazard control, supervisor safety interactions, and our workforce-led safety programs. Gold production for the quarter was 83,000 ounces, with 56.1 thousand ounces from Duketon and 27,000 ounces from our 30% share of Tropicana.
Speaker #2: Intermittent heavy rain through September disrupted mining at our open pits, as well as all haulage to the mills. During that period, we supplemented mill feed with low-grade stockpiles which reduced the head grade for the quarter.
Speaker #2: Outside the impact of the weather, the operations performed as planned. With the weather now improving, we are back into the better-grade material, and we expect to recover the deferred production from the subsequent quarters noting that the second half of the year is stronger than the first half for ounce production.
Speaker #2: Underground mining and all processing were not affected. At Duketon, open pit mining continued at the King of Creation Mulatwell laterites Banigay Mitchell and Ben Hur open pits delivering 10.1 thousand ounces, at 0.89 grams per ton.
Speaker #2: Our underground operations at Gardenwell and Rosefont delivered 33.8 thousand ounces at a grade of 1.64 grams per ton, and this is as per the schedule and the mining sequence.
Speaker #2: Underground development was 4,344 meters up from 3,803 meters with 47% classified as capital development. The Duketon Mills processed 1.96 million tons at 0.99 grams per ton, with recovery at 89.6%.
Speaker #2: Production was 51 56.1 thousand ounces at an all-and-sustaining cost of 3,657 dollars an ounce, the main driver of the higher all-and-sustaining cost was the larger ounces produced in the quarter compared to the previous quarter.
Speaker #2: We will see unit costs improving as production increases particularly in the second half of the year. Growth capital at Duketon was 76 million dollars for the quarter, this covered the underground development of Rosefont Stage 3, the construction of the Gardenwell Pasteville plant, and the mining of the Ben Hur open pit cutback and buckwell open pit.
Speaker #2: The Paste plant will be commissioned in quarter 2, improving the overall extraction of the ore body for Gardenwell Main. As we progress through the production and filling stope cycle for Gardenwell Main, we will review the opportunities for Paste backfill in Gardenwell South and Rosefont, to improve the overall ore body extraction ratios in those areas.
Speaker #2: As we flag with guidance, growth capital this year is weighted to the first half as we start several new open pits at Duketon. Turning now to Tropicana.
Speaker #2: Regis has a tributal production at Tropicana was 27,000 ounces, and an all-and-sustaining cost of 3,423 dollars per ounce, compared with 39.1 thousand ounces at 2,532 dollars an ounce in the June quarter.
Speaker #2: The lower production came from a lower mill grade of 1.35 grams per ton compared with the 1.96 gram per ton in the June quarter, with less open pit ore mined and at a lower grade.
Speaker #2: Tropicana all-and-sustaining cost was higher in the quarter predominantly due to the lower production in quarter 1. Unit costs will reduce over the coming quarters on improving ounce production in the subsequent quarters based on the planned activities.
Speaker #2: Open pit operations delivered 7.4 thousand ounces at 1.23 compared to 21.9 thousand ounces, at 2.02 grams per ton in June quarter, as Habana Stage 4 was completed and mining transitioned fully to Habana Stage 6.
Speaker #2: The underground mines delivered 13.5 thousand ounces at 2.85 grams per ton, which is a little higher than the June quarter, with development of 1,276 meters.
Speaker #2: The mill processed 694,000 tons at 1.35, with recovery at 89.7. The development of the Habana underground progressed during the quarter and remains on target for first ore in the first half of calendar 2027.
Speaker #2: In closing, as Jim mentioned, we reaffirm our FY27 guidance, both for production and costs. With that, I'll now hand over to Anthony to take you through the financials.
Speaker #1: Thank you, Michael. Good morning, everybody. Cash generation in the quarter remains strong. Our operating cash inflow was 265 million dollars, with 175 million dollars generated at Duketon and 90 million dollars coming from Tropicana.
Speaker #1: Gold sales for the quarter were approximately 75,000 ounces, at an average realized price of 6,088 dollars an ounce, generating 454 million dollars in revenue.
Speaker #1: Referring to Figure 2 in the ASX release now, the cookie jar topped up by another 93 million dollars during the quarter, taking the total balance to 1.3 billion dollars as at the 30th of September.
Speaker #1: Two items in that waterfall chart are worth separating out. The first is the vault transaction break fee of 51 million dollars, which we received during the quarter, and is captured within the corporate cash flows in this diagram.
Speaker #1: The second is tax, and we paid 53 million dollars of installments during the quarter. You'll also notice that we sold about 8.5 thousand ounces fewer than we produced, and that is reflected in our higher bullion balance.
Speaker #1: Bullion on hand at 30 September was around 18,000 ounces, barely that nearly 6,000 dollars an ounce or totaling circa 110 million dollars, up from less than 8,000 ounces at the end of June.
Speaker #1: And note that bullion holdings are converted to cash in a matter of days. On to capital. Growth capital for the quarter was 80 million dollars and sustaining capital was 50 million dollars.
Speaker #1: At Duketon, 43 million dollars of the mine development spend related to pre-commercial production expenditure at the buckwell and Ben Hur North open pits. A further 3 million dollars went into the Gardenwell Pasteville plant and its associated infrastructure.
Speaker #1: We also spent 7 million dollars acquiring the long-term Banjuan Station lease, which is a key pastoral lease at Duketon that overlays about two-thirds of our tenement package, making it an important strategic acquisition.
Speaker #1: At Tropicana, capital spending was mostly on mine development and waste removal, with 2 million dollars in pre-production costs spent at the Havana Underground. Exploration expenditure was 19 million dollars for the quarter, and 8 million dollars was spent at McFilmy's, which includes 2 million dollars for a land acquisition.
Speaker #1: Remember also consistent with recent years, McFilmy's costs excluding any land acquisitions are expensed through the income statement. Looking at the rest of the year, FY27 production is weighted to the second half as Jim has mentioned.
Speaker #1: The September quarter results at 83,000 ounces and 3,617 dollars an ounce reflect that, and the September weather at Duketon has slightly increased that expected second half production improvement.
Speaker #1: On costs, diesel remains the input to watch, and prices increased during the quarter. Our guidance used a dollar 35 per liter, and in the September quarter we paid an average of a dollar 45 per liter.
Speaker #1: As a guide, a 10 cent per liter movement changes group all-and-sustaining costs by about 25 dollars an ounce, for gold produced at that diesel price.
Speaker #1: Now to tax, which is the largest one-off Treasury cash item ahead of us in this coming quarter. As I said at the full year results presentation in August, monthly installments are running at approximately 15 to 20 million dollars for the first half of FY27.
Speaker #1: The upcoming true-up payment for FY26 is covering the period before installments recommenced in April 2026, and is expected to be in the order of 220 to 240 million dollars.
Speaker #1: And we'll be paid in the December quarter. The one-off final settlement of our historical tax obligations represents a significant deployment in cash consistent with the provisions we've been making in our financial statements.
Speaker #1: But importantly, the strong cash surpluses we have generated over recent quarters has positions us well to comfortably accommodate these payments. Reflecting the strength of our financial position and our disciplined approach to capital management.
Speaker #1: Okay, so there are the headline numbers from me. Thank you, everybody, and I'll now pass back to Jim.
Speaker #2: Thanks, Anthony. I'd like to cover a few more points outside the operational results now. Firstly, on McFilmy's, a few days ago on the 14th of October, the Federal Court delivered its judgment in our judicial review of the Section 10 declaration that affected part of the approved McFilmy's project site.
Speaker #2: We saw Justice Stelios determine that the declaration is legally invalid. And we welcome that finding. It confirms the position that we have held since August 2024, and it was the correct one.
Speaker #2: That view being that procedural fairness was not followed in the assessment process. We expect that the current Federal Environment Minister will be required to re-determine the application for a Section 10 declaration and in that process will take into account the finding in that judgment.
Speaker #2: We intend to participate actively and constructively in the process. Now, there's no certainty on time or outcome of this re-determination, so we will continue to progress the alternative development approach.
Speaker #2: This will ensure that McFilmy's has a development pathway whatever the re-determination timing or outcome may be. As we've noted earlier, this alternative uses the integrated waste landform for co-disposal, a filtered processed ore, and waste rock, and it avoids the area affected by the declaration.
Speaker #2: Now, despite that, and to be clear for a number of practical and operational reasons, we absolutely prefer a clear, positive declaration in relation to the original Section 10 application.
Speaker #2: But being responsible managers, we have to hope for the best and plan for the worst. So that's what we're doing. Now, I won't belabor the point any further, but a lot of work obviously continues on the project, as you can see from the quarterly expenditure.
Speaker #2: Now, moving on to the Regis Board. Last week, we announced that our Chairman, James Macteer, a non-executive director, Fiona Morgan, will retire at the conclusion of our AGM on the 19th of November.
Speaker #2: This is part of the renewal process, first announced at last year's AGM. On behalf of the company, I take this opportunity to thank James and Fiona for their significant contribution over almost a decade on the board.
Speaker #2: That period included the acquisition of our 30% interest in Tropicana, and also Duketon transitioning to become a significant underground-based operation. Both have made a material impact on the way we've gone about our work and provided myself support by way of guidance and encouragement over the years, and I thank them for that.
Speaker #2: And in with the new, I now welcome Ian McLiver, who joined the board on the 14th of October as an independent non-executive director and chairman-elect.
Speaker #2: Ian brings extensive mining sector experience as a director and chair, and I look forward to working with him. Our third next item I wanted to touch on was capital management.
Speaker #2: Our 26 financial years saw a record net profit after tax of 715 million dollars, and off the back of that, a strong cash build of 667 million, we paid a 35 cent fully-framed dividend for the year, or a total of 265 million dollars, which is a 39% of our group cash increase.
Speaker #2: Our intentions on capital management are clear, and are being action. We're reliable, but responsible dividend payer. Now, looking to this year and this half, I do note that we will be carrying a reasonably significant tax catch-up payment, which Anthony described earlier.
Speaker #2: So, as I said back in August, once we're through that catch-up, we remain in a very strong position to continue to build cash. And we expect that to be reflected in our dividends going forward.
Speaker #2: On expiration, in September, we reported step-out drilling at the Rosemont Underground down-plunge of Rosemont Stage 3. This work was intended to give understanding and greater confidence in the potential for down-plunge continuance.
Speaker #2: Four diamond holes confirmed an additional 600 meters along 200, sorry, 20 to 30 meter thick segment of the host unit south of the current resource envelope.
Speaker #2: You can see this illustrated in Figure 3. We are very pleased with what we saw, with the best result, a healthy 1.6 meters at 8.8 grams per tonne.
Speaker #2: Now, of course, one swallow does not a summer make. But as you can see in Figure 3, quite a few swallows around now, and it reaffirms the strong indicators that the mineralization remains open along strike and down dip.
Speaker #2: So, despite what some might say about mine life at Duketon, we keep adding life year on year. Our expiration team have a pipeline of targets, and we intend to continue chasing them.
Speaker #2: Other drilling in the period also continued across the rest of Duketon, Tropicana, and McFilmy's, and those results will be in our next biennial exploration update later on in this quarter.
Speaker #2: Now, finally, back to guidance. As mentioned earlier, we reaffirmed the FY27 guidance as unchanged. Group production, 360 to 400,000 ounces, all sustaining costs, 2990 to 3390.
Speaker #2: And on costs, and I'm sure you're all seeing this across the industry, as we all do, diesel remains a key external input to the to be monitoring as Anthony outlined earlier on.
Speaker #2: So, to summarize, group production, 83,000 ounces was in line with our expectations, taking into account the September rainfall. Cash and bullion rose, 93 million to 1.28 billion after 53 million dollars in tax pay.
Speaker #2: We declared a record NPAT for FY26 and paid 152 million in fully-framed final dividends for the second half, giving a total dividend of 265 million fully-framed.
Speaker #2: Which is the current yield of 7.2%. We reaffirmed the FY27 guidance is unchanged for both our operations, noting a slight increase in the weighting to the second half.
Speaker #2: At McFilmy's, pleasingly, the federal court has found the Section 10 declaration made by the minister in August 2024 was legally invalid, and will now head back for redetermination.
Speaker #2: At the same time, we continue to progress the IWL pathway in parallel drilling at Rosemont Underground has confirmed another 600 meters of host unit south of the current resource modeling.
Speaker #2: And our board renewal is well underway, with Ian McLiver joining us as chairman-elect. Regis remains unhedged, debt-free, and well-placed to keep delivering long-term value to our shareholders.
Speaker #2: Thanks all for your time this morning. Darcy will now open it up, please, for questions.
Speaker #1: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Speaker #1: If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Jonathan Sharp with JP Morgan. Please go ahead.
Speaker #3: Yeah, hi, Jim and team. First question's just on Duketon Underground. So, the grade was down a bit, tons were up. You've said that it was as per schedule in mining sequence, which is good, but just wondering about how the next three quarters look there.
Speaker #3: Should we assume grade's going to continue to be down with volume up, or does grade start cleaning back up as well? Thanks.
Speaker #2: Yeah, thanks, Jonathan. Look, I think I wouldn't read too much from one quarter's movement to another. As Michael sort of touched on, these are just movements that we see in our schedules.
Speaker #2: I wouldn't be surprised if in a quarter's time, there might be tons downgrades up or tons up, grades up. It's just a variation. I wouldn't overread it, as we say, as we've said in our guidance, we expect to come in on plan and that variation that we're seeing is part of that plan.
Speaker #3: Okay, no worries. And just second question, McFilmy's, congratulations on the court ruling. Good news for Regis, good news for the industry. But just, yeah, you've said you hope for the best, plan for the worst, which I assume is continuing with the IWL pathway.
Speaker #3: But just interested in at what point does it become a point of no return and you basically go ahead with that option?
Speaker #2: Yeah. Look, we've at what point is the point of no return? Once we've made FID, really? I mean, as we've indicated, we expect that this process of redetermination, assuming that's where we go, is probably going to take a little while.
Speaker #2: One of the things that I'm sure the department will want to be wanting to the department that considers this part of the act will be wanting to do is ensure that it follows the right fair process this time.
Speaker #2: So I'd imagine that'll take a bit of time. So we don't know how long that'll take. If we look at the program, the timeline, because this thing has been delayed, we've had to other things have happened in the area, and we've had to redirect a little bit of about 10 or 15 kilometers of our pipeline.
Speaker #2: That requires re-approval. It's all quite frustrating. We sort of experiencing things on the project now that other result of this sort of ongoing delay, because things change, so we have to roll with the punches on it.
Speaker #2: I expect that when we look at our schedules, either way, if we look at the IWL scenario, we're anticipating that we'll be in a position to finalize that and approve that by the later in the probably in the second quarter of calendar 28.
Speaker #2: So whatever that is, a year and a half away, something like that. If we haven't got a declaration, then of the on the Section 10, a new declaration, then we'll be having to make a decision at that point as to whether we wait or whether we push on.
Speaker #2: It'd need to be clear, though, the declaration that was made over the mine site we really need our desire is to get that cleared because it's quite it's made life very difficult for us to be able to operate.
Speaker #2: It's cut out. It's basically put a line right through the center of our mining of our lease and our farms. And we really need that flexibility.
Speaker #2: So I don't want to suggest that we're we don't want a positive outcome on the Section 10. But in the event that it takes too long or there is an adverse finding, there is a pathway for us, and we'll be ready to make that call, as I said, in the second quarter of calendar 28.
Speaker #3: Okay, great. Thanks for the detail, Jim. Appreciate it. I'll pass it on, and I'm sure it is frustrating with that. Thanks.
Speaker #2: Yeah, thanks. Thanks, Jonathan.
Speaker #1: Thank you. Your next question comes from Adam Baker with Macquarie. Please go ahead.
Speaker #4: Hi, since I'm Jim. Maybe just following on the McFilmy's. Yeah, just looking at your slide deck, your release of the market today. I mean, you've, I guess, highlighted some of the district-scale opportunities there at McFilmy's.
Speaker #4: With the historic intersections, you've got a discovery ridge in Kings Plains. Just wondering if you've given any thought to increasing the exploration expenditure there for the next couple of years following the, I guess, the positive federal court decision.
Speaker #2: Yes, look, this is prime country, right? That Lochland fall belt area is extremely attractive, as you can see by just Katie, just up the road and some other we've got quite a bit of ground there.
Speaker #2: What we're trying to do is get the balance right behind proving that there's more than just the open pit. Versus actually expending money on something that's quite a few years away.
Speaker #2: One thing's for sure, we can see the mineralization continuing at depth. It's not cut off. So I think there's a very high potential for a run for underground alone, although a mill of the scale of McFilmy's of whatever it'll about six or seven million tons, we won't be able to get all of that from underground post the pit completion.
Speaker #2: So there's certainly a reason to be looking. Elsewhere, we know we've got discovery ridge already down the road, 400,000 ounces of resource sitting there.
Speaker #2: So we've already got a reasonable amount of assets there that we can look to exploit. But we will certainly be looking to do a bit more on exploration than we have done over the last five years or so.
Speaker #2: It's just a question of how much and how fast we want to run with that. And we're still assessing that against our other exploration priorities.
Speaker #4: Yeah, that's clear. Thank you. And I guess the second question, just pertains to your dividend policy of the 25 to 50 percent half and half cash build.
Speaker #4: I guess, how should we be thinking about the treatment of the catch-up tax payment of 220 to 240 during this quarter? You've got some time to think about this, and so do we.
Speaker #4: Given we're not going to find out what your dividend will be until February next year, but should we be treating this as an abnormal item and expecting you still to pay a dividend for this half?
Speaker #4: Just given your strong cash balance, or just pertaining to include that catch-up tax payment, your cash actually your cash build is negative. So yeah, just how should we think about that?
Speaker #4: Thank you.
Speaker #2: Yeah, obviously, it's a little bit tricky to say too much that might be taken as an indication of what it could be because that's up to the board to decide in late January and February when we see what we've actually done.
Speaker #2: But probably a good way to look at it is just have a look at our policy and how it looks to treat some of these tax provisions.
Speaker #2: And we've already taken that one into account when we made dividend payments about a year ago, I think, or probably about eight or nine months ago.
Speaker #2: So we can take that into account. And by that, I mean exclude its impacts on our overall position. So it certainly will give the board some flexibility as to how to think about the dividend.
Speaker #2: And of course, these are one-off, right? That's our point, is that the cash and bullion at the end of this quarter will probably be unless the gold price really surges, which of course it could do, but it'll probably be a little bit more challenged relative to where it ended in September.
Speaker #2: But it's not due to the fundamental structure of the business. It's a one-off tax catch-up that will be well clear of and we'll be looking at a we'll be then sort of into January, February, we should be clear of all of that noise and, in in fact, heading straight into the stronger second half.
Speaker #2: So all of those factors will play into how the board will think about applying that policy and where it lands on the final number.
Speaker #4: Yeah, that all makes sense. All right, thanks, Jim.
Speaker #1: Thank you. Your next question comes from Levi Spry with UBS. Please go ahead.
Speaker #2: Hi, Levi.
Speaker #3: G'day, Jim. G'day, team. Two questions, please. One on McFilmy's again and one on Trops. So just in terms of the news on the ruling being invalid, obviously great news.
Speaker #3: Can you just talk a little more through what milestones you expect from here? Will they give you any indication on how long the redetermination will take?
Speaker #3: Or are we just sort of still thinking about June quarter 28 is sort of the next marker in the sand?
Speaker #2: Yeah, look, it's a good question, Levi. The short answer is no. There is no timeline. It's not like some other processes where there's a set time schedule that has to be followed.
Speaker #1: Pardon me, this is the operator. It looks like we've just lost connection with Jim's line. Please stand by while we get that reconnected. Pardon me, and now reconnected.
Speaker #1: Please go ahead.
Speaker #2: Hi, can you hear me?
Speaker #3: I've got you, Jim. If you can hear me.
Speaker #2: Yeah, yeah, sorry, Levi. Obviously, something happened with the call. I'm not sure where I got cut off, but whatever you missed was some of the best pros that you would ever hear in your life.
Speaker #2: So I think the question was, oh, timing. No, look, we don't there is no set time. And that's why we have to follow the other the second line of on the IWL.
Speaker #2: The one point that I would make, I think that's most important, is that however the department goes about doing it and however long they take, we need to make sure for the sake of all parties that it's done in a manner that doesn't involve a repeat of what happened the first time, which was it just didn't follow a fair process from our perspective.
Speaker #2: So while we might want it to be rushed, it's probably more important that whatever the updated decision is, is done in a manner that means that it just it's clean and it's tight and it can't be challenged.
Speaker #2: Or it's not open to this unfair process claim. So we're very pleased to have got the outcome. It's justified our view that we were treated unfairly.
Speaker #2: But we need to make sure that the process going forward treats everybody fairly. So that we can all be comfortable that whatever the new decision is, is the right one.
Speaker #2: But in the meantime, we'll just work on the basis that if it happens early, that's great. If it doesn't, we'll continue with our IWL scenario.
Speaker #2: As I said, even if we do proceed down the IWL scenario, we really want a positive outcome because we need access to that ground.
Speaker #2: We can't go on to any of that area because of the restrictions the original restrictions that the manager put on it. We can't and basically runs right through the center of our lease.
Speaker #2: So it makes life very difficult for us, and it's important that it gets resolved.
Speaker #3: Yeah, okay. Thanks. Yeah, thanks, Jim. And so maybe just this one on Tropicana. So can you just remind me of, I guess, the outlook through the course of the remainder of the year or maybe even the next 12 to 18 months in terms of where you're getting the call from and how I think about the grade profile?
Speaker #2: Well, certainly, the open pit continues for the next 18 months at least. We've got open pit and underground feed going into the mills. So we're not expecting to see any material change as we're seeing now, there'll be fluctuations from quarter to quarter like there are across any mining operation.
Speaker #2: But we won't see the reduction in open pit feed for probably another couple of years.
Speaker #3: Okay. Thank you. Thanks.
Speaker #2: No worries, Levi. Sorry about that intermission.
Speaker #1: Thank you. Your next question comes from Daniel Morgan with Barren Joey. Please go ahead.
Speaker #3: Hi, Jim and Tim. Quite clearly, weather impacted you during the September quarter. Just wanted to understand what has impacted your plans from that, i.e., if I look at the physicals you did in the quarter, you did quite a bit of material movement at Duketon.
Speaker #3: Was that on plan? Was that materially impacted, or was it haulage around the site of all? Could you just provide a bit more color on where you sit versus plans, maybe two to three months ago?
Speaker #2: Yeah, Daniel, I think the answer to that is pretty well as Michael sort of covered off. With the rain, we were able to carry on in some areas, and we did see a good some lift in TMMs.
Speaker #2: But the rain also impacted our access in ore in the bottom of some pits. And also made it hard for us to transport ore around our site on the long haul roads.
Speaker #2: As the weather clears, and we're back in, so what it means is that lower-grade feed we were planning to put in later in the year or we just had to shuffle it around in the schedule to keep the mills going.
Speaker #2: It's a short-term issue. And no long-term implications.
Speaker #3: Yeah, very, very, very clear. And just on McClellan News, I mean, I echo everyone here. Great for you, great for industry. The decision. Just wondering, is there anything you can do on the project?
Speaker #3: I mean, you've lost two years through no fault of your own. Is there anything you can do to compress timelines? Is there any early works or anything?
Speaker #3: Or is that too risky to undertake given you don't yet have a formidable project, as you given the various roadblocks?
Speaker #2: Yeah. Yeah, look, it's a tricky one. I mean, it's a substantial project. We want to make sure that we're going to get everything through.
Speaker #2: And I mean, this is part of the concern that you have is that you're going to have approvals and then you cannot have approvals.
Speaker #2: Which is basically what we experienced. Whatever it was now, two years ago when we had all the approvals, both state and federal, and then the section 10 decision was made, which sort of made life impossible for us.
Speaker #2: We always look to see whether there's something we can do to accelerate the timeline. But the reality is the IWL is a for example, is a new concept, and it does require work to get that approved through the planning process.
Speaker #2: And as much as I'd love to be able to say we could accelerate that, we have to run the process that the state is reviewing.
Speaker #2: And I would point out that the New South Wales state is doing a lot to try and help expedite that as much as it can.
Speaker #2: But of course, as you'd expect and hope, that doesn't mean taking shortcuts on some on important assessments. But I'd certainly say to say that both the state is really trying to help us find ways to progress responsibly through this.
Speaker #2: It just takes time. We said it at the time when we were told that it was there was an easy solution by to find a new tailings location.
Speaker #2: It clearly wasn't. And it still isn't. I think we said it'd take five plus years, and it's probably the timeline that we're going to run to.
Speaker #2: So we're looking for everything that we can to expedite it, but really it's the tailings the tailings disposal is the thing that's going to is a key thing for us.
Speaker #2: And also some of the modifications that we've had to make to the pipeline line because of what we had approvals to do three years ago.
Speaker #2: Different parties have changed, and we've had to redirect about 10Ks, which all requires repermitting. It's quite frustrating. All there's the obvious costs and there's the hidden costs of delays and that's another one.
Speaker #3: Yeah, thank you. Just last question. I mean, at the margin, the decision obviously means that McClellan News is more permittable incrementally than it was before or more of a permittable project.
Speaker #3: Does that mean I'm interested just hearing how you think about growth? Because it was potentially a stalled project for a while and maybe you had to look at inorganic opportunities as a growth avenue.
Speaker #3: Now it looks more and more likely it might be a project that's executable. Does that change your thinking about growth in other areas at all?
Speaker #2: Yeah, it's a good strategy question there, Daniel. Look, McClellan News is definitely on our one way or another, this will be developed. This will be a producer of the 30s.
Speaker #2: Which may sound a long way away, but it's only three years. So that's and we've got the capacity already with our cash and bullion on hand and our capacity to add to that over the coming years.
Speaker #2: To basically build that from a standing start. I think if we were in a position where we could build it to we could start building it today, we could do that without any debt.
Speaker #2: So we're in a strong financial position to be able to take advantage of that of the McClellan News project and we're charging full steam ahead at it for FID in first half of '28.
Speaker #2: That doesn't preclude us considering other growth opportunities. It's just whatever we look at and that's inorganic ones, whatever we look at, it's just got to be we want to make sure that it's value accrued for our shareholders.
Speaker #2: And doesn't overly it doesn't compromise our ability to execute McClellan News because that's a great value add as well. So pursuing the McClellan News project and.
Speaker #2: In this position to be able to do it does not preclude us from looking at other growth opportunities. As well.
Speaker #3: Okay, Jim and Tim, thank you for your perspectives.
Speaker #2: Thanks, Daniel.
Speaker #1: Thank you. Your next question comes from Tiago O'Hare with Citi. Please go ahead.
Speaker #3: All right, thanks. Thanks, everyone. Quick question on my side, still on McClellan News. Going back to the previous design, I know that it's quite early, but do you have any rough estimate on how much could you save on CAPEX and OPEX compared to the one that you were pursuing after having this revoked?
Speaker #2: Tiago, are you asking what's the capital difference between the two scenarios?
Speaker #3: Exactly. Just rough general ideas. I know that you're still going to detail this in way better, but just to have a broad sense.
Speaker #2: Yeah, I mean, we our capital estimates were updated for the IWL scenario. And what we saw was something of the order of about 50 to 80 million dollars more in CAPEX for the IWL scenario.
Speaker #2: Obviously, there's some pretty significant savings from not having to build a tailings storage facility. And all the earthworks associated with that. But that's offset plus a little bit more by the filtering equipment that you've got to put in to handle the to dry out the processed ore.
Speaker #2: So we see it's a marginal increase in the CAPEX was our but still, it's still a reasonable chunk of money. What we also saw was an increase in the operating costs and that was to the order of something like 150 to 180 dollars an ounce, which accounted for the power the maintenance and running of that filtering filter press facility plus the trucking and the extra handling required to appropriately co-mingle the dried out processed ore with the waste rock.
Speaker #2: So there's certainly a difference there, not a huge difference in the capital, but enough to be noticeable. And also, a change in the operating costs.
Speaker #2: But nonetheless, whichever way you look at it, I mean, the returns on McClellan News even with the IWL scenario are still quite impressive. I mean, I think at a $4,000 gold price, the internal rate of return still nearly 22% after tax and an NPV of over a billion dollars.
Speaker #2: And that's a $4,000 Aussie an ounce. So either way, that project's a cracker.
Speaker #3: No, that's great. And Jim, just another question. Garden Well mineralization now is confirmed, right? And also I think Rosamont State Street extends like 600 meters south of the current design.
Speaker #3: So I know that you have a December reserve update, but should we read this that maybe this would push the stone to underground life maybe extend this five year reserve life of the group?
Speaker #2: Look, I mean, what our confidence in these ore bodies and how they progress is quite high. But what
Speaker #5: What we want to be able to do, and the reason for doing this down plunge extension drilling, is to show the physical evidence that the mineralization continues, and and therefore by extension.
Speaker #5: Are we justified in being— are we justified in being confident that that mineralization and therefore that mineability will continue? Obviously. To get reserves-quality extensions, we've got to do a lot more drilling.
Speaker #5: But in much the same way as we do extend, you know, we've done some deep down plunge drilling at Tropicana to show that it extends down You know, same lithology, same thicknesses, same grade.
Speaker #5: We've done that now at Rosemont and at Gardenwell South and at Gardenwell Main. So we are drilling You know, you certainly could source off it because it's only a handful of holes, but I tell you what, I'd much rather have 5 or 6 holes that have all intersected thicknesses and grade.
Speaker #5: To build my confidence that that continuity is there. You know, time will tell, but I would be certainly saying there's a reason why we're doing it and there's a reason why we're presenting it for people to look at and draw their conclusions from.
Speaker #5: Hard to argue with the facts.
Speaker #6: That's clear. Thank you so much.
Speaker #7: Thank you. Your next question comes from Paul Liggers-Davries with Bank of America. Please go ahead.
Speaker #5: G'day, Jim and team. Just looking into Q2, you've got a number of open pit opportunities at Duketon that are starting up. Is the general move to increase material volumes
Speaker #8: ahead of and build stockpiles at the operation?
Speaker #5: No, not a conscious decision to build stockpiles ahead of processing. What we do is like most operations, we'll grade stream. You know, we'll run a, we'll run a pit and we'll feed the higher grade in while we've got the capacity in the mill.
Speaker #5: And if we're running that mill at full capacity, then we'll stockpile We'll maintain the pit for efficiency. You don't want to turn pits on and off, you know, just based on feed, and we'll build up stock.
Speaker #5: We'll build up low-grade stock. Stockpiles while we're feeding the the appropriate, the the better grade feed, and then over time when the pits finish and we run out of.
Speaker #5: higher grade, we'll start to run that low-grade material through. And really, that's— we see that in patches all over the site. We've got low-grade stockpiles from old pits, and we do a real balancing between a high-grade feed from a pit versus the lower-grade feed from stockpiles.
Speaker #5: And quite frankly, sometimes you can make pretty good cash off those stockpiles like we showed at Jupiter North last year. We're processing very low-grade stockpiles there that have been built up over many years and made some very good money out of it.
Speaker #5: Now we're back at Dugden North running, getting ready to start significant production from Buckwell. That's where a lot of the TMMs are being moved.
Speaker #5: And we'll see a combination of lower-grade stockpiles being built while we're also feeding higher grades into the mill. So it's all part of the strategy, but I wouldn't be, you know, you wouldn't run a pit just to build stockpiles.
Speaker #5: We wouldn't do that. We'll run the pit. to produce feed, and stockpiles are built in that process while you've got excess production from the pit over and above what your mills can take.
Speaker #8: No, of course, I understand that. On the stripping ratio for Tropicana, obviously up significantly quarter on quarter. Was that a function of the access given the rainfall, or was that a planned high stripping quarter?
Speaker #5: I think it's a bit of a combination of both. You just see that, you know, swings and rounds from quarter on quarter. I wouldn't read anything sinister in it.
Speaker #5: It's just a You know, sometimes you've got— sometimes the guys are moving a lot more material. I do know that the rain did have some impacts, but they'll all that the swings and roundabouts will come out.
Speaker #5: Over time. Thank you.
Speaker #7: Thank you. There are no further phone questions at this time. I'll now hand back to Jim Beyer for closing remarks.
Speaker #5: All right, thanks, Darcy. Thanks everybody for your questions. Apologies for the technology dropping out there on that Q&A. And as always, if you've got any follow-ups, please get in touch and we'll do our best to answer them.
