Regis Sources Ltd (RGRNF) CEO Jim Beyer on This autumn 2022 Outcomes – Earnings Name Transcript


Regis Resources Ltd (OTCPK:RGRNF) Q4 2022 Earnings Conference Call July 26, 2022 9:00 PM ET

Company Participants

Jim Beyer – CEO, MD & Director

Conference Call Participants

David Coates – Bell Potter Securities Limited

Alexander Barkley – RBC Capital Markets

Andrew Bowler – Macquarie Research

Patrick Collier – Crédit Suisse


Thank you for standing by, and welcome to the Regis Resources Limited Quarterly Briefing. [Operator Instructions].

I would now like to hand the conference over to Mr. Jim Beyer, Managing Director and CEO. Please go ahead.

Jim Beyer

Thanks, Ashley, and welcome, everybody, to the June Quarter 2022 Results. Joining me is Elena Macrides, our Company Secretary; Stuart Gula, our Chief Operating Officer; Tony Bevan, our Interim CFO; and Ben Goldbloom, our Investor Relations Executive.

What I’d like to do is slightly different to the way that we’ve handled these in the past. Rather than run through the quarterly, we’ll probably move through some of these the results fairly quickly. Obviously, at the end, we’ve got an opportunity for Q&A, but there are a couple of things that I’d like to talk about in relation to our outlook and our assets at Tropicana and at Duketon. So I would hope that everybody has a copy of the technical issue. I just hope that I’ll talk to the presentation, and I’ll just make sure I try and remember to say what slide I’m — what page I’m referring to. So with the — you’ll find it helpful if you’ve got the presentation pack that we sent out with this — with the quarterly release sitting in front of you.

Looking first at the June quarter results. We’re very pleased with it. It was a strong quarter. From a safety point of view, our lost time injury frequency rate was at 1.1, which is still sitting at about 40% below the gold industry average, which is great. Of course, it’s not good to have a rate at all, but it’s pleasing to know that the effort that the team is doing is continuing to deliver improved results there on safety.

Production-wise, it clearly was a strong quarter for us with a record quarter and also that flowing through to a record year. We came in on guidance, the restated guidance, certainly comfortably. And as foreshadowed in our earlier release this month, the all-in sustaining cost came in slightly above the guidance at $1,556 for the full year, which under the circumstances and the inflationary pressures we think is pretty reasonable.

We did see some good positive impacts during the quarter as the high shear reactor was commissioned, as we had mentioned, I think, in mid-April, which was a little bit later than we’re anticipating in our early plans from a few months beforehand, but COVID impacted on that. But certainly, once that piece of device was commissioned and running, you could basically see a performance change overnight. It was a fantastic addition to our plant. Something that we’ll be leveraging off going forward as we alluded to in our outlook.

The mining performance continued to be strong from — at Duketon and delivered into our requirements. We did see some impacts at Tropicana, which less so on this year’s production performance, but certainly seen in some dragging of our growth capital costs and our delay in getting into Havana high grade by a few months this year at Tropicana.

All in all, I think not a bad result considering the challenging COVID environment that we’re in and the inflationary pressures that we saw. And through all of this, we managed to build our cash by $64 million, up from — up to $231 million to the end of June.

On Slide 4, we’ve got a waterfall chart showing the buildup and the expenditure of how that — a bit more of the detail on how that cash build was made. I won’t go into that. It’s pretty well laid out in the quarterly.

Importantly, now moving on to Slide 5, talking about our guidance for this year. You’ll see our production guidance is a bit lifted from our actual last year. Our total guidance range, 450,000 to 500,000 ounces for the year. All-in sustaining cost is $1,525 to $1,625. So we’re seeing it being reasonably steady compared to the year just gone.

We see a lowering in growth slightly at Tropicana. And there is a bit of a carryover, as I mentioned before, where we’re seeing the Havana cutback continue to be classified as growth capital until we get into the ore proper, which we’re anticipating will be around about the middle of the year in late December, early January. So that growth represents the remaining there for the 6 months. We also see some growth capital at Duketon as we bring our new deposit Ben Hur. You’ll recall we bought — purchased a couple of years ago. That’s due to be set up and coming into production, which is a new 5 million new growth source of life. The Garden Well South underground continues to be developed, and we’re anticipating that will come into — we’ll start the first stoping later on in the, in the December quarter. So there’s a bit of growth capital still associated with that as we complete the initial phase of that development and also a little bit of ongoing at Rosemont Underground as part of our seeking out new and additional reserves outside the current life of mine plan.

As I mentioned, the production is lifting certainly at Tropicana and Duketon, and I’ll cover those in a little bit more detail as I come to those over the coming slides.

Slide 6 is really a useful investment light, and I’ll talk through these in a moment, but you can see we have a strong financial position. As I mentioned, $231 million in cash and gold on hand. The net — with a net debt of just under $70 million.

Looking a little bit closer at some of the other areas, if you move on to Slide 7. Our ESG is certainly continuing to improve. I’ve discussed safety. Our female employees sits above industry average. And in the total employment numbers in our workforce, you can see the other statistics there for gender diversity across our business.

On the environmental stewardship front, our performance continues to be strong there. Of interest on both — at both the Tropicana and at Duketon, we’ve had some projects and studies underway to look at renewable energy sources to — well, certainly, at the moment with the current diesel price, to reduce our costs at Duketon, where we use all our power comes from diesel. We’re looking at a solar farm to certainly partially offset our emissions and our costs of diesel. And at Tropicana, there’s a project that’s being assessed at the moment in the final stages that given its extensive life, and I think this is another reflection of how much confidence does sit in the life, there is a proposal to being finalized at the moment to incorporate a solar farm and a wind farm to help supplement the power and reduce emissions there. As I said, both of these projects are in the final stages of approval.

Looking across to Slide 9, I just want to talk about now something that we haven’t really done in the past, and let’s give a little bit of an outlook on where we see our business growing. And this is from an internal point of view. So we want to grow our business or more importantly, we want to increase our shareholder value. And we want to get the right balance between short- and long-term value there. And we see that as we look internally, we have potential to continue to grow our business up to this 500,000 — and we target this plus 500,000 ounces per annum production rate. It’s certainly a target that we believe we’re capable of driving to.

What are we doing? Well, we see a pathway that can get us to that target of 500,000 from internal sources using both some of our existing, what we call mining inventory and also some mineral inventory. And for these, for example, we see Ben Hur is an important part of helping us to lift our production as well as Garden Well Underground.

We also have other potential opportunities, which we’re talking about. We haven’t finalized them yet, but they are certainly more than lens in our eye, which is the Garden Well Main area, I’ll discuss a little bit further on, and a new area — or it’s actually deposit that we’re working and drilling on at the moment that doesn’t sit in — it doesn’t sit in any formal inferred resource, but Commonwealth, which is up feed potential for Duketon North is certainly another one of these potential, although that’s, to be honest, the numbers aren’t included in our in this growth outlook here. But this is, what I’m saying is that there’s more potential than what we see just on these plans.

And what we’re basically anticipating is that over the next 2 or 3 years that we’ve got, we’ll run in this range of 450,000, and we’ve got the potential to run up to 500,000 ounces. And then beyond FY ’25, there’s a very strong case for us to be able to deliver plus 500,000 ounces per annum. If we include the — clearly, the yet to be approved, but the McPhillamys project and with its production being a real step-up in that production range. So it’s a key area for us now.

What we’re doing we’re indicating that these are the things that we’re driving it to increase our value and our value growth and production growth outlook in the — over the next 3 to 4 years. We’re basically building on our current reliable pillars of Duketon and Tropicana.

Maybe just moving on to Slide 11, I’ll talk a bit more about how that might look for both of those and why we are confident that there’s growth potential.

At Tropicana, just touching on the guidance for this year, it’s 130,000 to 145,000 ounces, a lift on the current — on the year just gone, $1,350 to $1,450 an ounce. And we can see that Havana — sorry, Tropicana will increase up to at least 150,000 ounces as we’ve been talking for quite some time to 450,000 to 500,000 ounce range as well and truly within our grasp. And as you can see, we’re confident that we can deliver into that asset. We’ll be able to deliver this circa 150,000 ounce range from FY ’24 onwards.

Importantly, we also see growth capital starting to decrease. I mentioned before we still are doing work at the Havana cutback, but that growth capital expenditure will drop off at the end of this calendar year or thereabouts, and then we’ll move into all our costs being treated as sustaining there. We like the asset. We continue to love it. It’s 10-plus years, and it’s a strong cash generator.

The interesting thing that we’re also — the project that the site is undertaking, and it’s just kicked it off as this program called the Full Asset Potential, FAP. The Full Asset Potential is a review that’s being driven across the Anglo Group across their sites. I think Tropicana is the second one — second cab off the rank. We’ve been in on the briefing sessions and discussed it with Vane, the group that are leading that project at Tropicana. It’s really focused in a couple of areas, looking to understand all the bottlenecks, making sure that the strategic — the best value has been identified in its medium-term and its strategic extraction plans, but it all looks to find opportunities for the more routine cost efficiencies and cost reductions.

So we’re looking forward to that. That’s a program that’s expected to take something in the order of about 3 months to work its way through. And then, of course, the execution of it will be something that will be managed on an ongoing basis.

Slide 12 is really when things — we can show that why we’ve always felt that there’s been great value at Tropicana. That slide shows a 3D view looking down on Boston Shaker and Tropicana. And you can see the areas there where the red squares or red rectangles are around the next target areas. So this is where we start to see this rolling addition to the reserves as we go to areas where we’ve got plenty of SNFs, and it’s clear that there’s a mineral inventory there by drilling it out in detail so that we can get that converted into inferred and indicated and ultimately converted across to reserves. And these are some great opportunity now. And the plan is that these areas that are boxed in are the next immediate targets. And in fact, I think you can see in Tropicana, the development that’s going in to give access over the top of that.

The interesting piece that’s been added into Tropicana just recently is this area called — or this item called the Havana Link. Now a scoping study was done looking underneath the existing Havana pit to see what the potential was for new underground area, one that basically wasn’t included in plans. And that identified that there is certainly scope for an opportunity, and the work is now in progress for a pre-feasibility study, PFS, to be done.

And as part of that, exercise in building our confidence in the resource and reserve potential sitting underneath the existing bottom design of Havana pit, there’s access development that will link, the 2 things that will link into the Havana pit, which will have material improvements — provide material improvements for the Tropicana underground just by improving its ventilation but also there’s a drive that will head across to the area or underneath Havana where we’ll be able to drill out and do some more confirmatory — confirmation drilling underneath that area that’s being focused on. But as well, it provides — it’s clear that there’s mineralization sitting between Tropicana and Havana and it will be doing some exploration drilling looking to see what potential can be brought into our production plans as well. So we think that’s a great addition to the life extension story that doesn’t just exist at Boston Shaker underground and Tropicana, but now there’s a new potential area that’s clearly opening up.

Slide 13 is one that really just emphasizes or illustrates in a different way how we think that even that red boxed area on the previous slide that we showed you, there’s more areas sitting further down. As you can see on Slide 13, if you look on the diagram on the right, there is a hole of 320-odd meters below or down plunge of the inferred material giving us confidence that, that mineralization clearly has the potential to carry on, and there’s no end in sight at the moment. So we think that there’s plenty of life potential in these 2 and potentially 3 underground areas.

Moving on to what’s going on at Duketon on Slide 15. The production guidance for the year 320,000 to 355,000 and the all-in sustaining cost of $1,550 to $1,650. And we see growth CapEx is, I think, down a little bit on prior year, but we certainly see that starting to decrease from FY ’24 onwards, as we will have brought Ben Hur online and Garden Well and the 2 key areas that are drawing capital.

There’s some — on that page, there are some other aspects of how we see production being sourced from. For example, you can see that by the time we run out to FY ’24, both Garden Well and Rosemont Underground represent quite a significant proportion of production coming out of Duketon at 40%. And so we’re looking forward to having Garden Well South coming, as I mentioned before earlier through — later on this financial year.

On the open pit front, the key sources of ore continue to be from Garden Well too as well. And as I mentioned, Ben Hur and a number of other finer satellites.

Well, broadly, I think the way we’re still looking and our confidence is quite — is strong now, as reflected in our outlook beyond this year. We think that Duketon certainly, at least for the next 3 years or so, is capable of sitting in this what we’ve thought has been the sweet zone of 320,000 to 350,000 ounces of gold per annum. And that’s based on the material that we have on hand not — we do believe that there is more potential, and we’re chasing that. And what I just want to show you a couple of examples of where that sits over the next couple of slides.

So if you move on to Slide 16. This is where we’ve got 2 areas that are highlighted, not included in the uplands, but have got great potential.

If we look at Garden Well, and we have spoken, and you’ll see in the quarterly that we refer to this, and we’ve been talking about the study being done, we’ve identified an area sitting in the — underneath the Garden Well Main Pit, where we could justify putting in a decline and from the south and accessing that gold and then looking to see what we could find from there. But as part of that review process, we’ve actually identified this area has actually got quite a lot more potential than we thought. And in particular, that gray zone that sits between the south and the main is while in this — it’s shown as being almost barren based on its color, we’ve gone and we — through the process of evaluation. We pulled lot of old information.

It’s been quite a particularly tricky area to drill and get access to because sitting over the top of it in the zone where we would drill it from, there’s a whole bunch of stockpiles, which makes it extremely expensive and very difficult to drill out. But through — looking at some of the old data and projecting information from the pits that we had, we’ve recognized that actually the potential exists in between that corridor, if you like, between the south and the main, and we’ve made an assessment and a decision to do rather than run the risk of compromising the effectiveness of that drive by focusing on the small block of exploitable material that we know exists underneath Garden Well Main. We’re going to approach this as a decline that is set more for exploration to give us — so that we get — we don’t put any development in anywhere that potentially compromises our extraction, but also gives us the best chance to be able to identify all of the material that sits between south and main as well as getting access into the main and below the area where we were originally targeting.

So — and of course, the benefit of that is that we may even have potential for — apart from putting in a plan that’s not compromised by existing development, but also perhaps get some earlier potential production out of that area that’s considered previously to be a bit more barren. So that’s a great area that’s got potential to add to our existing plan.

Rosemont, which is a diagram on the right on that Slide 16, has area as well, which I, it’s — we’ve been drilling out underneath what’s called Rosemont South Underground. Pleased to say that, that’s starting to look quite prospective, and we’ll also be putting it’s a lot less, but some development out to that to be able to drill that out and we don’t have that in our plans at the moment. A little bit of pleasing news as well. We’re starting to see as we’re getting further into Rosemont Central that the grades there and the tonnages are actually improving from as we go down with depth and also get a better understanding of the structure and the material at best is carrying the gold grade. So we’re seeing some improvements there as well in an area that we thought was sort of main was the juicy bit in central was okay, and south was sort of modest grade. We’re actually seeing both south and central lift in its performance a little bit as we get a better understanding of the ore bodies there and how to exploit them properly, which is great news.

Slide 17 shows a little bit more of life extensions that we’re chasing. Ben Hur is probably sitting at 100,000 ounces, but we’ve seen this drilling underneath it that’s giving us the potential to add some more life to it. And we are seeing that around, which doesn’t give us — it’s not a major step change in life, but it certainly gives us the potential to add another year here or another 6 months there, which all adds up in value to our plan.

So look, that’s just moving fairly quickly over Duketon, but giving you a bit more color on what we’re seeing as being near-term opportunities to add some life both from our open pits and our underground.

On McPhillamys on Slide 19. Look, that continues to be the slow burn. It’s not a no-burn. We are certainly making negotiations and discussions with deep high water have been continuing. The SPAL is certainly, Specific Purpose Access License, is out there for us to be able to utilize once the license conditions are finalized with water. So we are progressing there, and we are hoping that we’re going to see something more positive and some real output there, certainly during this second half of the year. Hopefully, this quarter, but certainly before Christmas.

Moving on to Slide 20, which I think a few people will have seen before, and we just use — touch on this to highlight and make sure people understand what we’re trying to highlight here. This slide is about the benefits of time and the better focus on exploration. You can see that some of the Greenstone Belts have been very well endowed with gold. And then there’s the smaller ones that’s sitting more on the left-hand side of that chart. And the key reason that we see for that is that if you’ve been exploring long enough and looking hard enough, you find gold on the Greenstone Belts in WA as reflected by the time that those big belts have been known about.

The Duketon Belt and the Albany Fraser are relatively younglings in this process, certainly not explored to the extent in the detail of some of the bigger belts. And we just see that it’s not the sole reason, but we see that as part of — the simple reason why we’re confident that there’s plenty to be found on our belt, which, of course, we hold circa 90% of that ground.

And just to show you on Slide 21, what it is that makes us interested. And we’ve had the ground now for a while. We’ve been putting quite a bit of focus on to what the real basic elements of exploration, and we think we’re starting to see some of the — some glimpses of what that’s going to provide to us in the future.

And sitting between the Rosemont open pit or the Rosemont mill and the Baneygo is this area called the Rosemont South Trend. And on it, there is — we’ve been doing some drilling and getting some very encouraging results sitting at an asset now called Maverick is this deposit — no, it’s not a deposit, but it’s an intercept where we — the hole was drilled for about 150 meters. And the last 10 meters of the hole, we hit 10 meters at 110 grams a tonne. Now the reason that the hole pulled up in mineralization was because we water and with the type of drilling that we were doing at that stage, we couldn’t continue. But we’re back, obviously, in doing more drilling there. And we’ve drilled another hole 100 meters further south of that, and the ground is looking particularly interesting to us, and we’re looking forward to getting those results from that. In fact, there’s a whole series of holes around it. Now obviously, we’re putting a lot of effort running 100-meter spacings around those white spaced holes.

But it’s a particularly interesting area for us, as you could imagine, with those types of grades 10 meters at 110, including 4 at 274 grams a tonne and then further up the hole, another 8 meters at 1.2. And further south, probably, I think it’s about 3 or 4, 5 kilometers.

We had a hole a bit closer to the surface, 40 meters below surface, 12 meters at 6 grams a tonne. I’m pretty sure we all look at those and think for a junior, there would be some pretty spectacular results. We’re very encouraged by them. Obviously, it forms part of our large portfolio, but we’re putting a lot of focus on those. Now we’ve gone back in the team are putting a lot of effort into that. And as those results start to come through, we’ll make sure that we keep the market informed.

So look, rounding off at Slide 22. I’ve talked through the performance of last year given the guidance for FY ’23 and hopefully given a little bit more insight into how we see our existing assets being pulled together and how we see that sort of forming an important part of our growth outlook and the — our efforts in looking to improve and increase the value of our shareholder value.

We’ve got a strong financial platform, as I said. We generate strong operating cash flows, as you can see from past quarters, past periods. We’ve got a solid long life reserve certainly sitting at — in assets like McPhillamys and at Tropicana and looking to build our growth profile of those reserves. We’re in a great location in Tier 1 in Australia, building our ESG credentials, and we’re certainly looking forward to some of the projects that will help both reduce our emissions but also reduce our costs and reliance on diesel. Key factor at the moment.

We are returning and we see our plans are coming back to where we — our June quarter, one where we delivered on what we said we were going to do, notwithstanding some of the impacts of COVID all around us. So at Duketon, we were pleased to see that. And as I said, I just finished talking through the — our position on the Greenstone Belt at Duketon is very exciting. And while it’s early days, we think we’re starting to see some glimpses of what the future might look like.

So look, I might — I’ll cut there, and I’ll hand it back to you, Ashley, and open it up to Q&A.

Question-and-Answer Session


[Operator Instructions]. Your first question comes from David Coates with Bell Potter Securities.

David Coates

Congratulations on the very strong June quarter. We’ve got a few questions about the growth outlook. But just before on the June quarter, the all-in sustaining cost presumably benefited from that strong production performance. But can you give us a bit of a guide to what sort of underlying unit cost inflation is in sort of dollars per tonne mining and processing and how that’s looking into FY ’23?

Jim Beyer

Sorry. Underlying what?

David Coates

Like your cost inflation on your sort of your unit mining and processing costs, the all-in sustaining costs will sort of recover, benefited from the high gold production in you gold per tonne mining pricing, what sort of inflation you’re seeing there? And what — how is that sort of coming over into FY ’23?

Jim Beyer

Yes. All right. Look, I’ll do my best to answer that question. Look, clearly — well, not clearly, but I’d say our costs for last year for FY ’22, almost the cost of 2 halves. The big driver of our costs, and the largest was fuel. I think we averaged through the year about — we might have been about $1.05 or $1.10 for FY ’22 and was probably $0.85, $0.90 in the first half. And I think we’ve ended — we ended the year at about $1.70 and we’ve carried that forward. And that is, when you’re using just the Duketon alone, didn’t have quite the same impact to Tropicana because power runs off gas. But at Duketon alone, we were using 110 million liters last year. That will drop a little bit this year because we come off our physicals, but that has a pretty significant impact on our costs. And we’re assuming in our AISC that — of those guidance numbers that our fuel will continue at about $1.70 for the next quarter or so, and then we’ll drop down to $1.40 after that. So we see that’s probably the single largest impact on our AISC.

We saw and see other elements across everything from grinding media to input chemicals like cyanide and the like, but that fuel is the biggest — the other thing, probably less inflationary and more just performance-wise, COVID, and labor availability has impacted on some of our open pits. The MECA team at site did a pretty good job of being able to manage personnel, and we were able to not just deliver into our physicals at Duketon to deliver this year’s performance but also set — sorry, last year’s performance, but this year is up.

The challenges at Tropicana were a little bit more substantial. And as a result, not all of the material, they’re probably down on physicals by maybe 15% or 20%, and that’s one of the reasons why we see growth capital flowing into this current year because it just — it couldn’t get done. They didn’t have the capacity. And obviously, that has impact with fixed and variable.

So I — without sort of — and not really in a position to go through and break down every single cost. Salaries, of course, are the other ones that we’re seeing where we generally increase, easily at 5% to 6% on the salary front as well as putting a steady pressure on it. But the thing that really can impact on the unit cost, I think more than the impact of salary alone, is from an underground perspective, if you don’t have the labor benefit, people doing the job can’t move the material, you can’t get the ounces and that really pushes your all-in sustaining costs up.

David Coates

Just on the focus on the presentation here on growth and outlook. You’ve highlighted a number of areas for resource and reserve growth. But overall, at the moment, with the last resource update, it was pretty steady and the — you could sort of argue there’s quite a lot of resource-to-reserve conversion to happen to fill out those mine lives, when should we sort of be expecting to see that reserve growth start to come into the reserve and resource updates?

Jim Beyer

Yes. Well, the pleasing thing about — for a start, on the reserves and the resource update that we’ve already — we put out a few months ago was the fact that Rosemont Underground has moved into the phase of being able to replace depletion. We don’t expect to see any major doubling or tripling of that now. We just expect to see that on a rolling basis. And I think Garden Well will enter that phase over the coming 12 months as well. You basically, once you get underground, you get the right platforms and you can start to drill more material further down plunge with an accuracy and confidence to bring them into reserves.

I think from the surface point of view, the Ben Hur material will, any additions that we see from that drilling, that will — unless that’s spectacular, we won’t be doing anything additional with that until the reserves and resource update.

Certainly, of work, as I mentioned, there’s some potential deposits that we’re working on at the moment that we think are sitting in, they’re not currently in our plans here, but there’s one or 2. There’s one called Commonwealth, which is not — doesn’t have any formal resources on it, but we’re quite confident that that’s an area that’s got the potential to add more life to more high-grade feed and life to Moolart Well.

I think once we finish that work, we’ll be talking about that when it’s ready, and we won’t be waiting until the reserve statement because that — at the moment, our plans in our reserves that our direct feed at Moolart starts to run out in probably the first third of next financial year. So probably whatever that would be, 16, 18 months away. So we think that that’s got the potential to add — to extend the period of high-grade fee. Once we’ve got that work done, and we’re satisfied with it from a jaw perspective and from our own risk category perspective, then we’ll come out with that. We won’t wait for that type of — anything substantial will come out when we’re ready. Otherwise, it will be incremental growth that gets reported in the R&R update.


Your next question comes from Alex Barkley with RBC.

Alexander Barkley

I was just asking a bit more about the guidance you’ve got in Duketon, if there’s any additional information you can kind of give around the split Duketon North and Duketon South going into next year. Duketon North obviously finished the year with costs a little bit higher. Is that something we should maybe expect in the next year and Duketon South maybe a bit lower with the increased underground feed?

Jim Beyer

No. I think, I mean, the, we certainly did finish the quarter at Moolart with, as I think, only was about $2,500 all-in sustaining costs, which was pretty damn high. But there were some unique things that were driving that, that was one-off, but we’re expecting that to settle back down to levels well below $2,500. That’s, as I said, that’s just anomaly. We were doing some special — we had to get another contractor in to do some road haulage, for example, which was particularly expensive and we’ll be backing off from that.

Look, I haven’t got — and we’re not, we haven’t given any more breakdown on that guidance by area. We just view that as being well consolidated. So — but I think you can certainly take away that we don’t — I mean, if we’re experiencing those ongoing costs at Moolart Well, that’s recreational mining. We wouldn’t be heading down that path at all. We’ll run a site and we’ll run it because we know that it will make a profit, we will make cash.

Alexander Barkley

Yes. Okay. Sure. And just sort of looking a bit further ahead, you’ve given FY ’24, ’25 around a similar sort of guidance raise, and presumably, there is more underground coming in. Just wondering what happened with Duketon North given the reserve life was a little bit shorter? Are you, at this stage, planning any integration with the south via trucking? Or sort of coming into FY ’25, is there any broader regional plan that you’re thinking about? Or is it still waiting for mine life extension at this stage?

Jim Beyer

So what our current plans are at Duketon North, which is feeding into the Moolart mill, look, as I said before, we will — we’ve got pit there in existing reserves that will run out in, I said, probably about 4 months or so into FY ’24. And after that, we’ve got at least another 2 years thereabouts of low-grade stockpiles, about a year, thereabouts, low-grade stockpiles that if we were running with that, we’d certainly, we’d anticipate lower production. We factor that into these outlooks, by the way. But what we also would see because it’s basically from a cash point of view, it’s free issues. So it’s still good cash generating, just not quite as many ounces.

But what we’re definitely looking at this is where we’ve got a number of opportunities that don’t currently sit in reserves, but we’re quite confident that we’re going to have, as I mentioned before, Commonwealth is one. And there’s, I think, in the Appendix, there’s a planned view of the holes and the drilling that we’re doing there. And that’s an area that’s got the potential to mean that we — while we’re still doing the numbers on it, it could be anything from another 1 year to 1.5 years of high-grade feed production sitting in Moolart. I think in the long term, our expectation is we’ve also got the Gloster Underground, which is extremely complex. It’s perplexed us, and we’re trying to work out the geology for that. But, that also has the potential to be another feed there, but it doesn’t, again, doesn’t sit in reserves or in resources for that matter at the moment.

Long term, what would we do? By long term, I’d turn around and say our exploration guys are finding — looking for opportunities there to be able to keep it running. I suspect that if we didn’t, we would continue to look at are there any satellite opportunities, but we’d integrate. I think ultimately, like all mines do, if you run out of ore, you wind it up, but we certainly don’t have that on our agenda. We see enough interesting exploration, SNFs, and also mineralized inventory that we can get into potential into reserves that we’re working on at the moment to give us a bit more than that 3- or 4-year mine life — mill life that we have there.

Alexander Barkley

Yes. Okay. That’s very good color on that one. And just a last quick one for me. You flagged a major mill shut at Garden Well in the September quarter. Did you know sort of the impact or how many days out it might be there?

Jim Beyer

Yes, it’s finished now. It was a 5-day shut. It was probably the biggest shut that I think we had on site. Pleased to say that it came off without an injury, which is always very pleasing because these things are under a lot of pressure. But it actually involved a significant power upgrade that was required because of the age and the quality of that infrastructure that was there over the years. And it also involved a pretty significant move that was required of the tailing system that has basically got to the point where it was no longer fit for purpose, and we had to undertake some pretty significant works around that along with the other usual suite of things that occurred through, mill relines and the like. But that’s come out, and we’re up running again now.

Is it — does it have an impact on this month’s production? Yes, you can’t pull 5 guys out without it impacting. But that’s all factored into our guidance. We’ve still got — we believe that we’ve still got 2.5 months there really — well, maybe we question that now, a bit over 2 months to continue to run at Garden Well and there’s nothing to suggest we won’t be able to meet what would meet our requirements for the quarter. It was all part of the plan. It wasn’t unplanned. Thanks, Alex.


Your next question comes from Andrew Bowler with Macquarie.

Andrew Bowler

You alluded to this before that there’s a lot of costs. Just wondering if Regis has ever engaged any diesel hedging and what that sort of position looks like if you kind got hedges outstanding.

Jim Beyer

Yes. I think a number of years ago, there was a period — a few, I’m not quite sure it was — I can’t remember exactly what year. So I think we just did sort of jag a pretty good bit of hedging. We haven’t done any in the last 4 or 5 years. I mean we continue to look at that. We did look at that last year. And hindsight is the most accurate management tool on demand. The reality is, though, that part of the — you can’t hedge diesel. You can hedge large volumes of oil, but the diesel prices are being driven in part by oil price, but more significantly by refinery margins given the limited refinery capacity. So we haven’t — the short answer to your question is we haven’t undertaken it. We are looking at it, and we’re looking for options and opportunities to be able to do that. But I guess at the moment, we’re trying to work out like everybody else, when the softening starts.

Andrew Bowler

And also, I may have missed this before, but just timing on those studies for renewable energy in the WA business? And also, is that something that Regis could potentially carry the CapEx for? Or is that more likely to be a third-party sort of style of supply?

Jim Beyer

Well, it’s — I would anticipate — first to answer your first question, timing-wise, I would be anticipating well and truly in this first half of the financial year, barring anything unforeseen at this point.

The way it’s being funded is basically apart — well, there’s a few clearance and a few basic initial, very low levels of prep work that we do for the Duketon proposal, and it’s — then it’s a supplier in stores, KPS are our diesel suppliers.

The power supply for renewables would set up and basically, that would be a cost recovery over the period that we’ve got it in place. And I think the similar arrangement is being considered for Tropicana, with a little bit of initial up-front CapEx to get it going but nothing substantial.

Andrew Bowler

No worries. And last one for me, is sort of renewable energy something that you’d be looking at McPhillamys just given elevated East Coast power prices at the moment. Or are you just sort of looking to get that approved and then that’s something you could add on later?

Jim Beyer

Well, it’s certainly something that we would be doing from 2 parts, in part to make sure that we’ve got the most cost-effective power that we can pull in because the advantage of being in New South Wales is it’s got quite a large grid and a number of options that we can tap into. There’s big power running about [indiscernible] or something. They’re a big power line, which is connected into the network so we can access those renewable energies which has the advantage of potentially lower costs, although I think cost and renewables in those big grids are. It’s not completely clear whether it reduces your cost, but it certainly reduces your emissions and certainly would in the event of some cost on emissions was put in place. So we do expect to do that, but we haven’t factored — we don’t factor that in on the assumption of any material savings in our valuation when the time comes to make that call. Thanks, Andrew.


Your next question comes from Alexander Popov [ph] now with Citi.

Unidentified Analyst

Jim and team on guidance for Tropicana next year, are you able to give any more color on the planned total open pit ore movements and great expectations?

Jim Beyer

Look, I don’t have the total movements sitting in front of me. What I can say is that, I mean, basically, at Tropicana, once Havana comes in, you’ll see that the grade starts to lift up. I mean the Havana grades are sitting at 1.5 grams a tonne. So as that feed starts to kick in, what — because at the moment, the feed comes from — the feed comes into the mills at the moment from the underground, primarily Boston Shaker, a little bit from Tropicana, and Tropicana will grow in the year. It comes from the Boston Shaker open pit, which will be finished in the first half of our financial year. And then we will see Tropicana — sorry, we’ll see Havana ounces and feed into the mill, start to lift and lift significantly.

The — pardon me, we never produce enough at this stage in the plans. Tropicana does not produce enough direct feed ore to completely replace the use of — and the drawdown of the lower grade stockpiles got, but it certainly sees an increase, and that’s why we’re seeing over the next, this coming year, we see easily a 10%, 15% increase in production. It’s all driven by that higher grade offsetting more of the low-grade stockpiles.

Unidentified Analyst

Yes. Okay. And on McPhillamys, can you expand on the note about purchasing a rural property to advance the project development?

Jim Beyer

Yes, sure. So there’s — as part of some of the infrastructure corridor that we need to put in for the project, we’ve — in one area, we’ve decided to ensure that we can get the right and maintain the right line. We’ve purchased a property that we were previously negotiating an easement on, and we purchased that property to ensure the access to that easement.

Our expectation is that we won’t hold on to that property for very long. We’ll ensure that the easement is secured, and then we’ll look to put that property back into the market. We are, in the meantime, continuing to run it as a farm because it’s what it is, a decent size. It’s a substantial amount of money, but it’s — we see it as being rotating in and out over the medium term. So we already hold a substantial amount of property in that part of the world, and we don’t want to particularly on too much more. But it is something that we saw as being the best strategy to be able to ensure that we secure a line for our infrastructure — and infrastructure, meaning power, that if we didn’t get access to that line for a change in owner, for example, then the cost to us would have been quite significantly more to reroute it. Does that make sense?

Unidentified Analyst

Yes, sure Yes, very clear. Final question is do you have any expectations for D&A for FY ’23?

Jim Beyer

Expectations for D&A for FY ’23. Probably, we report on that in our table. And I don’t think we’re going to see anything too significantly different from that. We’ll give an indication of — we’ll give — we’ll give a — if it’s — like our expectations are, it will be similar rates to the last 12 months. So we’re not anticipating any major change there. And you know where that is in our tables that we release?

Unidentified Analyst

Yes. Yes. That’s it for me.


Next question comes from Patrick Collier with Credit Suisse.

Patrick Collier

Jim, just a very quick one. Looking at Duketon outlook in the presentation, Duketon North, 2 million to 2.5 million tonnes. Just comparing that to around 3 million tonnes that it’s done over the last, at least, a year or so. Are you able to give any detail on what’s driving that step down?

Jim Beyer

Sorry, I missed what you were saying there, the what at Duketon?

Patrick Collier

The Duketon North mill throughput in the outlook slide, it’s got 2 million to 2.5 million tonnes per annum. And just comparing that to what’s been achieved recently.

Jim Beyer

Yes, yes, sure. So like the Duketon, the Moolart mill is very susceptible, as most mills are, to feed type. And when we see the high rates that we’ve experienced, it’s usually the result of a lot of oxide, a lot of soft material, you can get high throughput. And as we start to get a little bit deeper in some of our pits, things like Gloster and the like, will move into more fresher rock and the mill rate starts to drop because you just can’t get the same throughput through.


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

Jim Beyer

All right. Thanks, Ashley. Thanks, everyone, for joining us. And as always, if you’ve got any follow-up questions, please give myself or Ben a call and we’ll do what we can to help out. Thanks for joining us, and have a good day.


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

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